Tuesday, November 25, 2014

Rationing By Waiting, and Four Laws of Human Economics

All things come to those who wait.

But sometimes they come too late.


More people will receive care under the health law, but there will be fewer doctors to care for them. Many of these people will receive subsidies. This means health care will be rationed by waiting rather than price, for the supply of care (number of doctors) will not meet the demands of the newly insured, nor will the supply of federal monies be sufficient to meet the new costs of care.

Long waiting lists for care are common in countries with universal care. Longer waiting lists are also more common in Massachusetts, where people wait over 30 days to see a family doctor and 48 days to see an internist, even though Massachusetts has more primary care doctors per capita than any other state.

Growing waiting lists will also become the rule rather than the exception in the United States (Austin Frakt, “When Health Coverage Means Longer Waits for Doctors,” New York Times, November 24, 2014).

There are various explanations for long waites: a static or shrinking number of doctors entering primary care, the entry point for patients into the health system, more than half of existing primary care doctors are not accepting new patients; of those doctors taking on new patients, fewer still are accepting patients on health exchanges or receiving subsidies from those exchanges.

The solutions to this pervasive and growing waiting problem are : one, reduce waste and increase productivity within the system, something government is not noted for; two, increase the number of primary care physicians by paying them more or allowing nurses to substitute for primary care physicians; or three, increase the number of visas for foreign-trained primary care physicians.

All of these things take time and have controversial downsides.

According to John Goodman, a conservative economist who created and heads up the National Center for Policy Analysis in Texas, rationing by waiting has its own costs.

“What I call health policy orthodoxy is committed to the idea that waiting for care is always better that paying for care for low-income patients. In other words, if you have to ration scarce medical resources somehow, rationing by waiting is always better than rationing by price. Yet, whenever the poor and the non-poor compete for resources in almost any non-price rationing system, the poor always seem to lose out.”

They lose out because their illnesses may become worse while waiting. They lose out because doctors often do not accept them because doctors find government pricing too low and government bureaucracy too cumbersome and too time consuming.

Goodman says market-based alternatives are cutting through the rationing-by-waiting time warp: walk-in clinics, telephone and email consulting services, surgery centers, free-standing emergency centers, retail outlets, and concierge practitioners - all of whom will see patients on short notice or the day they call or need care and who ask for cash for care.

Why is rationing by waiting such a common feature of government programs? Because of certain laws of human economics.

One, the Law of Supply and Demand. When the demand for care goes up, and the supply of doctors goes down, price and costs go up, and rationing by waiting becomes inevitable.

Two, the Law of Time and Money. Time is money, and there is only so much time. Doctors, already overloaded, have limited time, so they ration care by prolonging waiting times.

Three, the Law of the Free Lunch. There are never enough doctors to meet the demands created by the promise of free care, or enough middle class taxpayers to finance those demands, so time is rationed.

Four, the Law of Competition and Cash. The only way to disrupt the Laws of Supply and Demand, Time and Money, and the Free Lunch, is through the practice of the Law of Competition and Price. People understand lower prices offered by competitors, and they understand that direct cash transactions without intervening middlemen are a visible and viable way of saving time and limiting rationing. Money talks, and lower prices offered by competitors talk even louder

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