Communications Department

Rationing Dangers Raised in Health Care Reform by Obama Budget Proposal

Mar 31, 2009 | 03-March 2009 NRL News

By Burke J. Balch, J.D.

President Obama’s February 26 budget proposal included $634 billion over 10 years for health care reform—financed partly by raising taxes through reducing the deductions that can be claimed by higher-income Americans, and partly by cutting payments for Medicaid drugs and for hospitalization under Medicare. The objective is to use the money raised to cover part of the costs of paying for health insurance for those who are currently uninsured.

The Washington Post quoted Obama health care advisor Neera Tandem as saying, “We know that this is not enough to achieve our overall goal of getting health care for every American, but it is a significant down payment.”

Two days earlier, in an address to Congress, the President said, “[H]ealth care reform cannot wait, it must not wait, and it will not wait another year.”

While the Administration has made clear that it is relying on congressional leaders to formulate the specifics of health care reform legislation, and exact proposals have yet to emerge from committee chairs and other key leadership, the budget elements so far proposed raise serious concerns about the danger of rationing.

First, reducing payments for drugs limits the funds available for research and development of innovative pharmaceuticals, making new treatments for Alzheimer’s disease, cancer, diabetes, and other forms of illness and injury less likely.

Second, decreasing funding for hospitalization under Medicare, although promoted as bringing about more efficiency, translates into rationing treatment.

Third, to the extent the Obama budget relies on increased income taxes to pay for subsidizing health insurance, it fails to recognize the inherent gap between general fund revenues, which only rise (or fall) with the general economy, and health care costs, which consistently outpace the general economy. (See for an explanation.) Because general fund revenues, such as income taxes, cannot keep up with health care costs, the consequences in the long term will require cutbacks in benefits and reimbursement rates, resulting in rationed care—a promise of expanded health insurance unmet. (For a description of the alternative financing mechanism that could avert rationing, see

The stimulus bill, signed into law on February 17, already contains funding for a program that, depending on how it is applied, could lay the groundwork for the means of implementing such rationing. It provides $1 billion for “comparative effectiveness” medical research, ostensibly to determine which methods of treatment are most successful and efficient in combating particular forms of illness and injury.

However, the impact of “comparative effectiveness” research depends on how effectiveness is defined and measured and how such research is used. Unfortunately, the professional literature sometimes uses standards that consider health care “ineffective” in preserving life if, to take one example, people are statistically unlikely to be alive 90 days or even two years after receiving the treatment.

Moreover, these standards often measure effectiveness by “quality-adjusted life years,” which means that treatment yielding a more lengthy preservation of life associated with disability may be rated ineffective in comparison to that yielding a shorter preservation of life associated with less disability. Yet extra weeks or months of life may be highly valued by someone with terminal illness, and a person with a disability may still want to live.

The effect of these sorts of “comparative effectiveness” standards may be to deem as “ineffective” treatment that is necessary to sustain the life of a person with a disability or a person with a terminal illness. If, down the line, such standards are made mandatory in order to enable bureaucrats and health care providers to meet the budgetary constraints dictated by relying on inadequate general fund revenues, they will enable rationing based on “quality of life” and expected duration of life.

Action Alert

Contact your U.S. representative and both your U.S. senators and urge them, in your own words, to ensure that:

1. Any health care reform providing coverage for the uninsured must have a sustainable, reliable means of full funding so that we do not over-promise, only to have the budget come up short in the long term, forcing rationing.

2. Health care reform must protect Americans from rationing or denial of treatment based on age, disability, or “quality of life.”

Because of post-9-11 security screening requirements, postal mail, to be effective, is best sent to the LOCAL instead of the Washington office, which you may locate in your local phone book or by going to http://[insert senator’s last name] and

You can send an e-mail by going to, clicking on Legislative Action Center, clicking on the Health Care Reform link in the left column, and following the links to take action; and/or

You can call your representative’s and senators’ state offices (see local phone book) or go through the Capitol Switchboard: (202) 224-3121 (Senate) or (202) 225-3121 (House).