Arizona and Bad Public Policy on Health Care

January 10, 2011

The Arizona Medicaid program has been much in the news lately for its decisions to deny Medicaid coverage for certain transplants. The state has variously argued several things about these decisions. First, that these are evidence based decisions; that is, that the transplants were denied because the research shows that they don’t actually work. But, when challenged by transplant surgeons and others, the state has given other reasons for their denial, with cost being at the top of the list.

How ironic that during the debate on health care reform, the threat of rationing health care was used by opponents as a reason to oppose the Affordable Care, and here is a state with leadership that strongly opposed the Affordable Care Act but that are implementing rationing their own way.

To many health policy ethicists/analysts, the idea of explicit rationing of health care has much conceptual appeal. The idea is that we don’t have enough resources to pay for all the things we want as a society and therefore, we should choose what health care services to cover based on a transparent public process that takes into account both medical evidence and public preferences. Certainly, other countries with national systems and national health policy have made these kinds of choices, at least to some degree.

Some in Congress used Don Berwick’s favorable comments about the British Health Care system as a reason to oppose his appointment to head CMS because they noted that the British system rations health care. Indeed, in Great Britain, there are some explicit discussions about trade- offs in coverage and a valuation of the benefit of certain services in terms of “Quality of Life Years”obtained.

But, the practice of explicit health care rationing – vs. the more implicit approach we take in the U.S. today: rationing through price and lack of any coverage for broad segments of the population – is far more difficult than the theory. When one looks more deeply at the British system, the limits of rationing are apparent. But, perhaps, the best example of this issue in the U.S. is what happened many years ago in Oregon.

In 1987, Oregon had its own transplant controversy in the Medicaid program. At the time, the state denied coverage for leukemia treatment for a child. A physician, John Kitzhaber, was head of the Oregon legislature at the time and rather than pushing through support for the transplant coverage, he argued that with so many people uninsured, it was unfair and unethical to pay for a few high priced services for some but leave many without even basic care. Thus ensued a long path that resulted in the passage of the Oregon Health Plan, which was implemented in 1994 and supposed to be an explicit form of health care rationing where all procedures would be arrayed on a list based on value and a line drawn at a certain point based on the state resources available for the Medicaid program.

As chronicled in a terrific article written in 2001 for the Canadian Medical Association, Jon Oberlander and colleagues described the reality of what happened in Oregon and noted that it was far different from what the framers of the OHP originally envisioned. Indeed, they concluded that the system in Oregon actually excluded very few services and as a result, saved very little money (in fact, transplant coverage was actually expanded under the program). For those services that were excluded, the list was circumvented by physicians on a fairly routine basis as they found ways to get those services covered for their patients; and over time, the list was less and less reflective of objective, scientific theory and very much influenced by interest-group pressure.

Arizona’s approach today is essentially rationing by price: picking high ticket procedures and then looking for the evidence to support their exclusion from coverage. This approach undermines a legitimate public debate.

But, Oregon demonstrates that even when we try a transparent process to this issue, it, too, has difficulty being true to the conceptual framework it is based on. In Oregon’s case, the plan actually became more about expanding coverage than about choosing which resources to use.

It would be ideal if we could ask how much medical care we can afford and who should pay – and doing it thoughtfully, comprehensively, and in the full light of day. Arizona’s approach certainly doesn’t do that. While Oregon’s experience might say that we can’t get there, they tried and had a rich public debate as part of the process. It would be better if Arizona could at least have an honest and open approach to what they are doing.