October 13, 2009

There Will Be Rationing

Justin Katz

Further to this morning's vlog, John Goodman's got a good explanation of the reason that Sarah Palin's "death panel" comment was broadly accurate. He touches on the public sections of the healthcare industry, but then moves on:

As currently envisioned, private health plans and at least one public plan would compete. The plans would be free to set their own premiums but would have to charge all enrollees the same price, regardless of their health status. Because some plans will attract a greater percentage of sick enrollees than others, a government administrator will have the power to "tax" plans with healthier enrollees in order to subsidize plans with sicker enrollees, through a process called risk adjustment. And it is through this process that the government will have enormous power to control what is done for the sick.

Suppose a plan attracts an above-average number of people whose doctors say they need hip replacements. The company asks the government risk adjuster for a subsidy to cover the cost. The risk adjuster may decide these hip replacements constitute "unnecessary care" or "futile care" and deny the request. In this way, the risk adjuster will effectively force doctors to deny people care.

The risk adjuster will be aided by a national health board, which will do "comparative effectiveness" analyses. If the health board decides that a hip replacement is "unnecessary" or "futile," it will offer cover for the risk adjuster to deny payment and for insurers to deny care.

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Yes, Sarah was right, of course.

Posted by: SeanO at October 13, 2009 3:16 PM
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