Tuesday, September 6, 2011

When is rationing not rationing?

When is rationing not rationing, a mandate not a mandate and price-fixing not price fixing?

When the government says so.

Supporters of the PPACA react to opponent’s charges of rationing by claiming that the Independent Payment Advisory Board (IPAB) can't ration because the law says it can't. 

"The proposal shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums under section 1818, 1818A, or 1839, increase Medicare beneficiary costsharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria. [Emphasis added] Pub. L. 111-148, § 3403"

But when the government takes your money to fund a program (e.g. Social Security and Medicare) and then in any way limits your access to the benefits of that program, that's rationing. Since the law prohibits restricting benefit restriction and increased cost sharing by patients, the only effective way left for the IPAB to achieve mandated spending decreases is to lower payments to doctors and hospitals. But if you end up with less access to doctors and medical care because the government pays them less, that’s rationing. No matter how much you try to deny it, or what you call it instead of rationing: a rose is a rose...and government controlled health care is rationing.

The same people who say the IPAB cannot and will not ration will tell you that markets ration through prices. This is a complete misrepresentation of the role of prices in a free market. Free market prices are a signal. They provide information. Prices do not ration any more than a bathroom scale makes you fat or thin. Free market prices give you information about the relative scarcity of resources and then allowyouto decide how to allocate your own private resources. Free market prices are a reflection of what individuals voluntarily pay. Government rationing is an act of force. It's a fundamentally different kind of interaction when the government determines for you how your resources are to be allocated--whether the government expropriates them first, as in the case of Medicare, or simply mandates how you must spend them, as in the case of the individual mandate to purchase health insurance.

While we are talking about mandates—in the legal challenges to the PPACA, the government is currently arguing before the courts that the “requirement to maintain minimal essential coverage” is not a mandate to buy coverage. The government’s top lawyer, Solicitor General Neal Katyal, argued in court:

Congress is not regulating the failure to buy something, but the failure to secure financing.

The New York Times reports:

Mr. Katyal…argued that the law’s insurance mandate, which takes effect in 2014, does not so much require individuals to buy coverage as it does regulate the way they pay for health care they will inevitably consume. 

This is a distinction without a difference. Lawyers are good at word games, but if you look at the actual real life effect of the law, it is a mandate which offers you no real choice: you can either obtain a government-defined product or you can break the law and pay a penalty.

In language similar to the restrictions placed on the IPAB, the new heath care control law also forbids the use of quality-adjusted-life-years (QALYs) “as a threshold to establish what type of health care is cost-effective or recommended.” But thousands of cost-utility studies use QALYs to determine cost-effectiveness.  Realistically, QALYs are the yardstick currently used to measure and compare outcomes to various medical treatments. It is hard to imagine how this ban could be any more meaningful than the ban on rationing discussed above.

Just over a year ago, The Christian Science Monitor reported:

[T]he Antitrust Division, [of the Dept. of Justice] joined by Idaho Attorney General Lawrence Wasden, forced a group of Boise orthopedists to accept price controls for worker’s compensation and HMO contracts as part of a settlement accusing the doctors of “price fixing”… [T]he Justice Department has unambiguously stated that refusal to accept government price controls is a form of illegal “price fixing”… The FTC has hinted at this when it’s said physicians must accept Medicare-based reimbursement schedules from insurance companies. But the DOJ has gone the final step and said, “Government prices are market prices.”

Through a simple decree, the government thinks it can turn prices set by voluntary exchange into price-fixing, and government-determined prices into market prices. Who are they trying to convince? Must be themselves because any one with a bit of common sense can see that changing the terminology can not change the reality.

Other equivocations by government officials and their defenders include denying that clinical guidelines accompanied by sanctions and rewards do not amount to promoting “cookbook medicine.” And that as long as you call it “evidence-based care,” you can ignore the fact that much of the “evidence” is controversial and that many of the guidelines are written or funded by those with vested interests in a particular outcome.

Lest you think that this verbal trickery is restricted to health care, you can find much of the same in the politicization of energy policy. Regarding the elimination of the incandescent light bulb, Penelope Green writes in the New York Times:

The [Energy Independence and Security Act of 2007] does not ban the use or manufacture of all incandescent bulbs, nor does it mandate the use of compact fluorescent ones. It simply requires that companies make some of their incandescent bulbs work a bit better, meeting a series of rolling deadlines between 2012 and 2014.

Yet, a short week later, again in the NYT, Andrew Rice informs us:

[O]ne day very soon, traditional incandescent bulbs won’t be available in stores anymore. They’re about to be effectively outlawed…Conservatives like Rush Limbaugh have denounced the “light-bulb ban” — actually, [it’s] a new set of federal efficiency regulations that the traditional incandescent can’t meet.

You see, a ban on light bulbs isn’t really a ban on light bulbs, because the law doesn’t call it a ban.

As Richard Ralston so aptly warns:

“When the clear meaning of words is replaced with government fiat in this way, all limits on arbitrary government power and its use of force are destroyed.”

Rationing, mandates, price-fixing, and bans are al terms with precise meanings in plain English. Shame on us if we are fooled by the deliberate distortion of these simple definitions. Stick and stones can break our bones, and words can actually hurt us --when they are used to obscure instead of clarify our understanding of reality.

(This post was published in Townhall.com in a shorter version here.)