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Healthcare Resources, Allocation of: I. Macroallocation

I. MACROALLOCATION

The allocation of healthcare resources involves distributing health-related materials and services among various uses and people. The concept of allocation can imply that a designated individual or group is responsible for each level of decision making within a system that is designed to distribute fixed amounts of resources. Nevertheless, the degree to which such a system exists and such explicit allocation decisions occur varies widely. In the United States, for example, allocation of resources to and within healthcare has long been more the product of millions of individual clinical decisions and various market forces than the result of an overall social policy. Even in the United States, however, arenas exist where more explicit allocation occurs, such as the U.S. Veterans Health Administration with its Veterans Equitable Resource Allocation System (U.S. Veterans).

Healthcare allocations are commonly classified in terms of two levels of decision making: microallocation and macroallocation. Microallocation focuses on decisions regarding particular persons. It often involves "patient selection": determining which patients among those who need a particular scarce resource, such as a heart transplant, should receive treatment. Sometimes, however, microallocation entails deciding for an individual patient which of several potentially beneficial treatments to provide, particularly when only a limited time is available for treatment.

Macroallocation, on the other hand, entails decisions that determine the amount of resources available for particular kinds of healthcare services. Macroallocation decisions include how particular health-related institutions such as hospitals or government agencies such as the U.S. National Institutes of Health budget their spending (sometimes referred to as mesoallocation). Macroallocation also encompasses the decisions a nation makes concerning what resources to devote to particular institutions or, more broadly, to high-technology curative medicine as opposed to, for example, research or primary and preventive care. The extent to which health is fostered through medical care as opposed to nonmedical interventions such as environmental regulation is also a matter of macroallocation, as is the amount of money, time, and energy a society allocates to the pursuit of health rather than to education, defense, and other activities.

The term rationing is a much less clearly defined term that appears in discussions of macroallocation and microallocation alike. Because the debate over rationing raises issues at the foundation of healthcare allocation, it is the focus of the opening section below. The remainder of this entry discusses substantive standards for judging macroallocation, under three headings: the individual's right to healthcare, the community's responsibility for healthcare, and the importance of efficiency in healthcare.

Rationing

Rationing involves leaving some people, at least temporarily and against their wishes, without particular forms of healthcare that might benefit them. Some use the label "rationing" only if a person is barred from treatment by an explicit policy or decision. Those operating from this definition often oppose rationing because they believe there are sufficient resources, if managed and distributed correctly, to address at least the most important health needs of all. Others view the unavailability of care as rationing, whether or not explicit policies or decisions are involved. While part of this group also holds that there are sufficient resources to avoid rationing for the most part, the majority see implicit or explicit rationing as unavoidable and tend to favor developing explicit, ethical criteria (Ubel; Blank; Wikler).

A fundamental ambiguity, then, attends the word rationing. Moreover, the word's association with a short-term policy for handling a temporary crisis, such as a shortage of goods in wartime, makes it a misleading word to designate society's long-term task of healthcare provision. So the less ambiguous terminology of macroallocation and microallocation is probably more helpful in most discussions. Nevertheless, the debate over the term rationing has identified two important issues that should be examined before embarking on a more detailed consideration of macroallocation: (1) Does implicit allocation of desired and potentially beneficial healthcare actually occur? (2) Will some form of allocation be necessary in the future?

There is little dispute that implicit allocation of beneficial care does take place. For example, waiting lists for certain types of healthcare have been commonplace in Canada and Europe. There the structure of the system (referral and reimbursement policies, acquisition and location of technologies), rather than the explicit exclusion of people or services from coverage, has limited overall national spending on healthcare (Grogan). In less developed countries, some resources are typically located only in major urban centers and have been unavailable to most of the population (Attfield).

