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Rationing health care in Britain and the United States.

Rationing is a "dirty word," (1) "a code word for immoral, inappropriate, or greedy," (2) and "a four letter word." (3) And not surprisingly, rationing was at the forefront of the recent debate in the United States over health care reform. Former Governor Sarah Palin's Facebook page allegation (4) that the Democrat's health care reform legislation included "death panels," which would ration care for the sick and elderly, was later named "lie of the year" by the fact checkers at, but it did garner significant attention. (5)

Governor Palin was referring to section 1233, a provision in the America's Affordable Health Choices Act ("the House bill") that would have authorized Medicare to pay for advance care planning consultations for Medicare recipients every five years or upon a significant change in health status, such as entry into a skilled nursing facility or hospice. (6) The House bill required practitioners to explain "the continuum of end-of-life services and supports available, including palliative care and hospice, as well as the government benefits available to pay for such services." (7) In an article in the Washington Post, editorial writer Charles Lane characterized the death panel allegation as "rubbish," but he nonetheless, voiced concerns about the approach taken in section 1233 noting, "Indeed, the measure would have an interested party--the government--recruit doctors to sell the elderly on living wills, hospice care and their associated providers, professions and organizations. You don't have to be a right-wing wacko to question that approach." (8) This provision was dropped from the final legislation, but a regulation was issued at the end of November 2010 that would have required Medicare to pay physicians to provide "voluntary advance care planning" concerning advance directives. (9) But even this seemingly innocuous regulation caused a backlash, and the Obama Administration later announced that it would be withdrawn. (10) Similarly, in another memorable moment during the debate over health care reform, Betsy McCaughey, a former Lieutenant Governor (R-NY), referred to Dr. Ezekiel Emanuel, a member of the Federal Comparative Effectiveness Counsel who was also serving as a health policy advisor Office of Management and Budget, as the "Rationer-in-Chief." (11) In her article, McCaughey included the now infamous "reaper curve," originally set forth in a Lancet article Dr. Emanuel co-authored, which stands for the proposition that as an individual gets older in age, the probability of receiving a medical intervention significantly decreases. (12)

To be fair, Dr. Emanuel's article presents a very careful and nuanced discussion of allocating very scarce resources, such as vaccines in public health emergencies. In the article, Dr. Emanuel and his co-authors proposed using "a complete lives" approach, which "prioriti[z]es younger people who have not yet lived a complete life and will be unlikely to do so without aid." (13) Although they touch briefly on the potential broader use of the complete lives system, they note, "Accepting the complete lives system for health care as a whole would be premature. We must first reduce waste and increase spending." (14)

McCaughey also accused Dr. Emanuel as being "part of a school of thought that redefines a physician's duty, insisting that it includes working for the greater good of society instead of focusing only on a patient's needs." (15) Indeed, Dr. Emanuel and Victor Fuchs, in an article they co-authored, argue that the problem of overutilization of health care resources has been driven in part by a medical culture and training that encourages physician to ignore costs in recommending treatments. (16) They were particularly concerned about "higher volumes, such as more office visits, hospitalizations, tests, procedures, and prescriptions than are appropriate or more costly specialists, tests, procedures, and prescriptions than are appropriate." (17) Moreover, in another article, Dr. Emanuel opines that it will be necessary to limit government guaranteed health care to certain basic services. (18)

Although Governor Palin's and Ms. McCaughey's claims are "sensationalistic," they draw attention to a central truth, i.e.: "Under highly centralized national health care, the government inevitably makes cost-minded judgments about what types of care are 'best' for society at large, and the standardized treatments it prescribes inevitably steal life-saving options from individual patients." (19)

In fact, in his 2008 book calling for health care reform and illustrating the benefits of the aforementioned truth, former Senator Tom Daschle (D-S.D.) spoke approvingly of Britain's National Institute for Health and Clinical Excellence ("NICE"), which he described as "the single entity responsible for providing guidance on the use of new and existing drugs, treatments and procedures." (20) He noted that NICE determines "how well the medicine works in relation to its cost." (21) In addition, he proposed that an independent Federal Health Board similar to the Federal Reserve should be created to preside over health care reform in the United States and to "promote 'high value' medical care by recommending coverage of drugs and procedures backed by solid evidence." (22) He further noted, however, that while NICE uses cost-effectiveness studies to determine coverage, he would not "adopt a hard and fast rule on cost-effectiveness in public policy." (23)

Similarly, during the debate over health care reform, President Obama spoke of the need for a "very difficult democratic conversation" about health care at the end of life, even expressing doubt about whether his own grandmother should have been given a hip replacement when she was terminally ill. (24) But he also acknowledged that, "It is very difficult to imagine the country making those decisions just through the normal political channels. And that's part of why you have to have some independent group that can give you guidance." (25)

While some have pointed to the rationing in the British National Health Service ("NHS") as something to be avoided in the United States, others have suggested that we could learn some valuable lessons from the NHS. According to data from the Organisation for Economic Co-Operation and Development ("OECD"), in 2008, health care spending was 16% of the gross domestic product ("GDP") in the United States, while it was only 8.7% in the United Kingdom. (26) Through the years 2007-2009, life expectancy for newborn males in the U.K. was 77.7 years and for newborn females it was 81.9 years. (27) Comparatively, in the United States in 2010, life expectancy at birth was lower: for newborn males it was 75.78 years and for newborn females it was 80.81 years. (28) The weak primary care system in the United States has been contrasted with the relatively robust system of the NHS with its ready access to preventive services and the coordination of care provided by its general practitioners. (29) The role of NICE in making explicit decisions to ration care on the basis of cost-effectiveness has also been praised. (30)

This article will examine the issue of rationing health care through a comparative analysis of the British and American health care systems. Britain provides universal care for all its citizens through a socialized system and also has a small but vigorous private sector. When the Patient Protection and Affordable Care Act ("PPACA")31 becomes fully effective in 2014, the United States will provide universal access to health care for its citizens through a combination of public programs (e.g., Medicare, Medicaid, Veteran's Administration hospitals, TRICARE, Indian Health Service), premium subsidies for the purchase of private insurance through state-based exchanges, and tax subsidies for employer-based plans. Both systems are struggling with rapidly increasing costs due to the aging of their populations and the deployment of expensive new treatments. Moreover, both are also struggling with delineating the appropriate role of the market vis-a-vis political decisions in allocating health care resources.

PPACA will significantly expand the role of the federal government in regulating private health insurance plans, thereby blurring the distinction between the public and private sectors. For the present, however, a significant number of people will continue to receive health insurance through their employer and many millions will have the opportunity to purchase insurance from private health insurers through state-based exchanges. As the various provisions of PPACA become fully operative and the baby boomers continue to age, many will be shifted into government health insurance programs, such as Medicare and Medicaid, or receive premium subsidies from the federal government to purchase standardized insurance policies on the insurance exchanges from private insurers. (32)

Although some economists would define rationing to include allocation of health care services through both the market and political processes, (33) in this article the term will be used to denote governmental policy decisions to limit access to beneficial health care in publicly subsidized programs. (34) Thus, rationing for purposes of this article includes both explicit and implicit rationing. Explicit rationing consists of decisions employing a transparent process that candidly acknowledges cost-related concerns as a justification for limiting access to particular treatments and thus impacting specific individuals. For instance, an example of explicit rationing is the NICE's use of cost-effectiveness analysis for denying approval of a drug. Implicit rationing, on the other hand, includes decisions to limit access to care where cost considerations are not articulated in a transparent process but nonetheless are a factor. For example, implicit rationing can be illustrated through a clinician's decisions to deny treatments to stay within strict budget limits or through queues for access to treatments.

This article's focus will be on the political and legal aspects of health care rationing, rather than on the ethical, clinical, and economic aspects. After a brief introduction to some of the literature on rationing, Part II will provide overviews of the British and United States health care systems, discussing their essential characteristics and reviewing rationing efforts. In Part III, the section on the United States, the focus will be PPACA's potential impact. While it has been possible in Britain for successive governments to engage in rationing, it is uncertain at this time whether sustained rationing will be sufficient in the United States to bend the cost curve downward significantly in publicly subsidized health care programs such as Medicare.

I. Rationing Through Policy Decisions

One of most vital questions currently facing both policymakers in Britain and the United States is whether it will be possible to contain the costs of health care so as to prevent the occurrence of significant harm to their respective economies. Unfortunately, the track record in both countries gives pause for concern. Health policy experts customarily refer to the health care "Iron Triangle," used in the U.S., and the "Inconsistent Triad," used in the U.K. (35) The three angles of the triangle or triad are cost, access, and quality. It has been observed that, "increasing the performance of the health care system along any one of these dimensions can compromise one or both of the other dimensions, regardless of the amount that is spent on health care."36 The essential point here is that it is very difficult to simultaneously increase access, decrease costs, and improve the quality of a health care system.

At the time of the original creation of public systems in both countries--Medicare and Medicaid in the United States and the British National Health Service in the United Kingdom--very little attention was paid to health care economics or the fiscal sustainability of the programs. Now, not surprisingly, both systems face significant problems with exploding costs in their publicly funded health care programs, further exacerbated by an aging population and the deployment of new treatments. In the United States, the Medicare Trust Fund had been projected to be exhausted by 2017, but now, due to the passage of PPACA, the Medicare Trust Fund is expected to last until 2029. (37) In Britain, the government has announced "efficiency" cuts to the National Health Service budget, which are already impacting front-line care. (38)

Moreover, in the recent debates over health care reform in the United States, politicians in both parties largely ignored the implications of the "iron triangle" for health policy. Democrats argued that it was possible for health care reform legislation to simultaneously reduce costs, increase access, and improve quality. (39) On the other hand, Republicans attacked PPACA for increasing costs, (40) but they also attacked the cuts in the Medicare Advantage program (41) and supported the "Doc fix" deal, which denied automatic cuts to doctors receiving Medicare payments. (42) Similarly, as noted by Professor John Butler, formerly Director of the Centre for Health Services Study at the University of Kent in Canterbury, the successive British governments have ignored the "inconsistent triad." He is undoubtedly correct when he observes that there are "no technical solutions to the inconsistent triad ... [Further,] the problem is inherently contestable because it touches upon social, political and economic values about which people not only care but disagree." (43) For that reason, politicians in both the United States and Britain prefer to avoid endorsing rationing schemes.

In an unusual opinion that the Supreme Court of the United States issued in a 1974 case, (44) Justice William O. Douglas obliquely suggested that it is necessary to ration health care in publicly subsidized health care programs where care is provided free at the point of delivery. In this case, Justice Thurgood Marshall's majority opinion held that an Arizona statute, requiring a year's residence in a county as a condition of eligibility to receive non-emergency hospitalization or medical care at the county's expense, impinged upon the interstate right to travel and absent a showing of a compelling state interest, violated the U.S. Constitution's equal protection clause. (45) In his separate opinion, Justice Douglas began by noting, "[t]he legal and economic aspects of medical care are enormous; and I doubt if decisions under the Equal Protection Clause of the Fourteenth Amendment are equal to the task of dealing with these matters." (46) Thus, he concluded that resolving these issues through political processes was preferable to equal protection litigation. (47) He also attached an appendix, without further comment, which contained a brief fable about a country that decided to provide its inhabitants "the right to eat anywhere" and "as elaborately" as they chose while paying nothing. (48) The fable concludes:
   These recommendations were adopted. Large numbers of people spent
   all of their time ordering incredibly elaborate meals. Kitchens
   became marvels of new, expensive equipment. All those who were not
   consuming restaurant food were in the kitchen preparing it. Since
   no one in Gourmand did anything except prepare or eat meals, the
   country collapsed. (49)

This fable illustrates what many distinguished bioethicists and health policy experts have recognized: the necessity of rationing health care; however, only some have acknowledged the political difficulties of doing so. For example, in 1983, the first Presidential bioethics commission issued a report recommending that a cost/benefit analysis be used in determining the level of care to be guaranteed in government health care programs. (50) Daniel Callahan, co-founder of the Hastings Center, has argued that age-based rationing would be necessary because of the aging of the baby-boomers, and he has proposed that Medicare not pay for life-extending health care for persons who have lived out their natural lifespan. (51) Henry Aaron, a Senior Fellow at Brookings Institute, and William B. Schwartz, M.D., who was a professor of medicine at the University of Southern California and a health policy expert, argued that the achievement of universal access to health care in the United States will be a welcome prelude to a system-wide rationing scheme. (52) They were concerned about the overall cost of health care per capita and its continued growth rate, which has been two and a half percent over the general rate of inflation since 1960. (53) They argued that those with generous insurance coverage receive an excessive amount of health care where the marginal cost of that care exceeds the marginal benefit. Moreover, they believed excessive care is system-wide because over-insurance and fear of litigation have influenced standards of care. Thus, they concluded that the United States would be better off with system-wide rationing because the savings could be diverted to provide appropriate levels of care for everyone and to other, more beneficial, purposes. (54) But, Aaron and Schwartz also recognized the difficulty of imposing rationing and the potential divisiveness of the debates. (55)

Guido Calabresi, currently the Sterling Professor Emeritus at Yale Law School and a judge on the United States Court of Appeal for the Second Circuit, and Philip Bobbitt, presently the Herbert Wechsler Professor of Federal Jurisprudence at Columbia Law School, used the term "tragic choices" to describe the allocation of scarce goods, and they identified four methods of allocation: markets, political processes, lotteries, and custom. (56) They also recognized two levels of allocation decisions: first order decisions determining how much of a good is to be produced and second order decisions about who gets what is produced. (57) While acknowledging that in the case of "tragic choices" decisions are made separately at these two levels, they noted that these decisions are closely connected: decisions to limit the supply of goods at the first level impact decisions at the second level, and the costs of the second level decisions influence the first level decision. (58) They argued that "tragic choices," i.e., rationing decisions through public and transparent processes that result in the suffering and death of specific persons, exacerbate social tensions. (59) Thus, societies inevitably try to conceal the conflict in values to avoid the appearance of making a "tragic choice." (60)

Dr. Emanuel identified three levels of health care allocation decisions with respect to government health care decisions. (61) First, macro-allocation decisions determine how much of the gross national product ("GNP") to spend on health care services as opposed to national defense, transportation, etc. (62) Second, there is an intermediate level where a determination will be made as to the basic package of health care services that all citizens are entitled to receive. (63) Third, micro-allocation decisions about which patients are eligible to receive particular services. At the intermediate level, he suggested the need for transparency in the form of "public forums to deliberate about which health services should be considered basic and should be socially guaranteed." (64)

David Orentlicher, a medical doctor and Samuel Rosen Professor of Law at Indiana University Law School-Indianapolis, posited that rationing of health care is necessary, noting that writers have advocated either "a centralized model in which a commission establishes rationing guidelines for widespread use" or "a decentralized model in which rationing decisions are made by health care providers on a case-by-case basis." (65) He argued that successful rationing will combine these approaches. (66) He further identified the advantages of centralized model as: (1) increased legitimacy because of a transparent process and broad participation; (2) preservation of the physician duty of loyalty to the patient; and (3) promotion of consistency and fairness among patients. As examples of centralized decision making, he cited NICE, the State of Oregon's scheme for expanding the numbers of people Medicaid covers through reducing the scope of coverage, and the United Network for Organ Sharing ("UNOS"), a non-profit organization that distributes organs for transplants. (67)

As to the decentralized model, Orentlicher identified the following advantages: (1) the infeasibility of centralized decision making for most medical decisions; (2) it is a better way to deal with the "tragic choices" problem; (3) it allows for individualized decision-making that benefits patients; and (4) it preserves the traditional role of the physician. (68) He notes, "It is not clear that society can tolerate a transparent process for rationing." (69) He concluded that while centralized rationing is not feasible and physicians should make rationing decisions in the treatment context, the government should establish policies to channel "decision-making ... in the direction of more cost-effective care by limiting the resources at their disposal and eliminating their personal incentive to provide high-cost care." (70)

Thus, it is clear that rationing will have to be a part of any publicly subsidized program for the provision of health care to maintain fiscal sustainability. Rationing could be accomplished either through explicit decisions employing cost-effectiveness analysis or through implicit decisions treating physicians make on a case-by-case basis. While some health policy experts favor explicit rationing through transparent processes, others have recognized the political difficulties that this would entail. Implicit bedside rationing decisions could lead to disparities in access to treatment and a less rational pattern of decision making in allocating health care resources, but implicit rationing may be more politically viable by avoiding the "tragic choices" problem. The social costs of politicized rationing decisions may be too high for rationing to be effectuated according to the suggestions, and benefits of doing so, noted above. Friedrich Hayek, the classical liberal economist and philosopher, argued that while reliance on the market may result in inequality, its impersonal nature is less likely to result in an exacerbation of social tensions. (71) On the other hand, deliberate and "consciously directed" government decisions to limit an individual's access to resources are more likely to precipitate significant reaction and resentment by those affected. (72) Dylan Matthews, writing on Ezra Klein's Washington Post blog and quoting Hayek, has argued, "It's worth noting that Hayek does not only accept a limited welfare state, but specifically singles out health care as an area where the state should provide a safety net." (73) However, it is probable that Hayek was referring to social insurance for insurable risks, such as coverage for catastrophic care, rather than the government providing routine health care that is free at the point of delivery. (74) Certainly, Hayek's critique of centralized planning focused on the importance of the price mechanism in allocating scarce goods and services. (75) For Hayek, the price mechanism was essential for the efficient allocation of resources in a complex economic system because of its function in providing information about changing circumstances. (76) Furthermore, his aversion to centralized planning suggests that he would have preferred market-based solutions to the allocation of health care resources, as opposed to government imposed rationing. (77) Hayek's insights concerning the difficulties of politicized rationing, the impracticability of centralized planning, and the necessity of market-based pricing for the efficient allocation of resources could be applied to both the NHS and the new U.S. health care system under PPACA.

