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Tuesday, November 14, 2023

Death panel

From Wikipedia, the free encyclopedia
Sarah Palin, whose statement originated the phrase

"Death panel" is a political term that originated during the 2009 debate about federal health care legislation to cover the uninsured in the United States. Sarah Palin, former governor of Alaska and 2008 Republican vice presidential candidate, coined the term when she charged that proposed legislation would create a "death panel" of bureaucrats who would carry out triage, i.e. decide whether Americans—such as her elderly parents, or children with Down syndrome—were "worthy of medical care". Palin's claim has been referred to as the "death panel myth", as nothing in any proposed legislation would have led to individuals being judged to see if they were worthy of health care.

Palin's spokesperson pointed to Section 1233 of bill HR 3200 which would have paid physicians for providing voluntary counseling to Medicare patients about living wills, advance directives, and end-of-life care options. Palin's claim was reported as false and criticized by the press, fact-checkers, academics, physicians, Democrats, and some Republicans. Some prominent Republicans backed Palin's statement. One poll showed that after it spread, about 85% of respondents were familiar with the charge and of those who were familiar with it, about 30% thought it was true. Owing to public concern, the provision to pay physicians for providing voluntary counseling was removed from the Senate bill and was not included in the law that was enacted, the 2010 Patient Protection and Affordable Care Act. In a 2011 statement, the American Society of Clinical Oncology bemoaned the politicization of the issue and said that the proposal should be revisited.

For 2009, "death panel" was named as PolitiFact's "Lie of the Year", one of FactCheck's "whoppers", and the most outrageous new term by the American Dialect Society.

Background

Betsy McCaughey

On July 16, 2009, former lieutenant governor of New York, Betsy McCaughey, a longtime opponent of federal healthcare legislation said Section 1233 of HR 3200 was "a vicious assault on elderly people" because it would "absolutely require" Medicare patients to have counseling sessions every five years that would "tell them how to end their life sooner". Conservative talk radio hosts including Rush Limbaugh, Sean Hannity and Laura Ingraham repeated McCaughey's claim. The AARP, a non-profit lobby group for retired persons, responded that the sessions were in no way designed to encourage euthanasia, but would instead help seniors make better decisions and would help ensure that their wishes were followed. PolitiFact said the proposal provided Medicare coverage for optional counseling sessions for patients who wanted to learn more about end-of-life-planning.

On July 24, 2009, an op-ed by McCaughey was published in the New York Post. In the piece, which was titled "Deadly Doctors", McCaughey falsely asserted that presidential advisor Ezekiel Emanuel believed disabled people should not be entitled to medical care, and quoted him out of context. On July 27, excerpts from the McCaughey's op-ed were read, with approval, by Representative (Rep.) Michele Bachmann (R-MN) on the floor of the U.S. House of Representatives. Within days, Rep. John Boehner (R-OH), then the Minority Leader of the House and Rep. Thaddeus McCotter (R-MI), the Republican Policy Committee Chairman, repeated claims that Section 1233 would encourage "government-sponsored" euthanasia, and Rep. Virginia Foxx (R-NC) charged that the proposal would "put seniors in a position of being put to death by their government." On July 30, former Republican House Speaker Newt Gingrich, declared that the House bill had "a bias toward euthanasia". The Washington Post reported on August 1, 2009 that the claim had been spreading via "religious e-mail lists" and internet blogs. In early August, members of Congress held town hall meetings that were marked by hostility—including shouting, sporadic, physical altercations and comparisons between the proposed reforms and Nazi Germany.

Palin's initial statement

Sarah Palin, who had been keeping a low profile after her July 3, 2009, resignation announcement as Alaska's Governor, was the first to use the "death panel" term on August 7, 2009. In her first Facebook note, she said:

[G]overnment health care will not reduce the cost; it will simply refuse to pay the cost. And who will suffer the most when they ration care? The sick, the elderly, and the disabled, of course. The America I know and love is not one in which my parents or my baby with Down Syndrome will have to stand in front of Obama's "death panel" so his bureaucrats can decide, based on a subjective judgment of their "level of productivity in society," whether they are worthy of health care. Such a system is downright evil.

Although Palin's post did not identify a portion of legislation she believed mandated "death panels", a spokesperson pointed to HR 3200, Section 1233, and Palin herself followed up in an August 12 Facebook note clarifying her argument by discussing Section 1233. However, neither Section 1233 nor any other provision in any health care bill provided for a system to determine if individuals were worthy of health care. Yet, Palin's charge of "death panels" became believed by about 30% of those surveyed in the U.S. within a week.

Proposed policy

Rep. Earl Blumenauer (D-OR) sponsored the bill HR 3200.

Legislation providing for counseling patients on advance directives, living wills and end-of-life care had been on the books for years, however, the laws did not provide for physicians to be reimbursed for giving such counseling during routine physical exams of the elderly. The Patient Self-Determination Act (1991) requires health care providers, including hospitals, hospices and nursing homes to provide information about advance directives to admitted patients. The Medicare Prescription Drug, Improvement, and Modernization Act began providing reimbursements for end-of-life care discussions with terminally ill patients in 2003.

A bill to provide for reimbursement every five years for office visit discussions with Medicare patients on advance directives, living wills, and other end of life care issues was proposed by Rep. Earl Blumenauer (D-OR) in April 2009—with Republican cosponsors Charles Boustany (R-LA), a cardiovascular surgeon, Patrick Tiberi (R-OH), and Geoff Davis (R-KY). The counseling was to be voluntary and could be reimbursed more often if a grave illness occurred. The legislation had been encouraged by Gundersen Lutheran and a loose coalition of other hospitals in La Crosse, Wisconsin that had had positive experiences with the widespread use of advance directives. Blumenauer's standalone bill was tabled and inserted into the large health care reform bill, HR 3200 as Section 1233 shortly afterward. Supporters of the Section 1233 counseling provision included the American Medical Association (AMA), AARP, the National Hospice and Palliative Care Organization, and Consumers Union; the National Right to Life Committee opposed "the provision as written". It was removed from the Senate version of the bill due to the death panel controversy and was not included in the reconciled and final bill which became law in March 2010 and which is known as the Patient Protection and Affordable Care Act.

In late December 2010, it was reported that a new Medicare regulation had been approved that would pay for end-of-life care consultations during annual physical exams. The regulation was to be effective January 1, 2011, but was deleted on January 4 for political reasons.

Reaction

Protesters referencing the phrase "death panel" at a town hall meeting

The "death panel" myth produced widespread reaction among the media, physicians and politicians.

Media

The Economist said the phrase was used as an "outrageous allegation" to confront politicians at town hall meetings during the August 2009 congressional recess. The New York Times said the term became a standard slogan among many conservatives opposed to the Obama administration's health care overhaul. Former Newsweek editor Jon Meacham said it was "a lie crafted to foment opposition to the president's push for reform" and Fox News analyst Juan Williams said "of course there is no such thing as any death panel." The Christian Science Monitor reported that some Republicans used the term as a "jumping-off point" to discuss government rationing of health care services, while some liberal groups applied the term to private health insurance companies. Journalist Paul Waldman of The American Prospect called the "death panel" charge a consequential policy lie, a falsehood about a policy that had definite effects on the policy, a type of lie that is not as condemned in the media as personal lies.

The Daily Telegraph noted that some critics of the U.S. reform used the United Kingdom's National Institute for Health and Clinical Excellence (NICE)—"as an example of [doing] the sort of drug rationing that amounted to a 'death panel'". NICE, as one of its functions, uses cost-effectiveness analysis to determine whether new treatments and drugs should be available to those covered by Britain's National Health Service. The Sunday Times wrote that Sarah Palin's use of the "death panels" term was a reference to NICE.

