Appendix - Devising a methodology for open rationing

In Section 8, we examined in some detail the six basic principles we need to take into account in devising a system for open rationing.  Based on our discussion of those principles, we proposed the following basic structure for open health care rationing: 

Our scheme has three tiers.  Tier 1 incorporates Medical Savings Accounts (MSAs), which strongly incent patients to weigh the relative benefit of a medical service against its cost before asking for that service.  Thus, MSAs encourage voluntary cost consciousness among consumers,  and thus limit the amount of health care rationing that will have to be imposed externally.

Tier 2 consists of a Universal Basic Health Plan.  All Americans are entitled to receive health care services that are covered under this universal health plan.  The services to be covered are determined by establishing a ranking order of all possible health care services, according to their cost-effectiveness.  All medical services that achieve a specified target level of cost-effectiveness will be covered.

Tier 3 consists of optional health plans that individuals may purchase if they wish.  These optional plans will allow individuals to receive, if they choose to pay for it, health care services that are less cost-effective than those provided to everyone under Tier 2.

In the three sections of this Appendix, we will consider in more detail how we might develop such a methodology for the open rationing of health care.  In Appendix A, we will discuss the policy changes we need to make in order to establish a basic structure for rationing.

In Appendix B, we will consider some of the nuts and bolts of rationing, namely, specific methodologies for prioritizing health care services under a rationing plan.  Prioritizing health care services, of course, ultimately establishes which of those services are covered and which are not.

Next: Appendix A - Necessary policy changes

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