II. The British National Health Service

The essential characteristics of the British National Health Service from the time of its creation have been: (1) government ownership of most hospitals; (2) consultants (specialists) attached to the hospitals; (3) government contracts with general practitioners ("GPs") to provide primary care services; (4) universal coverage financed by taxes; (5) care free at the point of delivery (with charges added later for prescription drugs and dentistry); (6) private practice permitted for NHS doctors, including private pay beds in NHS hospitals; and (7) clinical freedom for the GPs who control access to hospitals and consultants. (78) It was a socialist belief that creation of the NHS would actually save money by reducing the incidence of disease, but initial cost estimates were well short of the mark: from the beginning, the costs of the NHS substantially exceeded the government's initial predictions. (79) Nonetheless, Britain's parliamentary democracy with its strong party discipline has resulted in setting strict budget limitations on the NHS. (80) "Since its birth in 1948, the NHS has always been perceived as being underfunded, a perception encouraged by those working in it. All governments, Labour as well as Conservative, have sooner or later incurred the charge of starving the NHS of resources." (81)

Although the NHS was initially created during a Labour government, all major political parties have been supportive of it. (82) There have, however, been significant controversies between the Labour and Conservative parties over the role of the private sector, funding levels, and the organization of the NHS. Although it was founded to provide care free at the point of delivery, there are charges for some services, and "widespread rationing" has been commonplace within the NHS. (83) Moreover, rationing decisions have generally not reflected the preferences of individual patients, and political discourse over rationing criteria has been limited. (84) Various approaches to rationing have been used throughout the history of the NHS, such as waiting lists, limiting deployment of new technologies, strict budget limits that have required physicians to engage in bedside rationing, and explicit rationing through the use of cost-effectiveness analysis. The British parliamentary system, with its strong political parties and general consensus over the role of the NHS, has resulted in both parties imposing significant budget limitations over a sustained period, thereby enforcing implicit rationing to contain costs in the NHS. But, as discussed infra, explicit rationing has been more controversial and difficult to maintain.

A. Creation of the NHS

In 1942, Sir William Beveridge, President of the Royal Statistical Society and a former Director of the London School of Economics, issued a report calling for the British government to provide universal health care. (85) The Beveridge Report did not set out a comprehensive policy framework or provide any economic analysis. In fact, "The report contain[ed] almost no economics in the theoretical sense and no statistical sophistication. Friedrich Hayek, who had been Beveridge's colleague and became a virulent opponent of the welfare state, claimed that Beveridge 'knew no economics whatever.'" (86) The foundational principle set forth in the Beveridge Report was simply that, "restoration of the sick person to health is a duty of the State and the sick person, prior to any other consideration." (87) Subsequently, in 1944, the wartime Coalition government issued a White Paper calling for creation of the NHS. (88) It proposed that free comprehensive health care services be provided to all persons with some exceptions, such as dental and ophthalmology services. (89) It further proposed the creation of a centralized authority to preside over the system, a limited continuing role for existing local authorities in administering parts of the system (e.g., GP services and local health clinics), and the formation of larger joint authorities with responsibility for providing hospital and consultant (specialist) services. (90)

In 1946, the Labour government, with Aneurin Bevan as the Minister of Health, passed a bill to create the NHS. (91) Most physicians were initially opposed to the legislation, and a former President of the British Medical Association ("BMA") even characterized it as a "step" toward National Socialism. (92) Subsequently, however, Bevan formed an alliance with the consultants, the hospital-based specialists, by "stuffing their mouths with gold," i.e., allowing them to engage in private practice and have private pay beds in NHS hospitals while continuing to work for the NHS. (93) Thus, by July, 5, 1948, the day the NHS went into effect, ninety percent of physicians had signed up to participate in it. (94) On that day, the central government took over 1,771 English and Welsh local authority hospitals and 1,334 voluntary, hospitals. (95) Consultants were attached to the hospitals and the Executive Councils, or local government bodies, contracted with general practitioners to provide primary care services. (96)

The NHS' original structure was based on a system of centralized command and control. "The 1948 settlement assumed central accountability for the NHS. The sound of every dropped bedpan was to reverberate around Whitehall, in Nye Bevan's immortal phrase." (97) By the early 1970s, however, there was widespread concern about the lack of coordination among the three parts of the NHS: hospitals, GPs, and public health services. (98) In 1971, a Conservative government "introduced the concept of 'management' in the [NHS] with delegation downwards and accountability upward." (99) There were lengthy discussions about reforms during a period when there were changes in the control of the government between the Labour and Conservative parties. (100) In fact, despite the emergence of a new political group in power, there was little disagreement over the substance of NHS reorganization. (101)

The 1974 reorganization that followed had two primary purposes: to enhance "standards of patient care in areas neglected by mainstream medicine" and to introduce "management controls to contain costs and improve efficiency." (102) Although the percentage of GDP allocated toward health care and the rate of increase in health care spending had been lower in Britain than in other countries, there were concerns that the NHS was spending too much money on unnecessary hospital care. (103) Accordingly, the 1974 reforms replaced the old NHS structure with a new structure with three tiers of management: fourteen Regional Health Authorities, ninety Area Health Authorities, and approximately two-hundred health districts at the lowest level in the hierarchy. (104) Management in the NHS was to become "fully integrated," and the district was designated as the "operational unit." (105) Multi-disciplinary teams with a focus on consensus management were to preside over the planning within the districts. (106) There were also mechanisms in place at the district level for consumer participation in planning. (107) However, in 1984, a Conservative government yet again restructured the NHS; it removed one level of the bureaucracy by abolishing the Area Health Authorities and replacing them with 192 District Health Authorities ("DHAs"). (108)

B. Conservative Reforms: The Internal Market

In the 1980s, there was a widespread perception that the NHS was "tottering on the edge of collapse." (109) This was a result of the confluence of three factors: strict budgetary constraints that the Conservative Government imposed, increasing public demand for health care services in response to "individual wants rather than professionally defined needs," and escalating pressure on providers to improve productivity. (110) In response to these concerns, Prime Minister Margaret Thatcher's government strengthened the role of management to improve efficiency in the NHS. (111) In 1991, Thatcher's government also implemented NHS reforms designed to reduce costs, enhance efficiency, and maintain equity. (112)

Professor Alain Enthoven of Stanford University proposed reforms to the NHS based on a managed competition model; these reforms were designed to enhance efficiency and reduce costs by introducing competition while maintaining universal access to health care. To that end, he proposed the creation of an internal market through a split between the purchasing and providing of services. (113) Under this arrangement, the DHAs would act only as purchasers of services, while private hospitals and general public hospitals would compete to provide hospital and community health services, thereby promoting efficiency and decreasing costs. (114)

A 1989 White Paper and subsequent legislation incorporated most of Enthoven's recommendations. (115) Under these reforms, some NHS hospitals became NHS Hospital Trusts that were able to generate revenue and compete for contracts to provide care. (116) In bargaining between the NHS Hospital Trusts and the DHAs, "both price and quality were negotiable, although information on quality was extremely limited." (117) Some of the GP practices became fund-holders that could manage their own budgets and purchase hospital services for their patients from public and private providers. (118) There was also a private financing initiative. (119) Under this initiative, NHS Hospital Trusts were permitted to seek financing from the private sector. Between 1997 and 2001, this became the main source of capital funding for major NHS capital projects. (120) The government would then repay the debt "in the same way that borrowers repay a mortgage." (121)

At the time of these reforms, many believed that the NHS had deteriorated under the Conservatives and that the Thatcher government was attempting to privatize or dismantle the NHS. (122) The Labour Party, for example, vociferously opposed the reforms, called for increased spending, and vowed to undo them when they regained power. (123) The BMA similarly opposed the reforms. (124) But by 1996, all the major parties accepted "three strategic changes: the purchaser/provider split, the self-governing status of hospitals, and a commissioning role for GPs." (125)

While the Conservatives claimed that the reforms had shortened waiting lists, critics questioned the validity of their statistics. (126) According to LeGrand, a health care expert who was an advisor to Labour Prime Minister Tony Blair, the Conservative reforms had minimal impact. Thus, while there was a change in culture within the NHS, there was "little overall measureable change." (127) The explanation for this assertion is that, "Most of the key actors in the NHS internal market, for a variety of reasons, had little direct incentive to move in the direction indicated by market developments." (128) There was some greater "cost consciousness. (129) but also increased managerial and administrative costs. (130)

Under the Conservative reforms, the government still provided more than ninety percent of health care funding. (131) There was no "cream-skimming," as some initially feared. (132) Patient choice was not enhanced because most patients could not choose their purchaser. (133) NHS Trust Hospitals could not keep surpluses generated, and the government would make up any losses incurred. (134) There was also no difference in referral rates for surgery between fund holding and non-fund holding GPs. (135) On the other hand, however, there was some improvement in quality attributable to GP fund holders, including increased opportunities for provider outreach, quicker patient admission, and better response from providers to patients. (136) Moreover, there was increased standing within the health care system for GPs and more involvement for them in "local commissioning processes." (137)

The overall effects of the internal market are difficult to assess "due to lack of monitoring and regulation as well as the fact that [some] reforms were abruptly abolished when Labour came into power in 1997." (138) There is "mixed and inconclusive" evidence on the impact of the internal market. (139) The limited success of that reform was apparently due to "barriers to market entry" and "political interference." (140) Nonetheless, there was an increase in patient satisfaction through the 1990s. (141) In a reappraisal, Enthoven agreed that the internal market had not worked, noting that the government continued to exert too much control over the NHS. (142) In a subsequent article with respect to the internal market, he concluded that, "on the whole its effects were quite limited." (143)

C. New Labour's Reform of the Reform (1997-2009)

The Labour party won the 1997 election, ending eighteen years of Conservative rule. Over their ensuing thirteen years in office, the Labour party increased funding for the NHS, expanded regulatory oversight, improved patient choice, reinstituted competition, enhanced the role of the private sector, and focused on quality improvement. While these reforms increased satisfaction with the NHS, (144) the Labour government also created the NICE to reduce costs and standardize the availability of treatments throughout the NHS, discussed infra, (145) and this has led to continuing controversy over its explicit rationing decisions.

1. Management Reforms and Increased Funding

In 1997, the Labour government issued a White Paper that called for the replacement of the internal market with "integrated care." (146) The White Paper insisted on a "Third Way," indicating that it would retain what had worked in the Conservative reforms, promising that there would be "no return to the old centralized command and control systems of the 1970s," and rejecting the "divisive internal market of the 1990s." (147) It further articulated six principles of reform: (1) renewal, (2) decentralization-local control, (3) partnership with local authorities, (4) increased efficiency, (5) focus on quality, and (6) accountability to patients. (148) These reforms "retained the architecture of the buyer and seller split but changed policy to reduce competition and to implement instead longer term cooperative relationships between buyers and sellers." (149) Under this arrangement, which is similar to the U.S. managed care plans' selective contracting, "buyers and sellers negotiated over price, quality (mainly waiting times), and volume on an annual basis, with the majority of contracts taking the form of annual bulk-purchasing contracts." (150)

The 1997 White Paper set forth the new organizational scheme creating new Primary Care Groups ("PCGs") that would eventually replace health authorities as purchasers of care. (151) All GPs would be required to join PCG-organizations composed of GPs and community nurses. (152) The PCGs were to commission (purchase) services from NHS Trust Hospitals, and the fund-holding GPs were to be absorbed into PCGs. (153) The PCGs were expected to progress over time to become freestanding Primary Care Trusts ("PCTs") that could be combined with existing NHS community trusts3s4 As to NHS Trust hospitals, the White Paper called for the implementation of "clinical governance" with a focus on quality improvement. (155) This "clinical governance" would allow clinicians a greater role in the governance of NHS Trust Hospitals and for the reinvestment of gains. (156)

As such, PCTs emerged as key players in the NHS system. Eventually, PCTs were made responsible for managing the delivery of primary care, i.e., "the care provided by people you normally see when you first have a health problem. It might be a visit to a doctor or a dentist, an optician for an eye test, or just a trip to a pharmacist to buy a cough mixture." (157) They were local organizations that oversaw GPs and dentists. (158) PCTs could either provide the medical services by entering into contracts with NHS providers or contracting with private providers. (159) PCTs came to control eighty percent of the NHS budget. (160) PCTs were required to adhere to strict budget guidelines and ensure that their providers supplied the drugs and appliances patients needed. (161) And they were not permitted to "generate financial savings by imposing caps on the prescribing costs on ... providers." (162) In a 2000 White Paper, the Labour government called for significantly increasing funding levels for the NHS and "modernization" to enhance its performance. (163) This was undoubtedly in part occasioned by press reports of the NHS' inability to cope with a disastrous flu epidemic in the winter of 1999-2000. (164) The Labour party promised an increase in funding for the NHS of thirty-five percent in real terms over four years, which meant two-hundred-fifty more scanners, one-hundred new hospitals, seven-thousand more beds, five-hundred primary care centers, better food, and cleaner wards. (165) Indeed, "The 2001 election campaign was marked by a consensus among the three major British political parties that the crucial component of any remedy for the condition of the NHS must be an increase in direct government funding." (166) The Bristol incident, a scandal involving the deaths of children due to grossly inadequate care at a pediatric cardiac service, and the subsequent public inquiry and report that ensued, may have also contributed to the push for increased funding. (167) While the Bristol report acknowledged that, "under-funding blighted the NHS as a whole, it does not alone provide the explanation for what went wrong in Bristol;" it also called for a "sustained increase in funding" for the NHS. (168)

The Labour government more than doubled the NHS' budget during its thirteen years in power, but productivity in the NHS fell 2.3% from 1997 to 2008. (169) Notwithstanding the massive infusion of funds, proportionately the areas of improvement in the NHS did not keep up with the funding increases. (170) Nonetheless, in a 2005 White Paper, the Labour government claimed that since 1997, 79,000 more nurses and 27,000 more doctors were added, and waiting lists and waiting times were "dramatically down." (171)

In 2002, the Labour government began a series of reforms that by 2006 had reinstated a policy of competition within the NHS. (172) In 2003, it created Foundation Trusts ("FTs"), which were NHS hospitals that were given greater independence and subject to local, rather than centralized, control. (173) Their purpose was to twofold: increase competition among providers and improve quality. (174) In addition, FTs were empowered to enter into legally enforceable contracts with PCTs. In fact, there are now 129 FTs in England, but despite the FTs' growth, FTs were controversial within the Labour Party; some viewed them as introducing two-tier medicine into the system and undermining equity. (175) They were similar to co-ops with local governance. (176) While they were given the freedom to govern their own affairs, an independent regulator was responsible for overseeing them. (177) FTs remain part of the NHS, serve primarily NHS patients, and derive their income from private pay patients subject to a cap. (178) Although it has now been generally acknowledged that FTs were not a "backdoor form of private[z]ation," their complex organizational structure has been criticized. (179)

The 2002 Plan also acknowledged systemic problems in NHS, such as overcentralization and disempowered patients. It proposed to apply the principle of subsidiarity, meaning more local control. It further called for a greater focus on continuous quality improvement ("CQI"), outcomes research, and evidence based medicine. (180) In 2002, the Labour Government created twenty-eight Strategic Health Authorities ("SHAs") to manage the NHS, but in 2006, it reduced the number of SHAs to ten. (181) The SHAs have been involved in developing plans for the NHS, reducing the number of PCTs, and reconfiguring the Foundation Trusts. (182)

Significantly, the Labour party instituted a new payment methodology for hospitals, referred to as "payment by results," whereby hospitals were to be paid under a prospective payment system of Health Related Groups ("HRGs"), similar to the U.S. Medicare program's system of Diagnosis Related Groups ("DRGs"). (183) All hospitals were to be paid on a "flat-rate, per-case basis, regardless of length of time the patient spends in the hospital," thereby providing incentives for hospitals to become more efficient. (184) The Labour Party introduced the payment reforms in 2003, and by 2006, the reforms governed most procedures. (185) "The aims were that hospitals would only receive payment if they attracted patients ... and that fixed prices would mean that choice would depend on quality and not price as in the previous system." (186)

Further attempting to restructure the payment arrangements, in 2004, the government introduced a pay-for-performance scheme for family practice that was based on meeting targets for improvements in the quality of clinical care. The scheme accelerated improvements m quality over the short term for three chronic conditions, but the pace of improvement was not sustained after the initial goals were reached. (187) Moreover, while the scheme reduced socio-demographic inequalities in health care, "unintended consequences" led to "reductions in quality of some aspects of care not linked to the incentives and in the continuity of care." (188)

