Running Head: ETHICS CASE STUDY ON RATIONING

Ethics Case Study on Rationing

David Atwell and Keston Trammell
Auburn University/ Auburn University Montgomery

ETHICS CASE STUDY ON RATIONING

Abstract
The Patient Protection and Affordable Care Act (PPACA) was passed in 2010, and is set
to begin phasing in January 2014. The PPACA is one of the largest reforms of our
healthcare system in over 50 years and will bring about many new challenges. This paper
will address some of the concerns of the bill, such as, healthcare rationing, especially
with the baby boomers coming of age. This paper will also review some of the
economics of this massive reform as well as discuss application to the micro and macro
systems. Leadership theories will also be explored in the context of this new reform and
future needs from our leaders.

ETHICS CASE STUDY ON RATIONING

Ethical Case Study on Rationing

The Patient Protection Affordable Care Act passed in 2010, brings in a new age in
healthcare. The tremendous changes not only affect distribution of healthcare but also
healthcare delivery and management. Issues such as rationing, economics, and leadership
are very much a part of this change. These issues also include how to deal with finite
resources when one of the largest generation, the baby boomers, come of age as they are
now. This new healthcare reform is to begin phasing in at the start of 2014. For those
who believe healthcare is a right and not just a privilege, this is a step in the right
direction. Others believe however, that this will become to great an economic burden and
decrease our quality of care as well as creating a rationing of healthcare.
Summary and Synthesis of Case Study
The Patient Protection Affordable Care Act (PPACA) was passed in 2010 and
designed to provide insurance for the estimated fifty million uninsured Americans. This
comprehensive Medicaid, requires most to purchase insurance, and prevents exclusions
such as pre-existing conditions.
Healthcare rationing is a topic being considered by many with the passing of the
PPACA. Today, healthcare is rationed mostly in the aspect of private insurance, public
insurance, and Cadillac plans. Services are provided somewhat on the basis of
payment. The PPACA is meant to provide all with equal insurance, and a more fairly
rationed healthcare system. The post PPACA future will have to find ways to deal with
rationing of healthcare. There are finite resources available for healthcare. The most
obvious area for possible healthcare rationing is with our elderly population.

ETHICS CASE STUDY ON RATIONING

Another problem with rationing of care comes with the primary care available to
meet the increased demand. It is already estimated that primary care practitioners,
including physicians, advanced practice nurses, and physician assistants are not sufficient
for current demands and that with the aging population, as well as growth, another 35,000
to 44,000 primary care providers will be needed by 2025 (Carrier, 2011).
Rationing healthcare for this country has been seen mostly by the ability to pay.
The PPACA tries to eliminate that pay providing all with adequate and good health
coverage and access. While the PPACA does not include rationing many have suggested
that rationing is going to be necessary. The area of interest to most in regards to rationing
is the elderly and upcoming baby boomers. Some advocate refusing to pay for lifeextending medical care. This is justified by figures that by 2030, the 65-year and older
population will reach 21 percent and that estimates that the government currently spends
more than $9000 per elderly and less than $900 per child each year (Andre & Velasquez,
1990). The advocates of this rationing maintain that this offers the greatest good for the
most people. They also argue that by 70 to 80 years of age only end of life comfort
measures should be given as these people have lived out their useful lives.
Opponents of rationing argue from many different points, but also from a sense of
what is right morally and respecting the life of all, no matter what their age. The quality
of life for an 80 year old can be just as good as for an 18 year old and in some ways
better. The argument is also provided that we are a country of people with certain
inalienable rights and that healthcare is a right and not a privilege. Opinion polls have
shown public agreement with this for decades (Hoffman, 2013). Opponents also argue

ETHICS CASE STUDY ON RATIONING

that reducing cost; reforms, and improved efficiency are all examples of ways to counter
any rationing.
Leadership Implications
The Affordability Care Act (ACA) has many implications for healthcare and
nursing leaders in regards to rationing. Current demands from legislation require that
patient care services provide the highest quality of care to all patients as well as the
demand to cut expenditure and costs in the process. Rationing of healthcare can be seen
as either a difficult or promising venture that the ACA may involve in its implementation.
An aspect of rationing that is difficult to comprehend from a care aspect is when to say to
no to a patient. As nurses, our job requires that we be of service to those in need.
Managing that role with rationing can be controversial to many. In reference to the
elderly and rationing, it can be considered unfair that ones who have served to raise the
current generations and who provided for the workforce could be left out of the
healthcare picture and will not be adequately cared for (Engleman & Johnson, 2007). A
benefit to rationing as baby boomers are aging rapidly with various disease processes is
that the provision of care to younger generations can be more vastly applied. Considering
younger individuals who currently do not qualify for insurance in need of a transplant,
this patient would now have access to a needed organ that typically would go to older
individuals. Regardless of ones viewpoint on rationing a difficult aspect for the leader
will be implementation of rationing and the opinions of those involved.
Beneficial Theories
Various leadership theories can be beneficial to the changes that are proposed by
the Affordability Care Act. One aspect of leadership that will be almost required in