Even in the United States, where per capita spending on healthcare exceeds that of any other country, many have not been able to obtain certain forms of beneficial healthcare. In recent decades, tens of millions annually have gone without any health insurance, and at least as many more have been underinsured—predicaments that have resulted in reduced access to healthcare and in poorer health (U.S. Congress). Employer decisions to limit employee health-benefits packages, as well as governmental decisions to omit services from the Medicaid and Medicare programs, have excluded certain people from potentially beneficial healthcare. So have decisions by health facilities not to operate in the most accessible locations or at the most convenient times, and insurance company decisions to exclude from coverage people with preexisting conditions or other high-risk factors.

Greater controversy surrounds the second question, whether healthcare resources can be allocated so that no one has to go without potentially beneficial healthcare (Kilner, 1990). The possibility of avoiding rationing in this sense of the term hinges on achieving sufficient cost containment. Proposed strategies include reducing expenditures on items less vital to society (e.g., potato chips and advertising); eliminating medical procedures with little health benefit; placing greater emphasis on preventive care that preempts the need for more expensive acute care; reforming tort law to reduce the need to practice defensive medicine; simplifying administration; imposing global budgets on the entire healthcare system; and limiting the large gap between the incomes of physicians and other full-time workers. Various forms of "managed care" arrangements pursue several of these strategies simultaneously by restricting patients to approved providers (e.g., in preferred provider organizations or health maintenance organizations) who agree to limit their charges or forgo fee-for-service entirely in exchange for a salary or per-enrollee payment.

Some commentators contend that significant cost savings could be obtained through each of these strategies. Others disagree, arguing that the scope and cost of potential healthcare benefits are so vast that any savings will prove insufficient to fund needed benefits for everyone. Time will tell how effective various cost containment strategies can be in reducing the need for limiting the access to healthcare. After initial cost savings, however, managed care in the United States apparently has been unable to check the growth of healthcare costs (Ginzberg). Meanwhile, ethical questions have arisen concerning the extent to which physicians can truly pursue patient well-being if they must also serve as "gatekeepers" to conserve society's resources (Willems;S. Daniels). At the same time, the experience of other countries such as the Netherlands, with healthcare systems more nationally coordinated than that of the United States, suggests the pragmatic limits of cost containment (The Netherlands, Government Committee on Choices). Such challenges underscore the importance of making allocation decisions explicit if allocation is not to be shaped by unknown factors and unethical considerations.

Major Macroallocation Standards

Numerous people have proposed ways to prioritize the potential uses of limited resources. These proposals tend to be rooted in one or more of three major ethical concerns: the individual's claim to healthcare, the community's responsibility for healthcare, and the importance of efficiency in healthcare. Within these three concerns, different understandings of justice are at work, and different weights are attached to competing ethical considerations such as liberty, care, and utility.

THE INDIVIDUAL'S CLAIM TO HEALTHCARE. Those who are primarily concerned about the healthcare that is due to each individual often invoke the notion of a right to healthcare. When the World Health Organization in its 1946 constitution affirmed the "enjoyment of the highest attainable standard of health" to be one of the fundamental rights of every human being, the statement both reflected and fostered a growing debate over health-related human rights.

The concept of a human right promotes the idea that each person is entitled to have something or to be free from something. It commonly reflects the basic conviction that each human being has special and great significance. While this conviction is not necessarily religious in nature, it receives special emphasis in theological traditions such as Christianity, Judaism, and Islam (Kilner, 1992; Zoloth; Rahman).

Negative and positive rights are frequently distinguished, as are moral and legal rights. Negative (or liberty) rights guarantee freedom from certain types of interference with the pursuit of one's interests. Positive (or material) rights guarantee access to important services and goods. Accordingly, a right to protection from anything that is seriously harmful to one's health is a negative right; a right to receive certain forms of healthcare is a positive right. Whereas moral rights involve claims about what one ought to have on ethical grounds, legal rights involve claims about what one is actually entitled to by law. Whether everyone has an ethically justifiable right to healthcare is debated in the United States, yet Medicare legislation confers a legal right to healthcare on the country's elderly people.

