Monday, April 22, 2013

A Rational Look at Rationing

Back when Congress and the pundits were debating the Affordable Care Act, some warned of the dangers of rationing of healthcare.  The defense was that nothing was written into the law about rationing, implying that it would therefore never happen.  This got me thinking.

During World War II, more so in the UK than in the US, rationing happened by allotment.  Citizens were issued ration books allowing them a limited amount of certain resources, such as gasoline and food.  This rationing was government imposed, and is what most people think of when they think of rationing, but it is not the only form rationing can take.  Rationing comes not necessarily by law or decree.  It may happen naturally in response to an imbalance of supply and demand.

When supply is small and demand is high, what normally happens in a capitalist economy is that the price goes up.  Think about gold or diamonds or Super Bowl tickets.  Supply is small and the demand is high.  Fewer can afford to pay the price.  Rationing by price solves the imbalance.

There is also rationing by first-come, first-served.  Think about concert tickets.  With a limited number of tickets, people line up, sometimes for days with tents and sleeping bags, to get a chance at the best seats.  Those who care less might be shut out, even if they could afford the price of the tickets.

Sometimes goods or opportunities are rationed by a queue.  You sign up and wait your turn.  Waiting lists develop for season tickets, the newest smartphone, a popular book or an organ transplant.  This has been reported as being the case for certain, more common healthcare procedures in Canada and the UK.  People wait in line.

Rationing may occur by privilege or prestige.  Not everyone is invited to the Inaugural Ball, the Academy Awards or other major celebrations.  You must be on the list.  Space is limited and many people would like to attend.  Those who arrive uninvited are crashing the party and are asked to leave.

Finally rationing may be by qualification.  Many more people apply to Harvard than are accepted.

Rationing happens in many ways every day and we don’t even notice.  When you hear someone confidently declare about any product or service that rationing is not a possibility, don’t believe it.  Most rationing doesn’t happen because we plan it or even want it; it results from an imbalance.  The only way to avoid it is to make that imbalance go away, which is not always possible.

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