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Rationing Healthcare: Obama Versus Ryan

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Rationing is a dirty word in politics.  If a politician states they want to ration healthcare, they almost certainly will not get elected. However, everyone knows in their heart of hearts that we have to cut spending somewhere. Both the Obama and Ryan plans for Medicare involve rationing, although the word is never used. Today I will review how each plan rations health care.

First, let’s review how we currently ration care and who is responsible for how we ration.

  • When your private insurance company does not cover a procedure, a medicine, or denies care because of a pre-existing condition, that is rationing. The insurance company underwriters decide what to pay for. The rationing decision is in the hands of the insurer.
  • If you cannot get health insurance because you have a pre-existing condition, that is rationing. The insurance company underwriters decide the outcome of this scenario. Again, the rationing decision is in the hands of the insurer.
  • When Medicare does not cover that same procedure or medicine, again, that is rationing. Government employed underwriters decide what to pay for. However, Medicare does not ration based on pre-existing conditions and cannot turn down applicants based on health history. The rationing decision is in the hands of government employees.
  • If you cannot get health care because you have not purchased insurance – that is rationing. You either choose not to buy coverage or cannot afford coverage. If you choose not to buy coverage, you are in charge of rationing. If you cannot afford coverage, our society and economics determines how your care is rationed. You have put the rationing decision in the hands of various souls – some who are kind and some who do not care.

Many will point out that people without coverage go to charity or the emergency department to receive care, and they will not pay the cost for their care. First, this is a very inefficient and expensive way to provide what should be basic and inexpensive care. Second, it still is rationing. How?

I work in a charitable program and previously in the emergency department setting, so let me share what really happens.  At Jacksonville, Florida’s Sulzbacher Center, the patient shares income information which our social worker uses to connect them with any services they may be eligible for, such as Medicaid or other local insurance programs. We manage all the primary care needs and provide basic medications purchased with charity dollars or donated by pharmaceutical companies. The clinic has to hire one person just to fill out all the paperwork to get the drugs donated. If a patient has a complicated problem, volunteer specialists and hospitals donate their services. Thank goodness, Jacksonville has a well organized system through another non-profit, We Care. We Care organizes these “donations” of time and services so the patients will eventually obtain needed care. However, many patients don’t know about our clinic and We Care, so they usually get help late in the game of their illness. It shouldn’t have to be this convoluted, and it takes considerable effort and money. We Care and Sulzbacher spend a significant amount of time and energy raising funds for their work.

So what happens when an uninsured patient goes to the emergency department? Because of the EMTALA law, the emergency physician has to see and stabilize the patient. Basically, we take care of the emergency problem, if it is one. If they are sick enough to be admitted to the hospital, they get admitted. However, most of the time, the patient has a chronic illness that is not an emergency. We see the patient, do the best we can, and refer them to the appropriate physician. The patient receives a bill, and unfortunately, they get charged a lot of money because an insurance company did not negotiate a lower fee. If they don’t pay, we send bill collectors after them.

If the patient tries to follow up with the physician they were referred to, they are basically told the doctor will not see them unless the patient pays up front. The physician outside the emergency department is not subject to EMTALA. Again, they have to pay “full price” because an insurance company has not negotiated a lower fee for the patient. Most patients do not follow up with another doctor, so eventually, they end up in another emergency department, hoping for better care. This is sad and inefficient. Basically, we ration care haphazardly and irrationally.

There are many other great examples of rationing, but now back to Obama and Ryan.

So how does Obama’s Affordable Care Act ration care? At least for Medicare, it creates the Independent Payment Advisory Board.  The job of this 15 member board is to reduce the per capita rate of growth of Medicare spending.  The Board cannot “ration care, raise premiums, increase cost sharing, or otherwise restrict benefits or modify eligibility.” What is basically left for them to do is cut how much they pay for services. So how is this rationing? Doctors and hospitals take the brunt of this – they have to provide unlimited care with limited funding, and are liable for any missteps that occur. Maybe they will become more efficient, but it is an unfair burden when we all need to take responsibility for how our taxpayer’s dollars are spent.

How does Ryan’s Medicare plan ration care? Basically, people will receive a stipend to buy private insurance. So now your 90 year old grandmother has to shop for coverage, compare plans, and argue with the insurance company when they deny her care. With the Ryan plan, we put rationing into the hands of the health insurers. Good luck, Grandma.

So what do we do? We have to take rationing out of the closet without fear. As a country, we spend too much on overuse of medicine and unnecessary care at the end of life. Thankfully, programs such as Choosing Wisely and the Coalition to Transform Advanced Care address these issues and will hopefully make some headway. However, when it comes to taxpayer’s dollars, we should boldly and honestly limit care that is not in the best interest of our country. If someone wants wasteful or futile care, they should have private insurance to pay for it. This would be a great start.