Differing views. In light of such distinctions and the conflicting conceptions of justice and freedom that underlie them, it is not surprising that people have fundamentally different views about the meaning and legitimacy of a "right to healthcare." Some hold that there is a right to health. The point of the right is to make sure that people actually have health itself, not just access to resources. Others insist on a right to healthcare. Because of the fundamental importance of health, people should have guaranteed access to resources that foster it. Still others reject both positions. While all of these claims represent worthwhile aspirations, they argue, such claims are not rights because no one has the obligation to satisfy them. Probing this last argument first provides useful entry into the debate.

The most prominent basis for rejecting a right to healthcare is a libertarian view of justice that emphasizes negative rights over positive rights (Engelhardt). According to this view, people ought to be free to pursue their own life plans, including their economic livelihood. Government should prevent others from interfering with that pursuit. A right to healthcare that forces healthcare professionals to provide care—or that forces certain people to give up part of what they have earned to pay for other people's care—directly contradicts what justice requires. That some people lack healthcare (or the ability to pay for it) is simply unfortunate rather than unfair. No rights are violated in a market-based system where people are free to buy and sell as their resources permit.

Critics of this position argue that it is self-defeating and mistaken. It is self-defeating because in its zeal to protect people's freedom to use their resources for healthcare and other desired goods, it effectively ensures that those with insufficient resources will not have the freedom to obtain healthcare (Brennan). It is mistaken in three assumptions. First, some note the implausibility of assuming that the present distribution of general resources is fair. In their view, the vastly unequal distribution of the means by which people pay for healthcare is attributable to forces that have affected the fairness of the market over time.

Others doubt a second assumption, namely, that a free-market approach is appropriate for healthcare. Consumers in this case are frequently sick patients with limited knowledge about healthcare. For a free market to function well, consumers would have to be able to understand the costs and benefits of all the available medical options and be willing and able to trade health or even life for money. A free-market approach, then, unfairly discriminates against those who are uneducated as well as those who are poor because of social circumstances or genetic endowments beyond their control.

A third debatable assumption, most frequently questioned by those who operate from a theological perspective, is the understanding of liberty as autonomy. The term autonomy, derived from the Greek words auto (self) and nomos (law), tends to emphasize people's separateness from others. According to a more relational understanding, freedom entails "freedom for"—the ability (and obligation) to help others—as much as it involves "freedom from" the interference of others.

Some of those who reject a libertarian approach instead affirm the right to health. They insist that health, like life itself, is something so fundamental to human existence that it must be fostered as much as possible. Precisely what the right to health entails, though, is not always clear. It may involve only the negative right that would protect one's freedom from actions that undermine health. This formulation of the right is compatible with the libertarian outlook already discussed. Alternatively, the right to health may entail that people have an entitlement to be healthy and that others have failed in their moral obligations toward individuals who are not healthy.

Those who find this outlook objectionable worry about the prospect of making one person's health another person's responsibility. Such a view tends to undermine people's responsibility for their own health. Opponents also note that it is not possible to maintain someone else's health indefinitely—given that everyone dies eventually—so it seems mistaken to suggest that anyone has an obligation to do so.

A right to healthcare. To avoid these problems some people advocate the right to healthcare. The right to healthcare is a positive right that holds that all people are entitled to receive some measure of healthcare. Whereas some others argue that people are entitled only to an amount of monetary resources that they can spend on whatever they deem important (Brody), supporters of the right to healthcare insist that people must be assured healthcare in particular. Rights, they maintain, do not involve the sort of discretionary items on which people place differing priorities. Rather, they concern goods that all people require in order to pursue their various life courses.