Physicians

C. Porter Storey Jr. said the term represents fear that due to financial pressure "some mechanical, governmental method will be used to determine how much of our scarce health care resources will be applied to their situation."[53] Atul Gawande, a surgeon and writer, said that fear of missing out on an expensive life-extending treatment is behind the phrase, but he thought that framing the issue in this way was completely mistaken. "[T]he trouble is not whether we're going to offer a $100,000 drug to help someone get 3 or 4 months"; our big trouble is that patients receive a $100,000 drug that not only yields no benefit—it also causes major side effects that shortens their lives", he said. Gawande said doctor's schedules of 20 minute appointments, a lack of payments and the emotional difficulty of conversations about mortality were barriers to the doctor-patient discussions about end-of-life care issues, which can take about an hour.

Geriatric psychiatrist Paul Kettl said his experience in a geriatric unit showed end-of-life discussions and reimbursements were "desperately needed" as these hour-long conversations are "ignored in the crush of medication and disease management." In the Journal of the American Medical Association, Kettl wrote he was in favor of the "death panels that were originally proposed ... periodic discussions about advance directives that Medicare would pay for as medical visits." Kettl noted that the attention-catching phrase "death panels" became "a lightning rod for objections to a series of ideas about health care besides" end-of-life discussions, and that somehow, "the concept of physicians being paid for time to talk with patients and their families about advance directives ... generated into the fear of decisions about life and death being controlled by the government." Kettl also wrote that, "We can expect more good medical ideas to be destroyed by sound bites and needless concerns that will be exaggerated. It makes for good television, but bad medicine."

The American Society of Clinical Oncology (ASCO) published a statement in January 2011 advocating an individualized approach to treatment and supportive care for patients with advanced cancer. They stated that there is:

need to recognize the value of these conversations to both our patients and society and the effort such care requires in our reimbursement systems. Currently, our system highly incentivizes delivery of cancer-directed interventions (chemotherapy, targeted therapy, and so on) over conversations that are critical to establishing a patient's goals and preferences and providing individualized care. Efforts to compensate oncologists and others for delivering this important aspect of cancer care were unfortunately politicized in the recent health care reform debates, but these efforts had at their core a critical patient-centered societal interest and should be revisited.

Benjamin W. Corn, a cancer specialist, wrote in the New England Journal of Medicine that the "death panels" controversy showed Americans were uneasy discussing topics related to the dying process. Corn said the end-of-life care conversations can have an important positive effect on patients, although some patients may not ever welcome them. Corn also said that certain issues, such as whether experimental therapies should be reimbursed, the possible expansion of hospices, restoring dignity to the process of dying, and guidelines for physician assisted suicide, need to be addressed directly. David Kibbe, a physician, and Brian Klepper, a health care analyst and consultant, wrote, "One of American politics' most disingenuous conceits is that health care must cost what we currently pay. Another is that the only way to make it cost less is to deny care. It has been in industry executives' financial interests to perpetuate these myths".

Politicians

Sen. Lisa Murkowski (R-AK) stated that "death panels" were a baseless charge that unnecessarily incited fear and detracted from real problems in the proposed legislation. She said the proposed legislation was "bad enough that we don't need to be making things up." Sen. Johnny Isakson (R-GA), thought there was illogical confusion over "death panels"; he said advance directives put "authority in the individual rather than the government." In July 2010 Rep. Bob Inglis, (R-SC) said that he thought it was counterproductive for the conservative movement for some to promote misinformation about death panels when they do not exist. Rep. Darrell Issa (R-CA) endorsed Rep. Charles Boustany's statement that "medical panels of people who care about what's best for their patients ... is good science and good medicine." Speaking for himself, Issa said "Republicans have to step back from the words 'death panels'." Michael F. Cannon, a former domestic policy analyst for the U.S. Senate Republican Policy Committee and a member of the Cato Institute, wrote that "[p]aying doctors to help seniors sort out their preferences for end-of-life care is consumer-directed rationing, not bureaucratic rationing."

President Barack Obama cited the charge—along with the citizenship conspiracy theories and "job-killing" allegations—as demagogy against him. In testimony before the United States Congress Joint Select Committee on Deficit Reduction, Erskine Bowles (D), co-chair of the National Commission on Fiscal Responsibility and Reform, called "death panels" "a kind of crazy stuff" and added that end-of-life care in the U.S. needed reform. Rep. Earl Blumenauer (D-OR) called the references to "death panels" or euthanasia "mind-numbing" and "a terrible falsehood". He thought that the news media contributed to the persistence of the myth by amplifying misinformation and extreme behavior. When a regulation for reimbursing consultation payments was upcoming, Blumenauer cautioned supporters to keep things quiet, reasoning that Republican leaders would attempt to continue the myth.

Palin response

On August 12, 2009, Palin said "the elderly and ailing would be coerced into accepting minimal end-of-life care to reduce health care costs" and charged on Twitter that Britain's National Health Service (NHS) was an evil "death panel", leading to so many replies from British citizens defending the NHS that Twitter crashed. Stephen Hawking, who had amyotrophic lateral sclerosis (ALS), responded by saying "I wouldn't be alive today if it weren't for the NHS."

In a September 2009 speech, Palin said the term was "intended to sound a warning about the rationing that is sure to follow if big government tries to simultaneously increase health care coverage while also claiming to decrease costs." In November 2009 Palin said that Obama was "incorrect" and "disingenuous" when he called the "death panel" charge "a lie, plain and simple." In the National Review she said

[t]o me, while reading that Section of the bill, it became so evident that there would be a panel of bureaucrats who would decide on levels of health care, decide on those who are worthy or not worthy of receiving some government-controlled coverage ... Since health care would have to be rationed if it were promised to everyone, it would therefore lead to harm for many individuals not able to receive the government care. That leads, of course, to death.

She explained that the term should not be taken literally, likening it to when President Ronald Reagan called the Soviet Union the "Evil Empire". "He got his point across. He got people thinking and researching what he was talking about. It was quite effective. Same thing with the 'death panels'." Media Matters stated that Palin's claim of "death panels" was "simply false, regardless of whether she meant it literally or figuratively."

In December 2009 Palin warned on Twitter that a merged health care bill could have the "death panels" restored. Palin used the term jokingly while speaking at the 2009 Gridiron Club dinner for journalists, saying it was like being in front of a "death panel".

Newt Gingrich

Supporters

After Palin's statement, conservative commentators including Glenn Beck, Rush Limbaugh and Michelle Malkin agreed that death panels were mandated by the proposed legislation. On August 9, former House speaker Newt Gingrich backed Palin's "death panel" charge by saying that the bill created numerous agencies and panels, that government was not to be trusted, and "there clearly are people in America who believe in establishing euthanasia, including selective standards". One week later, Gingrich wrote that the proposed legislation did not provide for government rationing of health care, but it was "all but certain to lead to rationing."

At an August 12, 2009, town hall meeting, Senator Chuck Grassley, the ranking Republican on the Health Care subcommittee said, "living wills ... ought to be done within the family. We should not have a government program that determines you're going to pull the plug on Grandma." Grassley later said that he did not think the provision would grant the government the authority to decide who lives and dies.

Impact

Political

Consultation payments were removed from the Senate version of the bill by the Senate Finance Committee. Time wrote that "a single phrase—'death panels'—nearly derailed health care reform". The Washington Post wrote that "President Obama's health-care initiative was nearly consumed by the furor" over the end-of-life care provision that would allow physician reimbursement for counseling.

