Health Care Rationing: What it Means

Brookings Policy Brief Summary-December 2005
Policy Brief #147
December 2005
Aaron, H.J.

The United States spends more on health care than any other nation. In 2003, medical spending made up more than 15 percent of U.S. GDP, and if historical trends persist, this share will climb to more than one-third of GDP by 2040. With medical technology advancing at an ever-increasing rate, the potential for spending on procedures not worth their costs is growing. But there are few good ideas for reining in medical costs without hurting patients.

One approach, used in Britain for many years, is rationing. This brief examines many of the issues involved with rationing health care by applying its principles to radiology, using examples from the budgetlimited British health system. There, policymakers and medical providers routinely grapple with two difficult and value-laden questions: How much should be spent on the expensive but life saving technology? And how much should be spent on very costly research to evaluate that investment?

The United States has not had to confront such issues. But as outlays rise, the need for the government, private insurers or employers to set health care spending priorities will intensify. It is time for the United States to begin investing in the knowledge it will need to control growth of health care spending.

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