Sometimes the right to healthcare is formulated in comparative terms. According to this view, everyone should have access to whatever healthcare is necessary to provide for a level of access—or even of health itself—equal to that of others (Veatch). Many have resisted this egalitarian outlook because it tends to focus more on the value of equality than on the healthcare people receive. People with chronic illnesses or congenital disabilities may never achieve a level of health equal to that of others and so could claim an infinite amount of healthcare resources by invoking an egalitarian right to healthcare. Alternatively, this right could justify leaving all at a relatively low level of access or health, as long as everyone was treated alike. If, on the other hand, this egalitarian approach requires that everyone be able to receive every treatment that may provide any benefit, then it seems hopelessly unsuited to a world of limited resources.

To correct these deficiencies, various people have proposed identifying the right to healthcare with some sort of achievable standard of healthcare that could be guaranteed to all. They often suggest that because healthcare is provided in response to need, some standard of need should determine the level of healthcare to which all people have a right.

Others would similarly root the individual's claim to healthcare in a person's need for that care, but would appeal to various understandings of justice rather than to the notion of rights. For example, a contractarian approach, which appeals to what all people would agree to in hypothetically fair positions, usually advocates people's access to basic goods that anyone must have in order to carry out a personal life plan. Healthcare is one such good, and whatever amount is essential to enable people to function at a normal level is mandated by justice (N. Daniels; compare Toenjes, who sees the contract as one between physicians and society). Religious traditions that posit a divinely created world also tend to espouse a needs-based understanding of justice. They may, however, view normal more in terms of how people were created to be than how they typically are (Mackler).

A utilitarian conception of justice might also undergird a right to healthcare, but the support is tenuous. Because classical (or act) utilitarianism advocates acts that will produce the greatest good for the greatest number of people, it is often criticized for lacking any concept of justice to protect individuals from oppressive majorities. On the other hand, rule utilitarianism, which supports standards that produce the greatest good for the greatest number if followed consistently, might well support a standard of justice.

Standard of need. In light of the important place a standard of need commonly has in formulations of the right to healthcare and in conceptions of justice, it is essential to consider what this standard entails. Defining the standard and delineating its implications are not easy, because even marginal benefits can be considered needs (President's Commission). One definitional approach is to think of meeting needs in terms of restoring normal functioning. Another ties the meeting of needs to providing significant health benefit. Establishing significance might involve a careful assessment of the quality and length of life that various forms of healthcare would likely provide in various situations, together with some individual or societal evaluation of those benefits.

A broad range of considerations is relevant to the delineation of healthcare needs. In particular, needs less dramatic than the need for acute medical care must receive sufficient attention. Some non-healthcare goods can make an important claim on whatever portion of its resources a society devotes to the pursuit of health. Food, education, and shelter, for example, all contribute directly to health (Tuckson). So do programs that encourage healthy lifestyles. Habits of eating, drinking, sleeping, and drug use can all have a dramatic impact on health, although positive habits resulting in greater longevity may not reduce total healthcare expenditures over the course of an individual's lifetime (L. Russell).

Preventive medicine, supportive care, and medical research must similarly receive sufficient attention along with curative medicine. While preventive medicine is not necessarily less expensive or more effective than curative medicine, it can be both (Hope). Prenatal care for a mother as opposed to neonatal intensive care for her low-birthweight infant is a case in point. Analyses of need must give due attention to the importance of supportive care such as long-term care for elderly persons or effective pain relief for dying patients. Finally, fascination with current curative capabilities can all too easily siphon resources away from medical research. Without sufficient attention to research, there will be fewer new medical resources in the future, to the long-term detriment of society's health.

In the face of such a broad array of healthcare needs, many people believe that not everything that is needed can be provided for all. Accordingly, they conclude that justice or the right to healthcare must mandate only that each individual receive some reasonable level of healthcare—socalled essential care or a decent minimum (Eddy). Determining this exact level presents the same challenges as determining need, with the added task of tailoring the determination to the level of overall resources available at the time.

Moreover, people in different locations differ dramatically in their perceptions of need and essential care. Those in European countries, for example, avoid the notion of a decent minimum altogether. Nevertheless, each country's effort to provide comprehensive care is unique in terms of the particular forms of care that receive emphasis (Grogan). Canada has typically acknowledged differences by allowing each of its provinces to determine which health-related services will be included in the package of guaranteed benefits.