By mid-August 2009, about a week after Palin's initial Facebook note, the Pew Research Center reported that 86% of Americans had heard of the "death panels" charge. Out of those who had heard the charge, 30% of people thought it was true while 20% did not know. For Republicans, 47% thought it was true while 23% did not know. Oberlander said the false warnings of a "government takeover" and "death panels" from Republicans drowned out the "Democrats' focus group–tested mantra of 'quality, affordable health care' ". Morone said the White House was not able to offer a "persuasive narrative to counter the Tea Party percussion", and "struggled to recapture public attention", contributing to Republican Scott Brown's election. The election of Brown in the special Senate election in Massachusetts was a surprise victory for Republicans and a setback for the chance of health care reform under Democratic leadership; Brown won the historical Senate seat of the late Democrat Ted Kennedy, ending the Democrat's supermajority of 60 in the Senate.

In September 2010, six months after the passage of the Affordable Care Act, a BBC article stated that among the "sticky charges" that had stuck against the bill was the false charge of "government 'death panels' deciding who can get what sort of care". A survey by the Regence Foundation and National Journal released in 2011 showed 40% of Americans knew that the "death panels" were not in the Affordable Care Act, while 23% said they thought the law allowed government to make end-of-life care decisions on behalf of seniors, and 36% said they did not know.

Other findings from the survey included:

  • 78% thought palliative care and end-of-life issues should be in the public discourse;
  • 93% thought those decisions should be a top priority in the U.S. health care system;
  • 70% agreed with the idea that "It is more important to enhance the quality of life for seriously ill patients, even if it means a shorter life" while 23% placed more importance on extending life through any possible medical treatment;
  • Doctors, family, and friends were highly trusted sources for end-of-life care information while only 33% trusted elected officials or political candidates for accurate information.

Social

Atul Gawande, a physician who writes on health care topics for The New Yorker, said "that the whole death panel reduction and reaction to it" temporarily "shut down our ability to even have a national discussion about how to have the right [end-of-life] conversation" between doctors and patients.

When investigating for his article "Letting Go", Gawande was asked to refrain from writing about palliative care by physicians who were concerned the article might be manipulated to create another political controversy—and as a result, hurt their profession. Professor Harold Pollack wrote that given the "anxieties captured in the crystalline phrase 'death panel,' I would not commence a national cost-control discussion within the frightening and divisive arena of end-of-life care."

Bishop et al. were fearful of how their publication on CPR/DNR would be received by the medical and bioethics communities. They were concerned because in "the era of rhetoric centered on fictional 'death panels' " their paper addressed "the quest for immortality implicit in US culture, a culture of 'life-at-all costs' that medical technology has advanced". Bishop et al. interpreted cautioning comments from their peers as a suggestion "that land mines of 'death panels' await us".

Media analysis

PolitiFact gave Palin's claim its lowest rating—"Pants on Fire!"—on August 10 and on December 19 it was named "Lie of the Year" for 2009. "Death panel" was named the most outrageous term of 2009 by the American Dialect Society. The definition was given as "A supposed committee of doctors and/or bureaucrats who would decide which patients were allowed to receive treatment, ostensibly leaving the rest to die". FactCheck called it one of the "whoppers" of 2009.

Megan Garber of the Columbia Journalism Review called the topic "irresistible" to reporters because it covered conflict, drama, innuendo, and Sarah Palin. Garber said it was "notoriously challenging for the press to deal with" because the old method of delegitimization, ignoring, was no longer workable. "Debunking rumors without simultaneously sanctioning them has always been a fraught endeavor, with the proliferation of niche media sites over the past several years only rendering that effort even more precarious", said Garber.

A study by Regina G. Lawrence, a communications professor, and Matthew L. Schafer, a Juris Doctor candidate, found that "the mainstream news, particularly newspapers, debunked 'death panels' early, fairly often", however, some journalists presented information in a he said/she said style, often confusing readers, and most did not include an explanation as to why the charge was false. Lawrence and Schafer said that "the dilemma for reporters playing by the rules of procedural objectivity is that repeating a claim reinforces a sense of its validity—or at least, enshrines its place as an important topic of public debate. Moreover, there is no clear evidence that journalism can correct misinformation once it has been widely publicized. Indeed, it didn't seem to correct the death panels misinformation in our study."

In his study of the "death panel" myth, Brendan Nyhan concluded that "once such beliefs take hold, few good options exist to counter them". However, in future such cases he recommended that "concerned scholars, citizens, and journalists ... [could] create negative publicity for the elites who are promoting misinformation", and "pressure the media to stop providing coverage to serial dissemblers." In contrast to the above statements suggesting there is no good method to correct misinformation in the minds of the public, MIT professor Adam Berinsky has found some success when people are exposed to corrective information from sources that belong to the same political party as the misinformer.

Academic analysis

Bioethicist George Annas wrote that America has a "death denying culture that cannot accept death as anything but defeat." We will "prepare for any and every disease and screen for every possible 'risk factor', but we are utterly unable to prepare for death." Annas commended and quoted The Boston Globe columnist Ellen Goodman, who wrote "I think that what our [healthcare] system may need is not more intervention, but more conversation, especially on the delicate subject of dying ... More expensive care is not always better care. Doing everything can be the wrong thing." However, Annas said mythical "death panels" blocked exploring these issues, appearing to affirm Ivan Illich's 1975 Medical Nemesis, when he said " '[s]ocially approved death happens when man [sic] has become useless not only as a producer but also as a consumer. It is at this point that [the patient] ... must be written off as a total loss'."

Brent J. Pawlecki, a corporate medical director, said the phrases "death panels" and "killing Grandma" were "used to fuel the flames of fear and opposition". Gail Wilensky, a health adviser to President George H.W. Bush and John McCain who has overseen Medicare and Medicaid, said the charge was untrue and upsetting, adding that "[t]here are serious questions that are associated with policy aspects of the health care reform bills that we're seeing ... And there's frustration because so much of the discussion is around issues like the death panels and Ezekiel Emanuel that I think are red herrings at best." Susan Dentzer, editor of Health Affairs, said Congress' approval of $1.1 billion for comparative effectiveness research in the 2009 stimulus contributed to fear the research would "lead to government rationing" which "fueled the 'death panels' fury of summer 2009."

Brendan Nyhan, a health care policy analyst and assistant professor at Dartmouth College, wrote that "Obama's plan might lead to more restrictive rationing than already occurs under the current health care system", but criticized Palin's statements as largely "unjustified and false". Nyhan also said that labeling institutions "death panels" for denying "coverage at a system level for specific treatments or drugs" was an attempt to "move the goalposts of the debate."

Princeton economics professor Uwe Reinhardt said that it is possible to slightly bend the U.S. health care cost curve down through a lower volume of health care services "by more widespread use of living wills—an idea once actively promoted by Newt Gingrich. But those ideas were met in the past year by dark allusions to 'rationing', to Nazi-style death panels and to 'killing Granny'." Reinhardt said lowering health care costs would require lowering health care incomes, and that such reforms always end up being a political third rail.

Health economist James C. Robinson said the debate over "death panels" showed how willing the public was "to believe the worst about perceived governmental interference with individual choices." Historian Jill Lepore characterized "death panels" as a conspiracy theory that is believed by a minority of the U.S. population and is based on fears that the federal government is conspiring to kill off its weakest members. Of the reform effort, Lepore said it was an "unwelcome reminder of a dreaded truth: death comes to us all"; of the uproar, Lepore said it was a savvy political tactic in that it rallied a party base against death. Lepore also said Obama was "catastrophically outmaneuvered" by the spread of the death panel rumors. Johnathan Oberlander, a professor of health policy, said the Obama administration was "seemingly unprepared for the intense opposition and fury that erupted during town-hall meetings in the summer of 2009." Political scientist James Morone said the term death panel played a role in the Democrats' loss of control over the public debate because they did not address the "underlying fears of big government". Morone called the "death panel" arguments "pungent, memorable, simple, and effective."

