PERSPECTIVE ON HEALTH CARE : Creating a Plan for ‘Us-Us’ Medicine : The Oregon plan rations--but so does every other plan. What’s needed is rationing for all, not just the poor.

Virtually everyone interested in health reform is by now familiar with the broad outlines of the Oregon plan that last week received waiver approval from the Clinton Administration. Rather than continuing a full menu of medical services for poor Oregonians eligible for Medicaid, the state will now cover all of the poor for fewer medical procedures.

Much ink has been spilled on the question of whether these are the right procedures, listed in the right order, and on the legality of the program under federal law, particularly the Americans with Disabilities Act.

The Oregon “experiment” should be understood, however, in the context of two broader questions:

* What does it tell us about the relationship between the reform of medical financing and the “rationing” of medical care?

* What does it suggest about the role of the states in health care reform?

On the first question, we should be clear about this: There is no system of providing medical care that does not ration. Fee-for-service medicine rations by price. The Medicare system rations by age group and disability status, plus an extraordinarily complex prospective-payments rate-setting system. Medicaid traditionally rations by income, and family or disability status, combined, again, with prospective rate-setting.

The Oregon plan simply changes the technique of Medicaid rationing from population to procedure.

Thus, while any more comprehensive reform of health care finance will contain its own rationing devices, there is obviously a choice among rationing techniques. That choice is crucial to who determines what medical care will be provided, and how much it will cost.

Our present medical-care arrangements are unsustainable partly because who decides what care is provided has been divorced from who determines how much is paid for that care. It is also deeply flawed because the care provided is an artifact of one’s individual economic position, one’s eligibility for particular medical programs or the vagaries of local public or private charity. This disorganization produces something close to rationing by luck.

Combined with the absence of any effective control over total expenditure, this means we spend grandly and feel badly about it.

The novelty and appeal of the Oregon plan is not in the way it rations care, but rather that the state takes clear responsibility for determining who gets what and at what cost. Criticism of the particulars of the plan should not obscure that this is a big step in the right direction--a step that we must take, somehow, on a national scale.

The Oregon plan, however, has critical defects: First, while presented as both “scientific” and “democratic,” it is neither. There simply is no general “scientific” basis for arranging medical procedures in order of medical priority. Such decisions necessarily depend on individual cases. To be sure, certain services can be excluded as generally valueless and wasteful or worse.

But, a complete list of all medical procedures in order of priority is a scientific fairy tale, as Oregon’s continuous massaging of the list to make it politically acceptable revealed.

Second, while the decision-making was quite “democratic” by comparison with many public choices, this decision was made for poor people, not for all Oregonians, and the participants in the process were predominantly upper-middle-class service providers. The list negotiated by the providers was then ratified in a political process that produced the form, but not the substance, of participatory democracy.

Of course, no national insurance plan can avoid attention to the scientific evaluation of clinical procedures. Nor is democratic accountability (as distinguished from medicine by town meeting) a bad thing. But if we are to ration explicitly, then we should do so for everyone, not just for the poor. This creates a different political process and a much stronger form of democratic accountability. Universality means that medical care is an “us-us,” not an “us-them” issue.

That everyone is affected not only concentrates the minds of politicians, but also dampens the impact of the interest groups, whether providers (doctors, nurses, hospitals) or patient groups (the aged, the disabled, children, the poor, the rich, veterans). A system that must be acceptable to all cannot play obvious favorites. More important, it can demand sacrifice--or at least the abandonment of profligacy--from all.

The meaning of Oregon’s experiment, however, goes far beyond the merits of its rationing. What Oregon--like Hawaii, Kentucky, Maryland, Minnesota, New York, Vermont and other states--really demonstrates is a different and potentially fruitful path to national health reform. If the federal government would maintain its financial effort while providing a sensible but less restrictive framework for state experimentation, the states could reform our costly system with a variety of programs that assure universal coverage, cost control and decent standards of care.

Allowing states to experiment permits different schemes to be tried in discrete jurisdictions rather than in the whole country at once. That way, we can find out what works, or the many things that work in various places. Oregon’s plan is a step in the right direction, even if it’s the wrong step.