Definition: What is Resource Allocation?

Resource allocation is the distribution of resources – usually

financial - among competing groups of people or programs. When we talk about allocation of funds for
healthcare, we need to consider three distinct levels of decision-making. Level 1: Allocating resources to
healthcare versus other social needs. Level 2: Allocating resources within the healthcare sector. Level 3:
Allocating resources among individual patients.

An Example of Resource Allocation

Let's consider an example: A community receives a gift of $100,000 from a wealthy donor to spend on
healthcare, education and housing. The funds can be distributed among the three areas or dedicated to
a single area, such as healthcare. Level 1 : At this level, community members consider how to distribute
the funds among one, two or three of the competing programs. For example, should the funding be split
in three equal portions or should one program, possibly under-funded in the past, get all or most of the
money? Level 2 : Assuming that healthcare gets a portion of the $100,000, the next decision community
members face is how best to direct the spending among competing healthcare interests. Should most or
all of the funds go to hospital care and medical equipment? What about the public education program
that promotes healthy lifestyles and behaviors (like exercise or immunizations) that prevent disease? Or,
community members could decide to spend the money to purchase health insurance for those who
can't afford it. Level 3 : The next level of decision making involves distributing the financial resources
among individuals. Most communities have policies and guidelines to insure fairness in these situations.
Decisions at this level include:

Who gets the next available heart for transplant? And, who sees the doctor first when there are many
people waiting in an emergency room? Why is Resource Allocation needed? Because of increasing
demand for healthcare services and rising costs to provide those services, Americans must choose how
to allocate healthcare dollars. Rising cost of healthcare Resources spent on healthcare have increased
over the last century. Americans are spending far more resources on healthcare than do citizens of any
other industrialized nation. Why? • Continued medical advances have lead to more accurate diagnoses
and better treatments, but also have increased the cost of healthcare. • The aging population is
growing. Nearly 36 million Americans (more than the entire population of Canada) are age 65 or older
and account for a majority of healthcare expenditures. • More people are living with chronic disease
and disabilities, including AIDS.

Healthcare rationing Rationing refers to the conscious decision to exclude certain people from a service
or treatment that they need. Rationing takes many forms. Rationing occurs when a state determines
who is eligible for Medical Assistance insurance. It also occurs when deciding which patient on the
waiting list gets an organ transplant. Rationing is also utilized when prices are set for health insurance
and health services that some people cannot afford.

Responses and attempted solutions to the problem of limited healthcare resources Since health is
valued very highly in American society, there have been many attempts to reform the system. These
reforms have attempted to either increase the financial resources directed to healthcare or to use
limited resources in the best way possible. Reform attempts have included efforts to: 1. Increase
efficiency. By curtailing waste and unnecessary care, providers can be more efficient. Methods include
evaluating health technologies and expanding prevention programs. 2. Distribute resources equitably.
The basis of distribution is value-based and can take many forms: strict equality, access to a determined
level of care, access to an equal opportunity for care, limiting access to people responsible for their
health problems, and access based on age or other factors. 3. Adopt managed care plans. Managed care
has been offered as an organizational structure that hopes to distribute healthcare resources more
efficiently and wisely by having physicians review policies that balance the healthcare of the individual
patient (and the cost of caring for that patient) with the goals and costs of providing healthcare to the
entire group.
A number of ethical questions arise when discussing healthcare resource allocation: • If healthcare
resources are scarce, how should they be distributed? • Distribution choices will benefit some and not
others. How should choices be made? What values should guide these choices? • Could Americans
devote more resources to healthcare if they chose? • Does America spend too much on healthcare?
What about in comparison to other countries? • Is the current distribution of healthcare resources fair
and equitable? • Is the current distribution of healthcare resources an efficient and wise use of funding?
Health Care Coverage for Everyone? According to the National Academies (which advises the federal
government and the public on scientific and medical issues), the United States: • Leads the world in
spending on health care. • Is the only wealthy, industrialized nation that does not ensure that all citizens
have health care coverage. • Has seen the number of uninsured adults increase by 6 million from 2000
to 2004. • Has seen the number of businesses offering health care plans drop from 69% to 60% in 2005.
• Experiences 18,000 unnecessary deaths each year due to this lack of health care coverage.