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  • There should be more discussion of the similarities between the Ryan proposal and the current Medicare Advantage plans that cover about a quarter of Medicare eligibles. Seniors seem at ease substituting a private insurance contract for Original Medicare (Grandma seems to like it).
    The main difference seems to me to be the defined contribution Grandma will get to spend. In the MA market today the DC is frequently enough to provide richer benefits than Original Medicare. If the DC under a Ryan like plan is lower than the average cost of OM, what would the benefits look like? Would the plans remain popular?
    We already have a system that uses private insurance, and it is popular. We need to discuss more what the costs and possible plan designs would if it were expanded.

  • Carolyn McClanahan Carolyn McClanahan, Contributor 2 years ago

    The Medicare Advantage plans are higher in costs for taxpayers, as the government subsidizes private insurers for Medicare Advantage. This is one of the uproars with the ACA, as Medicare Advantage plans will be pared back. Also, the plans work well with younger, active seniors, and not as well with 90 year old Grandma.

    Medicare coverage is already struggling – payments to providers continue to fall and physicians do not want to take Medicare. With the lower payments under the Ryan proposal, this will worsen significantly. Instead, we need to focus on cutting costs in two ways – decreasing administration and overhead, and thoughtfully ration unnecessary and futile care. We could easily cut out 1/3 of our health care costs, and improve the health of our country.

    Thank you for taking the time to comment.

  • Actually the plans work very well with Grandma. All the concepts with a Medical Home are present in the MA plans. Everything from Rx compliance to Case Managers, to Discharge Planning have been a part of MA for years, in fact since M+C.
    The problem is that the Feds have never made these plans bid competitively. There were two experiments in Phoenix and Denver under M+C that did not survive the political process that could have validated bidding.
    We have never truly tried a free market approach to solving our Medicare problem, and I say this as a beneficiary.

  • Carolyn McClanahan Carolyn McClanahan, Contributor 2 years ago

    It would be interesting to see. I assume your free market approach would require guaranteed issue coverage, no lifetime limits, and no denials of service over pre-existing conditions? Also, where would one appeal if a denial occurs? I bring this up because most free market advocates want no oversight, and the attempts I’ve seen at free market are not favorable to the patient who needs these protections. To me, the answer is somewhere in the middle, and it is difficult to get both sides to agree on that point.

  • The concerns you have are not part of MA. There is no limit, PCL. There are the typical exclusions for experimental procedures and requirements that members follow the rules of the plan. I really think MA plus competitive bidding would be a logical next step in finding a way to bend the curve of caring for the elderly. If private insurance cannot provide attractive plans at the no more than what the Feds pay now at least we will have tried to use the free market.

  • Carolyn McClanahan Carolyn McClanahan, Contributor 2 years ago

    That is true… I’m all up for experimenting, but just make it easy for people who don’t have the savvy to navigate this crazy system.

  • jnail jnail 2 years ago

    Carolyn, great real life post. The theory and think tank stuff posted here usually is mostly propaganda.

    On MA the major point of the savings from Mecicare that Romney Ryan decry as blood on Obama’s hands for raiding the Medicare trust fund are ending the 14% taxpayer subsidy to private insurers selling MA. That is over $200B of the $700B in savings from Medicare.

    In other words the Romney Ryan plan wants to reinstate a $200B giveaway of Medicare dollars to,private insurers.

    In 2012 with this subsidy gone haven’t MA costs remained stable to going down a bit? Even with free preventative care and the donut hole closing included, right?

    So the idea that removing this giveaway from Medicare over a decade hurts the program is utter nonsense.

  • Carolyn McClanahan Carolyn McClanahan, Contributor 2 years ago

    Thanks – I’m trying to help people who are not policy wonks understand the law better. Yesterday I gave a speech on the ACA to a civic group. When I was done, a woman said, “This is great. How does it compare with Obamacare?” It floors me how many people still do not understand the law.

    I have not seen MA numbers for 2012… but I’m certain the insurers aren’t hurting.

    Thanks for taking the time to read and comment.

  • jnail jnail 2 years ago

    I have a colleague who is doing a lot of MA sales and he has told me rates are stable and options really too numerous for folks to navigate so competition has not been harmed either.

    Stats show 33% of new seniors choosing these plans which makes sense. 65ers in the senior age group are like 20 year olds in the normal population relative to the average cost for older folks. With 10,000 a day turning 65 every day for the next 20 years the Medicare pool will have lots of ” young blood” joining it.

  • russpoter russpoter 2 years ago



    Madam, are you aware, in Canada and Europe, those who are afraid of dying while waiting for gub-mint “aid,” they buy private insurance?

    You have a right to your opinion. Ignoring facts and reality just makes things worse.

    OweBama (D) and his Chicago mob are failures and incompetent. They are bankrupting the USA, making it Greece. Which, BTW, is now having problems getting pharms. If that is the USA you want, good luck, Madam. You and your welfare crowd will need it.

  • palmetto palmetto 2 years ago

    Carolyn- insightful as always. As you say we all need to take responsibility for how tax dollars are spent. One point- the Ryan proposal makes no changes to Medicare “as we know it” for those over 55- so 90 year old Grandma will not have to shop for coverage .