2. Role of the Private Sector

By the 1970s, private care provided a significant part of some forms of health care in Britain. (189) Nevertheless, there was continuing controversy over the existence of private beds in the NHS hospitals (Bevan's "Faustian Bargain"). (190) In the 1980s and 1990s, however, the role of the private sector grew as waiting times increased, and by 1996, thirteen percent of the population had private health coverage. (191)

Many British unions and employers provide private health insurance. (192) Generally, however, private insurance covers "only elective procedures, such as hip replacement and cataract surgery and has not been a substitute for primary or emergency care provided by the NHS." (193) It provides a way to avoid waiting in the queue for elective treatments. (194) American health care companies and English provident societies (insurers) have built private hospitals near NHS hospitals, and by 1996, the British United Provident Association owned twenty-nine hospitals. (195)

The Labour government took several measures to increase the role of the private sector in delivering services to NHS patients after 1997. In fact, the private health sector and government entered into a concordat in 2000, under which the health authorities were permitted to work with private health care providers to make greater use of beds in the private sector for elective care, intermediate care or rehabilitation, and critical care. (196) During the 2001 Election, Prime Minister Tony Blair indicated that there was "'no ideological bar" to increased use of private sector in delivering health services. As such, he suggested increasing the use of the private sector to shorten waiting times, while emphasizing that care would still be free at the point of use. (197)

Perhaps most significantly, in 2003, the Labour government announced a plan to enhance patient choice within the NHS. Under this plan, beginning in the summer of 2004, patients waiting more than six months for elective surgery would have the opportunity to switch to another hospital including a private hospital. (198) In addition, beginning in December 2005, GPs referring patients for elective surgery offered a choice of four or five alternative providers, which could include private hospitals, as well as NHS Trust and FT hospitals. (199) These policies encouraged patient movement away from the local hospitals GPs had traditionally used.(200) This program of "payment by results" and increased patient choice resulted in significant improvements in the quality of care. "Within two years of implementation the NHS reforms resulted in significant improvements in mortality and reductions in length-of-stay without changes in total expenditure or increases in expenditure per patient." (201)

Nonetheless, private health care shrunk four percent under the Labour government: the proportion of privately funded elective hospital activity dropped from 14.6% in 1997-98, at the beginning of the Labour government, to 10.6% in 2008. (202) The explanation for this change was the tremendous growth in NHS-funded elective surgery due to the Labour party's massive infusion of funds into the NHS. (203) But, by 2009, there had been a surge in the number of patients choosing private hospitals for their NHS funded treatments pursuant to the government's choice program. (204) In her blog for the Telegraph, political commentator Janet Daley suggested that the next government should allow patients to pay with private funds for extra care in NHS facilities. (205)

3. Quality

In March 2009, the news broke that Britain had the worst cancer survival rates in Western Europe. (206) An article in the Daily Mailnoted:
   Despite Health Service funding tripling under Labour, survival
   rates are on a par with Poland and the Czech Republic, even though
   they spend two-thirds less on cancer. A damning league table shows
   that Britain is [sixteenth] out of [nineteen] countries surveyed.
   Patients in some European countries are [fifteen] percent more
   likely to be alive five years after diagnosis. (207)

In June 2007, Labour Prime Minister Gordon Brown appointed Ara Darzi, a renowned surgeon, as Minister of Health. (208) In June 2008, the Labour government published a report focusing on quality in health care. (209) The report proposed that the NHS systematically measure and publish information on the quality of care. (210) In addition, it called for a shift to personalized medicine and more emphasis on patient choice. (211) A Lancet article approvingly noted that, "Ara Darzi's final report ... candidly admits failures in recent Government health policies. There remains unacceptable variation in the quality of care across the country ... [a]nd the U.K. lags too far behind other countries in important aspects of its health system." (212)

Further, "Darzi has wisely thrown out regulation as the organi[z]ing principle of the NHS. He has replaced it with quality, by which he means clinical effectiveness, patient safety, and the patient experience." (213)

The reaction from the left was, however, much less enthusiastic, "Lord Darzi, the unelected health minister, has signaled that Labour will continue to dismantle and privati[z]e the NHS delivery system, its staff and services--handing taxpayers' funds to multinational companies, and remodeling the service along the lines of U.S. health care." (214) Nonetheless, the Coalition Government's July 2010 White Paper on the NHS takes a more positive view of Darzi's accomplishments promising to build on his work in improving quality and outcomes. (215) The White Paper calls for establishing national outcomes goals for GP consortia that would focus on treatment effectiveness and patient safety. (216) It also suggests that NICE develop % comprehensive library of standards for all the main pathways of care." (217)

D. Coalition Government 2009-Present

During the 2009 campaign, when a maverick Tory politician criticized the NHS on television in the United States, David Cameron, the Tory candidate for Prime Minister stated, "The Conservative party stands full square behind the NHS.... We back it, we are going to expand it, we have ring-fenced it and said that it will get more money under a Conservative government, and it is our No. 1 mission to improve it." (218) The Coalition government had initially promised no "top down reorganizations." (219) But in July 2010, the Coalition government issued a White Paper calling for a major overhaul of the NHS that would lead to abolition of the SHAs and PCTs. (220) The Health Secretary said the reorganization was necessary to get rid of "unnecessary" bureaucracy, and he advocated for a new emphasis on improving quality." (221)

The White Paper suggested enhancing patient choice of providers, a focus on "personalized care," and "devolving" purchasing power to GP consortia. (222) It also proposed the creation of a NHS Commissioning Board that would "lead on the achievement of health outcomes, allocate and account for NHS resources, lead on quality improvement and promoting patient involvement and choice," while limiting "the powers of Ministers over day-to-day NHS decisions." (223) Further, it urged the release of "up to 20 billion [pounds sterling] of efficiency savings by 2014, which will be reinvested to support improvements in quality and outcomes," a reduction of "NHS management costs by more than 45% over the next four years," and a radical reduction of "the number of NHS bodies" and "the Department of Health's own NHS functions." (224) Moreover, all hospitals were to become part of an FT, and to that end, the Coalition government planned to lift the cap on how much FTs can earn from treating private patients. (225)

A leaked report from Independent Challenge Group on the NHS ended 2010 on a gloomy note for the government because the report indicated that the NHS may be in for a significant shortfall, savings from efficiency may not be realized, significant cuts to cancer research charities and social care may be necessary, and the results from devolving purchasing power to GPs may be "patchy." (226) By the end of its fiscal year, March 31, 2011, the government was expected to spend 17.5% of its budget on the NHS, second only to social protection payments, such as pensions and welfare, as a slice of the budget. (227)

In January 2011, the Coalition government unveiled its plan to increase efficiency in the NHS by cutting bureaucracy and giving physicians greater responsibility for allocating resources, but physicians and health care administrators reacted negatively. (228) The plan proposed to cut out a layer of financial managers with the notion that physicians were in a better position to decide the treatments their patients needed. (229) It would additionally offer patients greater flexibility in choosing providers and more opportunities for private companies to compete for NHS business. (230) The Department of Health stated that the reforms would result in substantial efficiency savings that could be plowed back into the NHS. (231) Although some characterized the plan as a "radical pro-market shake-up," (232) Julian LeGrand, a former advisor to Prime Minister Blair, rejected that contention. (233) He noted, "The commissioner-provider split, payment-by-results, and more choice and competition: all were developed under Mr. Blair, and are now extended by the coalition. The evidence suggests they are working." (234)

Thus both parties have struggled with the difficulties of controlling costs in the NHS while maintaining quality and access. Political discourse concerning the NHS has proceeded at a fairly low level in Britain, focusing on secret agendas to privatize the NHS, inadequate funding, poor quality, and platitudes about preserving free health care. (235) All parties have avoided confronting the "inconsistent triad" and the "tragic choices" that would result from attempts to reconcile conflicting values. Nonetheless, successive British governments have limited health care expenditures relative to the United States through the imposition of strict budgetary limits.

E. Rationing

Cost containment in the NHS has been achieved in part by the use of rationing. (236) In The Painful Prescription, a seminal work published in 1984, Aaron and Schwartz examined rationing within the NHS. Comparing per capita rates of consumption in the United States and Britain, they found that three procedures were being performed at the same level in both countries: clotting treatments for hemophilia, megavoltage radiotherapy for cancer patients, and bone marrow transplantation. (237) But they found that several other services were clearly rationed in Britain because of a shortage of resources, e.g.: x-ray examinations, dialysis for chronic renal failure (<1/3 U.S. rate in Britain), and total parenteral nutrition (<1/4 U.S. rate in Britain). They noted that excessive demand had led to rationing by queue. (238) Age-based rationing was used for some treatments, such as renal dialysis. (239) There was also significantly less use of technology in the NHS as compared with the United States on a per capita basis, such as lower CT-scanning capability (1/6th), fewer intensive care unit ("ICU") beds per capita (1/5 to 1/10), and a lower rate of coronary artery surgery (only 10%). (240)

In reviewing Aaron and Schwartz's 1984 findings, Professor John Butler criticized their approach. His critiques include the following: it is based on the faulty assumption that the correct amount of care is being provided in the United States; it ignores the extent to which patient expectations, defensive medicine, and fee-for-service medicine drives care in the U.S.; and it ignores the fact that British physicians may actually be more discerning in selecting appropriate treatments than their U.S. counterparts. (241) However, Butler ultimately concluded:
   Nevertheless, Aaron and Schwartz's study, conducted at a time when
   the notion of health care rationing was rarely on the agenda of
   public or professional debate, exposed the likely extent to which
   patients in the U.K. were being denied the treatments that, in a
   more prosperous context, they might have received.... These
   included services that depended upon specialized capital equipment
   and staff, the care of older people, treatments that are costly in
   relation to the medical benefits they yield, and those which may
   succeed in prolonging life only at the expense of a sharp reduction
   in its quality (internal citations omitted). (242)

Subsequently, in a 2005 book, Aaron and Schwartz re-examined rationing in the NHS and found some changes. By 2002, the rates of renal dialysis had increased to five times the rate in 1980, and age-based rationing had declined. In fact, "nearly half of new patients being accepted for renal replacement therapy in the United Kingdom were age sixty-five or over, roughly the same fraction as in the United States." (243) On the other hand, the authors found that access to ICU beds continued to be much more limited in the U.K. than in the United States. (244) As to hip replacements, they noted that even as late as 2002, the average waiting time for a hip replacement was seven to nine months, but by 2004, the Labour party had reduced the average wait to four months for those treated. (245) Moreover, many hip surgeries, twenty-five percent, were done privately, either in NHS pay beds or private hospitals. (246) Although the combined angioplasty-CABG rate had increased significantly in the U.K., by 2002, it was still only one quarter the U.S. rate. (247) Regarding CT scans, in 2001, less than one-fourth as many CT scans were being performed in the U.K. compared to the U.S., excluding those performed in private facilities in both countries. (248) Beginning in 2001, the Labour government increased the number of CT scanners by fifty percent over the next three years. (249) As for MRI machines, the U.S. had many more per capita in 2001 than the U.K., and the procedure rate in the U.S. was more than five times that in England. (250) There was also a shortage of radiologists in the United Kingdom. (251)

There is some evidence that managed care organizations in the United States perform better than the NHS. "[H]ealth care costs per capita in Kaiser and the NHS are similar to within 10% and that Kaiser's performance is considerably better in certain respects, particularly access to specialist diagnosis and treatment and hospital waiting times." (252) Further, it may be that, "the NHS can learn from U.S. managed care organi[z]ations on improving care for people with chronic conditions." (253)

In the 1997 White Paper, the Labour government proposed creating the National Institute of Clinical Excellence ("NICE") to "promote clinical and cost-effectiveness by producing clinical guidelines and audits, for dissemination throughout the NHS." (254) NICE was established in 1999 as an "independent, government-funded organization that advises the British National Health Service." (255) Prior to 2002, the impact of NICE decisions on health authorities was limited because they were not required to adopt its recommendations. (256) Since 2002, however, the NHS has been required to pay for NICE approved treatment and medications; whereas, usually, the NHS does not provide treatment and medications that are not NICE approved. (257) The creation and empowerment of NICE was part of the Labour shift to increased regulatory oversight; prior to the creation of NICE, rationing was accomplished primarily through local decisions by GPs and hospital consultants rather than through NICE's formalized evidence based approach. (258)

NICE has been controversial primarily because of its use of cost-effectiveness to determine whether the NHS should pay for a drug or device. (259) In 2007, NICE's refusal to approve the use of Aricept, a drug utilized in the treatment of Alzheimer's disease was challenged in court. (260) NICE had approved its use for treatment of moderate Alzheimer's, but not for early or late stage Alzheimer's. (261) Traditionally, its analysis has been cloaked in secrecy, but in a 2008 decision involving Aricept, an appellate court held that NICE was required to reveal the way in which it reaches its decisions, including the computer models it uses to assess cost-effectiveness. (262) Subsequently, in October 2010, NICE announced that it had "squashed" its prior recommendations on Aricept and was now recommending it for use earlier stages of the disease. (263)

Some of NICE's refusals to approve cancer drugs have similarly been very contentious. In 2008, NICE announced that it would not approve certain drugs for the treatment of kidney cancer because of their cost, despite the fact that clinical research showed the drug's effectiveness. (264) Likewise, in 2009, NICE refused to approve a drug for the treatment of breast cancer because of cost, again despite evidence of some clinical effectiveness. (265) Although its approval of drugs and treatment may put significant cost pressures on PCTs, NICE is not supposed to take the resource constraints of PCTs into account in conducting its evaluations. (266)

In October 2010, the Coalition government indicated that that it would remove NICE's controversial power to decide that drugs should not be provided based on cost-effectiveness determinations. (267) The Coalition government also announced increased funding for cancer drugs to fulfill Prime Minister David Cameron's campaign promise of a new "value-based" regime of negotiated drug pricing. (268) Coupled with the recent announcement that the government intends to abolish the PCTs and empower physicians to make treatment decisions, discussed supra, it seems that the British government is abandoning explicit rationing through a public and transparent process in favor of a regime of implicit rationing.

III. Health Care Rationing in the United States after Health Care Reform

Rationing may be more difficult for the government to achieve in the United States than in Britain because of significant institutional dissimilarities between the United States with its Presidential system and the parliamentary system in Britain; thus, sweeping policy changes are more difficult in the former. (269) Political parties in the United States are weaker than parties in Britain, and legislators in the United States are more concerned about responding to their constituents' concerns than in pleasing political leaders in their own party. (270) This may make it more difficult for United States party leaders to coerce their members to take unpopular votes on issues like reducing health care costs in public programs.

In addition, there is less of a consensus on health policy between political parties in the United States as compared to Britain, and there are significant differences between the Republican party in the United States and the Conservative party in Britain. The former has much stronger libertarian leanings, while the latter has a stronger communitarian tradition with more of a focus on economic egalitarianism. (271) As seen in the last campaign in Britain, the Conservative party leader David Cameron promised not only to support the NHS but to expand it. (272) On the other hand, in the United States, there have been fundamental differences in approach with Republicans generally focused more on market-based solutions, while Democrats are more inclined to expand the public sector. (273) There are also differences between voters self-identifying as Republicans and Democrats, with the former generally much less supportive of the expansion of government health care programs. (274) Moreover, a public choice model suggests that in systems allowing private purchase of health care services outside the public sector, higher income voters will favor reduced public expenditures. (275)

Some proponents of market-based approaches to health care reform have questioned the political viability of rationing schemes in the United States. Sally Pipes, CEO of the Pacific Institute, argued that rationing similar to that in the British system may be an intended result of health care reform in the United States, but she then questioned whether Americans will accept it in light of the managed care backlash of the 1990s, in which limits on choice were rejected despite the fact that costs were cut without compromising aggregate quality. (276) Certainly, it is not clear at this time that voters in the United States will accept health care rationing. The possible deprivation of future health care benefits in Medicare will likely continue to be an important issue for older voters in the United States. (277) In addition, PPACA will greatly expand the number of families on Medicaid and provide significant subsidies to many purchasing insurance through the state-based exchanges (278) With more voters than ever dependent on public funding for their health care, politicians in both parties may be very reluctant to embrace rationing schemes in government programs. And of course, explicit rationing schemes with transparent consideration of issues in public forums are the most vulnerable to politically-motivated attacks.