What rules guide rationing decisions?

Often scarcity can be alleviated by improved efficiency or expanded

investment. However, if these practical solutions cannot solve the problem, a
“rationing” decision must be made. Rationing means the distribution of any needed
thing or procedure that is in short supply to those who need it in accord with a set of
rules that assure fair distribution. The reasons for shortage can be many. For example,
there are many more patients with end stage cardiac disease or liver disease than there
are cadaver organs available; expensive equipment may be lacking in a particular
region; tertiary care hospital beds may be limited; a particular medication may be
extremely costly; few personnel might be trained for a certain technical procedure,
insurance coverage is unavailable or of prohibitive cost.

Every physician rations his or her own time available to provide medical services. For
the most part, this personal rationing is done by rules of common sense: I will take
only as many patients as I can care for competently; I will assure that my attendance is
sufficient to guarantee high quality medical care to my patients, etc. For other kinds of
rationing, for instance rationing of ICU beds, these rules of thumb are not enough.
More articulate principles are required.
Are there ethical criteria for making triage decisions?

One common medical situation in which specific principles must be applied is called
“triage.” Triage (which means "choice" or "selection") is required when many patients
simultaneously need medical attention and medical personnel cannot attend to all at
the same time, such as in a disaster or in the crowded emergency department of an
urban hospital. Again, the common sense rule is to serve persons whose condition
requires immediate attention and, if this attention is not given, will progress to a more
serious state. Others, whose condition is not as serious and who are stable, may be
deferred.

Can I make allocation decisions based on judgments about "quality of life"?

Under conditions of scarcity, the question may arise whether a patient's quality of life
seems so poor that use of extensive medical intervention appears unwarranted. When
this question is raised, it is important to ask a few questions. First, who is making this
quality of life judgment, the care team, the patient, or the patient's family? Several
studies have shown that physicians often rate the patient's quality of life much lower
than the patient himself does. If the patient is able to communicate, you should engage
her in a discussion about her own assessment of her condition.

When considering quality of life, you should also ask: What criteria are being used to
make the judgment that the quality of life is unacceptable? These criteria are often
unspoken and can be influenced by bias or prejudice. A dialogue between care givers
and the patient can surface some underlying concerns that may be addressed in other
ways. For example, residents on a medical floor in an urban public hospital may get
discouraged with the return visits of a few chronically ill alcoholic patients and
suggest that money is being wasted that could be used for prenatal care or other
medically beneficial projects. While the residents' frustration is understandable, it
would be helpful to consider other ways they might interrupt this vicious cycle of
repeat admissions. How could this patient population be supported in ways that might
improve health?

Quality of life judgments based on prejudices against age, ethnicity, mental status,
socioeconomic status, or sexual orientation generally are not relevant to
considerations of diagnosis and treatment. Furthermore, they should not be used,
explicitly or implicitly, as the basis for rationing medical services.

What about "macro-allocation" concerns?

Some situations involve what is called "macro-allocation," that is, broad policies
to distribute resources across populations, as distinguished from
"micro-allocation" decisions, such as in the above triage examples, to give
priority to one patient over another.

Many of these reasons for shortage are the result of deliberate decisions to ration.
Even such shortages as vital organs result from social policies that favor voluntary
donation over routine salvaging or a commercial market in organs. Other shortages
result from broad social and cultural institutions: our country has left health care
largely in the private sphere and the availability of care for individuals is conditioned
by their ability to pay or their employment status, the scarcity of flu vaccine in a given
year may result from budgetary decisions rather than an estimate of need in the
population. The social "safety net" that acknowledges a moral duty to assure health
care to those unable to pay is strengthened or weakened according to prevailing
societal commitments.

The theoretical ethical question is: can a fair and just way of allocating health care
resources be devised? The practical ethical question is: can a fair and just allocation
be actually implemented in a particular social, economic and medical climate?