Use after August 2009

In response to legislation in Arizona which cut Medicaid funding for previously approved transplants, E.J. Montini of The Arizona Republic used the term, as did Keith Olbermann of MSNBC. Montini referred to Republican Governor Jan Brewer as "Governor Grim Reaper" and both Brewer and the Republican-controlled legislature as a "death panel". An editorial by USA Today said, "to the extent that death panels of a sort do exist, they're composed of state officials who must decide whether each state's version of Medicaid will cover certain expensive, potentially life-saving treatments."

Palin expanded her "death panel" attack to target the precursor of the Independent Payment Advisory Board (IPAB), a potential cost-cutting mechanism for Medicare, in September 2009. After the National Commission on Fiscal Responsibility and Reform released its recommendation to strengthen the IPAB, which had passed as part of the Affordable Care Act (Obamacare), she later charged that the board was " 'death panel'-like". FactCheck found her characterization of the board wrong on three counts. Representative Phil Roe (Republican-Tennessee), who has twice sponsored bills to eliminate the IPAB, said he would associate the term with the IPAB. Roe was described by The Washington Post as "a kindred soul by the medical industry" in part for his legislative efforts against the IPAB and a "magnet during the last election for more than $90,000 in contributions from medical professionals from across the country". Rep. Phil Gingrey (Republican-Georgia), an OB/GYN, issued a statement, described by PolitiFact as outrageous, that was in line with the "death panels" narrative.

In March 2010, Democratic Rep. Barney Frank (MA) was quoted as saying "There are going to be death panels enacted by the Congress this year, but they're death panels for large financial institutions" and later in the same year he used the term in reference to authority under the Dodd–Frank Bill.

Later that month, after the Affordable Care Act as amended by the Senate passed the House, conservative commentator David Frum made a widely-read post to his blog criticizing Republicans for their steadfast opposition to the bill over the previous year and a half. There had been congressional Republicans willing to work with Democrats, he said, but they had refrained from doing so out of fear of political reprisals from the Tea Party and other elements of the conservative base that had been regularly encouraged by talk radio and Fox News to believe the worst of the bill. "How do you negotiate with somebody who wants to murder your grandmother? Or—more exactly—with somebody whom your voters have been persuaded to believe wants to murder their grandmother?" he asked, alluding to the alleged death panels.

In November 2010, Paul Krugman said he was deliberately provocative on This Week, calling for "death panels and sales taxes" to fix the budget deficit. Krugman clarified that "health care costs will have to be controlled, which will surely require having Medicare and Medicaid decide what they're willing to pay for—not really death panels, of course, but consideration of medical effectiveness and, at some point, how much we're willing to spend for extreme care."

In his 2011 book, former governor of Arkansas Mike Huckabee wrote that the Federal Coordinating Council for Comparative Effectiveness from the 2009 stimulus were the seeds from which "the poisonous tree of death panels will grow." Media Matters called this a "lie"; it reported that Huckabee mischaracterized the council and that it was eliminated in the 2010 health care reform. Paul Van de Water of the Center on Budget and Policy Priorities, said "Huckabee seems to be suggesting that we shouldn't do research to find out what medical procedures work best just because that research could conceivably be misused. The new law makes every effort to assure that won't happen."

Critics of the United Kingdom's handling of certain medical cases, such as the cases of Charlie Gard (2017) and Alfie Evans (2018), have used the term "death panel" to describe those who made the decision to pull life support.

In 2018 Democratic socialist New York congressional candidate (later U. S. Representative) Alexandria Ocasio-Cortez said on Twitter, "Actually, we have for-profit 'death panels' now: they are companies + boards saying you're on your own bc they won't cover a critical procedure or medicine, Maybe if the GOP stopped hiding behind this 'socialist' rock they love to throw, they'd actually engage on-issue for once."

In November 2018 the podcast Death Panel was launched. The podcast was originally hosted by Beatrice Adler-Bolton, Artie Vierkant, Vince Patti, and Phil Rocco and covers politics, culture, and public policy from the left on a twice-weekly basis.

During the COVID-19 pandemic, the podcast Chapo Trap House often referred to the lack of hospital space in countries heavily afflicted by the crisis as having death panels. On the same day the referenced Chapo episode released (March 23, 2020), an article from The New York Times opinions section came out titled "Here Come The Death Panels" by Michelle Goldberg. This piece refers to the "lie" shared by Palin in 2009 and makes an opposing case about hospital patients in the United States not getting certain procedures they need depending on their condition. Two days later on March 25; the podcast Intercepted from The Intercept and Jeremy Scahill released an episode titled "Capitalist Death Panels: If Corporate Vultures Get Their Way, We'll Be Dead". On July 23, it was reported that, due to insufficient hospital capacity, Starr County, Texas would be forced to adopt "critical care guidelines", wherein critically ill patients would be "sent home to die"; the move was criticized as the creation of a "real death panel".

Healthcare rationing in the United States

Healthcare rationing in the United States exists in various forms. Access to private health insurance is rationed on price and ability to pay. Those unable to afford a health insurance policy are unable to acquire a private plan except by employer-provided and other job-attached coverage, and insurance companies sometimes pre-screen applicants for pre-existing medical conditions. Applicants with such conditions may be declined cover or pay higher premiums and/or have extra conditions imposed such as a waiting period.

The poor are given access to Medicaid, which is restricted by income and asset limits by means-testing, and other federal and state eligibility regulations apply. Health maintenance organizations (HMOs), which are common among the rest of the population, restrict access to treatment by financial and clinical access limits. Those 65 and older and a few others also qualify for Medicare, but it also has many restrictions.

In the media and in academia, some have advocated explicit healthcare rationing to limit the cost of Medicare and Medicaid. They argue that a proper rationing mechanism would be more equitable and cost-effective.

The Congressional Budget Office (CBO) has argued that health care costs are the primary driver of government spending in the long term.

Background

Peter Singer wrote for the New York Times Magazine in July 2009 that healthcare is rationed in the United States:

"Health care is a scarce resource, and all scarce resources are rationed in one way or another. In the United States, most health care is privately financed, and so most rationing is by price: you get what you, or your employer, can afford to insure you for. But our current system of employer-financed health insurance exists only because the federal government encouraged it by making the premiums tax deductible. That is, in effect, a more than $200 billion government subsidy for health care. In the public sector, primarily Medicare, Medicaid and hospital emergency rooms, health care is rationed by long waits, high patient copayment requirements, low payments to doctors that discourage some from serving public patients and limits on payments to hospitals."

David Leonhardt wrote in the New York Times in June 2009 that rationing presently an economic reality: "The choice isn't between rationing and not rationing. It's between rationing well and rationing badly. Given that the United States devotes far more of its economy to health care than other rich countries, and gets worse results by many measures, it's hard to argue that we are now rationing very rationally." He wrote that there are three primary ways the US rations healthcare:

  1. The increases in healthcare premiums reduce worker pay. In other words, more expensive insurance premiums reduce the growth in household income, which forces tradeoffs between healthcare services and other consumption.
  2. The increases also prevent smaller companies from affording health insurance for their workers.
  3. The cost prevents the certain types of care from being provided.

During 2007, nearly 45% of US healthcare expenses were paid for by the government. In 2009, an estimated 46 million individuals in the United States did not have health insurance coverage. In 2008, Tia Powell led a New York State work group to set up guidelines for rationing ventilators during a potential flu pandemic.

Methods used

By insurance companies

Dr. Gerald Grumet has chronicled how private insurers and third party payers delay and impede the utilization of medical services through creating inconvenience and confusion for both patients and physicians through complex claims review processes with layers of administrative handling that supersede the autonomy of treating physicians.

