As The Washington Times observed on July 13, “In political combat, there are few more potent weapons than a single word or a catchy phrase that can be used to target a proposal and drive it into the ground. For Republicans, 'rationing' could be that poison-tipped arrow for the Democratic-led health care bill.” Indeed, in a memo titled, “The Language of Healthcare 2009: The 10 Rules for Stopping the 'Washington Takeover' of Healthcare,” GOP consultant Frank Luntz encouraged Republicans to attack President Obama's health care plan by warning about the possibility of rationing. But these scare tactics deny the reality that Americans currently face: Insurance companies already ration care for financial reasons, and, in many cases, these companies keep patients from getting the medical treatments they need. Indeed, noting that rationing is currently done by insurance companies, proponents of health care reform argue, in the words of Health and Human Services Secretary Kathleen Sebelius, that they are seeking to “change that situation ... to make sure that it's really health care providers that make those choices in the future.”

On the June 15 edition of MSNBC's Hardball, after host Chris Matthews reported that the “concern” is that “some day, we'll have a health care system whereby somebody in Washington will say, 'No, you can't get the transplant,' ” Sebelius explained that rationing by insurance companies is currently “happening every day” and that supporters of health care reform are seeking to address the problem of insurance companies denying coverage for treatment or care that is medically indicated:

SEBELIUS: Well, you know, actually, what's interesting about that fear is that it goes on everyday. It's private insurers who often are telling their clients that, “No, you can't get this recommended treatment that the doctor has made”; “No, you can't get this drug”; “No, you're not going to be able to stay in the hospital an extra day”; “No, you're not going to get this because we're concerned about costs.”

So, people who say that, “Oh, this is a terrible idea; this could happen someday in the future,” it's happening every day. But it's really private insurance plans that are making those decisions. What we're hoping to do is change that situation. Private insurance companies should no longer be able to decide who gets health coverage and who doesn't, what kinds of benefits are available. And we want to make sure that it's really health care providers that make those choices in the future.

During her confirmation hearing on March 31, Sebelius testified that she saw rationing by “private insurers” on “a regular basis” while serving as Kansas' insurance commissioner. From the hearing (accessed via the Nexis database):

SEBELIUS: I can't tell you that I am not concerned about, ultimately, not with comparative effectiveness research, but ultimately reaching a point where, in order to control costs, there is some effort to ration health care.

I, frankly, as insurance commissioner, where I served for eight years, saw it on a regular basis by private insurers, who often made decisions overruling suggestions that doctors would make for their patients, that they weren't going to be covered. And a lot of what we did in the office of the Kansas Insurance Department was go to bat on behalf of those patients to make sure that the benefits that they had actually paid for were, in fact, ones that were delivered.

Additionally, Sebelius said in May 6 testimony before the House Ways and Means Committee that another aim of health care reform is to “end barriers to coverage for people with pre-existing medical conditions.” She continued: “In Kansas and across the country, I have heard painful stories from families who have been denied basic care or offered insurance at astronomical rates because of a pre-existing condition. Insurance companies should no longer have the right to pick and choose. We will not allow these companies to insure only the healthy and leave the sick to suffer.”

Insurance companies acknowledge that they ration care

The insurance industry has readily admitted to using cost-benefit analyses in coverage decisions. For instance, during the July 15 edition of NPR's Morning Edition, WellPoint chief medical officer Dr. Sam Nussbaum told co-host Steve Inskeep that “where the private sector has been far more effective than government programs is in limiting clinical services to those that are best meeting the needs of patients.” Moreover, while conservative media figures who oppose Obama's health care plan -- like Fox News contributor Dick Morris -- warn that the president would ration the use of imaging services such as MRIs and CAT scans, Nussbaum specifically pointed to the industry's effectiveness at reducing the use of those very services when they are “not necessary”:

NUSSBAUM: When we look at advanced imaging, and these -- this is MRI, CAT scan, PET scans -- we know that as much as 30 percent of those procedures are not necessary. And we've been able, over the last several years, to have growth in imaging procedures of between 0 and 5 percent. The government, under CMS, has seen imaging grow 15 to 20 percent a year during the same time interval.