The United States, lacking the nationally coordinated financing system of Canada, has traditionally left its states to develop their own priorities and healthcare systems (Moon and Holahan). For instance, Oregon has explicitly ranked all health-related services in terms of their funding priority. Hawaii has required all employers to provide health insurance to all employees working over twenty hours per week (Hawaii acted in 1974 before federal legislation barred this approach). Minnesota has linked improving healthcare access with an array of measures to control costs.

The differences among these and other state initiatives underscore what an international comparison also illustrates: that varying perceptions of need call forth different healthcare priorities and systems. Cross-cultural sensitivity will be essential if efforts to meet health-related needs are to cross national and international boundaries successfully (Attfield).

Employing need as a basis for allocation, then, presents various challenges. Challenges can be reasons for rejecting an idea. But challenges may be no more than obstacles to overcome so that a good idea may be implemented effectively.

THE COMMUNITY'S RESPONSIBILITY FOR HEALTHCARE. The substantial disagreement over the idea of the individual's claim to healthcare has made many people doubt its usefulness as a basis for allocating healthcare resources. Some have rejected the idea on more principled grounds as well. One prominent concern has been the impact that a preoccupation with the rights of the individual can have on the wellbeing of the community as a whole (Churchill). A case in point is the United States, a highly individualistic culture in which the use of the language of rights has been particularly prominent. The demand of U.S. taxpayers, patients, health professionals, and healthcare financers for the rights to pursue and satisfy their own various interests may have inhibited the development of an integrated, comprehensive healthcare system.

Those who would not jettison completely the notion of rights may argue—on theological or other grounds—that while people have rights, they have no "right to rights" (Kilner, 1992). According to this view, rights themselves (in the sense of freedoms and goods all people ought to have) are not the problem. The problem is people's preoccupation with their own (right to) rights—a preoccupation that undermines the commitment to pursuing the rights of all. In this sense, group rights are as problematic as individual rights, because attention to the claims of one's own group tends to encourage the same kind of self-focus and neglect of others as the pursuit of individual rights.

Therefore, some favor deemphasizing the notion of the individual's claim to healthcare—as well as rights language in general—or even replacing the notion with a more explicit conception of the community's responsibility for healthcare. Sensitivity to the needs of individuals and particular groups is not absent in this approach, but the driving concern is the community's obligation to ensure the wellbeing of the whole community.

In European societies such as Germany and the Netherlands, for example, discussions of healthcare have often invoked social solidarity as a fundamental goal to be pursued through resource allocation (Netherlands, Government Committee on Choices). In the United States, an increasing emphasis on community responsibility has been reflected in the ethics literature (Dyck; Tauber) and in the appearance of such interdisciplinary journals as The Responsive Community. Appeals to the common good have also become more frequent, especially in religious circles (Catholic Health Association). Increasingly, people are concluding that ethical macroallocation of healthcare resources in the United States will probably require a different way of thinking about the relationship between the individual and society.

Accordingly, the U.S. President's Commission for the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research, in its 1983 report titled Securing Access to Health Care, explicitly rejected the rights-oriented language in the 1952 report of the U.S. President's Commission on the Health Needs of the Nation, titled Building America's Health. Instead the 1980s commission affirmed the community's ethical obligation to provide all with equitable access to an "adequate level" of healthcare. In Securing Access, the commission argued that a community must ensure that all of its members can obtain such care because healthcare is so important in relieving suffering, preventing premature death, restoring functioning, increasing opportunity, providing information, and strengthening relationships of caring. This approach affirms that ungenerous or uncaring healthcare allocations are clearly as wrong as those that are unjust.

Caring in this context entails looking beyond what theoretical formulations of justice require. It means giving special consideration to those who have been marginalized in the allocation of healthcare resources. Identified in certain religious and liberationist contexts as "the preferential option for the poor," this sensitivity toward disadvantaged persons is characteristic of much feminist analysis as well (Caes; Holmes and Purdy). It embraces the notion of the "common good," but not in the utilitarian or majority-rule sense of the term. It insists that there is no true common good if all do not have the good in common.