The ongoing debate about the possible role of comparative effectiveness research in health care reform illustrates the political difficulty of rationing health care. In 2007, the CBO issued a report indicating that increased federal funding for comparative effectiveness research could result in reduced health care expenditures in federal programs without adverse effects on the aggregate quality of health care. (279) The 2009 federal stimulus legislation created the Federal Coordinating Council for Comparative Effectiveness Research ("FCCCER") to fund comparative effectiveness research and disseminate findings. (280) But the proposal to create the FCCCER engendered a considerable negative reaction. (281)

The rationing debate continued during the lead up to health care reform. Atul Gawande, a surgeon at Brigham and Women's Hospital in Boston, wrote an article focusing on the inappropriate use of resources, exemplified by the inexplicably high costs of treatment for Medicare beneficiaries in McAllen, Texas, without any improvements in overall quality. (282) On the other hand, Governor Sarah Palin accused the Obama administration of intending to ration care for the disabled and dying. (283) Likewise, in a Wall Street Journal article, Harvard economist Martin Feldstein argued that the Obama administration was intending to use comparative effectiveness research to ration health care. (284)

While PPACA terminated the FCCCER, (285) it provided for the establishment of the Patient Centered Outcomes Research Institute ("PCORI") with funding to conduct and support comparative effectiveness research. (286) The new institute is a non-profit corporation, rather than a governmental agency. (287) Perhaps in response to concerns about rationing, PPACA expressly precludes the Secretary of the Health and Human Services ("HHS") from relying solely on comparative effectiveness research to deny coverage (288) or from using PCORI sponsored comparative effectiveness research "in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, nondisabled, or not terminally ill." (289) But PPACA allows the Secretary to use findings to compare the effectiveness of treatments in extending life "due to the individual's age, disability, or terminal illness." (290) The Secretary is also precluded from using comparative effectiveness "with the intent to discourage an individual from choosing a health care treatment based on how the individual values the tradeoff between extending the length of their life and the risk of disability." (291) Despite these limits, the Secretary is not barred from making coverage determinations based upon the comparative effectiveness "in extending an individual's age, disability, or terminal illness. (292) Rather, these provisions have been interpreted to prohibit the PCORI "from developing or using cost-per-QALY ["Quality adjusted life years"] thresholds," and these provisions have been decried as reflecting "a certain xenophobia toward the kinds of approaches used in Britain, where the National Institute of Health and Clinical Excellence makes recommendations about technologies and services on the basis of cost-per-QALY thresholds." (293)

The essential characteristics of the United States health care system prior to the Patient Protection and Affordable Care Act were: (1) mixed public and private financing and delivery of health care; (294) (2) no universal access, up to 50.7 million were uninsured in 2010; (295) and (3) most private insurance being employment linked. (296) While PPACA expands health insurance access through the expansion of the Medicaid program and provides public subsidies for the purchase of policies from private insurers through the insurance exchange, it also preserves employment-based insurance. Ironically, this continued reliance on employment-based insurance may make it more difficult to impose rationing in the Medicare program because the standard of care for all is influenced by the care provided through relatively generous employment-based plans. Thus, too great a discrepancy between the levels of care in the employment-based plans as compared to Medicare is bound to breed resentment and create a political backlash. This is particularly true because Medicare is the predominant source of health care financing for members of the middle class that have reached the age of 65; many of them previously had employment-based health insurance and expect coverage through Medicare that is comparable to that coverage.

A. Overview of Key Provisions of PPACA

Some of PPACA's key provisions are: (1) the creation of state-based insurance exchanges, (2) insurance reforms, (3) an individual mandate, (4) premium subsidies for some to purchase insurance through the exchanges, (5) subsidies for small employers to provide insurance for their employees, (6) pay-or-play requirements for larger employers, and (7) Medicaid expansion with aid to the states to cover most of these costs. (297)

PPACA requires the states to establish exchanges to facilitate individuals and small businesses in purchasing "qualified health plans." (298) Non-profit or governmental agencies may administer these exchanges. (299) Individuals and small businesses with up to one-hundred employees can purchase qualified health plans through the exchange when the state exchanges begin operating in 2014. (300) After 2017, states can permit businesses with more than one-hundred employees to purchase coverage through the exchanges. (301) Only "qualified Health Plans" that include an "essential health benefits" package will be offered through the exchanges. (302) In the exchanges, there will be four categories of plans offered (bronze, silver, gold, and platinum), all including the essential benefits package as defined by the statute and yet to be promulgated regulations, with coverage levels ranging from sixty percent to ninety percent of the costs, (303) plus a separate high deductible catastrophic plan that is only available in the individual market for those under the age of thirty. (304)

With the exception of "grandfathered" plans, all small group and individual plans offered both within and outside of the exchanges will have to offer at least the "essential health benefits" package. (305) This package is supposed to include the elements of a typical employer plan, (306) but PPACA gives the Secretary of HHS some discretion in designing the elements included in the baseline plan. (307) The Obama Administration has appointed an independent advisory" group to assist the Secretary in determining these baseline requirements. (308)

As noted in the Washington Post, defining the "essential health benefits" is an important and difficult task; "Draw up a package that is too bare-bones and millions of Americans could be deprived of meaningful health coverage when they need it most--undercutting a central goal of the health care law. Add in too many expensive benefits and premiums could spike to unaffordable levels." (309) If the plans become too expensive, then many people will opt not to buy health insurance and pay the free that the individual mandate requirement imposes. (310) In addition, a generous package will increase the cost for the government. Jonathan Gruber, a health care economist, told the advisory group that, "a 10 percent rise in the cost of the essential benefits package would increase the cost of government subsidies by 14.5 percent, or $67 billion; while reducing the share of the insured by 4.5 percent, or 1.5 million, through 2019." (311)

Some have referred to insurance reforms, premium subsidies, and the individual mandate as the "three-legged stool" of health care reform, i.e., removal of one of these legs would result in the collapse of PPACA. (312) This analysis may be critical as there have been several constitutional challenges to the individual mandate. (313) At this writing, two federal district courts have upheld the constitutionality of the mandate, (314) and two have declared it unconstitutional. (315)

PPACA's insurance reforms will effectively end medical underwriting in group and individual markets. PPACA explicitly prohibited lifetime caps on "essential health benefits" upon enactment. (316) There is also a prohibition on annual limits for "essential health benefits," but for plan years prior to January 1, 2014, insurers may impose a "restricted annual limit," which the Secretary has the authority to define. (317) These provisions do not proscribe limits on benefits not included within the scope of the "essential health benefits." (318) Beginning in 2014, there is a ban on the use of preexisting condition limitations. (319) Guaranteed issuance and renewal is required. (320) Moreover, a regime of adjusted community rating will be imposed on insurers--permissible bases for rating are age ratio, limited to a ratio of 3:1, rating area, family size, and tobacco use, limited to a ratio of 1.5:1. (321) There will also be risk adjustment required so that states will compensate plans with high actuarial risk and firms with lower risk enrollees will be penalized. (322)

The purpose of medical underwriting and experience rating is to place individuals and groups in risk pools commensurate with their expected use, and because private insurance markets suffer from adverse selection, individuals are more acutely aware of their use of future services. (323) Thus, the effect of community rating, placing everyone in the same risk pool, raises premiums for the young and healthy but lowers them for the old and sick. (324) This community rating, coupled with other insurance reforms, exacerbates the adverse selection problem and provides an incentive for low risk individuals to wait until they are sick to purchase insurance.

Accordingly, PPACA requires providers of "minimum essential coverage" to report health insurance coverage status of individuals insured by them annually to the Internal Revenue Service ("IRS"). (325) Moreover, in an effort to mitigate the effects of low risk individuals opting out of insurance, it will impose a "shared responsibility payment" on individuals for each month they fall to have "minimum essential coverage" for themselves and their dependents. (326) By 2016, the penalty for each month without insurance during the year is the greater of 1/12th of $695 up to a maximum of three times that amount ($2,085) per family or 1/12th of 2.5% of annual "household income." (327) The total amount cannot exceed the cost of the national average premiums for the bronze plan offered through the insurance exchanges. (328) Proponents argue that this individual mandate will eliminate adverse selection and incentivize insurers to develop more efficient delivery systems. (329)

PPACA is patterned after health care reforms Massachusetts adopted in 2006, which also included an individual mandate. (330) The Massachusetts Division of Insurance recently released a report indicating that the number of consumers who are gaming the system has increased, namely, individuals who buy health insurance when they need an expensive medical procedure but drop it thereafter. (331) This tactic increases premiums and suggests that the individual mandate has not worked in Massachusetts. (332) However, others have argued that the mandate is adequate based on the Massachusetts experience. (333) A 2010 report found that compliance with the insurance mandate and reporting requirement was strong in Massachusetts. (334)

Massachusetts is considering legislation limiting enrollment periods to solve the gaming problem. (335) At the federal level, adopting regulations that limit enrollment periods could similarly address this problem. PPACA authorizes the Secretary to provide for an initial enrollment period and "annual open enrollment periods" for exchange-based policies. (336) If the Secretary implements regulations that limit enrollment to one annual enrollment period, this could provide strong incentives for the purchase of insurance, even if the individual mandate is declared unconstitutional or otherwise proves inadequate to the task of incentivizing the purchase of insurance. Without this limitation on enrollment, however, individuals may have more of an incentive to wait until they are sick to buy insurance, which would be possible under the insurance reforms.

The existence of the individual mandate further necessitates premium subsidies so that individuals may afford coverage. (337) Thus, PPACA provides refundable and advanceable premium credits pegged to the silver plan for those with incomes between 133-400% of the federal poverty level ("FPL") for purchase of insurance on the exchanges according to a sliding scale. PPACA also limits premiums to a percentage of income ranging from 2%, for those making between 100% and 133% of FPL, to 9.5% for those making between 300-400% of FPL. (338) In addition, certain low income individuals enrolling in silver plans through the exchange may qualify for cost-sharing subsidies to assist them in paying deductible and co-pays. (339)

Small employers with no more than twenty-five employees and average annual wages of less than $50,000 are provided a tax credit for a limited period of time for the purchase of insurance to cover their employees. (340) Large employers, defined as an employer with at least fifty employees, that do not provide an opportunity to enroll in a plan that provides minimum essential coverage and have at least one employee receiving a premium subsidy to purchase a plan through the exchange, are assessed a penalty of $2000 per year, multiplied by the number of employees less thirty. (341) Large employers that offer coverage, but have at least one full-time employee receiving a premium tax credit, are assessed the lesser of $3,000 per year for each employee receiving a premium credit or $2,000 for each full-time employee. (342)

There has been controversy over the impact on large employers of the aforementioned provision, known as the "pay-or-play" provision. Employers with lower wage employees may have an incentive to dump their employees on the exchange and pay the fine, while employers with higher wage employees may have an incentive to retain their insurance plans. (343) On the other hand, there is little evidence that the pay-or-play mandate San Francisco adopted in 2006 resulted in employers dropping health care coverage during the first year of its implementation. (344)

One of the most important means that PPACA employs to improve access to the health care is the expansion of the Medicaid program. PPACA expands Medicaid eligibility to all individuals under the age of sixty-five with incomes below 133% FPL. (345) These newly eligible adults are all entitled to "benchmark" or "benchmark equivalent" coverage, rather than full Medicaid benefits. (346)

Due to PPACA's enactment, in September 2010, CMS actuaries released a study examining the cost projections for 2009-2019, predicting "that the level of health care spending for the formerly uninsured will nearly double as a result of their gaining coverage through exchange plans." (347) In light of the Medicaid expansion, they projected that Medicaid and the Children's Health Insurance Program ("CHIP") spending would increase 17.4% in 2010, 11.1% more than before PPACA was enacted. (348) On the other hand, they also projected that PPACA would slow growth in Medicare spending due to reductions in providers' annual payment adjustment updates, substantial cuts in payments to Medicare Advantage Plans, and the impact of changes adopted by the Independent Payment Advisory Board. (349) Accordingly, n a letter dated January 6, 2011 to Speaker of the House John Boehner (R-MI), the Congressional Budget Office ("CBO") provided a preliminary estimate that repealing PPACA "would probably increase federal budget deficits over the 2012-2019 period by a total of roughly $145 billion." (350) As discussed in the next section, notwithstanding the CBO's estimates, it is not clear at this time that PPACA will achieve significant cost savings in the Medicare program.

B. Possible Cost Reduction Mechanisms Under PPACA

In a recent article, Professor Jacqueline Fox of the University of South Carolina School of Law argues that Medicare is already engaged in stealth rationing through the Centers for Medicare and Medicaid Services' the use of National Coverage Determinations ("NCDs"), in which CMS refuses to cover expensive new technologies; CMS nevertheless denies taking cost into account in making decisions relating to coverage. (351) Fox further argues that, "Medicare needs to be changed, giving CMS power and obligation to openly consider the costs of new medical treatments before covering them." (352) She calls for CMS to consider cost-effectiveness in a public and transparent manner. (353) While Fox is certainly correct in her observation that costs in the Medicare program are unsustainable and must be reduced, it is unlikely that Congress will give CMS the power to ration health care using a cost-effectiveness analysis, and even it did so in a reflexive response to cost overruns, it would not be politically sustainable over the long run.

At the time the Medicare program was created, at least one member of Congress foresaw the cost troubles that are inherent in the program's structure. Robert Helms, an economist and health policy expert at the American Enterprise Institute, has noted that Representative Wilbur Mills (D-AR), the powerful Chairman of House Ways and Means Committee at the time, was concerned that Medicare would threaten the fiscal solvency of Social Security. (354) To protect Social Security, Mills believed that Medicare should have its own separate trust fund financed by an addition to the payroll tax for social security. (355) As to Medicare, Chairman Mills stated:
   The central fact which must be faced on a proposal to provide a
   form of service benefit--as contrasted to a cash benefit is that it
   is very difficult to accurately estimate the cost. These
   difficult-to-predict future costs, when such a program is part of
   the Social Security program, could well have highly dangerous
   ramifications on the cash
   benefits proportion of the Social Security system. (356)

With the benefit of hindsight, it is clear that Chairman Mills' concerns about the difficulty of controlling costs in the Medicare program were justified. Helms observes that, "In 1964 the administration projected that Medicare in 1990 would cost about $12 billion in 26 years (which included an allowance for inflation); the actual cost was $110 billion." (357) PPACA proponents promise it will provide mechanisms to control Medicare costs. (358) We can only hope that they are correct. Nonetheless, despite the CBO estimates, discussed supra, there are reasons for concern. The probability that PPACA's cost containment mechanisms will be effective in reducing costs over the long run is doubtful. As long as Medicare is a service benefit program, it will be very difficult, politically, to control costs. This section will discuss possible PPACA mechanisms for reducing costs in the Medicare program: the Independent Payment Advisory Board, Accountable Care Organizations, Patient Centered Medical Homes, and Electronic Health Records.

1. Independent Payment Advisory Board

PPACA establishes the Independent Payment Advisory Board ("IPAB") for the purpose of reducing the per capita rate of growth in Medicare spending. (359) The board is to be composed of fifteen full-time members who are health care experts drawn from various fields. (360) Beginning in 2014, IPAB is required to make annual recommendations to Congress to reduce per capita growth rates when these costs exceed a targeted per capita growth rate that the Chief Actuary of CMS sets. (361) These recommendations will be implemented unless subsequent congressional action blocks them. (362) Notably, a 3/5 vote in the Senate is required to change the IPAB recommendations. (363) But there are some significant limitations on the nature of these recommendations. PPACA provides that these recommendations, "shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums[,] ... increase Medicare beneficiary cost-sharing[,] ... or otherwise restrict benefits or modify eligibility criteria." (364) Prior to 2020, the recommendation also cannot include cuts in payment rates for hospitals and suppliers, which PPACA already targets. (365)

The CBO, in a December 19, 2009 letter to Senator Reid, estimated that IPAB would produce an additional $28 billion in savings for the Medicare Program between 2015 and 2019. (366) A subsequent letter to Senator Reid clarified the CBO estimate, noting that savings after 2019 would be lower because of a higher threshold for recommendations, but the legislation would still reduce the growth rate in Medicare costs from 8% to 6% per annum during the next two decades. (367) In addition, in a letter to then Speaker Pelosi, the CBO estimated the IPAB would save $15.5 billion for the 2015 to 2019 period. (368) Moreover, the Chief Actuary for CMS estimated savings of $24 billion through 2019 due to IPAB. (369)

Some have raised questions as to whether these savings will be realized. Professor Timothy S. Jost of Washington and Lee University School of Law notes that the requirement of annual recommendations may focus the IPAB's attention on short-term fixes, rather than on longer-term measures that will be more effective in bending down the cost curve. (370) Jost further observes that the Senate can avoid the 3/5 change requirement by simply passing independent Medicare legislation. (371) He also comments that it may be difficult to constrain payments to providers in the Medicare program if private payments are not similarly constrained because this may cause more providers to refuse to participate in Medicare. (372) Further, a 2010 Congressional Research Service report states that, "Changes that reduce costs by improving the health care delivery system and health outcomes often require several years before savings may occur and the Board may have to find immediate savings, therefore, Board proposals may skew toward changes in payments." (373)

Provider reimbursement cuts that IPAB requires are highly likely to be "politically infeasible" and overridden by Congress. (374) Professor David Hyman, Director of the Epstein Program in Health Law and Policy at the University of Illinois School of Law, doubts that IPAB's recommendations will be politically acceptable to Congress; he observes, "nothing prevents Congress from allowing IPAB's recommendations to take effect and then reversing them with a simple majority vote." (375) Michael Tanner, a health policy expert at the Cato Institute, likewise notes that in light of the restrictions on IPAB, it will have few options other than reducing payments to physicians and that would likely drive more physicians out of the program. Accordingly, he concludes that it "will end up as neutered as previous attempts to impose fiscal discipline on government health care programs." (376) With all the constraints on its actions, and the possibilities for Congress to void any cuts proposed, it is unlikely IPAB will be successful in reducing costs in the Medicare program. Imposing additional cuts on payments to physicians to significantly reduce costs in the Medicare program will require the support of Congress, and this in turn, requires political will that is lacking at the present time.