Wendell Potter, a former senior executive at CIGNA health insurance company, has detailed ways in which the insurance industry makes cost-based coverage decisions. In June 24 testimony before the Senate Committee on Commerce, Science, and Transportation, Potter urged the committee “to look very closely at the role for-profit insurance companies play in making our health care system both the most expensive and one of the most dysfunctional in the world.” Later in his testimony, Potter discussed how “insurers routinely dump policyholders who are less profitable or who get sick” and “also dump small businesses whose employees' medical claims exceed what insurance underwriters expected”:

To help meet Wall Street's relentless profit expectations, insurers routinely dump policyholders who are less profitable or who get sick. Insurers have several ways to cull the sick from their rolls. One is policy rescission. They look carefully to see if a sick policyholder may have omitted a minor illness, a pre-existing condition, when applying for coverage, and then they use that as justification to cancel the policy, even if the enrollee has never missed a premium payment. Asked directly about this practice just last week in the House Energy and Commerce Committee, executives of three of the nation's largest health insurers refused to end the practice of cancelling policies for sick enrollees. Why?

Because dumping a small number of enrollees can have a big effect on the bottom line. Ten percent of the population accounts for two-thirds of all health care spending. The Energy and Commerce Committee's investigation into three insurers found that they canceled the coverage of roughly 20,000 people in a five-year period, allowing the companies to avoid paying $300 million in claims.

They also dump small businesses whose employees' medical claims exceed what insurance underwriters expected. All it takes is one illness or accident among employees at a small business to prompt an insurance company to hike the next year's premiums so high that the employer has to cut benefits, shop for another carrier, or stop offering coverage altogether -- leaving workers uninsured. The practice is known in the industry as purging. The purging of less profitable accounts through intentionally unrealistic rate increases helps explain why the number of small businesses offering coverage to their employees has fallen from 61 percent to 38 percent since 1993, according to the National Small Business Association. Once an insurer purges a business, there are often no other viable choices in the health insurance market because of rampant industry consolidation.

Extent of rationing by insurance companies

As Potter explained, insurance companies restrict or deny coverage by rescinding health insurance policies on the grounds that people had undisclosed pre-existing conditions. On June 16, a House Energy and Commerce subcommittee held a hearing exploring this practice, with the stated goal of examining “the practice of 'post-claims underwriting,' which occurs when insurance companies cancel individual health insurance policies after providers submit claims for medical services rendered.”

In conjunction with the hearing, the committee released a memorandum providing its findings about “problems with the individual health insurance market,” detailing various methods by which insurance companies rescind coverage. It's conclusion that “the market for individual health insurance in the United States is fundamentally flawed” was based in part on a review of “approximately 116,000 pages of documents and interview[ing] numerous policyholders who had their coverage terminated, or 'rescinded,' after they became ill.” The committee determined that three major American insurance companies rescinded 19,776 policies for over $300 million in savings over five years, as Potter noted in his testimony, and that even that number “significantly undercounts the total number of rescissions” by the companies:

The three insurance companies testifying at today's hearing reported to the Committee that they rescinded at least 19,776 policies from 2003 to 2007. This number significantly undercounts the total number of rescissions because one company, UnitedHealth, failed to provide data for 2003 and 2004, and another company, WellPoint, did not provide data from all of its subsidiaries.

The three companies also reported saving more than $300 million as a result of rescissions during this five year period. The specific amounts reported by the companies were:

WellPoint: $128.9 million

Assurant: $151.6 million

UnitedHealth: $18.7 million

According to documents provided by the companies, as well as first-hand accounts from individuals who obtained individual health insurance, it appears that insurance companies have taken advantage of the haphazard regulatory framework by engaging in a series of controversial practices involving rescissions.

