Arizona Budget Cuts Lead to Lethal Healthcare Rationing: Death Panels Do Exist and Have Existed for a Long Time
Previously published on Jan 26, 2011
Barely on the radar, controversy briefly erupted over the deaths of, at least, two Arizona residents that resulted from cuts in the State's Medicare budget. Many of these individuals were denied lifesaving procedures, including organ transplants, because they could not afford their care and the State decided it could save a grand total of 5.3 million dollars this year with cuts to 1.3 million people's emergency care. In essence, budget restraints had turned the State into a "death panel." Tragically, death panels of this sort are nothing new. Although quite shocking to hear such a decision comes from a government institute charged with fulfilling the public's needs, private health insurance providers have long pursued death panel policies.
When Sarah Palin infamously declared government healthcare reform efforts would lead to the creation of supposed "death panels" in 2009, she was referring to a provision that allowed for the coverage of end of life counseling. Although used quite ineptly for that particular policy option, the term could have been correctly applied in the private insurance market for policies, such as precondition exclusions, because insurance companies spend millions of dollars annually denying coverage. The reality is that healthcare is more of a discretionary necessity then our society would like to accept as cost is a very concrete concern that must be dealt with by those trying to balance a budget or make a profit. The easiest solution is denying coverage.
Affordability is not a question of having private or public insurance providers, it is a consequence of supply versus demand that can only be alleviated by decreased demand for services, i.e. cut people off, or increased supply and better utilization of medical resources. From doctors to bandages, the costs of treating even a healthy person mount very quickly. How resources are utilized can be drastically improved through innovation as well as better management of care. There are areas where private firms can do this better and others were the public sector has the muscle to force change. What creates costs in any given sector of the economy is the need for profits. What further adds extra costs are layers of for-profit bureaucracy.
Administrating healthcare and fees for service adds costs that can only be justified when enough savings are realized to more than pay for the service and the overall healthcare system is improved. In today's system, healthcare insurance providers add costs by exacting enormous profits while cutting benefits for those with purported preconditions. This is not improved efficiency under any definition of the term. Because the for-profit insurance market solution to cut costs is increased costs to patients and employer sponsors of insurance policies with reduced benefits, their existence only adds to the inefficiency of the system. Accordingly, reforms to the healthcare system cannot come from insurance providers as their mission is to cut costs.
Profit drives innovation and expansion when it attracts investments in terms of financial assets, human capital, and the pursuit of novel thinking. Offering satisfactory services to patients and caregivers is one way of using profits to accomplish this goal. Building hospitals and expanding facilities with advanced technology is another. Rewarding the administrators of health insurance plans with large bonuses is not. Health insurance exists to pull reserves of capital together, coordinate care, and allocate funds in a more efficient matter. Anything outside of these functions leads to waste as well as unnecessary denial of care, a.k.a healthcare rationing for the sake of profits. Consequently, a healthcare system driven by increased profits for bureaucrats, such as insurance providers, cannot lead to greater innovation or improved care.
In October of 2010, a story about an Tennessee home allowed to burn to the ground while the local fire department waited for it to spread to the next house before they stepped up to extinguish the new blaze was reported. The owners of the home had not paid their membership fee to this for-pay fire department. Not only did this 75 dollar lapse for a service fee cost these people their home, it endangered their lives and nearby homes. Just as fire and police are necessary emergency services, so are most medical services. The profit driven, versus service driven, model of the healthcare system in the US has dire consequences to individuals and the communities in which they live, especially considering the fact fewer and fewer employers are willing, or able, to offer useful health insurance.
The failure to cover life sustaining healthcare in Arizona is not the result of government reform efforts or rationing brought on by budget constraints. It is the consequences of an unchecked healthcare system, which has allowed the ballooning of costs without concern for people's unmet needs brought on by for-profit entities whose only solution is to ration care to those who actually need it instead of shedding excess layers of costs like unnecessary profit-taking in the insurance market. The profit of the healthcare system must be a well-served, healthy population while monetary gains should be in the hands of those who provide care to the sick, i.e. healthcare providers. Governments, which cut healthcare to balance budgets, are simply doing the same thing the for-profit market does when their job must be to cut real costs and expand coverage.