Covert rationing and what it means 

In the United States, we have placed our government and our managed care organizations into an in intractable dilemma, from which their only possible response is to conduct covert healthcare rationing.

First, we have told them to figure out how to create centralized pools of money from which to pay the cost of all of our healthcare. Such an arrangement stems from the reality that medical care, for almost anyone who really gets sick, has been priced out of reach. For even a substantial proportion of our citizens to receive top-notch healthcare, we must have general cost-sharing mechanisms in place.

Stated another way, healthcare has become a de facto entitlement in the United States. I make no claim that it is a well-functioning entitlement. (How could it be when millions of taxpayers who contribute to the centralized money pools are not themselves covered?)  Nonetheless, we all expect and demand that some kind of centralized funding mechanism (whether public or private) be in place so that every deserving ("deserving" being defined in different ways) American resident is well-covered, and we often express outrage that our leaders have yet to figure out how to do this.

While we insist that our leaders treat healthcare an entitlement (which, as we have just seen, requires rationing), at the same time we insist they adhere to another fundamental imperative, this one precluding rationing. That imperative is the "the culture of no limits." Unlike the entitlement mentality - which is nearly universal in Western countries - our deeply-held culture of no limits is uniquely American.  The culture of no limits can be stated thusly:

In America we have and will continue to have the best healthcare in the world, the best doctors, the best hospitals, and the best technology. Since one cannot place a price on human life, everything that can be done for a sick person must be done, as long as there is some small hope of a beneficial outcome. Finally, every disease is potentially curable, and as a matter of policy we will strive to learn how to cure every disease, death itself being merely a manifestation of insufficient technology. In summary, where healthcare is concerned there are and can be no limits.

So, at the same time we find ourselves up against inherent spending limitations that require rationing, we find that there can be no limits.

We can see right away that these two fundamental tenets - the entitlement mentality and the culture of no limits - are in their essence completely incompatible with one another.  And our need to simultaneously hold onto these two incompatible but necessary imperatives has strongly driven our healthcare system toward a policy of covert rationing. 

Covert rationing is our only option, since we must ration but cannot admit it.  But covert rationing is a completely dysfunctional way to run a healthcare system.  It places patients in mortal danger, destroys the fabric of the medical profession, and undermines the integrity of American society itself. In fact, covert rationing ultimately explains all the seeming chaos and illogic that are inherent in today's healthcare system.

Is covert rationing a vast conspiracy?

On the surface it might seem impossible to conduct widespread rationing in a huge industry like healthcare, which consumes nearly 15% of the GDP and directly affects the lives of most of us at one time or another, and to do it covertly, in secret.  Wouldn't the rationing of such a highly visible commodity be apparent to everybody?  

Actually, it is quite apparent if you look for it.  It's just that we've all more-or-less agreed not to look.  Indeed, covert rationing is not a conspiracy being foisted on millions of innocent Americans by a vast and evil cabal. As we are about to see, much of the rationing activity is only poorly hidden, and its covert nature must rely on an almost willful failure of the "innocents" to recognize it for what it is. Furthermore, the individuals who are actually conducting the rationing - the doctors, the hospital administrators, the managed care and insurance executives, the scientists, the policymakers and regulators - for the most part subscribe to the same "no limits" mentality as everyone else. Most would probably find the notion of rationing healthcare to be repugnant, and would probably take offense if they should hear they are being accused of it.

The covert rationing of healthcare is, in fact, a textbook case of subconscious collusion. Subconscious collusion is a defensive mechanism invoked by any social order when that social order is faced with an unpleasant fact of life that is a) unavoidable, and b) unacceptable. It is an unspoken, often subliminal decision to coexist with the unacceptable fact of life, but not to notice it, acknowledge it, or confront it.  Consider the wife who subliminally decides not to notice that her husband is having a string of extramarital affairs.  And consider the German populace during World War II, apparently failing to notice the holocaust.  Subconscious collusion is a relatively common survival technique that allows a social order to persist, for a time, when some fundamental tenet of that order has become severely compromised.  The major problem with subconscious collusion is that it allows the root problem to grow unchecked - and by definition, unnoticed - until the social order being "protected" implodes.  

In the case of healthcare rationing, subconscious collusion operates thusly: First, the irresistible economic forces that require rationing and the irresistible social forces that forbid rationing line up to foster a certain attitude, a certain way of looking at things. Then, within every entity operating within the healthcare system, those who embrace such an attitude become ascendant, not by conspiracy or plot, but by natural market forces.