President Obama noted that US healthcare was rationed based on income, type of employment, and pre-existing medical conditions, with nearly 46 million uninsured. He stated that millions of Americans were denied coverage or face higher premiums because of pre-existing medical conditions.

In an e-mail to Obama supporters, David Axelrod wrote, "Reform will stop 'rationing' - not increase it.... It's a myth that reform will mean a 'government takeover' of health care or lead to 'rationing.' To the contrary, reform will forbid many forms of rationing that are currently being used by insurance companies."

A 2008 study by researchers at the Urban Institute found that health spending for uninsured non-elderly Americans was only about 43% of health spending for similar, privately insured Americans. That implied rationing by price and ability to pay.

Fareed Zakaria wrote that only 38% of small businesses provided health insurance for their employees during 2009, versus 61% in 1993, because of rising costs.

An investigation by the House Subcommittee on Oversight and Investigations showed that health insurers WellPoint Inc., UnitedHealth Group and Assurant Inc. canceled the coverage of more than 20,000 people, allowing the companies to avoid paying more than $300 million in medical claims over five years. It also found that policyholders with breast cancer, lymphoma, and more than 1000 other conditions were targeted for rescission and that employees were praised in performance reviews for terminating the policies of customers with expensive illnesses.

Private and public insurers all have their own drug formularies through which they set coverage limitations, which may include referrals to the insurance company for a decision on whether the company will approve its share of the costs. American formularies make generalized coverage decisions by class, with cheaper drugs at one end of the scale and more expensive drugs with more conditions for referral and possible denial at the other end. Not all drugs may be in the formulary of every company, and consumers are advised to check the formulary before they buy insurance.

The phenomena known as medical bankruptcy is unheard of in countries with universal health care in which medical copayments are low or no nonexistent. In the United States, however, research shows that many bankruptcies have a strong medical component, even among the insured. Medical insurance before the Affordable Care Act allowed annual caps or lifetime caps on coverage, and the high cost of care made it common for insured persons to suffer bankruptcy after breaching those limits.

By price

A July 2009 NPR article quoted various doctors describing how America rations healthcare. Dr. Arthur Kellermann said: "In America, we strictly ration health care. We've done it for years.... But in contrast to other wealthy countries, we don't ration medical care on the basis of need or anticipated benefit. In this country, we mainly ration on the ability to pay. And that is especially evident when you examine the plight of the uninsured in the United States."

Rationing by price means accepting that there is no triage according to need. Thus, in the private sector, it is accepted that some people get expensive surgeries such as liver transplants or non-life-threatening ones such as cosmetic surgery, when others fail to get cheaper and much more cost-effective care such as prenatal care, which could save the lives of many fetuses and newborn children. Some places, like Oregon for example, explicitly ration Medicaid resources by using medical priorities.

Polling has discovered that Americans are much more likely than Europeans or Canadians to forgo necessary health care (such not seeking a prescribed medicine) on the grounds of cost.

According to a recent survey commissioned by Wolters Kluwer, the majority of physicians and nurses (79%) say the cost to the patient influences the treatment choices or recommendations the provider makes.

Rationing by pharmaceutical companies

Pharmaceutical manufacturers often charge much more for drugs in the United States than they charge for the same drugs in Britain, where they know that a higher price would put the drug outside the cost-effectiveness limits applied by regulators such as NICE. American patients, even if they are covered by Medicare or Medicaid, often cannot afford the copayments for drugs, which is rationing based on ability to pay.

Rationing by government control

After the death of Coby Howard in 1987 Oregon began a programme of public consultation to decide which procedures its Medicaid program should cover in an attempt to develop a transparent process for prioritizing medical services. Howard died of leukaemia, which was not funded. His mother spent the last weeks of his life trying to raise $100,000 to pay for a bone marrow transplant, but the boy died before treatment could begin. John Kitzhaber began a campaign arguing that thousands of low-income Oregonians lacked access to even basic health services, much less access to transplants. A panel of experts was appointed, the Health Services Commission, to develop a prioritized list of treatments. The state legislators decided where on the list of prioritised procedures the line of eligibility should be drawn. In 1995 there were 745 procedures, 581 of which were eligible for funding.

Republican Newt Gingrich argued that the reform plans supported by President Obama expand the control of government over healthcare decisions, which he referred to as a type of healthcare rationing. He expressed concern that although there is nothing in the proposed laws that would constitute rationing, the combination of three factors would increase pressure on the government to ration care explicitly for the elderly: an expanded federal bureaucracy, the pending insolvency of Medicare within a decade, and the fact that 25% of Medicare costs are incurred in the final year of life.

Princeton Professor Uwe Reinhardt wrote that both public and private healthcare programs can ration and rebutted the concept that governments alone impose rationing: "Many critics of the current health reform efforts would have us believe that only governments ration things.... On the other hand, these same people believe that when, for similar reasons, a private health insurer refuses to pay for a particular procedure or has a price-tiered formulary for drugs – e.g., asking the insured to pay a 35 percent coinsurance rate on highly expensive biologic specialty drugs that effectively put that drug out of the patient's reach — the insurer is not rationing health care. Instead, the insurer is merely allowing "consumers" (formerly "patients") to use their discretion on how to use their own money. The insurers are said to be managing prudently and efficiently, forcing patients to trade off the benefits of health care against their other budget priorities."

During 2009, former Alaska Governor Sarah Palin wrote against rationing by government entities, referring to what she interpreted as such an entity in current reform legislation as a "death panel" and "downright evil." Defenders of the plan indicated that the proposed legislation, H.R. 3200, would allow Medicare for the first time to cover patient-doctor consultations about end-of-life planning, including discussions about drawing up a living will or planning hospice treatment. Patients would be allowed but not required to seek out such advice on their own. The provision would limit Medicare coverage to one consultation every five years. However, as governor, Palin had supported such end of life counseling and advance directives from patients in Alaska in 2008.

Ezra Klein described in the Washington Post how polls indicate senior citizens are increasingly resistant to healthcare reform because of concerns about cuts to the existing Medicare program that may be required to fund it. That is creating an unusual and potent political alliance, with Republicans arguing to protect the existing Medicare program although they historically opposed that and other major entitlement programs. The CBO scoring of the proposed H.R. 3200 (America's Affordable Health Choices Act of 2009) included $219 billion in savings over 10 years, some of which would come from Medicare changes.

By economic value added

A concept called "quality-adjusted life year" (QALY - pronounced "qualy") is used by Australian Medicare to measure the cost-benefit of applying a particular medical procedure. It reflects the quality and the quantity of life added by incurring a particular medical expense. The measure has been used for over 30 years in the country's universal single-payer healthcare system and has been implemented in several other countries to help with rationing decisions. Australia applies QALY measures to control costs and ration care and allows private supplemental insurance for those who can afford it.

By comparative effectiveness research

Medicare spending per person varied significantly across states in 2006.

Several treatment alternatives may be available for a given medical condition, with significantly different costs but no statistical difference in outcome. Such scenarios offer the opportunity to maintain or improve the quality of care while significantly reducing costs through comparative effectiveness research. Writing in the New York Times, David Leonhardt described how the cost of treating the most common form of early-stage, slow-growing prostate cancer ranges from an average of $2,400 (watchful waiting to see if the condition deteriorates) to as high as $100,000 (radiation beam therapy):

Some doctors swear by one treatment, others by another. But no one really knows which is best. Rigorous research has been scant. Above all, no serious study has found that the high-technology treatments do better at keeping men healthy and alive. Most die of something else before prostate cancer becomes a problem.

