A healthcare prescription that's hard to swallow

SEVEN U.S. WORKERS in 10 still get health insurance coverage as a fringe benefit of employment. But perhaps not for long. Healthcare spending gobbled up nearly $2 trillion in 2004, and it has grown about 2 1/2 percentage points a year faster than income for decades. Yet Americans die younger than citizens of some industrialized nations that spend far less per capita on healthcare. And employers saddled with soaring costs are reducing coverage and raising employee premiums.

Something needs to be done, but no one seems quite ready to come forward with a solution. The only thing American politicians all agree on is this: The United States must at all costs avoid healthcare "rationing." One after another, they step forward to deplore this much-hated approach, insisting they will fight off efforts to deny the insured any beneficial service that their insurance covers.

But it's too late for that. The truth is that sensible rationing may be the only way to make sure that fair access to healthcare for all remains affordable. The U.S. can no longer afford to offer every available service no matter how high the cost or how small the benefit to the patient. Intelligent healthcare rationing -- limiting the availability of care that costs society more to produce than it is worth to patients -- is not a horror to be avoided. It's a regretfully necessary limit to sustain fair access to healthcare that \o7is \f7worth what it costs.

To see the connection between rationing and affordable care for all, one must recognize that insured patients pay little of the cost of their own care when ill. So they quite understandably want everything that might conceivably add even some tiny benefit -- the extra test that provides hardly any information at all, the surgery that is little or no better than watchful waiting, or the costly patented drug that is little or no better than the inexpensive generic.

At one time, providing every available bit of healthcare cost little. Healthcare accounted for only 5% of gross national product in 1950. It now eats up more than 16%. At current trends, it will require more than one-third of the nation's output by 2030. This means we would have to double both income and payroll taxes just to maintain current levels of healthcare for the elderly, disabled and poor. Unless we squeeze out services that are worth less than they cost -- in other words, unless we ration -- even cost-effective care will become unaffordable.