Can we ethically qualify a "right to health care"?

Several ethical theories have been elaborated to formulate criteria for fair and just
distribution and to examine the arguments for a "right to health care." At present, little
agreement exists on any of these issues. Ideally, all persons should have access to a
"decent minimum" of health care necessary to sustain life, prevent illness, relieve
distress and disability, so that, in the words of one bioethicist, "each person may enjoy
his or her fair share of the normal opportunity range for individuals in his or her
society."

Debates over this issue have been lengthy and serious. Many policy proposals have
been considered: some implemented and others rejected. However, in the systems of
managed health care now so common in American medicine, the question of fair and
just allocation of resources must be raised and the various policies and criteria for
allocating resources must be reviewed for their fairness and equitability.

Some specific examples of public policy in devising an allocation system concentrate

on the criteria of efficiency and cost-effectiveness. The state of Oregon is unique in
having such a system for its Medicaid patients: a long list of medical procedures,
ranked in terms of their cost/benefit ratio, determines the reimbursement policy. Even
with such a system, ethical criteria must also be considered: what is to be done if life-
saving and life-sustaining interventions rank low on cost-effectiveness? Is it ethical to
omit the rescue of a person from death because their rescue by, say, bone marrow
transplantation is less cost-effective than some preventive measures? How is cost-
effectiveness to be applied to persons with shorter natural life expectancy, such as the
elderly? These questions are not easily answered but they must be consistently raised
whenever allocation systems are proposed. Some forms of allocation are obviously
unethical in any society that values justice. For example, making the ability to pay the
only way of obtaining medical care or distributing medical resources to the friends or
political colleagues of those in power. Many other problems are less obviously
unethical but still need to be evaluated and debated.

Rationing is the allocation of a good in the face of scarcity, meaning that some
who want and could benefit from a good will not get it.[6] In other words,
different parties have an interest in the same scarce resource because each
of them will not be as well off without it, yet not everyone can or will receive
the scarce resource. Here, I am concerned with the sense of “rationing”
whereby goods are equitably distributed, though individuals are not
guaranteed health care resources in excess of those allocated.[7] To ration,
then, is to determine the equitable distribution of limited benefits within a
society, based on guiding principles and societal values. I
will describe a system of rationing, which deprives people of medical care they
are owed as less just or less fair than it could have been.

There are two distinct types of rationing: macroallocation and microallocation.

Decisions within the former, affect statistical or hypothetical lives; those within
the latter, affect identified lives. Examples of macroallocation include policies
on vaccine distribution during an outbreak, rules of priority on transplant
waiting lists, and decisions about apportioning funding for research between
common and uncommon diseases.[8,9] In contrast, microallocation is more
context dependent, relying on individual judgment to determine equitable
distribution, for example, of beds in an intensive care unit or care during an
emergency for existing patients.[10] The relevance of various ethical
considerations depends on the type of allocation.[11] This paper will highlight
problems posed by human judgment, particularly in the context of
microallocation.

Fair Allocation
Just rationing requires a set of guiding principles and social values.[12]
Depending on the circumstances, one system of resource allocation may be
favored over another. Examples of rationing strategies include those that treat
all people equally, favor the worst-off, maximize the total benefits, or promote
social usefulness.[9] For example, allocation for liver transplant—determined
by recipient MELD-Na (The Model for End-Stage Liver Disease-Sodium), a
score of three-month mortality in patients with cirrhosis—prioritizes the sickest
patients first. Allocation of organs for kidney transplant, in contrast, gives
priority to people who have waited the longest. At times, rationing is designed
using a mixed approach. Emergency departments (EDs), for example,
allocate medical attention first to urgently ill patients, and then to everyone
else on a first-come, first-served basis.[13] This approach achieves some
specified balance of distributive justice and social desirability. An acutely ill
patient with an urgent and serious disease is the worst-off without medical
attention, and potentially stands to benefit greatly from prompt treatment. On
the other hand, distributing a good to everyone else according to a queue is
widely considered equitable.