Additionally, the memo noted that "[d]ocuments produced to the Committee indicate that at least one insurance company, WellPoint, has evaluated employee performance based on the amount of money its employees saved the company through retroactive rescissions of health insurance policies." The memo continued:

The Committee obtained an annual performance evaluation of the Director of Group Underwriting at WellPoint prepared on February 26, 2004. One objective this official was evaluated for was her ability to meet financial “targets” and improve financial “stability.” Under “results achieved,” the review stated that this official obtained “Retro savings of $9,835,564,” indicating that she helped save the company nearly $10 million through rescissions. For this objective, the official was awarded a perfect “5” for “exceptional performance.”

In a June 16 post on Time magazine's Swampland blog, National political correspondent Karen Tumulty detailed several of the personal stories about post-claims underwriting that were recounted during the hearing. Among them was the following:

In May, 2008, Robin Beaton, a retired registered nurse from Waxahachie, Texas, went to her dermatologist to be treated for acne. He mistakenly wrote down something on her chart that made it appear that she might have a pre-cancerous skin condition.

Not a big deal, right? It shouldn't have been, except that soon after that, she was diagnosed with something far more serious -- invasive and agressive breast cancer. Three days before she was scheduled for a double mastectomy, her insurance company, Blue Cross, called her and told her they were launching an investigation into the last five years of her health records. It turned out that dermatologist's note had been a red flag, and the company was looking for a way to cancel her policy on the grounds that she had been hiding a serious medical condition.

What Robin went through after that was a nightmare, one she tearfully described Tuesday morning in front of the House Energy and Commerce Committee's oversight and investigations subcommittee. “The sad thing is, Blue Cross gladly took my high premiums, and the first time I filed a claim and was suspected of having cancer, they searched high and low for a reason to cancel me,” said Robin, whose hair is just beginning to grow back in from chemotherapy.

De facto rationing due to cost

Some Americans find their health care “rationed” by their inability to afford it even if they have health insurance. After Fox News host Sean Hannity cited the case of a 55-year-old British man who fixed his tooth with superglue because he was unable to find a dentist whose services were covered by the National Health Service and he could not afford to pay for the procedure himself, Media Matters for America highlighted media reports of Americans gluing and extracting their own teeth due to the costs of dental care. For example, in a March 12 article, ABCNews.com reported:

The mortgage is due, the kids have needs, and the dental insurance doesn't cover a ninth of the cost of your dental work. At that point, applying superglue to your crowns didn't seem too unreasonable for [September] Williamson.

But, the superglue was just one of a whole set of tooth troubles. Unable to pay for more expensive treatments, Williamson said she's resorted to just pulling out the problem teeth.

[...]

Although the poor have always employed questionable home treatments, some health care workers have noticed a recent increase in desperate attempts by people to play doctor out of economic desperation.

The ABCNews.com article also quoted one health services expert saying that more and more people with health insurance are increasingly unable to afford other types of medical procedures:

“They'll pull rather than try to fix; that's a huge, huge issue,” said Joan Whitaker, director of health services at the Action for Boston Community Development Center in Massachusetts.

While dental insurance rarely covers the cost of more expensive treatment, health insurance doesn't always cut it either, Whitaker said.

“Even if people have health insurance right now it doesn't mean that they have money for their co-payments,” she said.

Whitaker works with many low income families in the Boston area. She said that recently time, rather than money can be an issue for patients.

“What's happening with a lot of people is they are putting off finding out about problems, because if they're in low paying jobs, and if they take time off they're afraid they won't have a job when they get back,” she said. “They're out here working one or two jobs but they are still marginalized, because one thing could happen to them and they can lose it all.”

Similarly, in a July 15 New York Times Magazine article, Peter Singer, professor of bioethics at Princeton University, wrote, “In the United States, most health care is privately financed, and so most rationing is by price.” He continued:

Health care is a scarce resource, and all scarce resources are rationed in one way or another. In the United States, most health care is privately financed, and so most rationing is by price: you get what you, or your employer, can afford to insure you for. But our current system of employer-financed health insurance exists only because the federal government encouraged it by making the premiums tax deductible. That is, in effect, a more than $200 billion government subsidy for health care. In the public sector, primarily Medicare, Medicaid and hospital emergency rooms, health care is rationed by long waits, high patient copayment requirements, low payments to doctors that discourage some from serving public patients and limits on payments to hospitals.

