Health Care Rationing in Virginia: A “Success” Story

From the business section of the New York Times comes this profile of medical care in Richmond since 1996.

Since 1996, the Richmond area has lost more than 600 of its hospital beds, mostly because of state regulations on capacity. Several hospitals have closed, and others have shrunk. In 1996, the region had 4.8 hospital beds for every 1,000 residents. Today, it has about three. Hospital care has been, in a word, rationed.

Sounds like a sure way to diminish the quality of care. And yet

The quality of care in Richmond is better than in most American metropolitan areas, according to various measures, and it continues to improve. Medicare data, for example, shows that Richmond hospitals do a better-than-average job of treating heart attacks, heart failure and pneumonia.

…Richmond’s rationing has made a clear difference. In 1992, it spent somewhat less than average, per capita, on Medicare — 126th lowest out of 305 metropolitan areas nationwide. Since then, though, costs have risen at a significantly slower pace than they have elsewhere. As a result, Richmond had the 39th lowest costs in 2006.

In short

Richmond has gotten rid of 15 percent of its hospital beds, and its health care still looks a lot like the rest of the country’s, only cheaper and a bit better.

Sounds like a future success story for ObamaCare.

But hold the champagne. It’s important to remember that all these metrics track care rationed within our current third-party payment system. Either private insurance (paid for by employers with pre-tax income) or Medicare pick up the tab for most treatments. That means individuals are never given the incentive to ration their own care by being made responsible for its cost.

Instead, the program uses psychological ploys like limiting bed space and increasing red tape to encourage doctors and patients to reduce consumption.

In a truly free market system, government income tax structures would not incentivize third-party payment, and thus health insurance would be more like car insurance: purchased directly by consumers only in the amount needed, with claims filed for major accidents, but basic maintenance costs, like oil changes, coming out of pocket.

That way, providers would be forced to compete by offering superior quality care and price points, rather than establishing market hegemony through legislative or bureaucratic monopolies.

In any case, although supporters of proposed federal health care mandates might point to Richmond as an example of successful rationing, it really only proves that, in a country as large and diverse as our own, there are many possible ways to maximize health care quality and access.

Which is why vigorous competition should be allowed to blossom between providers and insurers in the private sector, and between the various state and local governments in the public sector. Ultimately, such competition will determine the best way to reach our shared goal of better health outcomes for all Americans.

Unfortunately, the proposed federal health care “reform” bills do exactly the opposite by calcifying an inadequate system that rewards ignorance and encourages irresponsible consumption; virtually guaranteeing that we will continue to be plagued by rising costs, without any reliable estimate as to the true value of the care we consume.