Emotional as well as rational, engaged as well as theoretical, a caring commitment to those who are least well-off may or may not justify a different healthcare allocation than that which a rights-or justice-based approach to healthcare allocation would advocate. Its proponents, however, maintain that such a commitment almost certainly will make a difference in the ways in which allocation is implemented. For example, it may be widely acknowledged that justice requires directing more healthcare resources toward African Americans and other disadvantaged groups in the United States (LaVeist). Reallocation, however, is not likely to take place as long as people do not see others' health as their responsibility in any way.

Basing allocation on the community's responsibility for healthcare, then, differs from basing it on the individual's claim to healthcare. But attributing responsibility to the community does not absolve the individual from responsibility. Because individuals are part of the community and share in its well-being, they must share the burden of paying for the cost of the community's healthcare in an equitable manner. Moreover, they have some responsibility for their own health. The implications of this responsibility are controversial. In particular, does an apparently irresponsible person forfeit the community's care?

Both justice and respect for people's liberty may entail that those who voluntarily cause their own health problems should take responsibility for them, particularly when there are insufficient resources to meet the healthcare needs of all. Holding people responsible in this way might have the added benefit of reducing illness and injury resulting from risky behaviors, thereby lowering related healthcare costs as well.

It is extremely difficult in most cases to prove, however, that people caused their illnesses and did so voluntarily. Often there are many causes of an illness, few of which are within a person's control. Even if a person's behavior, such as smoking or overeating, does cause an illness, the voluntary nature of the behavior is difficult to demonstrate conclusively. The person may have engaged in the behavior without understanding that it could cause the resulting illness. Regardless of foreknowledge, other factors—advertising, peer pressure, cultural values, dietary deficiencies, psychological instabilities, or genetic predispositions—may have significantly impaired the ill person's ability to act freely.

Even if a society becomes sufficiently adept at identifying those who have voluntarily caused their own health problems, three further ethical considerations are relevant. First, fairness may require that an allocation policy based on personal responsibility not apply only to those engaging in the least socially desirable behaviors. In other words, the policy should apply not only to smokers and intravenous-drug abusers but also to those who overwork or overeat, if responsibility can be established in all four types of cases.

Second, the idea that a society would have a responsibility to truly care for its members may call for the provision of more healthcare than strict justice alone requires, even for those who voluntarily engage in risky behavior. The healthcare professions have a long-standing tradition of offering care without making such offers contingent on the extent to which ill people caused their own need. Finally, if caring with fairness requires some form of accountability for risky behaviors, requiring payment of a tax to engage in those behaviors, say on cigarettes and alcohol, would be more humane than denying needed healthcare.

THE IMPORTANCE OF EFFICIENCY IN HEALTHCARE. Efficiency is also a central and disputed issue in ethical resource allocation. How best to eliminate health-related expenditures that are not truly beneficial in order to maximize funding for beneficial healthcare is only part of the efficiency problem. Even greater controversy surrounds proposed mechanisms for determining which forms of beneficial care are most worth their cost.

Two mechanisms for comparing costs and benefits have received particular attention as promising ways to pursue efficiency in healthcare: cost–benefit analysis and cost-effectiveness analysis. While both mechanisms typically involve assessing the costs of various forms of healthcare in monetary units, cost–benefit analysis also uses monetary units exclusively to assess the benefits of care, whereas cost-effectiveness analysis does not.

Cost–benefit analysis. Cost-benefit analysis is well-suited in principle to a broad range of resource allocation decisions both within and outside of healthcare. It employs identical units, such as dollars, to measure all costs and benefits. Accordingly, it can subtract total costs from total benefits to determine if an expenditure is wasteful (i.e., its costs outweigh its benefits). When applied to different health-related and other uses for the same funds, cost-benefit analysis can also determine which use will provide the greatest net benefit. This approach has proven particularly attractive to economists and policy analysts who must prioritize diverse uses of limited funds (Emery and Schneiderman; Oliver, Healey, and Donaldson).

