Rationing - An Overview

Date of publication: June 1998

Definition of "Rationing"
Rationing is the process of distribution of limited resources.

It is also referred to in health as "priority setting" or "resource allocation".

Good rationing is about allocating scarce resources in the best possible way.

Pressures on the sector

• The main factors that lead to increased demand for health and disability support services are:
  rapid advance in medicine and technology;
• increasing professional/public expectations; and
• changing demography - an increasing and ageing population.

This increased demand places considerable pressure on limited resources.

While New Zealand spends a proportion of its Gross Domestic Product (GDP) on health which is broadly consistent with other countries having a similar level of GDP per capita, it is not possible to fund everything everyone wants - demand is limitless, resources are not.

Rationing happens at all levels
Rationing happens throughout the health sector. The Government, the funder, providers, and individuals all make rationing decisions about health.

• Government

Examples of rationing decisions at an inter-sectoral level are Government's allocation to Health versus other areas of spending; while decisions about regional funding allocations and policy decisions (such as targeted funding for new initiatives), and on the relative shares of funding for Personal Health, Disability Support, and Public Health Services are examples of intra-sector rationing decisions.

• Funder

Funder rationing decisions include decisions on what services to fund, service volumes, and standards and levels of care to be funded.

• Provider
  Rationing decisions are made by management and clinicians. Management makes organisational decisions, such as whether a hospital should invest in equipment to do glamour surgery; and clinicians make decisions on how/whether to treat patients.
• Individual
  Examples of rationing decisions made by individuals include decisions on when to seek diagnosis/treatment, decisions to self-treat, and lifestyle choices (eg eating/exercise habits; smoking).

The Five Ds of rationing
There are several methods used to ration health and disability support services:

1. Deterrence - discouraging people from making demands for services;
2. Deflection - referring people to agencies outside the health sector;
3. Delay - having people wait in queues or on lists;
4. Dilution - provision of less intense treatment or lower quality of service;
5. Denial - not providing services/treatments.

Can health and disability support services be delivered without rationing?
Alternatives are sometimes suggested, in order to avoid rationing of health and disability support services, however, when considered closely these generally involve rationing as well, for example:

• Cease inappropriate care = rationing on the basis of ability to benefit or values
• Redeploy resources from other areas of spending = rationing on the basis of national utility
• Raise taxes = rationing of income by redistribution

Rationing is the solution to an inconsistent triad
A basic goal for public health and disability support services is to have comprehensive, high quality, health care available to all citizens on the basis of clinical need, without financial barriers to access.

The problem is that this goal is impossible to reach. Any two of these factors can be consistent with each other but as a group of three they present a contradiction.




Unfortunately in this "inconsistent triad" (Weale, 1998) there is no one logical solution - it requires a balancing of competing values and making difficult choices. Rationing is the tool by which this balancing can be attempted.

Rationing is inevitable - but it needs to be fair
The real issue that deserves debate is not whether rationing should occur, but how it should be done.

Some rationing that takes place currently is ad hoc, unfair, wasteful and ineffective. Good rationing will be consistent, fair, provide value for money, and be effective.

Examples often given when considering rationing in health are the easier choices such as whether tattoo removals and cosmetic surgery should be regularly funded. However it is important that more difficult issues are grappled with, if rationing is to be made fairer.

Difficult judgements must be made about what treatments are funded and for whom. There is often a tension between the good of the individual and the good of the wider population. Clinicians tend to focus on the individual and the concept of rationing is one they may be uncomfortable with because of the perceived potential for it to constrain the way in which they treat, or do not treat, a patient.

However, if the clinician treats a person ahead of, or at the expense of another person with a greater level of need there is greater indirect harm. The best possible outcome for the population as a whole will not have been achieved. This may suggest then, that doctors should be at the forefront of efforts to improve the way rationing occurs in the health sector.

New Zealand developments
The Core Services Committee (now known as the National Health Committee) was established in 1993 to develop a national minimum health package ("core" services) for New Zealand. This was abandoned, as it was decided that few treatments are ineffective for all patients, and exclusions are unfair to patients who may benefit.

Since then, progress in more explicit rationing in NZ has been made in a number of areas:

• Development of Clinical Priority Assessment Criteria for secondary care, as part of booking systems;
• Guidelines development;
• Purchasing on the basis of effectiveness/ability to benefit;
• Prioritisation of drug purchasing;
• Needs Assessment for disability support services.

Fairer Rationing is a shared responsibility
There is no single solution. Fairer rationing will only happen with commitment at all levels.