How State Exchanges Could Restrict Access to Health Care
Active Purchaser or Active Rationer…?
“The decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open.”
— Dr. Donald Berwick, June 2009[i]
“Maybe you’re better off not having the surgery, but taking the painkiller.”
— President Obama, June 2009[ii]
Over the next year, many state legislatures will consider legislation establishing insurance exchanges to implement the health care law. These legislative debates will revolve around whether governments can or should limit the insurance plans available to consumers—and in so doing, potentially restrict access to life-saving but costly treatments:
- In designing their exchanges, states will have to determine whether to allow their exchange to serve as an “active purchaser” of health insurance, negotiating rates directly with insurance carriers and excluding from the exchange those companies that do not comply with government diktats. Among the two states with existing exchanges, Massachusetts’ insurance Connector, the Commonwealth’s version of an exchange, utilizes the active purchaser model, while Utah’s nascent exchange welcomes all insurance companies licensed to operate in the state.[iii]
- States that choose to establish exchanges that function as active purchasers of health care could use their market clout to exclude plans that cover costly treatments. Such actions would attempt to reduce costs using the blunt instrument of government-imposed rationing.
- The health care law includes few restrictions on state exchanges regarding plans that cover costly treatments. Section 1304 of the law[iv] requires only that exchanges may not exclude insurance offerings “on the basis that the plan provides treatments necessary to prevent patients’ deaths in circumstances the exchange determines are inappropriate or too costly.”
While the language of the statute may sound reassuring, the definition of “treatments necessary to prevent patients’ deaths” is far from clear. For instance, whether costly chemotherapy drugs will be considered “necessary” to prevent a patient’s death is subject to interpretation. In the same vein, cancer drugs that extend life, but do not necessarily cure illness or prevent death, could be restricted on cost grounds—the policy of Britain’s National Health Service until a reversal earlier this month.[v] In other words, state exchanges granted the power to exclude insurance plans still would have broad latitude to exclude plans that cover treatments perceived as too costly.
- Influential Democrats have already proposed using government boards to restrict access to costly treatments, as state exchanges could do under the new law. In his book Critical, former Senate Majority Leader Tom Daschle—President Obama’s original choice to head the Department of Health and Human Services—noted that a board of health care bureaucrats, could “rank services and therapies by their health cost impacts,” and make coverage determinations based on that list.[vi] Daschle argued that “government could exert tremendous leverage with its decisions,” including a “nitty-gritty” analysis “of which treatments are the most clinically valuable and cost-effective.” [vii]
“The chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here….There is going to have to be a very difficult democratic conversation that takes place.”
— President Obama, April, 2009 [viii]
- Former leader Daschle is far from the only one who has advocated restricting access to costly treatments. Last year President Obama called for a “difficult democratic conversation” about what he perceives as excessive spending on end-of-life care.[ix] And in appointing Dr. Donald Berwick to head the Medicare program, the president chose as one of the key officials implementing the new law a man who has expressed his desire to “learn from and adapt” the British scheme of rationing based on cost.[x]
Many may find troubling the prospect that state-based insurance exchanges could restrict access to insurance plans that cover costly treatments—imposing a de facto form of rationing on the millions of individuals who will be forced to buy policies through the exchanges to receive federal subsidies. States wishing to avoid this particular problem could structure their exchanges in a way that prevents this form of government-imposed rationing. More broadly however, the fact that the health care law even contemplates unelected bureaucrats restricting access to treatments in this manner represents one of the many pernicious ways in which the overhaul places government between patients and their doctors.
[i] “Rethinking Comparative Effectiveness Research,” Biotechnology Healthcare June 2009, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2799075/pdf/bth06_2p035.pdf
[ii] “Questions for the President: Prescription for America,” ABC News forum, June 24, 2009, transcript available at http://abcnews.go.com/Politics/HealthCare/story?id=7920012&page=1
[iii] “Health Care Overhaul Depends on States’ Insurance Exchanges” by Robert Pear, New York Times October 25, 2010, http://www.nytimes.com/2010/10/24/health/policy/24exchange.html
[v] Life-extending drugs such as Sutent and Avastin were rejected by Britain’s National Institute for Health and Clinical Excellence (NICE) in 2008 as too costly; see “Kidney Patients Denied ‘Too Expensive’ Life-Extending Drugs,” Daily Telegraph 6 August 2008, http://www.telegraph.co.uk/health/2512639/Kidney-patients-denied-too-expensive-life-extending-drugs.html?DCMP=EMC-new_07082008. However, press reports from November 2010 indicate the new British government will restrict NICE’s ability to restrict drug access on cost grounds.
[vi] Critical: What We Can Do About the Health Care Crisis, by Tom Daschle, Scott Greenberger, and Jeanne Lambrew, St. Martin’s Press, 2008, pp. 171-72
[vii] Ibid., pp. 171-72, 158
[viii] “After the Great Recession,” by David Leonhardt, New York Times, April 28, 2009, http://www.nytimes.com/2009/05/03/magazine/03Obama-t.html
[x] “Rethinking Comparative Effectiveness Research,” Biotechnology Healthcare, June 2009