2. Accountable Care Organizations

PPACA requires the Secretary to establish a "shared saving program" to promote "accountability for a patient population" and coordination of services provided under Part A (hospital) and Part B (physicians) of the Medicare program. (377) Under this program, groups of providers known as Accountable Care Organizations ("ACOs") may receive a share of efficiency gains if they meet "quality performance standards." (378) ACOs consist of providers that have established "a mechanism for shared governance," including hospitals, networks of individual practices, group practices, etc., and ACOs are "willing to become accountable for quality, cost, and overall care of Medicare beneficiaries assigned to it." (379) They are required to have a legal structure that allows them to distribute shared savings to participating providers. (380) They must have an adequate number of primary care providers for the number of Medicare beneficiaries served. (381) They must also have processes in place to promote evidence-based medicine and meet "patient-centeredness criteria" to be defined by the Secretary. (382) The Secretary is permitted to use a variety of payment models for ACOs, including the traditional Medicare fee-for-service ("FFS") model or a partial capitation model. (383)

According to a Congressional Research Services report, ACOs "are modeled on integrated delivery systems such as the Mayo Clinic, Geisinger Health System, Kaiser Permanente, and Intermountain Healthcare. (384) In 2008, the CBO estimated that if 20% of FFS Medicare beneficiaries participated in ACOs by 2014 and 40 percent by 2019, the reduction in Medicare spending would be $5.3 billion over the 2010-2019 period. (385) It is possible that significant savings could result from the use of ACOs in the Medicare program with only modest changes in provider behavior. (386) Moreover, "Developing and testing accountable care organizations, alone and in combination with other reforms such as patient-centered medical homes, represents a critical step away from purely volume-driven payments and toward payments emphasizing value." (387) On the other hand, there will be significant costs and technical expertise involved in establishing ACOs. (388) It is further likely that the efforts to set up ACOs will result in increased hospital mergers and provider consolidations that could in turn diminish competition and give providers greater leverage in negotiations, thereby driving up prices. (389) While it is possible that ACOs could exert some downward pressure on costs, they "are not a panacea for health care spending control." (390) At this time, it appears unlikely that the transition to ACOs will significantly reduce costs in the Medicare program unless ACOs become widespread and are paid a sufficiently low capitation rate so as to force them to employ cost effectiveness analysis. But it is unlikely Congress would be willing to permit this.

3. Patient Centered Medical Homes and Electronic Health Records

PPACA could achieve cost reductions and improvements in quality in the Medicare program through the use of patient centered medical homes ("PCMHs") and a transition to electronic health records (EHRs), but the potential savings from these innovations are uncertain. The PCMH model is an approach to providing comprehensive primary care where a physician coordinates the care that a team of professionals provides. (391) PPACA creates the Center for Medicare and Medicaid Innovation within the Centers for Medicare and Medicaid Services ("CMS") to test innovative service models including PCMHs. (392) Hallmarks of PCMHs are the use of evidence-based medicine, use of EHRs to coordinate care, enhanced access, and an emphasis on continuous quality improvement. (393) PCMHs have been touted as having the potential to improve the cost effectiveness of primary care "especially for ... chronic health conditions." (394) A recently published study of the use of PCMHs at Group Health in Seattle indicates they may have the potential to save money and improve quality. (395) But there is also evidence suggesting, "that moving to a patient-centered medical home approach takes substantial time and considerable upfront investment." (396) The federal government is now offering incentive payments to assist providers in transitioning to EHRs, (397) but a recent Harvard study found that cost savings from EHRs are unlikely. (398)

IV. Conclusion

The debate over the impact of PPACA on Medicare costs illustrates the constraints of the iron triangle or inconsistent triad. While in theory it may be possible to increase health care access, reduce costs, and improve quality, in practice it is virtually impossible. The reduction of costs in public programs without endangering aggregate quality would have to be based on across the board rigorous application of cost-effectiveness analysis that would result in the denial of beneficial treatments to individuals. It is unlikely that Congress has the political will to impose such a regime, and then there is also a question of fairness: is it appropriate to enforce such a regime in the public sector while continuing to provide tax-subsidies for employment-linked insurance and premium subsidies for purchase of private insurance on the exchanges? It could be argued that basic fairness requires imposition of cost-effectiveness analysis in both the public and private sectors, and this is an even more remote possibility.

The actions of the IPAB, the transition to ACOs, the use of PCMHs, and the deployment of EHRs will probably not be sufficient to significantly bend the Medicare cost curve downward. Achieving meaningful cost savings in the Medicare program may not be possible without radical changes to the structure of the program and its eligibility requirements. For example, Paul Ryan (R-WI) and Alice Rivlin, formerly the director of the Office of Management and Budget ("OMB") under President Clinton and who is now at the Brookings Institute, have proposed converting Medicare from a service benefit program to a voucher program, as well as gradually raising its eligibility requirement from age sixty-five to sixty-seven. (399) The CBO's preliminary, estimate indicates that adopting their proposals could achieve significant savings. (400) If a considerable segment of the American public recognized the need for fundamental reform of the Medicare program, Congress might be willing to take this step. This would require a bipartisan consensus on the necessity, of fundamental reforms and an extensive conversation between the American people, the President, and the leadership of both the Senate and House. But again, shifting to a voucher program and raising the eligibility age to reduce costs will require significant political will on the part of Congress and this may be lacking.

While there is near universal agreement among policy experts in the United States and Britain of the need to contain costs in publicly funded programs, rationing remains an unappealing prospect for politicians. While Britain has successfully employed implicit rationing for decades, it has now given up on explicit rationing by NICE. In the United States, rationing is even more problematic. Certainly, it is unlikely that Congress will embrace an explicit rationing scheme, and even the tacit endorsement of implicit rationing measures could be politically hazardous. Rationing is certainly the third rail of American politics, and the cost controls in PPACA may not be sufficient to save us from ourselves.

(1) Peter Singer, Why We Must Ration Health Care, N.Y. TIMES MAGAZINE, July 15, 2009, at MM38, available at 1&r=1.

(2) PETER A. UBEL, PRICING LIFE: WHY IT'S TIME FOR HEALTH CARE RATIONING xvii (MIT Press 2001). Ubel also discusses the controversy over the definition of rationing. He notes:
   The medical literature contains numerous casual and formal
   definitions of rationing. Some experts state that health care
   rationing involves an 'inequitable distribution of resources based
   on inability to pay.' Others define it as 'the equitable
   distribution of scarce resources[,]' as the 'denial of commodities
   to those who have money to buy them[,]' 'the deliberate and
   systematic denial of certain kinds of services even when they are
   known to be beneficial because they are deemed to be too
   expensive[,]' and 'any set of activities that determine who gets
   needed medical care when resources are insufficient to provide for

Id. at 12 (internal citations omitted).


(4) Sarah Palin, Concerning the 'Death Panels," FACEBOOK (Aug. 12, 2009, 8:55 PM), 116471698434.

(5) Angle Drobnic Holan, Politifacts Lie of the Year: 'Death Panels,' POLITIFACT.COM (Dec. 18, 2009, 5:15 PM), http://p~litifact.c~m/truth-~-meter/artide/2~~9/dec/18/p~~itifact-~ie-year- deathpanels/ (stating that visitors of overwhelmingly voted the Palin Facebook post as the biggest lie of the year).

(6) Palin, supra note 4 (referring to America's Affordable Health Choices Act).

(7) America's Affordable Health Choices Act, H.R. 3200, 111th Cong. [section] 1233 (hhh) (1) (E) (2009), available at

(8) Charles Lane, Undue Influence, WASH. POST, Aug. 8, 2009, wrpdyn/content/article/2009/08/07/AR2009080703043.html (last visited Apr. 19, 2011).

(9) Jay Solomon, Whitehouse Ranks New End-of-Life Talks to Bush Polio, WALL ST. J., Dec. 27, 2010, SB10001424052970203568004576043970989095748.html?KEYWORDS=end-of-life. The Medicaid regulation states that it will pay for physicians to provide "voluntary advance care planning" and defines it as follows:

Voluntary advance care planning means, for purposes of this section, verbal or written information regarding the following areas:

(i) An individual's ability to prepare an advance directive in the case where an injury or illness causes the individual to be unable to make health care decisions.

(ii) Whether or not the physician is willing to follow the individual's wishes as expressed in an advance directive.

Medicare Program Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2011, 75 Fed. Reg. 73170, 73614 (Nov. 29, 2010) (to be codified at 42 C.F.R. 410.5 (a)).

(10) Robert Pear, U.S. Alters Rule on Paying for End-of-Life Planning, N.Y. TIMES, Jan. 4, 2011, at A15, available at

(11) Betsy McCaughey, Obama's Health Rationer-in-Chief, WALL ST. J., Aug. 27, 2009, SB10001424052970203706604574374463280098676.html (last visited Apr. 19, 2011).

(12) Govind Persad et al., Principles for Allocation of Scarce Medical Interventions, 373 LANCET 423, 428 (2009), available at

(13) Id. at 428.

(14) Id. at 429.

(15) McCaughey, supra note 11.

(16) Ezekiel J. Emanuel & Victor F. Fuchs, The Perfect Storm of Utilization, 299 J. AM. MED. ASSOC. 2789, 2789-90 (2008), available at 20Perfect%20Storm%20of%20Overutilization.pdf.

(17) Id. at 2789.

(18) Ezekial Emanuel, Where Civic Republicanism Meets Deliberative Democracy, HASTINGS CENTER REP. (Nov.-Dec., 1996), at 12. Dr. Ezekiel states:
   [S]ervices that promote the continuation of the polity-those that
   ensure healthy future generations, ensure development of practical
   reasoning skills, and ensure full and active participation by
   citizens in public deliberations-are to be socially guaranteed as
   basic. Conversely, services provided to individuals who are
   irreversibly prevented from being or becoming participating
   citizens are not basic and should not be guaranteed. Id. at 13.

(19) Editorial, Death Panels Revisited, WALL ST. J., Dec. 29, 2010, 001424052970203731004576045702803914780.html (criticizing how both Republicans and Democrats "[behave] as if every medical issue is a political matter that the government or some technocratic panel can and should decide").


(21) Id.

(22) Id. at 171-72.

(23) Id. at 172.

(24) David Leonhardt, After the Great Recession, N.Y. TIMES MAGAZINE, Apr. 28, 2009, at MM36, available at http: //

(25) Id.

(26) ORG. FOR ECON. CO-OPERATION & DEV., HEALTH DATA 2010-SELECTED DATA (2011), (last visited Apr. 19, 2011).

(27) U.K. OFFICE FOR NAT'L STATISTICS, LIFE EXPECTANCY (2011), 168 (last visited Apr. 19, 2011).


(29) See generally David J. Kerr & Mairi Scott, British Lessons on Health Care Reform, 361 NEW ENG. J. MED. e21 (1), e21 (2) (2009), available at

(30) See id. at e21(2)-e21(3).

(31) "PPACA" as used in this paper refers to the Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119, as amended by the Health Care and Education Reconciliation Act of 2010 ("HCERA"), Pub. L. No. 111-152, 124 Stat. 1029 (codified as amended in scattered sections of 42 U.S.C.)

(32) See generally MATTHEW BUETTGENS, ET AL., AMERICA UNDER THE AFFORDABLE CARE ACT (2010), available at (discussing impact of Medicaid expansion and premium subsidies available through exchanges on insurance coverage); Christopher J. Truffer et al., Health Spending Projections Through 2019: The Recession's Impact Continues, 29 HEALTH AFFAIRS 522 (2010) (discussing impact of baby boomer aging into Medicare on health care spending).

(33) See Ubel, supra note 2, at 17.

(34) Cf. Emanuel, supra note 18, at 12 (explaining the economics that make health care rationing necessary under a system of universal health care).

(35) See FED. TRADE COMM'N & THE DEP'T OF JUSTICE, IMPROVING HEALTH CARE: A DOSE OF COMPETITION 6 (2004), available at um.pdf ("Health policy analysts commonly refer to an 'iron triangle' of health care. The three vertices of the triangle are the cost, quality, and accessibility of care"); WILLIAM L. KISSICK, MEDICINE'S DILEMMAS: INFINITE NEEDS VS. FINITE RESOURCES 150 (Yale Univ. Press 1994) ("While needs are infinite, resources are finite. The Iron Triangle of Health care cannot be ignored"). See generally JOHN BUTLER, THE ETHICS OF HEALTH CARE RATIONING: PRINCIPLES AND PRACTICES (1999).

(36) FED. TRADE COMM'N & THE DEP'T OF JUSTICE, supra note 35, at 6.


(38) See Laura Donnelly, Patients Denied Hip Surgery and Fertility Treatment amid NHS Cash Crisis, THE TELEGRAPH, Dec. 4, 2010, surgery-and-fertility-treatment-amid-NHS-cash-crisis.html (last visited Apr. 19, 2011).

(39) See, e.g., Health Reform in Action: The Affordable Care Act, (last visited Apr. 19, 2011).

(40) GOP.GOV, Obamacare Six Months Later ..., (Sept. 22, 2010),,gov/policynews/10/09/22/obamacare-six-months-later (last visited Apr. 19, 2011).

(41) See Robert Pear & Reed Abelson, Promise of Renewed Battle over Reach of Health Care, N.Y. TIMES, Nov. 4, 2010, at B4, available at

(42) Jennifer Haberkorn, Deal Reached to Fix Medicare Doc Pay, POLITICO, Dec. 6, 2010, (last visited Apr. 19, 2011).

(43) See JOHN BUTLER, supra note 35, at 3.

(44) See Mem'l Hosp. v. Maricopa County, 415 U.S. 250 (1974).

(45) Id. at 269.

(46) Id. at 270.

(47) Id. at 273. Justice Douglas further noted that the durational residency requirement applied not only to indigent persons from out of state but also to those coming from another county in Arizona. Id. at 270. Thus, he identified invidious discrimination against the poor as the problem in the case rather than burdens on interstate travel. Id. at 271. He further observed that Maricopa County had received Hill Burton moneys for hospital construction and concluded a durational residency requirement was not an acceptable criterion for denying care to an indigent under that program. Mem'l Hosp., 415 U.S. at 271-72.

(48) Id. at 274-76; Foreword to Judith R. Lave & Lester B. Lave, Medical Care and its Delivery: An Economic Appraisal, 35 LAW & CONTEMP. PROBS. 252, 252 (1970), available at (containing, in the foreword, the fable 'Gourmand and Food').

(49) Mem'l Hosp., 415 U.S. at 276.

   Consequently, the level of care deemed adequate should reflect a
   reasoned judgment not only about the impact of the condition on the
   welfare and opportunity of the individual but also about the
   efficacy and the cost of the care itself in relation to other
   conditions and the efficacy and cost of the care that is available
   for them.

Id. at 36.







(57) See id. at 19.

(58) See id. at 20-21.

(59) See id. at 18; see also David Orentlicher, Rationing Health care: It's a Matter of the Health Care System's Structure, 19 ANNALS OF HEALTH LAW 449, 455 (2010).

(60) See CALABRESI & BOBBITT, supra note 56, at 22.

(61) See Persad et al., supra note 12, at 12.

(62) See Persad et al., supra note 12, at 12.

(63) See Persad et al., supra note 12, at 12.

(64) Persad et al., supra note 12, at 13.

(65) Orentlicher, supra note 59, at 451.

(66) Orentlicher, supra note 59, at 452-53.

(67) Orentlicher, supra note 59, at 451-53.

(68) Orentlicher, supra note 59, at 454-57.

(69) Orentlicher, supra note 59, at 455.

(70) Orentlicher, supra note 59, at 464.

(71) See FRIEDRICH A. VON HAYEK, THE ROAD TO SERFDOM 106 (Univ. of Chi. Press 2007) (1944). Hayek argued:
   Once it becomes increasingly true, and is generally recognized,
   that the position of the individual is determined not by impersonal
   [market] forces, not as a result of the competitive effort of many,
   but by the deliberate decision of [governmental] authority, the
   attitude of the people toward their position in the social order
   necessarily changes. There will always exist inequalities which
   will appear unjust to those who suffer from them, disappointments
   which will appear unmerited, and strokes of misfortune which those
   hit have not deserved. But when these things occur in a society
   which is consciously directed [i.e., through politics and
   government], the way in which people react will be very different
   from what it is when they are nobody's conscious choice [i.e., in
   the marketplace].


(72) Id. at 106-07.

