EBRI Issue Brief

Rationing: Resource Allocation in the Current Health Care Delivery System

Nov 1, 1992 30  pages


  • Using a broad definition of rationing to include any mechanism that allocates health care resources, this Issue Brief examines the health care system along two dimensions: what differences exist in the utilization of health care services and who makes the decisions that create these differences. It finds that similar people are given different treatments as a result of decisions made by others.
  • Proposals to reform the health care system implicitly or explicitly alter the way decisions are made on how health care services are rationed. The current system allocates health care services in a number of ways: by ability to pay, by physicians and hospitals, and by government decree. Understanding rationing as it currently exists is critical to making informed choices on the future of the health care delivery system.
  • The U.S. health care delivery system has a number of characteristics that limit the market's ability to allocate resources efficiently or equitably. Income is one of the most important determinants in rationing health care services, but even individuals with relatively high incomes face some constraints on their choice of health plans.
  • There are large differences in the way health care is rationed by type of health insurance coverage, characteristics of the local health care market, provider type, and employment situation.
  • There are many decision makers in the health care delivery system, but decisions on the consumption of health care services—unlike decisions in other markets—are not primarily being made by the consumers of these services. Health care cost inflation has led to changes in the way health care is financed in both the public and private sectors. As a result, the choices available to consumers are constrained not only by income but also by employers, insurers, providers, and government regulators.
  • Much of the debate on health care reform has centered on the notion that efforts to increase access to care and control costs may lead to health care rationing. However, we are rationing health care resources in our present health care system. More appropriately, the debate should focus on the mechanism for allocating health care resources and the tension between individual decision making and social objectives. This Issue Brief provides a basis for that discussion.