Chapter 1 Values in Health Policy Understanding Fairness

Chapter 1 Values in Health Policy: Understanding Fairness and Efficiency Deborah Stone © 2008 Delmar Cengage Learning.

Values in Health Care: Fairness and Efficiency • Broad agreement on desirability of both values in principle – But difficult, if not impossible, to achieve consensus on realizing both • “Inherent tension” between the two • Multiple definitions of both – Depending on one’s perspective 2 © 2008 Delmar Cengage Learning.

Efficiency Defined • Most simply, efficiency can be conceived as a bargain – With the ideal of achieving the highest ratio of outputs to input • Myth: efficiency can be measured – Efficiency can only be properly defined in reference to an individual, party, or constituency 3 © 2008 Delmar Cengage Learning.

Efficiency in Practice • “The Waiting Room Game” – Efficiency from doctor’s point of view • Always having patient available to treat, thus filling waiting room – Does not factor in wasted time on the part of patients – One person’s efficient outcome represents another’s wasted time/resources 4 © 2008 Delmar Cengage Learning.

Contesting Fairness: Actuarial Fairness vs. the Solidarity Principle • Actuarial fairness stressed by certain insurers beginning in 1980 s – Tied cost of insurance premium to an individual’s risk – Rhetorically asking why one should be forced to finance another’s risks 5 © 2008 Delmar Cengage Learning.

Contesting Fairness: Actuarial Fairness vs. the Solidarity Principle • Solidarity principle/ideal more closely approximated in European systems – Society at large funds the care of the sick and those (otherwise) least able to finance care 6 © 2008 Delmar Cengage Learning.

Actuarial Fairness in Practice • Insurers first sought to exclude racial minorities for their “greater risk” • Despite laws seeking to reform such practices: – Minorities in some areas, as well as those suffering from certain diseases, find themselves unable to receive coverage 7 © 2008 Delmar Cengage Learning.

Actuarial Fairness in Practice • Many insurers continue to perfect ways to further fragment market – Closely matching premiums to level of risk • While excluding certain groups altogether 8 © 2008 Delmar Cengage Learning.

The Solidarity Principle in Practice • Seeks to accomplish the ideal of basing distribution of medical care on the basis of need – Not ability to pay • Assumes that the community should be responsible for the cost of care for the infirm 9 © 2008 Delmar Cengage Learning.

The Solidarity Principle in Practice • Represents subsidy from the vast majority to the minority – Underlying principle of social insurance 10 © 2008 Delmar Cengage Learning.

Efficiency and Fairness in the American Health Care System • Current system infused with the spirit of actuarial fairness – Difficult to overcome 11 © 2008 Delmar Cengage Learning.

Efficiency and Fairness in the American Health Care System • Neither efficiency, nor fairness are “neutral criteria” through which to judge quality of health care system – They are values that have different meanings to different people 12 © 2008 Delmar Cengage Learning.

Efficiency and Fairness in the American Health Care System • There will always be winners and losers in nearly any health care system 13 © 2008 Delmar Cengage Learning.

Chapter 1 Summary • Fairness and efficiency – Two values crucial to any health policy debate • Idea of efficiency requires one to define specific perspective 14 © 2008 Delmar Cengage Learning.

Chapter 1 Summary • Central to the idea of fairness – Tension between actuarial fairness and the solidarity principle • Contemporary health care system tends to favor actuarial fairness over solidarity 15 © 2008 Delmar Cengage Learning.