(73) Dylan Matthews, Hayek on Social Insurance, WASH. POST. (Jul. 9, 2010, 2:57 PM), hayek_on_social_insurance.html (quoting Hayek's The Road to Serfdom in his discussion). As Matthews quoted in part, Hayek argued:
   There is no reason why, in a society which has reached the general
   level of wealth ours has, the first kind of security [i.e.,
   security against 'severe physical privation'] should not be
   guaranteed to all without endangering general freedom. There are
   difficulty questions about the precise standards which should thus
   be assured; there is particularly the important question whether
   those who rely on the community should indefinitely enjoy all the
   liberties as the rest. An incautious handling of these questions
   might well cause serious
   and perhaps even dangerous political problems: but there can be no
   doubt that some minimum of food, shelter and clothing, sufficient
   to preserve health and the capacity to work, can be assured to
   everybody. Indeed, for a considerable part of the population of
   England this sort of security has been achieved.

   Nor is there any reason why the state should not help to organize a
   comprehensive system of social insurance in providing for those
   common hazards of life against which few can make adequate
   provision.... Where, as in the case of sickness and accident,
   neither the desire to avoid such calamities nor the efforts to
   overcome their consequences are as a rule weakened by the provision
   of assistance -where, in short, we deal with genuinely insurable
   risks--the case for the state's helping to organize a comprehensive
   system of social insurance is very strong.... Wherever communal
   action can mitigate disasters against which the individual can
   neither attempt to guard himself nor make the provision for the
   consequences, such communal action should undoubtedly be taken.

Hayek, supra note 71 at 120-21.

(74) See Hayek, supra note 71, at 120-21; see also Rivett, infra note 79.

(75) John Meadowcroft, The British National Health Service: Lessons from the "Socialist Calculation Debate," 28 J. MED. & PHIL. 307, 316 (2003) (arguing that the allocation of resources in a planned economy becomes increasingly inefficient).

(76) See Will Wilkinson, Let There Be Prices, DEMOCRACY IN AMERICA, (Jan. 14, 2011, 4:15 PM), (discussing Friedrich A. Von Hayek's concept of "the indispensable informational function of the price mechanism") (last visited Apr. 19, 2011). This concept was famously presented in the article, The Use of Knowledge in Society. Id. See generally Friedrich A. Von Hayek, The Use of Knowledge in Society, 35 AM. ECON. REV. 519 (1945) (critiquing the merits of a planned economy).

(77) See Wilkinson, supra note 76. Wilkinson points out that the pricing information is actually curtailed under the Patient Protection and Affordable Care Act, a result that should be repugnant to Hayek's philosophy. See id.

(78) See Geoffrey Rivett, The Start of the NHS, NAT'L HEALTH SERV. HIST., (last visited Apr. 19, 2011) (discussing the history and structure of the NHS).

(79) See Geoffrey Rivett, Establishing the National Health, NAT'L HEALTH SERV. HIST., (last visited Apr. 19, 2011) (examining the financial impact of the NHS).

(80) See AARON & SCHWARTZ, CAN WE SAY NO? THE CHALLENGE OF RATIONING HEALTH CARE, supra note 3, at 18-20 (discussing budget setting procedures in the British health care system).

(81) Patricia Day & Rudolf Klein, Britain's Health Care Experiment, 10 HEALTH AFF. 39, 41 (1991), available at

(82) See id. at 40-41 (discussing the partisan dimensions of health policy in Britain).

(83) John Meadowcroft, Patients, Politics and Power: Government Failure and the Politicization of U.K Health Care, 33 J. MED. & PHIL. 427, 431 (2008) (discussing the policy implications of heath care rationing).

(84) Id. at 442 (arguing that NHS "rationing decisions [do not] ... reflect the ... preferences of individual NHS patients ... [since their preferences cannot] be translated into [a single] public policy").

(85) See SIR WILLIAM BEVERIDGE, SOCIAL INSURANCE AND ALLIED SERVICES para. 426 (1942), as reprinted in 78 BULL. WORLD HEALTH ORG. 847 (2000), available at bwho/v78n6/v78n6a17.pdf.

(86) P. Musgrove, The Influence of the Beveridge Report, 78 BULL. WORLD HEALTH ORG. 845 (2000), available at

(87) Beveridge, supra note 85, at 427.


(89) Id.

(90) Id.


(92) Making Britain Better, BBC NEWS (July 1, 1998), 50/special_report/119803.stm (last visited Apr. 19, 2011). He stated,
   I have examined the Bill and it looks to me uncommonly like the
   first step, and a big one, to national socialism as practiced in
   Germany. The medical service there was early put under the
   dictatorship of a 'medical fuehrer.' The Bill will establish the
   minister for health in that capacity.


(93) Id.

(94) Id.

(95) From Cradle to Grave, BBC NEWS (May 20, 1998), background_briefings/your_nhs/86100.stm (last visited Apr. 19, 2011).


(97) SEC'Y OF STATE FOR HEALTH BY COMMAND OF HER MAJESTY, THE NHS PLAN: A PLAN FOR INVESTMENT, A PLAN FOR REFORM 56 (July 2000), available at [hereinafter 2000 NHS Plan]. The report suggests that because millions of patients every day rely on the skills and judgment of trained medical professionals, the NHS cannot be run from Whitehall. Id.

(98) Geoffrey Rivett, From Cradle to Grave: The First Sixty Years of the NHS, Rethinking the National Health Service, NAT'L HEALTH SERV. HIST., htm (last visited Apr. 19, 2011). As to early health promotion in the NHS, Rivett noted that "although everyone eventually succumbs to one condition or another, it was commonly argued that redistributing funds in favour of prevention could reduce the burden of disease and the costs of the NHS." Id. A series of reports supported this argument on various diseases, however, the public was somewhat hesitant to measures that would reduce the prevalence of disease, while pressing for another course of action that not only was more costly but would also produce fewer results. Id.

(99) J.H. Marks, Reorganization: the first year. Run-Up to Reorganization, 2 BRIT. MED.J. 730, 731 (1975), available at pdf. In effect, regional and area health authorities, consisting of appointed members, would further consult elected professional groups and examined detailed management arrangements. Id.

(100) Roger M. Bartistella & Theodore E. Chester, The 1974 Reorganization of the British National Health Service--Aims and Issues, 289 NEW ENG. J. MED. 610, 611 (1973) (criticizing the NHS because insufficient action had been taken to link up health with social services at that point and suggesting that another reorganization would be necessary to fix the system).

(101) Id. at 613.

(102) Id. at 610.

(103) Id. at 610-11. The reorganization plan was developed with the assistance of McKinsey, an American management consulting firm. Id. at 615.

(104) Leathard, supra note 96, at 39-41.

(105) Marks, supra note 99, at 731.

(106) Battistella & Chester, supra note 100, at 611.

(107) Battistella & Chester, supra note 100, at 612.

(108) Geoffrey Rivett, From Cradle to Grave: The First Sixty Years of the NHS, Clinical Advance and Financial Crisis, NAT'L HEALTH SERV. HIST., (last visited Apr. 19, 2011).

(109) Day & Klein, supra note 81, at 41.

(110) Day & Klein, supra note 81, at 41-42.

(111) Day & Klein, supra note 81, at 45-46.

(112) See Alan Maynard & Karen Bloor, Introducing a Market to the United Kingdom's National Health Service, 334 NEW ENG. J. MED. 604 (1996) (generally noting that the 1991 reforms, which Prime Minister Thatcher's government introduced, sought to contain costs, maintain equity, and at the same time make the allocation of resources more efficient by introducing some features of a market).

(113) See Alain C. Enthoven, Internal Market Reform of the British National Health Service, 10 HEALTH AFFAIRS 60, 65 (1991).

(114) Id. at 65.

(115) Id. at 61.

(116) Id. at 65.

(117) Martin Gaynor, Rodrigo Moreno-Serra & Carol Propper, Death by Market Power." Reform, Competition and Patient Outcomes in the National Health Service 6 (Nat'l Bureau of Econ. Research, Working Paper No. 16164, 2010), available at (last visited Apr. 19, 2011).

(118) Enthoven, Internal Market Reform of the British National Health Service, supra note 113, at 67.

(119) CHRISTOPHER NEWDICK, WHO SHOULD WE TREAT? RIGHTS, RATIONING AND RESOURCES IN THE NHS 246 (Oxford Univ. Press 2d ed., 2005) (examining the economic, political, and legal environment of patients' rights in the NHS).

(120) Id. at 246 (citing Jon Sussex, The Economics of the Private Finance Initiative in the NHS, OFFICE OF HEALTH ECON., 12 (2001), available at

(121) See NEWDICK, supra note 119, at 246.

(122) See Robert J. Blendon & Karen Donelan, British Public Opinion on National Health Service Reform, 8 HEALTH AFFAIRS 52, 55-56 (1989), available at (discussing British public perception of NHS under Thatcher government).

(123) See Day & Klein, supra note 81, at 55.

(124) See Day & Klein, supra note 81, at 53.

(125) Malcolm Dean, Five Candles on NHS-Reforms Birthday Cake, 347 THE LANCET 1035, 1035 (1996).

(126) See id. (arguing statistics are distorted as the numbers are only based on waiting periods that officially start when the patient is placed on a waiting list).

(127) Julian LeGrand, Competition, Cooperation or Control? Tales From The British National Health Service, 18 HEALTH AFFAIRS 27, 31-32 (1999) (discussing the impact of various NHS reforms under Thatcher and others), available at

(128) Id. at 33.

(129) Id. at 32.

(130) Id. at 30-31

(131) See id. at 29.

(132) Id. at 31. "Cream-skimming" refers to the selection of healthier patients for hospitals to treat, intending to protect and maintain certain budgetary funding. LeGrand, supra note 127, at 31.

(133) LeGrand, supra note 127, at 29. Patients could change their general practitioner at will, but they could not change health authorities unless they moved. Id. Accordingly, there was little competition for patients. Id.

(134) LeGrand, supra note 127, at 33 (describing the disincentives for competition among trust hospitals).

(135) LeGrand, supra note 127, at 32.

(136) LeGrand, supra note 127, at 30.

(137) LeGrand, supra note 127, at 32.


(139) Id.

(140) Id. at 7.

(141) Id. at 7.

(142) NEWDICK, supra note 119119, at 61 (citing Main C. Enthoven, In Pursuit of an Improved National Health Service 19 HEALTH AFFAIRS 102 (2000), available at

(143) Enthoven, In Pursuit of an Improving the National Health Service, supra note 142142, at 110.

(144) John Appleby & Ruth Robertson, A Healthy Improvement: Satisfaction With the NHS Under Labour, in BRITISH SOCIAL ATTITUDES 27TH REPORT (2010-2011), available at nat%20british%20social%20attitudes%20survey%20summary%204.pdf.

(145) See infra notes 254-266 and accompanying text.

(146) THE NEW NHS: MODERN, DEPENDABLE, DEP'T OF HEALTH, para. 1.3 (1997), available at (last visited Apr. 19, 2011).

(147) Id. at para. 2.1.

(148) Id. at para. 2.4.

(149) Gaynor, Moreno-Serra & Propper, supra note 117, at 6.

(150) Gaynor, Moreno-Serra & Propper, supra note 117, at 6.

(151) THE NEW NHS: MODERN, DEPENDABLE, supra note 146, at paras. 3.17, 5.19.

(152) THE NEW NHS: MODERN, DEPENDABLE, supra note 146, at para. 3.18.

(153) THE NEW NHS: MODERN, DEPENDABLE, supra note 146; see also Andrew Bindman, Jonathan P.Weiner & Azeem Majeed, Primary Care Groups in the United Kingdom: Quality and Accountability, 20 HEALTH AFFAIRS 132, 133-35 (2001), available at full.pdf+html (discussing structure of PCGs).

(154) THE NEW NHS: MODERN, DEPENDABLE, supra note 146, at para. 5.13; Bindman, Weiner & Majeed, supra note 153, at 133.

(155) THE NEW NHS: MODERN, DEPENDABLE, supra note 146, at para. 6.13-6.14 (firm assurances that responsibilities and quality standards are being met would be required though no one mechanism for ensuring accountability was set out).

(156) THE NEW NHS: MODERN, DEPENDABLE, supra note 146, at para 6.4 (a robust "clinical governance" would emphasize the focus on quality, while the reinvestment of efficiency gains would allow for consistent improvements aligned with local Health Improvement Programs).

(157) NAT'L HEALTH SERV., AUTHORITIES AND TRUSTS, PRIMARY CARE TRUSTS, authoritiesandtrusts.aspx#primar (last visited Apr. 19, 2011). See also OFFICE OF HEALTH ECONOMICS, THE NHS-ORGANIZATION AND STRUCTURE (2002), structure.cfm (last visited Apr. 19, 2011) (describing the structure of PCTs).

(158) NAT'L HEALTH SERV., AUTHORITIES AND TRUSTS, PRIMARY CARE TRUSTS, authoritiesandtmsts.aspx#primar (last visited Apr. 19, 2011). A PCT must ensure that people in their area have enough services and that those services are acceptable, while also ensuring that hospitals dentists, opticians, mental health services, NHS walk-in centers, etc. are provided. Id.

(159) NEWDICK, supra note 119, at 90-91.

(160) NAT'L HEALTH SERV., AUTHORITIES AND TRUSTS, PRIMARY CARE TRUSTS, authoritiesandtrusts.aspx#primar (last visited Apr. 19, 2011).

(161) NEWDICK, supra note 119, at 91.

(162) NEWDICK, supra note 119, at 91.

(163) 2000 HHS Plan, supra note 97.

(164) Patrick Butler, NHS Reform: The Issue Explained, THE GUARDIAN (May 7, 2003), (last visited Apr. 19, 2011).

(165) 2000 NHS Plan, supra note 97, at 11.

(166) Meadowcroft, The British National Health Service: Lessons from the "Sodalist Calculation Debate," supra note 75, at 308.


(168) Id. at 8.

(169) Jeanne Whalen & Alistair MacDonald, U.K Unveils Plan to Revamp Health Service, WALL ST. J., Jan. 20, 2011.

(170) James Gubb, CMTAS: INST. FOR THE STUDY OF CIVIL SOC'Y, THE NHS AND THE NHS PLAN: IS THE EXTRA MONEY WORKING? A REVIEW OF THE EVIDENCE I1NT 2006, 4 (2006), available at ("in the vast majority of areas improvements in the NHS have in no way increased in proportion to the vast sums of money ploughed into its coffers").

(171) DEP'T OF HEALTH, OUR HEALTH, OUR CARE, OUR SAY: a NEW DIRECTION IN COMMUNITY SERVICES (Jan. 2006), available at /6737.pdf. As of September 2010, the total headcount for the NHS workforce was 1,214,998. See The Information Centre for Health and Social Care, MONTHLY NHS AND COMMUNITY HEALTH SERVICE (HCHS) WORKFORCE STATISTICS IN ENGLAND, available at numbers/provisional-monthly-nhs-hospital-and-community-health-service-hchs- workforce-statistics-in-england (last visited Apr. 19, 2011). The first FT was authorized in 2004, and there are now 129 FTs in England. See NAT'L HEALTH SERV., AUTHORITIES AND TRUSTS, PRIMARY CARE TRUSTS, authoritiesandtrusts.aspx#primar (last visited Apr. 19, 2011).

(172) Gaynor, supra note 117, at 7.

(173) NEWDICK, supra note 119, at 81-82.

(174) NEWDICK, supra note 119, at 81.

(175) NAT'L HEALTH SERV., AUTHORITIES AND TRUSTS, PRIMARY CARE TRUSTS, authoritiesandtrusts.aspx#primar (last visited Apr. 19, 2011); Rivett, supra note 98.

(176) DEP'T OF HEALTH, GUIDE TO NHS FOUNDATION TRUSTS 4, 8 (Dec. 2002), available at documents/digitalasset/dh_4060480.pdf.

(177) Id. at 8-15.

(178) Id.; MONITOR: INDEPENDENT REGULATOR OF NHS FOUNDATION TRUSTS, PRIVATE PATIENT INCOME CAP-REVISED AND UPDATED RULES (Feb. 2010), available at private%20Patient%20Income%20Cap%20%20revised%20and%20updated%20mles% 2010%20February%202010_1.pdf (setting out how NHS Foundation Trusts should operate the Private Patient Income Cap ("PPI Cap") following April 1, 2010).

(179) Rudolf Klein, Governance for NHS Foundation Trusts, 326 BRIT. MED. J. 174 (2003).

(180) Id.

(181) NAT'L HEALTH SERV., ABOUT THE NHS, STRATEGIC HEALTH AUTHORITIES, authoritiesandtrusts.aspx#strategic (last visited Apr. 19, 2011).

(182) See Rivett, supra note 98.

(183) See generally Jennifer Dixon, Payment by Results-New Financial Flows in the NHS, 328 BRIT. MED. J. 969 (2004).

(184) NEWDICK, supra note 119 at 62.

(185) Gaynor, Moreno-Serra & Propper, supra note 117, at 7.

(186) Gaynor, Moreno-Serra & Propper, supra note 117, at 8.

(187) Stephen M. Campbell et al., Effects of Pay for Performance on the Quality of Primary Care in England, 361 NEW ENG.J. MED. 368, 377 (2009), available at

(188) Id.