That certain correct attitude, the new "right stuff," is defined by the ability to suggest actions that have the effect of limiting healthcare services, while couching those suggestions in the language of the culture of no limits. In essence, this kind of thinking allows organizations to direct the rationing of healthcare, while at the same time advancing the notion that rationing is unnecessary.

It is important to understand that there is surprisingly little hypocrisy under this scenario. While undoubtedly some of the individuals who are directing the rationing behavior understand exactly what they are doing, most genuinely continue to subscribe to the myth of "no limits."  Most honestly believe (or at least, want very badly to believe) that their actions are not reducing useful services, that instead, they are reducing waste and improving the efficiency of the system.  Those who do understand the true nature of their actions generally shield themselves from having to communicate that knowledge.  They are more likely to become the quiet, private CEO's or Board Directors whose spokespersons and PR specialists (individuals who are entirely sincere about what they are telling the public) do their speaking for them.

So there is no conspiracy.  The covert rationing of healthcare is conducted by a myriad of organizations, all acting quite independently, and all simply responding to economic and social imperatives.  The key for organizations that want to flourish within our healthcare system, then, is to identify leaders who can respond both to the irresistible need to ration healthcare, and to the equally irresistible need to rationalize such behavior in terms acceptable to the rest of us.  Those individuals, men and women of vision, are the Most Valuable Players in American healthcare.

The enabling visions advanced by such individuals - visions that permit covert rationing activities to go forward openly, freely, and often profitably - can be categorized into two general schools of thought.  We will be spending some time with both schools of thought, and will be getting to know them well.  A brief introduction for now will suffice.

The two schools of covert rationing

School of Thought #1 - The Wonkonian School

This school of thought is the one most commonly espoused by governmental regulators, politicians, public health officials, political liberals, and policy mavens (hence, wonks).

Wonkonians believe that the root cause for all the problems in our healthcare system lies in human weaknesses (specifically, you will recall, in too many greedy doctors using too much expensive technology).  The fix for these problems therefore rests in setting public policy and promulgating governmental regulations to hold that greed in check.  From a philosophical point of view Wonkonians believe in Original Sin, in the essential evil in man - if you give a fellow too much freedom, he'll probably do something bad.

The Wonkonians' point of view is amply supported by the undeniable fact that that the traditional, "Tooth Fairy" RLQ healthcare system institutionalized the natural human greed of physicians. Under that RLQ system, the more technology doctors used, and the more medical procedures they performed, the more money they made.  Indeed, it simply cannot be credibly denied that this system fostered profligacy, waste, and the over utilization of expensive resources.  

According to the Wonkonian school, the greed inherent in our healthcare system is amply confirmed by the fact that millions of Americans have been shut out of the system (or at least, shut out of health insurance) altogether. Where is the cry of outrage from our "compassionate" physicians over the high number of uninsured?  The greed is further reflected by a lack of quality in our present healthcare system - consider the embarrassingly high infant mortality rate in the U.S., and the lagging life-expectancy of Americans as compared to other developed countries.  Again, where is the professional outrage?  Clearly there is a fundamental problem with our healthcare system, a problem that stems from the misguided incentives and maladjusted motivations of healthcare practitioners and other profiteers.  

Politicians and policymakers naturally gravitate toward this school of thought, since its basic premise is that the problem with healthcare results from misguided incentives coupled with human greed.  This premise obviously places the solution squarely in the hands of policymakers, who can do the job with new, stricter regulations and more enforcement muscle.

School of Thought # 2 - The Gekkonian School

This school of thought is usually espoused by the insurance industry, healthcare executives, many physicians, and most proponents of a free-enterprise economy, including most political conservatives. I have named it after Gordon Gekko, the character in the movie Wall Street, whose chief operating philosophy was that greed is good.

Its basic premise is that the open marketplace generally offers the best solution to society's problems.  Philosophically speaking, Gekkonians believe in the essential goodness of man - give a fellow his freedom, and just watch the good things flow.

Gekkonians assert that the healthcare crisis stems directly from the fact that, while doctors may be good at practicing medicine (though, for all we know, maybe they're not), they're no businessmen. And healthcare is simply a business, like any other economic enterprise.  

Leave it up to the doctors, and they'll forever practice medicine the way they did in 1910 - hundreds of thousands of independent guildsmen, each running their own shop, duplicating expensive services, multiplying inefficiencies, and shutting out the competition. No wonder the healthcare system is such an inefficient, wasteful mess. Instead, the healthcare industry should be treated as a market, just like any other market, and not as some sacred, protected economic sphere.