While social and moral norms determine how to fairly distribute scarce
resources in theory, explicit rules or criteria are required for application in the
real world.[14] Consider the following illustrative scenario: Patient A presents
to an ED with difficulty speaking and there is concern for acute stroke. Patient
B presents with diminished consciousness following a motor vehicle accident
and there is concern for intracranial hemorrhage (ICH). Both injuries are
potentially serious, and both would demand immediate diagnosis and
management to mitigate permanent neurologic sequelae. But whom should
the clinician evaluate first? Who would be worse off if not granted priority
access to the CT scanner, and who stands to benefit more from being
diagnosed first? Without a way to determine who meets the definition of
“sickest,” the first recipient of medical attention will be chosen ad hoc, rather
than by application of guiding principles and values.

Separate from the normative questions, any system for allocating scarce
medical resources should also provide explicit protocols that detail how to
distribute goods or services after the initial determination to allocate the goods
or services is made. These operational rules or criteria for resource allocation
can be adapted and improved to reflect an overarching aim.

The utility of algorithms in rationing is not contingent on the value of a single

system of resource allocation, nor the efficacy of some set of rules or criteria;
rather, algorithms are adaptable to promote many different ethical goals,
depending on one’s overarching aim. Minor tweaks to a system of allocation
can, in real time, also better realize an ideal system of rationing.
This argument is therefore agnostic about how to properly articulate the
principle of justice in the context of rationing. There are different ways to
determine who initially receives priority for resource allocation. While I do not
presuppose that any particular system of allocation is the fairest, in what
follows, there is an assumption that a system of rationing is more just than
failing to ration in practice. In other words, a system of rationing, wherein a
person ought to be allocated some resource but does not actually receive it, is
less just than a system that provides everyone with the resources they are
owed. Instead, I focus on human limitations in actual allocation of resources
owed and the extent to which big data algorithms can better realize a fair
system of rationing regardless of how justice is defined.

Health care rationing in the United

States is primarily rationing by price
(health care goes to those who can pay the
price asked); this type of rationing is often
.'....4. invisible or ignored.3 When health care
rationing is recognized, it is often viewed
as withholding care from those in need,
especially those unable to pay.4 Dictionaries
define "ration" as "to put on a fixed
allowance"5 or to restrict to limited
allotments, as in wartime.6 The association
of rationing with wartime restrictions
on the battlefield or at home means that
the word often connotes deprivation,
usually of something people need and
want, but for a limited time and for a
noble cause.7 When the idea of rationing
is applied to health care resources in
general, and apart from wartime restrictions,
it should not be surprising that the
focus is primarily on deprivation and not
on any noble cause.
The concept of rationing used in
discussions about health care is an "equitable
distribution of scarce resources."8
If rationing is intended to permit everyone
to have a fair share of scarce
resources, why is it not enthusiastically
embraced by everyone?
If rationing is the allocation of scarce
resources, then, in deciding whether or
what it is necessary to ration, the threshold
question is, Are the resources scarce?
If not, there is no need to ration because
there is plenty for all. If the answer is yes,
however, there is, in fact, rationing. It is
no longer a question of whether but
how.8'10 Resources will be distributed, one
way or another. If there is not enough to
satisfy everyone, the only remaining issue
is how to ration: What method should be
used to divide up the scarce resources?

Most rationing arguments have concerned

what method should be used and,
especially, what counts as an equitable
distribution of scarce resources.

The hypothesis just offered is complicated

by the prevalent belief that everyone is
entitled to live as long as possible and to
be as healthy as possible and that a long,
healthy life is ordinarily attainable, given
enough health care.

This hypothesis may explain

why many people view limits on their own
health insurance coverage, for example,
as an unfair denial of necessary care, not
as necessary rationing. If true, it will be
extremely difficult to limit either the use
of health care or the money spent on
health care as long as the supply of health
care resources is perceived to be unlimited
and as long as those who attempt to
impose limits can be viewed as making
hidden and self-interested decisions about
how much money to spend.
In short, an
equitable distribution of health care may
be impossible without a credible scarcity of resources.