ETHICS CASE STUDY ON RATIONING

regards to healthcare rationing is that of the shared leadership theory. The shared theory
involves the distribution of responsibility of leadership among multiple individuals
(Porter-OGrady & Malloch, 2011). With the demands that the ACA will place on the
hospital the load of policy and procedure change and regulation will have to be shared
among various leaders in the nursing and healthcare workforce. Another leadership
theory that will be beneficial to the implementation of healthcare reform will be the
transformational leadership style. The transformational leader looks beyond the status
quo and develops a means by which to transform the workforce towards goal attainment
(Porter-OGrady & Malloch, 2011). With the numerous changes that will be involved in
the ACA as well as the difficulty of rationing implementation, a transformational leader
will be beneficial to ensuring the moral of the workers and developing a means by which
to adapt and change to meet the needs that will come. The quantum leader will be most
beneficial to the changes of the ACA regarding rationing on both a large and small scale.
The quantum leader avoids hierarchical leadership and looks at all parts as equally
important and beneficial. The quantum leader is a proponent of adaptation and looks at
change as a way to improve methods and procedure (Porter-OGrady & Malloch, 2011).
On a large scale, the quantum leader can identify means by which to improve procedure
through the changes that will be enacted by the ACA. On a smaller scale, the quantum
leader can instruct other on ways to be involved with change and how to adapt as needed.
Difficult to Transition
Some leadership models may have difficulty in the transitions of the ACA. First
the servant leader that aims to carry the load of those in which they are over and is
selfless. This person may have difficulty in accepting the role that rationing places on the

ETHICS CASE STUDY ON RATIONING

nurse. The emotional leader may also have difficulty with these changes, as legislation
may remove provision of care for some patients in which the nurse leader has drawn
close to. Managing these emotions and ideals may be difficult for the leader to
accomplish in view of these changes.
Economics
The PPACA is to date the largest reform of our healthcare system. This reform
includes expanding Medicaid as well as introducing new taxes and fines. The
Congressional Budget Office (CBO) projects about $940 billion in new spending
combined with a projected $1,080 billion in spending reductions and revenue increases.
This is projected to bring about a $140 billion dollar deficit reduction in the first decade,
followed by more than a trillion in the following decade.
In order to pay for the expense of the PPACA, several fees and taxes have been
added. Taxes on medical devices, tax on Cadillac health plans, as well as reductions in
Medicare reimbursement. An increase in Medicare tax rates of 0.9% is also included in
the plan (Gruber, 2011). Money will also be made by requiring individuals and families
to purchase insurance if they currently have none. This can be done through state or
federal exchanges being set up for 2014. This insurance is still expensive. A family of
four with an income of 50,000 would have to pay approximately $757 per month
(Gruber, 2011). This cost would be offset by tax credits that would lower the actual cost
to around approximately $280 per month. The problem with this, however, is that if
individuals choose not to purchase insurance then a penalty of 2.5 percent of income or
approximately $695 whichever is greater will be the only penalty applied (Gruber, 2011).
This, of course, makes it much more economically beneficial to not purchase insurance.

ETHICS CASE STUDY ON RATIONING

The PPACA also has several measures to reduce the rising cost of healthcare.
One of these is a program that is considering other ways to reimburse providers, and
getting rid of the fee-for-service system. This would likely cut back on many
unnecessary tests that are done simply for the money.
There are many groups that have also evaluated the PPACAs economic effects
besides the CBO. The Kaiser, The Heritage Foundation, and Jonathon Gruber of the
National Bureau of Economic Research are examples of many who disagree with the
CBO. These groups predict that the PPACA will increase the deficit, increase insurance
costs, and reduce job creation. These opponents claim that the CBO is wrong because it
does not account for many costs associated with PPACA such as billions needed for the
IRS, CMS, and Medicaid to name a few. Money will also be diverted from the economy
and some analysts put the deficit costs at $562 billion for the first decade and $1.5 trillion
for the second decade (Howard, 2011).
Another issue not addressed with the PPACA, is the Medicare cuts. Medicare
already pays less than private insurance and Medicaid. With increased cuts in payments
many primary care providers have said that they will stop taking Medicare patients. With
the baby boomers coming of age, this will affect a large portion of our population. This
highlights the problem of having a limited number of resources and brings up the
possibility of considering healthcare rationing in a country where most believe healthcare
is a right.
Application to Macro and Micro Systems
The effect of health care reform and rationing of healthcare on macro-systems is
heavily bound to establishing policy and governance of the ACA. One method of

ETHICS CASE STUDY ON RATIONING

establishing such policies is through the use of Comparative Effectiveness Research

(CER). CER looks to establish the best care for the right patient at the right time
(Milstead, 2013). By utilizing CER, the federal government will be able to determine the
best allocation of resources that will be most beneficial in the enactment of healthcare
rationing.
Major implications in line of funding will be required on the micro-systems level.
Initially, the federal government will issue reimbursement to states through 2016 for the
acceptance of new patients into Medicaid. Beginning in 2017, that percentage of
reimbursement will decrease leaving the state to pick up the extra percentages themselves
(Drew, 2011). This will have a greater impact on states with lower average incomes, as
more people will be eligible for Medicaid with the induction of the ACA. Administrative
costs on the state level for implementation of programs such as Medicaid has also been
cited as a future problem for the states individually (Drew, 2011).
Conclusion
The enactment of the PPACA brings many new challenges to our country.
Quantum and transformational leaders will be and are needed to guide healthcare
institutions into this new era. Many challenges wait to be overcome, such as, the
possibility of rationing and dealing with finite resources. The economic challenges are
tremendous and uncertain, however, the country moving to a place where adequate
quality care is a right instead of a privilege is a step in the right direction.

ETHICS CASE STUDY ON RATIONING

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