Let those who know how to run a business run the business of healthcare, and let the doctors practice medicine (under the guidance, of course, of the fiscally adept). Bring the efficiencies of the for-profit, free enterprise system to the healthcare industry, and the healthcare crisis will take care of itself.

Wonkonians vs. Gekkonians - A Comparison

At first glance, the Wonkonians and the Gekkonians would seem to have little in common. The Wonkonians believe that too much greed is the problem, so the healthcare crisis can only be solved by regulations to hold that greed in check.  The Gekkonians, on the other hand, propose to allow market incentives (or, if you will, greed) to solve the healthcare crisis by reducing artificial constraints on the market (i.e., by reducing governmental regulations).  

A closer look, however, reveals that these two schools of thought actually have very much in common; certainly enough to explain why Wonkonians and Gekkonians can often be seen forming alliances with one another in their efforts to "reform" the system.

First, both schools of thought are based firmly on the notion that the healthcare crisis is caused almost entirely by too much waste and fraud within the healthcare system.  While one school tends to blame the waste and fraud on greed and the other on incompetence, the basic problem according to both schools is the inefficient use of resources.  We've already seen the fatal limitations of the "waste and fraud" hypothesis.  But still (as we've noted several times already), it is attractive to suppose that enough waste exists in the system to make rationing unnecessary.

As a direct result of the "waste and fraud" hypothesis, both schools of thought are able to assert that the underlying problem is merely one of how the healthcare system is organized, that is, of who gets to call the shots and which philosophy gets to determine the "rules." There is no argument by either group as to whether control should be centralized (clearly, it should).  The battle is over which central authority should exert that control, and whether they should do so through regulatory means, or market-based means. In neither case is there any reason to question our underlying premises.  There is no questioning, at least publicly, of either the entitlement mentality, or the culture of no limits.

The Wonkonians and Gekkonians have one more common feature that deserves prominent mention.  In each, the primary solution to the healthcare crisis requires limiting the capacity of doctors to behave as independent agents.  In one case this is to be done by regulatory means in order to stifle physician greed; in the other it is to be done by the marketplace in order to eliminate physician inefficiency.  But either way the primary goal, the number one priority, is to control physicians' behavior.  To the extent that controlling physicians' behavior prevents them from being greedy or inefficient, that's good. But to the extent that controlling their behavior prevents them from fulfilling their defining role as advocates for their patients, that's bad. Very bad.

Thusly does each school of thought provide a serviceable "cover" for activities that, if subconscious collusion were not the operational imperative, would quickly be seen for what they are - rationing activities.  Indeed, understanding these two schools of thought allows us to comprehend the secret language of covert rationing.  For rationing behavior is virtually always couched in terms of one school of thought or the other.

So far in the race to control our hearts and minds, neither school of thought has clearly predominated.  In 1993 and 1994, the "heyday" of the Clintons' healthcare reform efforts, the Wonkonians were clearly in the driver's seat.  Then, when the Clinton plan went down to overwhelming defeat, the Gekkonians rapidly took the fore, and the short-lived hey-day of private managed care organizations flitted by.  Now it would appear that the public has soured on healthcare run by the ostensible "free market," and the Wonkonians are making a strong comeback. It isn't likely that either school of thought will be vanquished any time soon.

But such a "horse race" scenario is a gross oversimplification.  As we will see, many forms of covert rationing are supported by both schools of thought, and the battle has been characterized more by collusion than collision. In any case, for the doctors and patients struggling in the trenches, it doesn't much matter which school of thought represents the paradigm of the day.  For, whichever one is providing it "cover" at any given point in time, covert rationing in any guise renders the pursuit of healthcare exceedingly difficult, frustrating and dangerous.

The Consequences of Covert Rationing

We've agreed that rationing in any form is bad.  But, while there's no doubt that devising a fair system of open rationing would be difficult and painful, the ultimate consequences of covert rationing are even more terrible.  

As we have seen, chief among the perfidies resulting from covert rationing is the deliberate, systematic destruction of the doctor-patient relationship.

The central authorities who are expected to control healthcare costs have a lot to gain by accepting this grave responsibility (for governmental bureaucracies, incredible power; for insurance executives, incredible profits). But they have to work very hard for that gain, because it is going to be extremely difficult, if not impossible, to control healthcare costs under even the best of circumstances.