What Resources Are Scarce

in Health Care?
Very few health care goods or services
are inherently limited by scarcity of
supply in nature. The most obvious examples
are organs for transplantation.

If more money is spent,

larger quantities can be (and have been)
produced.
The same is true for the people who
deliver health care services: the physicians, nurses, dentists, technicians, and
others who counsel, test, and treat patients.
The United States has enough
people to deliver health care services to
everyone in the country. When we heard
about a shortage of nurses, for example, it
was not because there were not enough
people in the country to serve as nurses. It
was either because not enough people
had been trained to provide nursing
services or because not enough money
was being paid as salary to persuade
people to train or work as nurses. The raw
materials-people-exist. It is money that
turns human resources into health care
providers-money to pay for training and
the services nurses deliver-just as money
turns raw materials into products.
If there is no natural limit on health
care providers or most technologies (including
goods and services), why are
health care services so often considered
scarce resources? The obvious reason is
that there is a limit on the amount of
money people are willing to spend to
"make" and use technology and providers.
In theory, we could spend 100% of
our gross domestic product on health care
services. We do not, of course, because we
could not survive without food, clothing,
and shelter, and we also want education,
police protection, vacations, and a host of
necessary or merely desirable things.
Thus, we allocate our money, devoting
only a portion to health care. If the pot of
money allocated to health care will not
buy everything we need or want, that pot
in turn is rationed among people and
services.

At the level of patient care, it

looks as if health care services are being
rationed, when in fact it is the money to
buy health care services that is limited.

how we allocate
our money reflects how we value
different
resources.

Of course, natural limits impose

absolute scarcity, whereas the financial
limits we set create artificial or
relative shortages. Nonetheless, financial
limits are inevitable. Indeed, this is the
rationale behind sensible arguments that
health care resources ought to be distributed
more equitably: because we cannot
spend all (or even nearly all) of our money
on health care, health care resources are
effectively limited. Despite the truth in
such arguments, it is not clear that this
logic has been wholly embraced by consumers.

Rationing anf Allocationg

Resource allocation at the
level of global decision making, called
macroallocation, is commonly distinguished
from decisions about which individuals
get what services.14 Macroallocation
decisions determine how much money
is allocated to health care in this country.
Rationing, strictly construed, occurs when
a patient is (or is not) selected to receive a
treatment that is in limited supply. Bioethicists
and economists correctly point out
that macroallocation decisions determine
how much of a given resource ultimately is
made available to ration among individual
patients.'

Macroallocation decisions at the federal

and state government levels result, usually
implicitly, from decisions about how much
of the government's budget to spend on
health care programs as opposed to
defense, education, road repair, environmental
protection, park services, the arts,
and other social goals.

Between macroallocation decisions and rationing care to individual patients,

thousands of organizations, primarily health insurers, allocate their resources in ways that affect access
to care by individual patients. Although such institutional decisions are also commonly referred to as
macroallocation decisions, they are actually microallocation decisions. This is because these decisions
are made at the level of the individual firm or company (such as a health insurance company, health
maintenance organization, or managed care network), not the national or state level.
The amount of money available to put in a company's health care pot is determined largely at the
macroallocation level as the result of market competition and, often, of government decisions; a
company does not engage in national macroallocation decisions.

ional macroallocation decisions. The allocation methods commonly discussed for macroallocation do not
easily fit microallocation decisions. Macroallocation criteria have been discussed in terms of principles of
social justice, that is, deciding how much to allocate to health care as opposed to other social goods.
Here, the debate often centers on whether people are entitled to any particular level of resources or to
particular resources for specific health needs by virtue of either an individual moral right or a societal
responsibility to provide for the common good.8"1"7'8 Such abstractions rarely play a role in decisions
by private organizations about how to spend their money. Many insurers