[...]

Rationing health care means getting value for the billions we are spending by setting limits on which treatments should be paid for from the public purse. If we ration we won't be writing blank checks to pharmaceutical companies for their patented drugs, nor paying for whatever procedures doctors choose to recommend. When public funds subsidize health care or provide it directly, it is crazy not to try to get value for money. The debate over health care reform in the United States should start from the premise that some form of health care rationing is both inescapable and desirable. Then we can ask, What is the best way to do it?

Additionally, in a June 17 article, New York Times economic and business columnist David Leonhardt identified “three main ways that the health care system already imposes rationing on us”:

[W]hen middle-class families complain about being stretched thin, they're really complaining about rationing. Our expensive, inefficient health care system is eating up money that could otherwise pay for a mortgage, a car, a vacation or college tuition.

The second kind of rationing involves the uninsured. The high cost of care means that some employers can't afford to offer health insurance and still pay a competitive wage. Those high costs mean that individuals can't buy insurance on their own.

The uninsured still receive some health care, obviously. But they get less care, and worse care, than they need. The Institute of Medicine has estimated that 18,000 people died in 2000 because they lacked insurance. By 2006, the number had risen to 22,000, according to the Urban Institute.

The final form of rationing is the one I describe near the beginning of this column: the failure to provide certain types of care, even to people with health insurance. Doctors are generally not paid to do the blocking and tackling of medicine: collaboration, probing conversations with patients, small steps that avoid medical errors. Many doctors still do such things, out of professional pride. But the full medical system doesn't do nearly enough.

Diagnosis: Fear-mongering

Conservatives warning of rationing resulting from health care reform include the following:

• On July 22, the Fox Nation linked to a New York Post op-ed about the American Medical Association's endorsement of House Democrats' health care bill under the headline: “Misguided American Medical Association Endorses Rationing.”

• In her July 22 syndicated column, Michelle Malkin wrote: “Big Nanny Democrats want to ration health care for everyone in America -- except those who break our immigration laws.”

• On the July 21 edition of his Fox News program, Hannity referred to “government-managed coverage” as “rationing” while citing results from a July 9-12 Public Strategies Inc./Politico poll. While the poll found that 44 percent of respondents believe government-managed health care coverage would result in a higher price of health care in the United States, Hannity claimed that “44 percent of those polled said that rationing care would actually drive up the cost.”

• On the July 21 edition of Fox News' Your World, host Neil Cavuto asserted that when Sen. Edward M. Kennedy (D-MA) wrote in a recent Newsweek op-ed that "[m]ost of these readmissions are unnecessary, but we don't reward hospitals and doctors for preventing them," Kennedy was "[m]ore or less saying, you know, we're going to be rationing things here."

• On the June 27 edition of Fox News' Forbes on Fox, referring to Obama's remarks during the June 24 ABC health care forum, Forbes publisher Rich Karlgaard claimed: "[W]hat he's indicating is that government health care involves rationing. It's kind of funny that he let it slip out." As Media Matters noted, Obama was specifically referring to medical procedures that are “not making anybody's mom better” and “additional tests or additional drugs that the evidence shows is not necessarily going to improve care.”

• On the June 15 edition of Fox News' Hannity, Fox News contributor Dick Morris claimed that one of the ways Obama can pay for health care reform is to “do what he's increasingly doing, which is to crack down on health care spending and have severe rationing.”

• On June 19, Hannity claimed that “we're going to have a government rationing body that tells women with breast cancer, 'You're dead.' ”

• On the June 10 edition of Hannity, former House Speaker Newt Gingrich (R-GA), a Fox News contributor, asserted: “This is a big-spending, big-government, big-politician, big-bureaucracy administration. I am deeply opposed to Washington bureaucrats deciding whether or not to ration your health care or the health care of your loved ones. And I think that it's a fundamental choice for America.”

