Moving forward on rationing: an economic view

Economists normally propose markets for rationing of goods. However, we know markets do not work well for health care.1 2 But the creation of publicly funded healthcare systems, in recognition of such market failure, does not get rid of scarcity. To sustain publicly funded health care and prevent moves back towards more market based systems, societies need to wake up and tackle rationing through explicit recognition and management of scarcity.

Management of scarcity requires two things. The first is to eliminate waste (where opportunities exist to meet a need at less cost, or meet more need at no extra cost, we should take them). Beyond this, we need to consider relative value (disinvesting from interventions providing little benefit to fund those providing greater benefit). Box 1 outlines a framework for doing this.3 It can be applied wherever scarcity of resources is a problem. This framework tends to be known as programme budgeting and marginal analysis, but it is based on recognition of scarcity and the need, ultimately, to make trade-offs between interventions and, thus, patients.