Chapter 1

1. Chapter 1 Values in Health Policy: Understanding Fairness and Efficiency Deborah Stone

2. Values in Health Care: Fairness and Efficiency • Broad agreement on desirability of both values in principle • But difficult, if not impossible, to achieve consensus on realizing both • “Inherent tension” between the two • Multiple definitions of both • Depending on one’s perspective

3. Efficiency Defined • Most simply, efficiency can be conceived as a bargain • With the ideal of achieving the highest ratio of outputs to input • Myth: efficiency can be measured • Efficiency can only be properly defined in reference to an individual, party, or constituency

4. Efficiency in Practice • “The Waiting Room Game” • Efficiency from doctor’s point of view • Always having patient available to treat, thus filling waiting room • Does not factor in wasted time on the part of patients • One person’s efficient outcome represents another’s wasted time/resources

5. Contesting Fairness: Actuarial Fairness vs. the Solidarity Principle • Actuarial fairness stressed by certain insurers beginning in 1980s • Tied cost of insurance premium to an individual’s risk • Rhetorically asking why one should be forced to finance another’s risks

6. Contesting Fairness: Actuarial Fairness vs. the Solidarity Principle • Solidarity principle/ideal more closely approximated in European systems • Society at large funds the care of the sick and those (otherwise) least able to finance care

7. Actuarial Fairness in Practice • Insurers first sought to exclude racial minorities for their “greater risk” • Despite laws seeking to reform such practices: • Minorities in some areas, as well as those suffering from certain diseases, find themselves unable to receive coverage

8. Actuarial Fairness in Practice • Many insurers continue to perfect ways to further fragment market • Closely matching premiums to level of risk • While excluding certain groups altogether

9. The SolidarityPrinciple in Practice • Seeks to accomplish the ideal of basing distribution of medical care on the basis of need • Not ability to pay • Assumes that the community should be responsible for the cost of care for the infirm

10. The SolidarityPrinciple in Practice • Represents subsidy from the vast majority to the minority • Underlying principle of social insurance

11. Efficiency and Fairness in the American Health Care System • Current system infused with the spirit of actuarial fairness • Difficult to overcome

12. Efficiency and Fairness in the American Health Care System • Neither efficiency, nor fairness are “neutral criteria” through which to judge quality of health care system • They are values that have different meanings to different people

13. Efficiency and Fairness in the American Health Care System • There will always be winners and losers in nearly any health care system

14. Chapter 1 Summary • Fairness and efficiency • Two values crucial to any health policy debate • Idea of efficiency requires one to define specific perspective

15. Chapter 1 Summary • Central to the idea of fairness • Tension between actuarial fairness and the solidarity principle • Contemporary health care system tends to favor actuarial fairness over solidarity