View the interactive version of this page

ISSUE CLASH: Health Care Reform: Will There Be Rationing?

The Panelists

Peter Singer
Professor of Bioethics, Princeton University
Michael Tanner
Senior Fellow, The Cato Institute

Q: Will the proposed health care reforms that include a government insurance option for all lead to rationing of medical services?


Peter Singer: Would a government insurance option "lead to" rationing of medical services? That way of phrasing the question buys into the myth that we don't have rationing of medical services now. But we do. It takes many different forms. It is commonplace for health insurance companies and HMOs to deny patients beneficial treatment. They find a variety of excuses for doing so, and may not openly admit it, but we all know that it happens. Medicare rations drugs by requiring co-payments that many patients can't afford. Emergency rooms ration care by making people wait so long in line that some just give up and go away.

A government insurance option could get rid of this kind of rationing, and ensure that everyone can get good medical care without financial stress. It would, however, refuse to pay for extremely expensive forms of treatment that had no proven benefit, or only very little benefit. That's the kind of rationing we need, to control the ruinous explosion in medical costs, which are now twice as high as in some other countries that have higher life expectancies than we do.

Michael Tanner: A government-run plan would have an inherent advantage in the marketplace because it ultimately would be subsidized by American taxpayers. The government plan could keep its premiums artificially low or offer extra benefits because it could turn to taxpayers to cover any shortfalls.

In addition, the government plan could impose much lower reimbursement rates on doctors and hospitals the way Medicare and Medicaid do today. Providers would be forced to recoup that lost income by shifting their costs to private insurance, driving up premiums and making private insurance even less competitive.

In the end, millions of Americans would be forced out of the insurance they have today—even if they are satisfied with it and into the government plan. Businesses, in particular, would have every incentive to dump their workers into the public plan. As many as 118.5 million people, roughly two-thirds of those with insurance today, could be involuntarily shifted from private to public coverage.


Peter Singer: There are plenty of examples around the world in which private health insurance flourishes alongside a government run plan. My own native country, Australia, is one of them. Although Australia had a conservative government from 1996 to 2007, Prime Minister John Howard never proposed doing away with universal coverage provided by a government run health care plan. He knew that Australians would vote him out of office if he did.

How do opponents of a government run plan explain the fact that in every country that has one, levels of satisfaction with the health care system are higher than they are in the U.S.?

Incidentally, Michael Tanner says that a government-run plan would ultimately be subsidized by American taxpayers as if the present employer-based health insurance plans are not subsidized by American taxpayers. But they are, to the tune of about $200 billion in tax deductions. Don't taxpayers have some interest in getting good value for this subsidy?

Michael Tanner: The big question is not whether there will be rationing. Rationing exists under any system. Health care is a commodity, after all, and a finite one at that. There are only so many doctors, so many hospitals, and, most importantly, there is only so much money to go around. The real health care debate, therefore, is not about whether we should ration care, but about who should ration it, and whether people will still be able to purchase a procedure even if the government denies coverage for it. In many government-run health care systems around the world, private contracting outside the government system is restricted or even prohibited. The concern, therefore, is that once people are forced into the government-run plan, they will not be able to purchase services that are denied under that plan-or that the government would punish private insurers for going beyond government guidelines.

Follow ups

Peter Singer: Amazingly, we are reaching some measure of agreement here! Opponents of health care reform have made vociferous use of the bogey of "rationing" as a weapon against a government health care option, so it's good to see Michael Tanner agreeing that rationing exists under any system, including our present one. And I entirely agree that, alongside a government health care option, people should still be able to purchase a procedure even if the coverage denies coverage for it. (Realistically, they will purchase the insurance that covers the procedure, rather than the procedure itself.) It's also true that in some government-run health care systems in other countries, private contracting is restricted or prohibited. But in others it is not. In my previous comment I mentioned Australia as an example. There is no need for a reformed U.S. health care system to restrict private health insurance plans and it shouldn't do so. What it should do, however, is provide a public insurance option, to keep the private insurance system honest and competitive.

Michael Tanner: In the end it all comes down to who should make the decisions in your
life. When it comes to health care, should it be insurance company bureaucrats (the current system), government bureaucrats (as under a public option or any government-run plan) or individual consumers together with their doctor (under a market-based system). Health care represents some of the most important, personal, and private decisions in a person's life. So who do you trust to make the decisions?

One way to shift more control to individuals would be to shift the tax subsidy that Dr. Singer describes from employer-provided insurance to personal, portable insurance purchased by individuals. And, if we want more competition in the insurance industry, why don't we let people buy insurance across state lines? In the end, we can fix the problems with our health care system without herding millions of Americans into a
government-run plan.

The opinions expressed belong solely to the participants and do not necessarily reflect the views of NOW, PBS, or local stations. The facts stated by the participants have not been verified by NOW.