From the July 21 edition of Fox News' Hannity:

HANNITY: The president's trying to fulfill key campaign promises on issues like health care and climate change, but dwindling public support may prevent him from doing so. A whopping 40 percent of Americans surveyed said that the president's health care proposal would actually make health care in this country worse, not better, and, similarly, 44 percent of those polled said that rationing care would actually drive up the cost. Only 27 percent think it would lower costs, while 29 percent said prices would stay about the same.

From the July 20 edition of Fox News' Your World with Neil Cavuto:

CAVUTO: All right. When even Ted Kennedy says -- and Ted's been doing this since before you were born, since before I was born -- and --

TARA DOWDELL (Democratic consultant): Thank you.

CAVUTO: -- says: “Most of these readmissions are unnecessary; we don't reward hospitals and doctors for preventing them.” More or less saying, you know, we're going to be rationing things.

From the July 15 broadcast of NPR's Morning Edition:

INSKEEP: Next, we'll hear from a leading insurance company, one of many opposed to the so-called public option. That's the plan for a government health insurance program to compete with private insurance. We sat down with Dr. Sam Nussbaum, chief medical officer for WellPoint.

[begin audio clip]

INSKEEP: What's wrong with the public plan?

NUSSBAUM: Steve, we do not endorse a government-run health plan. We absolutely want to see universal coverage for all Americans. We believe the private sector can provide innovative solutions to health care.

INSKEEP: Dr. Nussbaum influences coverage received by WellPoint's 35 million customers. It is the country's largest health benefits firm. He argues that the private sector is more efficient than the government.

NUSSBAUM: Let me give one specific example, Steve, that I think will be informative. When we look at advanced imaging, and these -- this is MRI, CAT scan, PET scans -- we know that as much as 30 percent of those procedures are not necessary. And we've been able, over the last several years, to have growth in imaging procedures of between 0 and 5 percent. The government, under CMS, has seen imaging grow 15 to 20 percent a year during the same time interval. That's an example --

INSKEEP: You're talking about Medicare -- Medicare payments, the --

NUSSBAUM: Yes.

INSKEEP: -- Medicare program.

NUSSBAUM: The Medicare program. I'm talking about the use of imaging services and the cost of imaging services. So I would argue that where the private sector has been far more effective than government programs is in limiting clinical services to those that are best meeting the needs of patients. Important as Medicare is for coverage for Americans, it has not been effective in controlling cost, in integrating care, and bringing the advances in medical treatment to all Americans.

INSKEEP: There are people who would argue with you about the effectiveness of Medicare or the efficiency of Medicare. I'll take the point that you have a different perspective on that, but I would just ask if you're not undermining your own argument. If the government is lousy at providing efficient health care, why is a public health plan a threat to you? You'll just -- you'll just be more efficient than they are and make money.

[end audio clip]

From the June 10 edition of Hannity:

HANNITY: Starting tomorrow -- now the president yesterday talked about pay-go after he spent all the money. He talked about pay-go, and then he's going to talk about nationalizing health care -- ObamaCare. That big debate begins tomorrow.

That is not included in the pay-go, nor is the stimulus, nor is the omnibus, nor is the $3.6 trillion budget, So, it's really deceptive -- he's trying to create the impression he's conservative on fiscal matters, when, in fact, he's not.

GINGRICH: Look, Democrats only talk about pay-go when they want to raise taxes. Democrats only sound conservative when they want to raise taxes. This administration and its allies, with Nancy Pelosi and Harry Reid on Capitol Hill, are spending an extraordinary amount of money.

We have passed a trillion dollars in debt already this year. It's unending, and I think the fact is that they waive every rule they want to waive to fit them and then hide behind the rules to fit them. And we ought to just relax and ignore them.

This is a big-spending, big-government, big-politician, big-bureaucracy administration. I am deeply opposed to Washington bureaucrats deciding whether or not to ration your health care or the health care of your loved ones. And I think that it's a fundamental choice for America.

Do you really want to have your future and your life and your health in the hands of the Washington bureaucracy?