Who's best at rationing health care?

By David Surdam

During the debate before the health care bill was passed, no public figure was willing to state the obvious: There will be rationing.

We live in a world with limited resources, so there must be rationing of health care as with all commodities. The real issue is: Who will decide how to ration health care?

If we lived in a world without private insurance or government health-care programs, then individuals or their loved ones would make the decisions. Such decisions, of course, would be constrained by the individuals' or families' resources.

Even a wealthy politician would face rationing. Suppose such a senator with a dire disease could for $3 million receive a treatment that would buy her an extra six months of life. Her estate can cover the cost. But if she foregoes the operation, she has $3 million more for her heirs or for charity. Is six months of life worth $3 million? Only she can answer that question. This is rationing at its starkest.

Most of us can't afford treatment costing even much less. We opt for health insurance, which pools customers so they can buy protection.

In return for our premiums, we trust the insurance company to adhere to the agreement on what is and isn't covered. The company serves to ration health care. The insured wouldn't want the company to pay for treatment not covered under the policy, as such might render the company insolvent and destroy the protection paid for.

Competition also helps protect individuals Companies don't remain successful by arbitrarily denying claims, as competitors will usurp market share.

The government can provide health care programs that subsidize care for indigent individuals. The government programs should, in any event, strictly comply with the legislation. No one would want government bureaucrats to arbitrarily withhold mandated health care, nor provide treatment outside the scope of the legislation. We want the government to ration the health care according to its legislative mandate.

Dissatisfied customers have the hope of changing private health insurance carriers, but dissatisfied citizens can only either work for a change in legislation or leave the country. These are not enviable alternatives.

As you contemplate government-run health care, consider: Does a politician's word outweigh the legal nature of a contract and the market pressure to provide good service that an insurance company faces? Given the public's low esteem of Congress, the answer should be self evident.

David Surdam is associate professor of economics, University of Northern Iowa. The author's views do not imply endorsement by UNI.