According to economist Peter A. Diamond and research cited by the Congressional Budget Office (CBO), the cost of healthcare per person in the US also varies significantly by geography and medical center, with little or no statistical difference in outcome:

Although the Mayo Clinic scores above the other two [in terms of quality of outcome], its cost per beneficiary for Medicare clients in the last six months of life ($26,330) is nearly half that at the UCLA Medical Center ($50,522) and significantly lower than the cost at Massachusetts General Hospital ($40,181)...The American taxpayer is financing these large differences in costs, but we have little evidence of what benefit we receive in exchange.

Comparative effectiveness research has shown that significant cost reductions are possible. Office of Management and Budget (OMB) Director Peter Orszag stated: "Nearly thirty percent of Medicare's costs could be saved without negatively affecting health outcomes if spending in high- and medium-cost areas could be reduced to the level of low-cost areas."

President Obama has provided more than $1 billion in the 2009 stimulus package to jumpstart Comparative Effectiveness Research (CER) and to finance a federal CER advisory council to implement that idea. Economist Martin Feldstein wrote in the Wall Street Journal, "Comparative effectiveness could become the vehicle for deciding whether each method of treatment provides enough of an improvement in health care to justify its cost."

By government

Former Republican Secretary of Commerce Peter George Peterson indicated that some form of rationing is inevitable and desirable considering the state of US finances and the trillions of dollars of unfunded Medicare liabilities. He estimated that 25 to 33% of healthcare services are provided to those in the last months or year of life and advocated restrictions if quality of life cannot be improved. He also recommended for a budget to be established for government healthcare expenses by establishing spending caps and pay-as-you-go rules that require tax increases for any incremental spending. He has indicated that a combination of tax increases and spending cuts will be required. He advocated addressing those issues under the aegis of a fiscal reform commission.

Arizona modified its Medicaid coverage rules because of a budget problem that included denying care for expensive treatments such as organ transplants to Medicaid recipients, including those who had previously been promised funding. MSNBC's Keith Olbermann and others have dubbed Governor Jan Brewer and the state legislatures as a real life death panel because many of those poor people who are now being denied funding will die or have health because of the political decision.

By age

In the US, the discussion on rationing healthcare for the elderly began to be noticed widely in 1983 when economist Alan Greenspan asked "whether it is worth it" in referring to the use of 30% of the Medicare budget on 5–6% of those eligible who then die within a year of receiving treatment. In 1984, the Democratic governor of Colorado, Richard Lamm, was widely quoted but claimed to have been misquoted as saying that the elderly "have a duty to die and get out of the way."

Medical ethicist Daniel Callahan's 1987 Setting Limits: Medical Goals in an Aging Society discusses whether healthcare should be rationed by age. He calls the elderly "a new social threat" and selfish and for age to be used as a criterion in limiting healthcare. Callahan's book has been widely discussed in the America media, including the New York Times, the Washington Post, the Wall Street Journal, and "just about every relevant professional and scholarly journal and newsletter." One of the major arguments against such age-based rationing is the fact that chronological age, by itself, is a poor indicator of health. Another major argument against Callahan's proposal is that it inverts the Western tradition by making death a possible good and life a possible evil. Amherst College Jurisprudence Professor Robert Laurence Barry called Callahan's view "medical totalitarianism." One book-length rebuttal to Callahan from half-a-dozen professors who held a conference at the University of Illinois College of Law in October 1989 was in 1991's Set No Limits: a Rebuttal to Daniel Callahan's Proposal to Limit Health, edited by Robert Laurence Barry and Gerard V. Bradley, a visiting professor of religious studies at the University of Illinois at Urbana–Champaign.

Arguments in favor

Australian philosopher Peter Singer argued for rationing processes:

"Rationing health care means getting value for the billions we are spending by setting limits on which treatments should be paid for from the public purse. If we ration we won't be writing blank checks to pharmaceutical companies for their patented drugs, nor paying for whatever procedures doctors choose to recommend. When public funds subsidize health care or provide it directly, it is crazy not to try to get value for money. The debate over health care reform in the United States should start from the premise that some form of health care rationing is both inescapable and desirable. Then we can ask, What is the best way to do it?"

Medicare and Medicaid Spending as a percentage of GDP

The Congressional Budget Office reported in June 2008:

"Future growth in spending per beneficiary for Medicare and Medicaid—the federal government's major health care programs—will be the most important determinant of long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs—which will be difficult, in part because of the complexity of health policy choices—is ultimately the nation's central long-term challenge in setting federal fiscal policy... total federal Medicare and Medicaid outlays will rise from 4 percent of GDP in 2007 to 12 percent in 2050 and 19 percent in 2082—which, as a share of the economy, is roughly equivalent to the total amount that the federal government spends today. The bulk of that projected increase in health care spending reflects higher costs per beneficiary rather than an increase in the number of beneficiaries associated with an aging population."

In other words, all other federal spending categories (such as Social Security, defense, education, and transportation) would require borrowing to be funded, which is not feasible.

President Obama stated in May 2009, "But we know that our families, our economy, and our nation itself will not succeed in the 21st century if we continue to be held down by the weight of rapidly rising health care costs and a broken health care system.... Our businesses will not be able to compete; our families will not be able to save or spend; our budgets will remain unsustainable unless we get health care costs under control."

Healthcare rationing remained a political topic into 2017, with Bernie Sanders and Ted Cruz debating on CNN whether a single-payer system would lead to healthcare rationing.

Health care prices in the United States

 
Health care prices in the United States of America describe market and non-market factors that determine pricing, along with possible causes as to why prices are higher than in other countries.

Compared to other OECD countries, U.S. healthcare costs are one-third higher or more relative to the size of the economy (GDP). According to the CDC, during 2015, health expenditures per-person were nearly $10,000 on average, with total expenditures of $3.2 trillion or 17.8% of GDP. Proximate reasons for the differences with other countries include higher prices for the same services (i.e., a higher price per unit) and greater use of healthcare (i.e., more units consumed). Higher administrative costs, higher per-capita income, and less government intervention to drive down prices are deeper causes. While the annual inflation rate in healthcare costs has declined in recent decades, it still remains above the rate of economic growth, resulting in a steady increase in healthcare expenditures relative to GDP from 6% in 1970 to nearly 18% in 2015.

Nature of the healthcare markets

Coverage

Health insurance coverage is provided by several public and private sources in the United States. During 2016, the U.S. population overall was approximately 325 million, with 53 million persons 65 years of age and older covered by the federal Medicare program. The 272 million non-institutional persons under age 65 either obtained their coverage from employer-based (155 million) or non-employer based (90 million) sources or were uninsured (27 million). Approximately 15 million military personnel received coverage through the Veteran's Administration. During the year 2016, 91.2% of Americans had health insurance coverage. An estimated 27 million people under the age of 65 were uninsured.

Price transparency issues

U.S. healthcare cost information, including rate of change, per-capita, and percent of GDP

Unlike most markets for consumer services in the United States, the healthcare market generally lacks transparent market-based pricing. Patients are typically not able to comparison shop for medical services based on price, as medical service providers do not typically disclose prices prior to service. Government mandated critical care and government insurance programs like Medicare also impact the market pricing of U.S. health care. According to the New York Times in 2011, "the United States is far and away the world leader in medical spending, even though numerous studies have concluded that Americans do not get better care" and prices are the highest in the world.

In the U.S. medical industry, patients generally do not have access to pricing information until after medical services have been rendered. A study conducted by the California Healthcare Foundation found that only 25% of visitors asking for pricing information were able to obtain it in a single visit to a hospital. This has led to a phenomenon known as "surprise medical bills", where patients receive large bills for service long after the service was rendered.