Many insurers ration care to their subscribers by approving or denying services or payment in specific
cases. But true rationing or patient selection decisions are not allocation decisions, even though they
may affect institutional budgets. Rationing methods include medical need, likelihood of medical benefit,
degree of benefit or predicted quality of life, social and psychological resources to enhance recovery,
age, social worth, economic productivity, vital responsibilities (favoring patients on whom others
depend), maximizing the number of lives saved, minimizing the resources used per pa tient, lottery or
random selection, first come/first served, and willingness to pay.'4 92' Because these methods focus so
specifically on which patient should receive which treatment, they do not capture the type of
institutional resource allocation decision that makes it necessary to limit the number of patients
receiving the treatment. While rationing decisions presume scarcity of a resource, microallocation
decisions create artificial resource scarcity. Perhaps microallocation decisions have been lumped with
macroallocation decisions because they are both primarily financial decisions (decisions about how
much money to allocate to health care). But the reasons for such decisions, as well as how the decisions
are made, differ significantly depending on whether the decision maker is a government or a private
organization.

Rationing

Often scarcity can be alleviated by improved efficiency or expanded

investment. However, if these practical solutions cannot solve the problem, a “rationing”

decision must be made. Rationing means the distribution of any needed thing or procedure that is

in short supply to those who need it in accord with a set of rules that assure fair distribution.

Resource allocation is different from rationing. Allocation generally used to refer to higher level
decisions that constrain the availability of resources whereas, rationing generally used to refer to

decisions about how resources that have been limited (through allocation decisions) should be

used. Rationing is unavoidable because need is limitless and resources are not.

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What Is Rationing?
Although rationing has been defined in slightly different ways by different groups, most
definitions cluster around one central idea: denying a potentially beneficial treatment to a patient
on the grounds of scarcity.12The focus on potentially beneficial treatments is appropriate because
virtually no treatment in medicine offers certain benefit for an individual patient and because a
central point of controversy is whether the potential benefit is large enough or likely enough to
occur in order to justify the expense. In this document, we use the terms “rationing” and
“resource allocation” synonymously, although we acknowledge that the emotional valence of the
two terms is clearly different.
It is also important to note that not all efforts to control health-care costs involve rationing. For
example, choosing a less expensive treatment over a more-expensive one does not entail
rationing if both are equally effective, because selecting the less costly of the two does not result
in the patient being denied a potentially beneficial treatment.12 In addition, strategies focused on
reducing administrative costs and waste in health care (eg, reducing duplicative testing and
administrative inefficiencies) are generally not rationing because they do not entail denying
patients potentially beneficial care.

Rationing Is Unavoidable
In many industrialized countries, social goods—including health care, education, defense,
infrastructure, environmental protection, and public health—draw funding from a common pool.
Although need for such social goods is limitless, the resources available to supply them are
limited.6,13‐15 Inevitably, difficult choices must be made to allocate finite resources in a way that
achieves a reasonable balance across the range of important social goods. Attempting to meet all
health-care needs would likely overwhelm our capacity to supply basic elements of other social
goods, such as public safety, education, and defense. Therefore, some degree of rationing of
health care is necessary for the overall well-being of society.
Rationing decisions pervade daily practice in ICUs.5,12,16 For example, it is common to transfer a
patient out of an ICU when she might still derive some small degree of benefit from ongoing
monitoring; such transfers accommodate the needs of sicker patients in the face of a finite
number of ICU beds. Physicians in ICUs also routinely ration their time.12 They must decide
which patients to see first and how much time to spend with each. Physicians also must balance
the needs of patients against their nonprofessional obligations, such as responsibilities to their
families. It is undoubtedly true that physicians cannot provide every potential benefit to every
critically ill patient. Therefore, the reality of practice in ICUs is that patients are routinely denied
some potential benefit—however small—through implicit rationing decisions made by
physicians at the bedside.
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The Appropriateness of Rationing Is Context Specific

The necessity of some rationing in medicine does not mean that all such rationing is ethically
justifiable, and a justifiable rationing decision in one health-care system may not be similarly
justifiable in another. One example is the rules in many health systems requiring less expensive,
less beneficial drugs to be first-line choices over more expensive, more beneficial drugs. This
type of rationing is relatively easy to justify in single-payer systems (eg, the government-
sponsored health-care plans in Canada and many European countries), in which savings are
reinvested in programs to improve the health of the population. Such rationing decisions are
harder to justify in a for-profit health system with wasteful administrative mechanisms and in
which most profits are passed on to employees and shareholders rather than invested in
improving the quality of care for patients.
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Levels and Transparency of Rationing