(190) N.J. AARON AND W.B. SCHWARTZ, THE PAINFUL PRESCRIPTION: RATIONING HOSPITAL CARE 22 (1984). In 1976, the Labour party began eliminating private beds. Id. at 23-24. When the Conservatives regained power in 1979, they ended the policy of closing private beds. Id.

(191) Caroline Richmond, NHS Waiting Lists Have Been A Boon for Private Medicine in the UK, 154 CAN. MED. ASS'N. J. 378 (1996), available at


(193) Maynard & Bloor, supra note 112.


(195) Richmond, supra note 191.

(196) See generally Jason O'Neale Roach, Alan Milburn Signs Concordat with the Private Sector, 321 BRIT. MED.J. 1101 (2000).

(197) See generally Malcolm Dean, London UK to Embrace Private-Sector Involvement in NHS?, 358 LANCET 45 (2001).

(198) DEP'T OF HEALTH, CHOICE OF HOSPITALS-GUIDANCE FOR PCTS, NHS TRUSTS AND SHAs ON OFFERING PATIENTS CHOICE OF WHERE THEY ARE TREATED, para. 2.4.1 (2003), available at documents/digitalasset/dh_4075412.pdf.

(199) Id.. at Par. 3.3.2; see also Gaynor, Moreno-Serra & Propper, supra note 117, at 7.

(200) Gaynor, Moreno-Serra & Propper, supra note 117, at 7.

(201) Gaynor, Moreno-Serra & Propper, supra note 117, at 31.

(202) Rachel Williams, Private Healthcare Shrank By 4% under Labour, GUARDIAN (Oct. 29, 2009), labour-laingbuisson (last visited Apr. 19, 2011).

(203) Id.

(204) Nicholas Timmins, Surge in Patients Going Private on NHS, FIN. TIMES, Oct. 25, 2009.

(205) Janet Daley, Labour Will Let the NHS Pay for Private Care: Why Not the Other Way Round?, THE TELEGRAPH, Oct. 31, 2009, let-the-nhs-pay-forprivate-care-why-not-the-other-way-round/(last visited Apr. 19, 2011).

(206) Daniel Martin, Cancer Survival Rates in Britain Among the Worst in Europe, DAILY MAIL (March 24, 2009), Britainwost-Europe.html. See generally Henrike E. Karim-Kos et al., Recent Trends of Cancer in Europe: A Combined Approach of Incidence, Survival and Mortally for 17 Cancer Sites Since the 1990s, 44 EUROPEAN J. OF CANCER 1345 (2008).

(207) Martin, supra note 206.

(208) Sarah Boseley, Ara Darzi: An Innovative Surgeon Who Led Reforms of UK's NHS, 374 LANCET 1057 (2007).

(209) DEP'T OF HEALTH, HIGH QUALITY CARE FOR ALL, NHS NEXT STAGE REVIEW, available at @en/documents/digitalasset/dh_085828.pdf.

(210) Id.

(211) Id.

(212) Richard Horton, The Darzi Vision: Quality, Engagement, and Professionalism, 372 LANCET 3 (2008).

(213) Id.

(214) Allyson Pollock, Farewell to Free NHS: Lord Darzi's Report Paves the Way for Labour to Charge, GUARDIAN, (July 1, 2008), (last visited Apr. 19, 2011).

(215) DEP'T OF HEALTH, EQUITY & EXCELLENCE: LIBERATING THE NHS 21 (2010), available at @ps/documents/digitalasset/dh_117794.pdf [hereinafter EQUITY & EXCELLENCE].

(216) Id. at 22.

(217) Id. at 23.

(218) Deborah Summers & Lee Glendinning, Cameron Rebukes Tory MEP Who Rubbished NHS in America, GUARDIAN (Aug. 14, 2009), (last visited Apr. 19, 2011).

(219) Nick Triggle, NHS to "Undergo Radical Overhaul," BBC NEWS (July 12, 2010), (last visited Apr. 19, 2011).

(220) Id. (citing EQUITY & EXCELLENCE, supra note 215).

(221) Triggle, supra note 225.

(222) EQUITY & EXCELLENCE, supra note 21 5, at 3-4.

(223) EQUITY & EXCELLENCE, supra note 215, at 5.

(224) EQUITY & EXCELLENCE, supra note 215, at 5.

(225) EQUITY & EXCELLENCE, supra note 215, at 5; Nicholas Timmins, Private Hospital 'Networks' Under Scrutiny, FIN. TIMES, Dec. 14, 2010.

(226) Nicholas Watt, NHS Faces More Cuts to Avoid 10bn [pounds sterling] Shortfall, Report Warns, GUARDIAN, Dec. 27, 2010, at 1, available at

(227) Whalen & MacDonald, supra note 169.

(228) Whalen & MacDonald, supra note 169.

(229) Whalen & MacDonald, supra note 169.

(230) Whalen & MacDonald, supra note 169.

(231) Whalen & MacDonald, supra note 169.

(232) Oliver Wright, What Does Cameron's 'Massive Gamble' with the NHS Mean For Us?, THE INDEPENDENT, (Jan. 20, 2011), doescamerons-massive-gamble-with-the-nhs-meanfor-us-2189271. html# (last visited Apr. 19, 2011).

(233) Julian LeGrand, Cameron's NHS Reforms is No Health Revolution, FIN. TIMES, Jan. 19, 2011.

(234) Id.

(235) Meadowcroft, Patients, Politics and Power." Government Failure and the Politization of U.IC Health Care, supra note 83, at 428-31.

(236) Id. at 430.



(239) AARON & SCHWARTZ, THE PAINFUL PRESCRIPTION: RATIONING HOSPITAL CARE, supra note 190; see also AARON & SCHWARTZ, CAN WE SAY NO? THE CHALLENGE OF RATIONING HEALTH CARE, supra note 3, at 36-39 (discussing the role of age in years in determining which patients would be rejected for treatment and the now rising rates of treatment in Britain).


(241) JOHN BUTLER, supra note 35, at 7-8.

(242) JOHN BUTLER, supra note 35, at 8.









(251) AARON & SCHWARTZ, CAN WE SAY NO? THE CHALLENGE OF RATIONING HEALTH CARE, supra note 3, at 85 (discussing the failure of the NHS and the medical schools to recognize future demand in the radiology field and a consequent failure to train sufficient radiologists).

(252) Richard G. A. Feachem et al., Getting More for Their Dollar: A Comparison of the NHS with California's Kaiser Permanente, 324 BRIT. MED. J. 135, 140 (2002).

(253) Jennifer Dixon et al., Can the NHS Learn from US Managed Care Organisations?, 328 BRIT. MED. J. 223, 225 (2004).

(254) THE NEW NHS: MODERN, DEPENDABLE, supra note 146, at para. 7.6.

(255) Robert Steinbrook, Saying No Isn't Nice-The Travails of Britain's National Institute for Health and Clinical Excellence, 359 NEW ENG. J. MED. 1977, 1977 (2008) (discussing formation of NICE).

(256) NEWDICK, supra note 119, at 206.

(257) Steinbrook, supra note 255, at 1977.

(258) Patrick Brown & Michael Calnan, Political Accountability of Explicit Rationing: Legitimacy Problems Faced by NICE, 15 J. HEALTH SERVS. RES. POL'Y 65, 65 (2010), available at

(259) Steinbrook, supra note 255, at 1977-80.

(260) Eisai Ltd. v. Nat'l Inst. for Health & Clinical Excellence, [2008] EWCA (Civ) 438, 2008 WL 1867206.

(261) Clare Dyer, NICE Faces Legal Battle Over Alzheimer Drug, 334 BRIT. MED. J. 654, 654 (2007), available at 00654.pdf.

(262) Eisai Ltd. v. Nat'l Inst. for Health & Clinical Excellence, [2008] EWCA (Civ) 438, [66]; Nigel Hawkes, Drug Companies Win Alzheimer's Appeal Against Watchdog, TIMES, (May 2, 2008), (last visited Apr. 19, 2011).

(263) IHS GLOBAL INSIGHT, NICE Recommends Alzheimer's Drugs Aricept, Reminyl, Exelon, and Ebixa Following Review (2010), http://www.ihsglobalinsight.corn/SDA/SDADetail19338.htm (last visited Apr. 19, 2011).

(264) John Carvel, Kidney Cancer Drugs Judged Too Costly for 3,000 NHS Patients, GUARDIAN, Aug. 7, 2008, at 4, available at (noting NICE rejected state funding of Sutent (sunitinib), Avastin (bevacizumab), Nexavar (sorafenib), and Torisel (temsirolimus)).

(265) Sarah Boseley, Women Denied Cancer Drug that Could Extend Life, GUARDIAN, Oct. 22, 2009, at 4, available at (noting NICE rejected Tyverb (lapatinib)).

(266) NEWDICK, supra note 119, at 207.

(267) Sarah Boseley, NICE to Ease Powers to Deride on New Drugs, GUARDIAN, Oct. 30, 2010, at 1, available at http://

(268) Id.

(269) Tsebelis argues that in a parliamentary system, "the executive (government) controls the agenda, and the legislature (parliament) accepts or rejects proposals, while in presidential systems [like the United States] the legislature makes the proposals and the executive (president) signs or vetoes them." George Tsebelis, Decision Making in Political Systems: Veto Players in Presidentialism, Parliamentarism, Multicameralism and Multipartyism, 25 BRIT. J. POL. SCI. 289, 325 (1995).

(270) Cf. Jonathan Oberlander, The Politics of Health Reform: Why Do Bad Things Happen to Good Plans?, HEALTH AFFAIRS W3-391, W3-394 (2003), available at hlthaff.w3.391.full.pdf+html (comparing political parties in United States to other democratic countries).

(271) See generally PHILLIP BLOND, RED TORY: HOW LEFT AND RIGHT HAVE BROKEN BRITAIN AND HOW WE CAN FIX IT (Bloomsbury House 2010) (discussing communitarian tradition in British conservatism).

(272) Summers & Glendinning, supra note 218.

(273) A good example of this disparity in approaches was seen in the 2007 conflict over SCHIP expansion during the administration of George W. Bush. See generally Sara Rosenbaum, The Proxy War-SCHIP and the Government's Role in Health Care Reform, 358 NEW ENG. J. MED. 869 (2008), available at (discussing ideological divide underlying SCHIP battle).

(274) See Robert J. Blendon et al., Health Care in the 2008 Presidential Primaries, 358 NEW ENG. J. MED. 414, 418 (2008), available at Republicans are more likely to consider health care an individual responsibility and to view private health insurance as more effective than the government in providing coverage and controlling costs. Id.

(275) Sherry Glied, Universal Public Health Insurance and Private Coverage: Externalities in Health Care Consumption, 34 CAN. PUB. POL'Y 345, 348 (2008).

(276) Sally C. Pipes, Obama Will Ration Your Health Care, WALL ST. J., Dec. 30, 2008, at A11, available at

(277) Cf. Jennifer Steinhauer, Ads Use Medicare Cuts as Rallying Point, N.Y. TIMES, Oct. 30, 2010, at A25, available at The article notes:
   From Florida to California, one of the most prevalent political
   advertisements this year accuses Democrats of slashing $500 billion
   from Medicare, the government health care program for the elderly,
   as part of the health care law passed by Congress last spring.
   Dozens of candidates have felt the heat.... Older people tend to be
   among the most reliable voters in midterm elections, when both
   parties have to work hard to increase turnout. Invoking the
   prospect of Medicare cuts has been an important and often effective
   technique used by Republicans and their allies, even though
   Republicans and many conservative groups are otherwise making
   smaller government and reduced federal spending central themes of
   their campaigns. (Republicans do not
   mention that they pushed for deep cuts to the growth of Medicare
   spending in the mid-1990s, prompting a political assault from


(278) See discussion, infra, at Part III.A and accompanying notes.


(280) 42 U.S.C.A. [section] 299b-8 (West, Westlaw current through P.L. 111-312 (excluding P.L. 111-259, 111-275, 111-296, and 111-309)).

(281) Jerry Avorn, Debate About Funding Comparative Effectiveness Research, 360 NEW ENG. J. MED. 1327 (2009), available at

(282) Atul Gawande, The Cost Conundrum, THE NEW YORKER (Jun. 1, 2009), (last visited Apr. 19, 2011).

(283) Sarah Palin, Statement on the Current Health Care Debate, FACEBOOK, (Aug. 7, 2009, 3:26 PM), (last visited Apr. 19, 2011). An article posted on Politifact noted, "Palin also may have also jumped to conclusions about the Obama administration's efforts to promote comparative effectiveness research. Such research has nothing to do with evaluating patients for 'worthiness.' Rather, comparative effectiveness research finds out which treatments work better than others." Sarah Palin Falsely Claims Barack Obama Runs a Death Panel,, palin/sarah-palin-barack-obama-death-panel/ (last visited Apr. 19, 2011).

(284) Martin J. Feldstein, Obamacare is All About Rationing, WALL. ST. J., (Aug. 18, 2009), SB10001424052970204683204574358233780260914.html (last visited Apr. 19, 2011).

(285) Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, [section] 6302, 124 Stat. 119 (to be codified as amended at 42 U.S.C. [section] 2996-8) (terminating federal coordinating council for comparative effectiveness research).

(286) Id. [section] 6301 (to be codified as amended at 42 U.S.C. [section][section] 1301 et seq.) (enacting patient- centered outcomes research).

(287) Id.

(288) Id.

(289) Id.

(290) Id.

(291) Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, [section] 6301, 124 Stat. 119 (to be codified as amended at 42 U.S.C. [section][section] 1301 et seq.).

(292) Id.

(293) Peter J. Neumann & Milton C. Weinstein, Legislating Against Use of Cost-Effectiveness Information, 363 NEW ENG. J. MED. 1495, 1495 (2010), available at

(294) John K. Iglehart, The American Health Care System: Expenditures, 340 NEW ENG. J. MED. 70, 70-72 (1999), available at (discussing roles of government, employers, and economic systems).

(295) Avery Johnson, Recession Swells Number of Uninsured to 50.7 Million, WALL ST. J., (Sept. 17, 2010), (last visited Apr. 19, 2011).

(296) Iglehart, supra note 294, at 70-71.

(297) see discussion, infra, at Part III.A.

(298) Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, [section] 1311(b)(1)(A), 124 Star. 119 (to be codified as amended at 42 U.S.C. [section] 18031).

(299) Id. [section] 1311(d)(1) (to be codified as amended at 42 U.S.C. [section] 18031).

(300) Id. [section] 1304(b)(2) (to be codified as amended at 42 U.S.C. [section] 18024) (defining "small employer" as having up to one-hundred employees); id. [section] 1311(d) (2) (A) (to be codified as amended at 42 U.S.C. [section] 18031) (making exchange available to qualified individuals and employers); id. 1312(f) (2) (a) (to be codified as amended at 42 U.S.C. [section] 18032) (defining qualified employers to include small employers).

(301) Id. [section] 1312(f)(2)(B) (to be codified as amended at 42 U.S.C. [section] 18032).

(302) Patient Protection and Affordable Care Act of 2010 [section][section] 1301(a) (1) (B), 1311(d)(2)(B)(i) (to be codified as amended at 42 U.S.C. [section][section] 18021, 18031).

(303) Id. [section] 1302(d)(1) (to be codified as amended at 42 U.S.C. [section] 18022).

(304) Id. [section] 1302(e) (to be codified as amended at 42 U.S.C. [section] 18022).

(305) Id. [section] 1201 (to be codified as amended at 42 U.S.C. [section] 300gg-6).

(306) Id. [section] 1302(b)(2) (to be codified as amended at 42 U.S.C. [section] 18022).

(307) Id. [section] 1302(b)(4) (to be codified as amended at 42 U.S.C. [section] 18022).

(308) N.C. Aizenman, 'Essential Benefits' a Complex Question in New Health-care Law, WASH. POST, (Jan. 14, 2011), 406172.html (last visited Apr. 19, 2011).

(309) Id.

(310) Id.

(311) Id.

(312) See Aaron Carroll, Stools Need Two More Legs, THE INCIDENTAL ECONOMIST, (Nov. 11, 2010), (last visited Apr. 19, 2011).

(313) See e.g., Florida ex re. McCollum v. U.S. Dep't of Health & Human Servs., 716 F. Supp. 2d 1120, 1165 (N.D. Fla. 2010) (denying federal government's motion to dismiss constitutional challenge to individual mandate); Thomas More Law Ctr. v. Obama, 720 F. Supp. 2d 882, 891-96 (E.D. Mich. 2010) (upholding constitutionality of individual mandate).

(314) Liberty Univ., Inc., v. Geithner, 2010 WL 4860299, at * 29 (W.D. Va. 2010) (upholding constitutionality of the individual mandate); Thomas More Law Ctr., 720 F. Supp. 2d at 891-96 (upholding constitutionality of individual mandate).

(315) Florida ex rel. Bondi v. U.S. Dep't of Health & Human Servs., 2011 WL 285683, at "40-41 (N.D. Fla. 2011) (declaring mandate unconstitutional, refusing to sever it, and declaring PPACA unconstitutional); Virginia ex tel. Cuccinelli v. Sebelius, 728 F. Supp. 2d 768, 790 (E.D. Va. 2010) (declaring mandate unconstitutional but severing it from PPACA).