And the central authorities are not working under the best of circumstances. Their only option, as we have seen, is to institute some form of rationing. But at the same time they cannot ration openly. They cannot accomplish the necessary rationing simply by decree or even by open negotiation; nor can they be particularly ham-fisted in enforcing the rationing. Instead, a relatively subtle, covert, plausibly deniable kind rationing is necessary.  With a little thought we can see that this constraint leaves them with only one good choice.

Namely, they need to coerce the doctors into doing the rationing for them. So, to the fullest extent possible, covert rationing must occur at the bedside, during the physician - patient encounter.  

Happily for them, the central authorities have many methods for coercing the behavior of physicians, all of which stem from the fact that they have empowered themselves to determine the individual physician's viability as a practitioner. The central authorities have at their disposal an arsenal of subtle weapons, and an occasional nuke, to assure that doctors relegate the needs of their patients to a secondary position, and that they instead take pains to keep their true "customers" satisfied. To a very large extent the medical profession has caved in to this pressure, albeit under great duress.

A direct result of covert rationing, then, is the systematic destruction of the classic doctor-patient relationship - the relationship under which doctors are supposed to act from a position of trust, solely as their patients' advocates, and to place the needs of their individual patients above all other considerations.  For we simply cannot have both covert rationing and an intact doctor-patient relationship at the same time.  

The systematic destruction of the doctor-patient relationship, as important as it is, is merely one manifestation of a general truth about covert rationing, namely, that covert rationing corrupts everything it touches.

In the following three sections of this discussion we will elaborate on this general truth. We will see how covert rationing has corrupted the principles of managed care, the regulatory environment of the healthcare system, the ethical issues surrounding end-of-life care, and even the founding principles of American society.

As we survey all this societal corruption, one less obvious manifestation of covert rationing will gradually become clear to us: covert rationing profoundly abhors simplicity and straightforwardness.  Byzantine policies, self-contradictory directives, tangled incentives, and endlessly shifting regulations assist greatly in keeping the flow of money and resources in the healthcare system an utter mystery. The resulting confusion is essential for creating many of the subtle incentives necessary to produce covert rationing. This is why each of the efforts that are periodically initiated to simplify and streamline healthcare, sometimes introduced with great fanfare, invariably becomes gummed quietly to a halt within the bureaucratic molasses, just one more layer of glom in a vast conglomeration of regulations.  All this systematic confusion is hugely inefficient and wasteful, and in fact negates most if not all the savings produced by the rationing itself.

And herein lies the great irony of covert rationing, the final joke.  When we attempt to conduct the necessary rationing covertly, the need to keep the rationing covert quickly becomes the primary objective, even more important than actually reducing costs. Obvious improvements in practices, processes, or technologies that, if implemented, would greatly reduce the cost of healthcare, will often, through the transparencies they create, threaten the bureaucracies that keep rationing covert - and therefore they will be stifled or suppressed.  

This phenomenon makes life very difficult for everybody.  For instance, companies whose products are aimed at making healthcare more efficient or cost effective have met utter failure by assuming that the healthcare system will embrace their efforts, that is, will pay for these benefits. Unfortunately, if in addition to saving money, their products also threaten the infrastructure of covert rationing, they are destined to be very disappointed with the results.

To summarize,

our current healthcare system is so wonderfully and intractably dysfunctional precisely because it operates under a paradigm of covert rationing. We're not dealing with an essentially sound healthcare system that just happens to have a few aberrancies here and there that we can simply identify and fix.  We're not merely dealing, for instance, with a problem of funding. Essentially it doesn't matter whether we're going to get the money to place in those centralized pools through the government or through insurance companies, or whether we have one centralized federal agency to administer American healthcare or several private ones. Because no matter how we get the money, and no matter how big we make those pools, and no matter who controls them, we're still going to have to ration. And unless we're ready to sacrifice one or both of our competing cultural imperatives (entitlement vs. no limits), we're going to ration covertly.

So we're not dealing with a system that can be tweaked into goodness. Instead, we're dealing with a healthcare system that - no matter what commonly discussed reform is put in place - fundamentally traffics in covert rationing, and thus in which complexity, inequity, and inefficiency are foundational operating principles.

Having reached this less-than-uplifting conclusion to the rationing question, let us now examine how covert rationing and its most personal manifestation - the destruction of the doctor-patient relationship - affects American patients every day.  

We'll begin by looking at modern managed care.