Because cost-benefit analysis is the more familiar efficiency mechanism of the two, and because it alone has the potential to compare all possible uses of available funds, it appears at first glance to be the superior mechanism for allocating healthcare resources. But cost-benefit analysis has a number of pragmatic and substantive weaknesses in its most common forms (B. Russell). Some of these difficulties are inherent in the overall way the mechanism operates. Identifying the numerous ways that people are affected by particular allocation decisions is difficult enough, but reducing the entire range of healthcare outcomes (including continued life itself) to monetary value is virtually impossible. More substantively, while cost-benefit analysis helps to identify the allocation of resources that yields the greatest balance of benefit over cost for a society as a whole, it may fail to consider how fairly the benefits and burdens of that allocation are distributed throughout society. Programs targeting affluent suburbs, for example, can tend to have better cost-benefit ratios than programs in poor inner-city areas because of the bad health fostered by poor social and economic conditions. Ethics, though, must attend to more than economics.

Other difficulties concern the methods cost-benefit analysis uses to convert lives saved and other benefits of healthcare into monetary units. One approach is the past decisions approach, which compares how much money a society spent on selected programs to save lives in the past with how many lives were saved as a result of those programs. The unique funding and implementation context of each such program, however, renders generalizations risky.

Two more popular conversion methods involve future earnings (human capital) and willingness to pay. The future-earnings approach determines the monetary value of a health benefit by calculating how much more money patients will earn in the future if they receive treatment than if they do not. Fairness again is a major problem, for this approach implies that the life of a person making twice the income of another person is twice as valuable (i.e., important to save) as that of the other person. Because women and minorities tend to receive less pay than white males for comparable work, this approach devalues the lives of women and minorities. In fact, whatever employment-related discrimination already exists in a society becomes compounded when healthcare allocation reflects salary level.

A willingness-to-pay approach, on the other hand, calculates the value of a health benefit on the basis of the amount of money people would pay to receive a specified increase in the likelihood of receiving that benefit over a particular length of time. This approach, like the previous one, tends to compound certain forms of discrimination. Because wealthy people are generally able to pay more for a program to reduce the risk of illness and death than are poor people, a willingness-to-pay approach systematically reproduces existing injustices in the distribution of wealth.

All forms of cost-benefit analysis, then, are vulnerable to the charges that they are inadequate measures of the value of lives and that they neglect some important ethical considerations in resource allocation. Accordingly, a better mechanism for maximizing the benefit of limited healthcare resources has been sought.

Cost-effectiveness analysis. Cost-effectiveness analysis has generally been the favored alternative because it avoids a major difficulty that troubles cost-benefit analysis: the need to convert health outcomes, including continued life itself, to a monetary equivalent. Cost-effectiveness analysis typically calculates the cost of alternative health initiatives in monetary terms. But it can adopt a nonmonetary unit for comparing the health benefits of these initiatives, such as degree of mobility restored or years of life saved. If, for example, two treatments for hip problems claim to improve mobility, cost-effectiveness analysis can determine which one restores more mobility for the same cost or identical mobility for less cost. It can also determine which use of earmarked funds will produce the greatest health benefits. While this approach cannot determine if costs outweigh benefits or compare all benefits inside and outside of the healthcare field, it can identify the cost per standardized unit of benefit for alternative health-related interventions.

Broad societal healthcare allocations, however, necessitate a more generic measure of health benefit than mobility. Because increased quality and length of life are the two primary goals of healthcare, the standard of quality-adjusted life years (QALYs) seems to many to provide a suitable measure (McCulloch; Nord). To determine the number of QALYs that a health-related intervention will produce, the number of years people will likely live after the intervention is multiplied by a percentage reflecting the quality of life to be experienced during those years—0 percent (0.00) signifying death, and 100 percent (1.00) signifying perfect health with no disability.

