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Rationing typically refers to the distribution of some good or service insufficient in supply to meet the available demand for it. Most people think of rationing as a situation when scarce commodities such as fuel during wartime are not sufficiently available. The fuel available could be rationed by price and given to the highest bidder, but such price rationing is seen as unfair. Thus, a system of allocation is designed that seeks to incorporate broader values such as equity, need, potential benefit, fair share, positioning in the queue, and so on.

The situation best exemplifying such scarcity in contemporary America is the lack of available hearts, kidneys, livers, and lungs for transplantation, where need in many cases far exceeds supply. Almost everyone regards price rationing for such available organs as unfair, so an alternative distribution system must be designed. Such distributions have been called “tragic choices” because there is no correct answer on how to do this.

Some analysts note that many of the instances in medicine referred to as rationing do not involve scarcity in that the needed supply is available but consumers are unwilling or unable to pay the price demanded. However, most instances of scarcity are imposed by policy choices reflecting culture and ethical values. There are numerous ways to increase the availability of scarce organs were we not bound by our values and norms. These include allowing people to buy and sell them, paying relatives to agree to the use of organs of their loved ones who no longer have brain function, or appropriating the organs of people who are brain dead by fiat regardless of family wishes. Or we can do what occasionally has been done in China-take the organs of prisoners following execution or solders killed in war. We can even imagine societies where people are bred for spare organs. Most societies view all the above solutions to scarcity as unethical.

Price Rationing

It is commonly asserted that healthcare is not rationed in America. This might be substantially true if price rationing is excluded. Our healthcare system has the capacity to provide an adequate level of care to all who need it. But many lack access because they are uninsured or have little of the disposable income needed to purchase care. Thus, many people forgo needed care because of cost and as a consequence have poorer health. To most economists, allocation by price is simply an instance of supply and demand. Most people would not think that luxury cars are rationed simply because many persons cannot afford to buy them. But societies think differently about some necessities such as healthcare than about ordinary commodities. The special claims for healthcare stem from the belief that adequate health is a precondition for fair competition.

Levels of Rationing

Most nations seek to control the resources devoted to healthcare relative to other societal needs. The United Kingdom, for example, establishes a central health budget each year and seeks to live within it, while other nations use a variety of price controls and other regulations to hold healthcare expenditures in check. Since no nation provides all the care the population would wish, all must have some rationing rules to determine the distribution of available health resources.

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