Since the majority (85%) of Americans have health insurance, they do not directly pay for medical services. Insurance companies, as payors, negotiate health care pricing with providers on behalf of the insured. Hospitals, doctors, and other medical providers have traditionally disclosed their fee schedules only to insurance companies and other institutional payors, and not to individual patients. Uninsured individuals are expected to pay directly for services, but since they lack access to pricing information, price-based competition may be reduced. The introduction of high-deductible insurance has increased demand for pricing information among consumers. As high-deductible health plans rise across the country, with many individuals having deductibles of $2500 or more, their ability to pay for costly procedures diminishes, and hospitals end up covering the cost of patients care. Many health systems are putting in place price transparency initiatives and payments plans for their patients so that the patients better understand what the estimated cost of their care is, and how they can afford to pay for their care over time.

Organizations such as the American Medical Association (AMA) and AARP support a "fair and accurate valuation for all physician services". Very few resources exist, however, that allow consumers to compare physician prices. The AMA sponsors the Specialty Society Relative Value Scale Update Committee, a private group of physicians which largely determine how to value physician labor in Medicare prices. Among politicians, former House Speaker Newt Gingrich has called for transparency in the prices of medical devices, noting it is one of the few aspects or U.S. health care where consumers and federal health officials are "barred from comparing the quality, medical outcomes or price".

Recently, some insurance companies have announced their intention to begin disclosing provider pricing as a way to encourage cost reduction. Other services exist to assist physicians and their patients, such as Healthcare Out Of Pocket, Accuro Healthcare Solutions, with its CarePricer software. Similarly, medical tourists take advantage of price transparency on websites such as MEDIGO and Purchasing Health, which offer hospital price comparison and appointment booking services.

According to the estimation of the US government, hundreds of thousands of Americans (Californians ) traveled to Mexico annually to get healthcare services.

Government-mandated critical care

In the United States and most other industrialized nations, emergency medical providers are required to treat any patient that has a life-threatening condition, irrespective of the patient's financial resources. In the U.S., the Emergency Medical Treatment and Active Labor Act requires that hospitals treat all patients in need of emergency medical care without considering patients' ability to pay for service.

This government mandated care places a cost burden on medical providers, as critically ill patients lacking financial resources must be treated. Medical providers compensate for this cost by passing costs on to other parts of the medical system by increasing prices for other patients and through collection of government subsidies.

Healthcare is not a typical market

Harvard economist N. Gregory Mankiw explained in July 2017 that "the magic of the free market sometimes fails us when it comes to healthcare." This is due to:

  • Important positive externalities or situations where the actions of one person or company positively impact the health of others, such as vaccinations and medical research. The free market will result in too little of both (i.e., the benefit is under-estimated by individuals), so government intervention such as subsidies is required to optimize the market outcome.
  • Consumers don't know what to buy, as the technical nature of the product requires expert physician advice. The inability to monitor product quality leads to regulation (e.g., licensing of medical professionals and the safety of pharmaceutical products).
  • Healthcare spending is unpredictable and expensive. This results in insurance to pool risks and reduce uncertainty. However, this creates a side-effect, the decreased visibility of spending and a tendency to over-consume medical care.
  • Adverse selection, where insurers can choose to avoid sick patients. This can lead to a "death spiral" in which the healthiest people drop out of insurance coverage perceiving it too expensive, leading to higher prices for the remainder, repeating the cycle. The Heritage Foundation, a conservative think tank in Washington, D.C., advocated individual mandates in the late 1980s to overcome adverse selection by requiring all persons to obtain insurance or pay penalties, an idea ultimately included in the Affordable Care Act.

Medicare and Medicaid

Medicare was established in 1965 under President Lyndon Johnson, as a form of medical insurance for the elderly (age 65 and above) and the disabled. Medicaid was established at the same time to provide medical insurance primarily to children, pregnant women, and certain other medically needy groups.

The Congressional Budget Office (CBO) reported in October 2017 that adjusted for timing differences, Medicare spending rose by $22 billion (4%) in fiscal year 2017, reflecting growth in both the number of beneficiaries and in the average benefit payment. Medicaid spending rose by $7 billion (2%) in part because of more persons enrolled due to the Affordable Care Act. Unadjusted for timing shifts, in 2017 Medicare spending was $595 billion and Medicaid spending was $375 billion. Medicare covered 57 million people as of September 2016. While on the other hand, Medicaid covered 68.4 million people as of July 2017, 74.3 million including the Children's Health Insurance Program (CHIP).

Medicare and Medicaid are managed at the Federal level by the Centers for Medicare and Medicaid Services (CMS). CMS sets fee schedules for medical services through Prospective Payment Systems (PPS) for inpatient care, outpatient care, and other services. As the largest single purchaser of medical services in the U.S., Medicare's fixed pricing schedules have a significant impact on the market. These prices are set based on CMS' analysis of labor and resource input costs for different medical services based on recommendations by the American Medical Association.

As part of Medicare's pricing system, relative value units (RVUs) are assigned to every medical procedure. One RVU translates into a dollar value that varies by region and by year; in 2005 the base (not location adjusted) RVU equaled roughly $37.90. Major insurers use Medicare's RVU calculations when negotiating payment schedules with providers, and many insurers simply adopt Medicare's payment schedule. The AMA-sponsored committee in charge of determining RVUs of medical procedures that inform Medicare's payment to physicians has been shown to grossly inflate their figures.

Employer-based market

The rate of increase in both health insurance premiums and out-of-pocket costs have declined in the employer-based market. For example, premiums increased at an annual rate of 5.6% from 2000-2010, but 3.1% from 2010-2016.

An estimated 155 million persons under the age 65 were covered under health insurance plans provided by their employers in 2016. The Congressional Budget Office (CBO) estimated that the health insurance premium for single coverage would be $6,400 and family coverage would be $15,500 in 2016. The annual rate of increase in premiums has generally slowed after 2000, as part of the trend of lower annual healthcare cost increases. The Federal Government subsidizes the employer-based market by an estimated $250 billion per year (about $1,612 per person covered in the employer market), by excluding health insurance premiums from employee income. This subsidy encourages people to buy more extensive coverage (which places upward pressure on average premiums), while also encouraging more young, healthy people to enroll (which places downward pressure on premium prices). CBO estimates the net effect is to increase premiums 10-15% over an un-subsidized level.

The Kaiser Family Foundation estimated that family insurance premiums averaged $18,142 in 2016, up 3% from 2015, with workers paying $5,277 towards that cost and employers covering the remainder. Single coverage premiums were essentially unchanged from 2015 to 2016 at $6,435, with workers contributing $1,129 and employers covering the remainder.

The President's Council of Economic Advisors (CEA) described how annual cost increases have fallen in the employer market since 2000. Premiums for family coverage grew 5.6% from 2000-2010, but 3.1% from 2010-2016. The total premium plus estimated out-of-pocket costs (i.e., deductibles and co-payments) increased 5.1% from 2000-2010 but 2.4% from 2010-2016.

Affordable Care Act (ACA) marketplaces

Separate from the employer market are the ACA marketplaces, which covered an estimated 12 million persons in 2017 who individually obtain insurance (e.g., not as part of a business). The law is designed to pay subsidies in the form of premium tax credits to the individuals or families purchasing the insurance, based on income levels. Higher income consumers receive lower subsidies. While pre-subsidy prices rose considerably from 2016 to 2017, so did the subsidies, to reduce the after-subsidy cost to the consumer.