While QALY-based cost-effectiveness analysis represents an improvement over cost-benefit analysis for the purpose of comparing health-related allocations, it, too, has proven controversial (Harris; Menzel; Stolk, Brouwer, and Busschbach). For example, certain analysts, while affirming the approach in principle, note that studies to date have not yet gathered all of the necessary data on healthcare outcomes, costs, and quality-of-life preferences. More data is needed before cost-effectiveness can be consistently employed as a basis for making comprehensive healthcare allocations.

The state of Oregon, for instance, originally intended to use a form of cost-effectiveness analysis during the early 1990s when it redesigned its approach to allocating public healthcare funds. Through a telephone survey, the state asked people to rank various functional limitations and other symptoms on a quality-of-life scale. The goal was to ascertain a quality-of-life score and cost figure for every health-related intervention so that these interventions could be prioritized for budgetary purposes. Reliable cost data proved so difficult to acquire, though, that the quality-of-life information was employed essentially only to identify which interventions produced the most benefit, irrespective of costs (Garland). Moreover, some rankings had to be altered in the end. The state discovered that interventions producing relatively little health benefit—if inexpensive enough—could rank higher than much more beneficial (even lifesaving) interventions.

Another methodological debate over cost-effectiveness analysis concerns who should assess quality of life (Fleck). The QALY approach determines the quality-of-life percentages for particular outcomes by interviewing large numbers of healthy people concerning the value they place on various qualities of life. Some insist that healthy people are the right ones to make these judgments because resource allocation is like purchasing health insurance. People will appropriately weigh alternative benefit packages before they contract a particular disease, but after contracting it they place disproportionate weight on covering that disease. Others cite studies documenting that healthy people frequently under-estimate the quality of life of people who are ill or disabled. One inference drawn is that only those who have experienced such conditions can adequately assess the degree to which they render living more difficult (Lawton, Moss, and Glicksman; Kaplan).

The most heated disputes over the QALY approach, however, involve problems of fairness similar to those attributed to cost-benefit analysis. Although QALY-based cost-effectiveness analysis does not intentionally discriminate against certain groups, it tends to disadvantage patients who are older or disabled—in fact, anyone whose future length or quality of life is comparatively limited. Because QALY calculations are based on precisely these two variables, the treatments most beneficial to such persons tend to receive lower QALY scores and so receive low funding priority. For many who believe in the sanctity of human life, this discrimination is typical of the devaluing of certain types of people that generally results when anticipated quality of life is employed as a basis for ranking patients rather than as a desirable outcome to be sought for each individual patient.

As it turned out, the U.S. government refused the state of Oregon's initial application, which sought legal permission to allocate the state's limited Medicaid funds by ranking health-related interventions based on public quality-of-life judgments. The government's controversial rationale was that the approach discriminated against persons with disabilities. Oregon successfully revised its proposal by eliminating reliance on quality-of-life data. While cost-effectiveness analysis, then, attends well to efficiency, like other efficiency mechanisms it can easily be insensitive to other ethical concerns such as degree of need and fairness (Menzel et al.; Rosenthal and Newhouse).

Conclusion

The individual's claims, the community's responsibilities, and efficiency's importance all represent widely held ethical sensitivities to which resource allocation must attend. The ongoing challenge is to determine how to affirm the best elements of each, where they are not mutually contradictory, in a way that also minimizes their ethically objectionable features.

john f. kilner (1995)

revised by author

SEE ALSO: Aging and the Aged; Autonomy; Beneficence; Contractarianism and Bioethics; Economic Concepts in Healthcare; Ethics; Human Rights; Justice; Long-Term Care; Managed Care; Medicaid; Medicare; Natural Law; Profession and Professional Ethics;Utilitarianism and Bioethics; and other Healthcare Resources, Allocation of subentries

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