Rationing can occur at multiple levels. The clearest conceptual distinction exists between
“macroallocation” and “microallocation” decisions.17,18 Macroallocation occurs at the societal
level and includes decisions about how to allocate funds across a range of public goods. For
example, macroallocation decisions determine how a particular society’s public funds are
allocated across social goods, such as defense, education, infrastructure, public health, and health
care. Microallocation decisions involve bedside decisions about whether an individual patient
will or will not receive a scarce medical resource. Although conceptually distinct,
macroallocation decisions and microallocation decisions are related. For example, restrictive
macroallocation decisions regarding health-care funding will create more situations in which
individual patients must be denied potentially beneficial treatments.
Perhaps the most straightforward examples of the rationing in medicine occur when there is an
absolute scarcity of a medical resource, such as organs for transplantation. The United Network
for Organ Sharing (UNOS) has developed policies to ration according to weighted organ-specific
criteria, such as time on the waiting list, severity of illness, human leukocyte antigen matching,
prognostic information, and other considerations.19‐22 These policies are examples of rationing at
the micro level. UNOS explicitly acknowledges that many will die without receiving an organ
because of the need to ration. Conceivably, more funding of initiatives to encourage organ
donation at the macro level would decrease deaths of patients on transplant waiting lists but
would likely come at the cost of funding other important social programs. Scarcity is
unavoidable in the realm of social goods, and the need to ration is one consequence.
Rationing also occurs because of general fiscal scarcity rather than an absolute scarcity of a
particular medical resource. For example, in the early 1990s, Oregon had to cope with escalating
medical expenditures for Medicaid recipients in the face of budget deficits. The resulting Oregon
Health Plan concurrently set a firm annual health-care budget and expanded the Medicaid
eligibility criteria to include all below the federal poverty level.23,24 The initial macroallocation
decision balanced state health-care spending against competing social goods, such as education,
infrastructure, and prisons.24 The second macroallocation traded providing a larger range of
health-care services to less than one-half the state’s poor for providing a basic level of health
care to all Oregonians living in poverty.23,25,26 Oregon covered services according to a published
priority list until projected expenditures exhausted the budget; there was not publicly funded
coverage for the remaining services.23‐26 This entailed denying beneficial therapies to some
patients (microallocation).
Both the UNOS strategy for organ allocation and the Oregon Health Plan are examples of
explicit rationing; these rationing decisions arise from stated principles and rules. In contrast,
implicit rationing occurs without formally stated rules or principles. The 46 million uninsured in
the United States are an example of implicit rationing at the macro level.27,28 Intensivists’
decisions about how much time to spend with each patient are also examples of implicit
rationing because they are generally not based on publicly disclosed reasons. In general, implicit
rationing raises more concerns about fairness than explicit rationing because the basis of the
decisions is not disclosed and because unspoken and illegitimate biases may exert undue
influence on the decisions.

Fair Processes of Rationing

In morally pluralistic societies, reasonable people may be unable to agree about which principles
should guide rationing. When such conflicts arise concerning high-stakes outcomes, using fair
processes to make decisions acquires special ethical importance.14,53 Daniels and Sabin14 and
Daniels53 have proposed four characteristics of fair processes related to allocation: oversight by a
legitimate institution, transparent decision making, reasoning according to information and
principles that all can accept as relevant, and procedures for appealing and revising individual
decisions.14,53 A fifth aspect of procedural fairness is meaningful public engagement.54 This step is
important to identify unanticipated needs and values and to obtain public support.54,55
The approach used to develop the Oregon Health Plan priority lists had many elements of
procedural fairness: The process was under the authority of the state government, which is a
legitimate authority for such policies; there was extensive public engagement; priority setting
was explicit and incorporated expert opinion; and mechanisms were created for review and
refinement of the priority list.56