For example, a study published in 2016 found that the average requested 2017 premium increase among 40-year-old non-smokers was about 9 percent, according to an analysis of 17 cities, although Blue Cross Blue Shield proposed increases of 40 percent in Alabama and 60 percent in Texas. However, some or all of these costs are offset by subsidies, paid as tax credits. For example, the Kaiser Foundation reported that for the second-lowest cost "Silver plan" (a plan often selected and used as the benchmark for determining financial assistance), a 40-year old non-smoker making $30,000 per year would pay effectively the same amount in 2017 as they did in 2016 (about $208/month) after the subsidy/tax credit, despite large increases in the pre-subsidy price. This was consistent nationally. In other words, the subsidies increased along with the pre-subsidy price, fully offsetting the price increases.

This premium tax credit subsidy is separate from the cost sharing reductions subsidy discontinued in 2017 by President Donald Trump, an action which raised premiums in the ACA marketplaces by an estimated 20 percentage points above what otherwise would have occurred, for the 2018 plan year.

Deductibles

While health insurance premium cost increases have moderated in the employer market, some of this is because of insurance policies that have a higher deductible, co-payments and out-of-pocket maximums that shift costs from insurers to patients. In addition, many employees are choosing to combine a health savings account with higher deductible plans, making the impact of the ACA difficult to determine precisely.

For those who obtain their insurance through their employer ("group market"), a 2016 survey found that:

  • Deductibles grew by 63% from 2011 to 2016, while premiums increased 19% and worker earnings grew by 11%.
  • In 2016, 4 in 5 workers had an insurance deductible, which averaged $1,478. For firms with less than 200 employees, the deductible averaged $2,069.
  • The percentage of workers with a deductible of at least $1,000 grew from 10% in 2006 to 51% in 2016. The 2016 figure drops to 38% after taking employer contributions into account.

For the "non-group" market, of which two-thirds are covered by the ACA exchanges, a survey of 2015 data found that:

  • 49% had individual deductibles of at least $1,500 ($3,000 for family), up from 36% in 2014.
  • Many marketplace enrollees qualify for cost-sharing subsidies that reduce their net deductible.
  • While about 75% of enrollees were "very satisfied" or "somewhat satisfied" with their choice of doctors and hospitals, only 50% had such satisfaction with their annual deductible.
  • While 52% of those covered by the ACA exchanges felt "well protected" by their insurance, in the group market 63% felt that way.

Prescription drugs

According to the OECD, U.S. prescription drug spending in 2015 was $1,162 per person on average, versus $807 for Canada, $766 for Germany, $668 for France, and is capped in the UK at £105.90($132) 

Reasons for higher costs

The reasons for higher U.S. healthcare costs relative to other countries and over time are debated by experts.

Relative to other countries

Bar chart comparing healthcare costs as percentage of GDP across OECD countries
Chart showing life expectancy at birth and health care spending per capita for OECD countries as of 2013. The U.S. is an outlier, with much higher spending but below average life expectancy.

U.S. healthcare costs in 2015 were 16.9% GDP according to the OECD, over 5% GDP higher than the next most expensive OECD country. With U.S. GDP of $19 trillion, healthcare costs were about $3.2 trillion, or about $10,000 per person in a country of 320 million people. A gap of 5% GDP represents $1 trillion, about $3,000 per person relative to the next most expensive country. In other words, the U.S. would have to cut healthcare costs by roughly one-third ($1 trillion or $3,000 per person on average) to be competitive with the next most expensive country. Healthcare spending in the U.S. was distributed as follows in 2014: Hospital care 32%; physician and clinical services 20%; prescription drugs 10%; and all other, including many categories individually making up less than 5% of spending. These first three categories accounted for 62% of spending. A 2022 study revealed that the United States is one of the most expensive countries for a 15 minute private doctors visit. The average cost of a visit in the U.S. is $104, while the global average is $40, ranking the U.S. as the #8 most expensive country.

Important differences include:

  • Administrative costs. About 25% of U.S. healthcare costs relate to administrative costs (e.g., billing and payment, as opposed to direct provision of services, supplies and medicine) versus 10-15% in other countries. For example, Duke University Hospital had 900 hospital beds but 1,300 billing clerks. Assuming $3.2 trillion is spent on healthcare per year, a 10% savings would be $320 billion per year and a 15% savings would be nearly $500 billion per year. For scale, cutting administrative costs to peer country levels would represent roughly one-third to half the gap. A 2009 study from Price Waterhouse Coopers estimated $210 billion in savings from unnecessary billing and administrative costs, a figure that would be considerably higher in 2015 dollars.
  • Cost variation across hospital regions. Harvard economist David Cutler reported in 2013 that roughly 33% of healthcare spending, or about $1 trillion per year, is not associated with improved outcomes. Medicare reimbursements per enrollee vary significantly across the country. In 2012, average Medicare reimbursements per enrollee ranged from an adjusted (for health status, income, and ethnicity) $6,724 in the lowest spending region to $13,596 in the highest.
  • The U.S. spends more than other countries for the same things. Drugs are more expensive, doctors are paid more, and suppliers charge more for medical equipment than other countries. Journalist Todd Hixon reported on a study that U.S. spending on physicians per person is about five times higher than peer countries, $1,600 versus $310, as much as 37% of the gap with other countries. This was driven by a greater use of specialist doctors, who charge 3-6 times more in the U.S. than in peer countries.
  • Higher level of per-capita income, which is correlated with higher healthcare spending in the U.S. and other countries. Hixon reported a study by Princeton Professor Uwe Reinhardt that concluded about $1,200 per person (in 2008 dollars) or about a third of the gap with peer countries in healthcare spending was due to higher levels of per-capita income. Higher income per-capita is correlated with using more units of healthcare.
  • Americans receive more medical care than people in other countries. The U.S. consumes 3 times as many mammograms, 2.5x the number of MRI scans, and 31% more C-sections per-capita than peer countries. This is a blend of higher per-capita income and higher use of specialists, among other factors.
  • The U.S. government intervenes less actively to force down prices in the United States than in other countries. Stanford economist Victor Fuchs wrote in 2014: "If we turn the question around and ask why healthcare costs so much less in other high-income countries, the answer nearly always points to a larger, stronger role for government. Governments usually eliminate much of the high administrative costs of insurance, obtain lower prices for inputs, and influence the mix of healthcare outputs by arranging for large supplies of primary-care physicians and hospital beds while keeping tight control on the number of specialist physicians and expensive technology. In the United States, the political system creates many “choke points” for diverse interest groups to block or modify government’s role in these areas."

Relative to prior years

The Congressional Budget Office analyzed the reasons for healthcare cost inflation over time, reporting in 2008 that: "Although many factors contributed to the growth, most analysts have concluded that the bulk of the long-term rise resulted from the health care system's use of new medical services that were made possible by technological advances..." In summarizing several studies, CBO reported the following drove the indicated share (shown as a range across three studies) of the increase from 1940 to 1990:

  • Technology changes: 38-65%. CBO defined this as "any changes in clinical practice that enhance the ability of providers to diagnose, treat, or prevent health problems."
  • Personal income growth: 5-23%. Persons with more income tend to spend a greater share of it on healthcare.
  • Administrative costs: 3-13%.
  • Aging of the population: 2%. As the country ages, more persons require more expensive treatments, as the aged tend to be sicker.

According to Federal Reserve data, healthcare annual inflation rates have declined in recent decades:

  • 1970-1979: 7.8%
  • 1980-1989: 8.3%
  • 1990-1999: 5.3%
  • 2000-2009: 4.1%
  • 2010-2016: 3.0%

While this inflation rate has declined, it has generally remained above the rate of economic growth, resulting in a steady increase of health expenditures relative to GDP from 6% in 1970 to nearly 18% in 2015.

Algorithmic information theory

From Wikipedia, the free encyclopedia https://en.wikipedia.org/wiki/Algorithmic_information_theory ...