(316) Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, [section] 10101(a), 124 Stat. 119 (to be codified as amended at 42 U.S.C. [section] 300gg-11).

(317) Id.

(318) Id.

(319) Id. [section] 1201 (to be codified as amended at 42 U.S.C. [section] 300gg).

(320) Id. [section] 1201 (to be codified as amended at 42 U.S.C. [section] 300gg-2).

(321) Id. [section] 1201 (to be codified as amended at 42 U.S.C. [section] 300gg).

(322) Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, [section][section] 1343, 10101(a), 124 Star. 119 (to be codified as amended at 42 U.S.C. [section][section] 18063, 300gg-16).

(323) MICHAEL A. MORRISEY, HEALTH INSURANCE 61 (Foundation of the American College of Healthcare Executives 2009).

(324) Id. at 75.

(325) Patient Protection and Affordable Care of 2010 [section] 1502(a) (to be codified as amended at 26 U.S.C. [section] 6055).

(326) Id. [section] 1501(b) (to be codified as amended at 42 U.S.C. [section] 18091).

(327) Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, [section] 1501(c), 124 Stat. 119, as amended by Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 1002(a), 124 Stat. 1029 (to be codified as amended at 42 U.S.C. [section] 18091). For individuals, the penalties are equal to the lesser of the sum of the monthly penalties for all months where there was a failure to have coverage or the average national premium for the bronze plan. Id. The monthly penalties to be phased in are 1/12th of the greater of a percentage of income or an "applicable dollar amount:" $95 or 1% of income in 2014; $325 or 2.0% of income in 2015; $695 or 2.5% of income in 2016; and an annual COLA thereafter. Id.

(328) Id.

(329) See Linda J. Blumberg & John Holahan, The Individual Mandate--An Affordable and Fair Approach to Achieving Universal Coverage, 361 NEW ENG. J. MED. 6, 6 (2009), available at

(330) See MASS. GEN. LAWS ch. 111M, [section] 2 (2006).


(332) See Kay Lazar, Short-term Insurance Buyers Drive Up Cost in Mass., BOSTON.COM, (Jun. 30, 2010), short_term_insurance_buyers_drive_up_cost_in_mass/ (last visited Apr. 19, 2011).

(333) See generally Amitabh Chandra, Jonathan Gruber & Robin McKnight, The Importance of the Individual Mandate--Evidence from Massachusetts, 364 NEW ENG. J. MED. 293 (2011), available at See also, Austin Frakt, Individual Mandate Penalties Are Adequate, THE INCIDENTAL ECONOMIST (Mar. 29, 2010), not-too-low/ (last visited Apr. 19, 2011).

(334) Michael T. Doonan & Katharine R. Tull, Health Care Reform in Massachusetts: Implementation of Coverage Expansions and a Health Insurance Mandate, 88 MILBANK Q. 54, 69 (2010).

(335) See Lazar, supra note 332.

(336) Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, [section] 1201, 124 Stat. 119 (to be codified as amended at 42 U.S.C. [section] 300gg-1). There are two provisions in the legislation that deal with enrollment periods, this section being one of them, providing,
   (1) Restriction.--A health insurance issuer ... may restrict
   enrollment in coverage described in such subsection to open or
   special enrollment periods.... promulgated under paragraph (3),
   establish special enrollment.... (3) Regulations.--The Secretary
   shall promulgate regulation with respect to enrollment periods
   under paragraphs (1) and (2).

Id. The other provision dealing with enrollment periods provides, "The Secretary shall require an Exchange to provide for--(A) an initial open enrollment ...; (B) annual open enrollment periods, as determined by the Secretary for calendar years after the initial enrollment period; (C) special enrollment periods...." Id. [section] 1311(c)(6) (to be codified as amended at 42 U.S.C. 18031).

(337) See Carroll, supra note 312.

(338) Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, [section] 1401(a), 124 Stat. 119, as amended by Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, [section] 1001(a)(1), 124 Stat. 1029 (to be codified as amended at 26 U.S.C. [section] 36).

(339) Patient Protection and Affordable Care Act of 2010 [section] 1402, as amended by Health Care and Education Reconciliation Act of 2010 [section] 1001(b) (to be codified as amended at 42 U.S.C. 18071).

(340) Patient Protection and Affordable Care Act of 2010 [section][section] 1421(a), 10105(e)(1) (to be codified as amended at 26 U.S.C. [section] 45R).

(341) Patient Protection and Affordable Care Act of 2010 [section] 1513, as amended by Health Care and Education Reconciliation Act of 2010 [section] 1003(t)) (to be codified as amended at 26 U.S.C. 4980H).

(342) Id.

(343) Bradley Herring & Mark V. Pauly, "Play-or-Pay" Insurance Reforms for Employers--Confusion and Inequity, 362 NEW ENG. J. MED. 93, 95 (2010), available at

(344) Carrie Hoverman Colla, William H. Dow & Arindrajit Dube, How Do Employers React to a Pay- or-Play Mandate? Early Evidence from San Francisco, National Bureau of Economic Research Working Paper 16179, July 2010, available at

(345) Patient Protection and Affordable Care Act of 2010 [section] 2001(a) (to be codified as amended at 42 U.S.C. [section] 1396a).

(346) Id.

(347) Andrea M. Sisko et al., National Health Spending Projections: The Estimated Impact of Reform Through 2019, 29 HEALTH AFFAIRS 1933, 1938 (2010).

(348) Id. at 1939.

(349) Id. at 1939-40.

(350) Letter from Douglas Elmendorf, Director, Cong. Budget Office, to Hon. John Boehner, Speaker of the House 4 (Jan. 6, 2011), available at

(351) Jacqueline Fox, The Hidden Role of Cost: Medicare Decisions, Transparency and Public Trust, 79 U. CINN. L. REV. (forthcoming 2011). In making her argument, Fox cites the various hurdles medical technology developers must surpass to ensure a market for their products, one of which is CMS approval. Id. CMS claims that "Cost effectiveness is not a factor CMS considers in making NCDs. In other words, the cost of a particular technology is not relevant in the determination of whether the technology, improves health outcomes or should be covered for the Medicare population through an NCD." CTR. FOR MEDICARE & MEDICAID SERV., FACTORS CMS CONSIDERS IN OPENING A NATIONAL COVERAGE DECISION, medicare_coverage_document_details.aspx?MCDId=6&McdName= Factors+CMS+Considers+in+Opening+a+National+Coverage+ Determination&mcdtypename=Guidance+Documents&MCDindexType=1&bc=BAAIAAAAAAAA& (last visited Apr. 19, 2011).

(352) Fox, supra note 351.

(353) Fox, supra note 351.

(354) See Robert Helms, The Origins of Medicare, AM. ENTER. INST. (1999), (last visited Apr. 19, 2011) (noting Representative Mills' concerns with Medicare system).

(355) Id.

(356) Eric Patashnik & Julian Zelizer, Paying for Medicare: Benefits, Budgets, and Wilbur Mills' Policy Legacy, 26 J. HEALTH POL. POL'Y & L. 7, 15 (2001) (citing CONG. Q. ALMANAC 1964:232).

(357) Helms, supra note 354.

(358) See generally, Todd G. Caldis, The Long-Term Projection Assumptions for Medicare and Aggregate National Health [section] Expenditures, CTRS. FOR MEDICARE & MEDICAID SERVS. (2009), available at; Peter R. Orszag & Ezekiel J. Emanuel, Health Care Reform and Cost Control, 363 NEW ENG. J. MED. 607 (2010), available at (discussing provisions in PPACA designed to reduce rate of growth in costs).

(359) Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, [section][section] 3403, 10320, 124 Stat. 119 (to be codified as amended at 42 U.S.C. [section] 1395kkk). See generally Timothy Jost, Independent Payment Advisory Board, 363 NEW ENG. J. MED. 103 (2010), available at (discussing creation and function of the IPAB to oversee health care system costs).

(360) Patient Protection and Affordable Care Act of 2010 [section][section] 3403, 10320 (to be codified as amended at 42 U.S.C. [section] 1395kkk).

(361) Id.

(362) Id.

(363) Id.

(364) Id.

(365) Id.

(366) Letter from Douglas W. Elmendorf, Director, Cong. Budget Office, to Senator Harry Reid, Senate Majority Leader (Dec. 19, 2009), available at 10868/12-19-Reid_Letter_Managers_Correction_Noted.pdf.

(367) Letter from Douglas W. Elmendorf, Director, Cong. Budget Office, to Senator Harry Reid, Senate Majority Leader (Dec. 20, 2009), available at 10870/12-20-Reid_Letter Managers_Correction1.pdf.

(368) Letter from Douglas W. Elmendorf, Director, Cong. Budget Office, to Representative Nancy Pelosi, Speaker of the House (Mar. 20, 2010), available at doc11379/AmendReconProp.pdf.

(369) Memorandum from Richard S. Foster, Chief Actuary, Ctrs. for Medicare & Medicaid Servs., Estimated Financial Effects of the "Patient Protection and Affordable Care Act," as Amended (Apr. 22, 2010), available at Memorandum_on_Financial_Impact_of_PPACA_as_Enacted.pdf.

(370) Jost, supra note 359, at 105.

(371) Jost, supra note 359, at 105.

(372) Jost, supra note 359, at 105.


(374) Douglas Holtz-Eakin & Michael J. Ramlet, Health Care Reform is Likely to Widen Federal Budget Deficits, Not Reduce Them, 29 HEALTH AFFAIRS 1136, 1139 (2010), available at deficit.pdf. Congress will continue to override scheduled cost reductions because the act requiring the cuts does not appropriately reform Medicare to permit the lower costs. See id. Therefore, when the cost cutting time comes around, the Centers for Medicare and Medicaid Services will be forced to limit benefits, which means that realistically Congress is unlikely to enforce any reductions. See id.

(375) David A. Hyman, In Medicine, Money Matters: Real health care reform would change incentives, 2011 THE CATO INST. 40, at 43, available at Pursuant to PPACA, the IPAB's proposals to Congress and the President will be aimed at reducing "excess cost growth" in Medicare programs. Id. The IPAB proposals will take effect unless the president issues a veto or a negative 3/5 vote from congress. Id. IPAB proposals are limited in that they cannot be aimed at hospitals until 2020, and they cannot raise taxes, change Medicare benefit, eligibility, or cost-sharing standards. Id.

(376) Michael D. Tanner, Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law, 2011 THE CATO INSTITUTE 23, available at The only available option to the IPAB would be to recommend reductions in provider payments. Id. This is because the IPAB is not allowed to make recommendations which would "ration care," increase revenue, or change benefits, eligibility, or Medicare beneficiary cost-sharing. Id. Consequently, most of the cuts the IPAB recommends would directly impact physicians, discouraging them from participating in the program. Id.

(377) See Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, [section] 3022, 124 Stat. 119 (to be codified as amended at 42 U.S.C. [section] 1395jjj). The "Shared Saving Program" promotes patient accountability by allowing qualified providers and suppliers the opportunity to work together in an accountable care organization to better manage and coordinate care for Medicare fee-for-service beneficiaries. Id. ACO's receive payments for shared services if certain quality performance standards are met. Id.

(378) Id. Payments for shared savings will be subject to performance measured against the performance standards established by the Secretary. Id. If an ACO meets the requirements, they will be paid a percentage of the estimated average per capita Medicare expenditures per year. Id.

(379) Patient Protection and Affordable Care Act of 2010 [section] 3022 (to be codified as amended at 42 U.S.C. [section] 1395jjj). The Secretary also has the discretion to deem other groups of providers and suppliers appropriate for the program. Id. To enter into the program, ACOs must also agree to a minimum three-year commitment with the Secretary. Id.

(380) Id.

(381) Id. To participate in the ACO program, it is mandated that the ACO have at least 5,000 fee-for-service beneficiaries assigned to it. Id. It is the responsibility of the ACO to provide the Secretary with the information to properly support the assignment of Medicare fee-for-service beneficiaries for an ACO. Patient Protection and Affordable Care Act of 2010 [section] 3022 (to be codified as amended at 42 U.S.C. [section] 1395jjj).

(382) Id. While the Secretary will establish quality performance standards, those standards will change over time to ensure continued growth in quality of care. See id. To accomplish this, the Secretary will specify higher standards and new measures to be enacted to better assess the quality of care. Id.

(383) Id. [section][section] 3022, 10307 (to be codified as amended at 42 U.S.C. [section] 1395jjj).

(384) DAVID NEWMAN, CONG. RESEARCH SERV., R41474, ACCOUNTABLE CARE ORGANIZATIONS AND THE MEDICARE SHARED SAVINGS PROGRAM (2010), available at This model puts an emphasis on the physician because the physician influences almost 90% of all personal health spending. Id. The emphasis on physicians should accomplish both goals of reducing costs and improving quality. Id.

(385) CONGRESSIONAL BUDGET OFFICE, BUDGET OPTIONS VOLUME I; HEALTH CARE 72-74, (December 2008), available at This option would cause the savings to Medicare to decline for two reasons. Id. First, the number of bonus-eligible organizations (BEOs) that would be eligible to receive bonuses would grow, consequently increasing bonus payouts. Id. Second, this option would reduce the volume of Medicare-covered physicians' services, thus negatively impacting the sustainable growth rate. Id.

(386) Elliott S. Fisher et al., Fostering Accountable Health Care, 28 HEALTH AFFAIRS 219 (2009), available at Elliot et al. points to three main areas where relatively minor improvements could vastly improve the value of health care. Id. The first area is in the lack of accountability for the overall quality and cost of health care; the second area is the current payment system, which rewards volume, as opposed to value; and the final area is in the belief that more medical care equates to better medical care. Id.

(387) Mark McClellan et al., A National Strategy To Put Accountable Care Into Practice, 29 HEALTH AFFAIRS 982, 989-990 (2010), available at 20Accountable%20Care%20into%20Practice.pdf. McClellan et al. points out that making the transition to a health care system that addresses gaps in performance will require linking payments with investments in infrastructure, as well as improvements in the health care process. Id. ACOs are the appropriate means for this transition because they offer incremental modification of payments, as well as foundations, which provide better financial support. Id.

(388) Stephen M. Shortell & Lawrence P. Casalino, Implementing Qualifications Criteria and Technical Assistance for Accountable Care Organizations, 303 JAMA 1747 (2010), available at ACOs will need assistance in the organizational, legal, and financial relationships with payers to support the performance reporting requirements. Id. ACOs will also need assistance in redesigning practice, improving process, improving quality, and EHR implementation. Id. Additionally, practices wishing to qualify as ACO will need support in developing the proper clinical and managerial leadership, which would take up considerable resources. Id.

(389) Thomas L. Greaney, Accountable Care Organizations, A New New Thing With Some Old Problems, 3 HEALTH LAW OUTLOOK 6 (2010), available at Outtook-Spring-2010.pdf.

(390) James C. Robinson & Emma L. Dolan, Accountable Care Organizations in California: Lessons for the National Debate on Delivery System Reform, 26 INTEGRATED HEALTHCARE ASSOC. 1 (2010), available at Currently, some health care markets provide no incentive for consumers who choose more efficient health care providers. Id. ACOs should be structured to reward patients for choosing higher-value ACOs, which would ensure cost and quality data are available. Id.


(392) Patient Protection and Affordable Care Act of 2010 [section] 3021 (to be codified as amended at 42 U.S.C. [section] 1315a).


(394) PATIENT CENTERED MEDICAL HOMES, HEALTH POLICY BRIEF (2010), (last visited Apr. 19, 2011); see also Diane R. Rittenhouse & Stephen M. Shortell, The Patient Centered Medical Home: Will it Stand the Test of Health Care Reform, 301 JAMA 2038 (2009), available at pcmh.pdf.

(395) Robert J. Reid et al., The Group Health Medical Home at Year Two: Cost Savings, Higher Patient Satisfaction, and Less Burnout for Providers, 29 HEALTH AFFAIRS 835 (2010).


(397) Medicare & Medicaid Programs, Electronic Health Record Incentive Program, 75 Fed. Reg. 44134 (July 28, 2010) (to be codified at 42 C.F.R. pts. 412, 413, 422, and 495), available at

(398) David U. Himmelstein, Adam Wright & Sterile Woolhandler, Hospital Computing and the Costs and Quality of Care: A National Study, 123 AM. J. MED. 40 (2010).

(399) Alice Rivlin & Paul Ryan, A Long-Term Plan for Medicare and Medicaid, PRISM MONEY (Nov. 17, 2010), available at

(400) Letter from Douglas Elmendorf, Director, Cong. Budget Office, to Rep. Paul D. Ryan, U.S. House of Representatives (Nov. 17, 2010), 11-17-Rivlin-Ryan_Preliminary_Analysis.pdf.

Leonard J. Nelson, III, Professor, Cumberland School of Law, Samford University, and Senior Scholar, Lister Hill Center for Health Policy, University of Alabama at Birmingham School of Public Health, Leonard J. Nelson, III.
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Date:Sep 22, 2011
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