A blunt kind of medical rationing began three years ago in Oregon.

It started a movement that could sweep the country.

In July 1987, trying to stretch dollars for care of poor Medicaid patients, Oregon legislators voted to stop funding many organ transplants -- cost, $65,000 to $250,000 apiece. They voted, instead, to use the money to give basic health services to 400 more women and 1,800 children.

Four months later, a 7-year-old boy with leukemia, Coby Howard, was denied a $100,000 bone-marrow transplant and died.

Told to "smile big," he had stood before TV cameras to help raise $60,000 toward the operation. But by the time a medical center agreed to accept that sum for the surgery -- the transplant that might or might not have saved his life -- he was too sick for it.

Coby Howard was a victim, the media told the public, of health care rationing. And he became a symbol of an emerging era in which Americans, like it or not, must face the fact that no government, no employer, no insurer, no individual can afford to pay for everything medicine can do.

How deeply such rationing must cut, how the dollars are to be allocated, who is to go without -- this is rapidly becoming "the health policy debate of the century," says Arnold Relman, the physician who edits the New England Journal of Medicine. "Can we improve our health care system sufficiently and soon enough," he asks, "to avoid either systematic rationing or more restriction of access through pricing?"

Across the country, health officials are faced with tough choices. In several states, public pressure has forced reluctant legislators to fund organ transplants. Oregon legislators knew that California had done so, then in 1982 had dropped 270,000 people from its Medicaid rolls.

Oregon stuck to its guns on transplants and has now proposed to go further with a revolutionary plan to, first, ration medical services for the poor but assure them basic care, and, second, move toward doing the same for all Oregonians, assuring them, too, a basic level of care but not all everyone might want.

Precisely this is the effect in the national health plans of Britain and many other countries. It is the effect to a considerable extent in the new Canadian health system. This practice goes by many, sometimes evasive, names: "allocation of resources," a "two- or three-tier medical system," even "socialized medicine," where the government doesn't say, "Doctors can't do this." It just doesn't provide the money.

Whatever the name, the impact is the same. Some things that make people feel or function better or even get well are not provided because they cost too much. But some affluent people continue to get first-class care because they can pay for it themselves.

This nation's keenest analysts of health care are now variously calling rationing by whatever name a "likelihood," a "certainty," a "necessity," a "danger," a "specter" and, to some, a "solution."

To others, rationing of health care dollars is already here. "Time out for truth," says Willis Goldbeck, former president of the Washington Business Group on Health. "The United States rations care daily in both the public and private sectors. People do not have equal access to even the most basic services."

De Facto Rationing

The rationing of treatment of America's poor or dispossessed is of course an old story. They have been getting second-class care for generations.

Observers commonly call their kind of rationing, our present practice, "silent rationing," "under-the-table rationing," "de facto rationing," "rationing by financing" or just "rationing by wallet."

Our present practice? Indeed so.

Michael Thompson of Silver Spring is a registered nurse. Because he and his wife, Debbie, feel "an obligation," they care for two foster children, both handicapped, as well as their own son, Michael, 10.

"When we call our health plan for an appointment for Michael, we often get one within three or four hours," Thompson reports. "But because we haven't been able to adopt the others" -- Adrian, 15, and Carlos, 11 -- "we can't get them into a plan for any affordable amount. They're on Medicaid, but we haven't been able to find a pediatrician who'll take its low fees.

"We've had to use Children's Hospital's clinic a lot. Once you get access, the care is fine. But getting access for the kids on Medicaid -- that takes longer.

"When Adrian was in an institution, before we took him, an ear infection was neglected. That caused a two-thirds hearing loss."

Richard Taranto of Burke, tells of switching jobs, trying to switch health insurance and learning that his wife's successful treatment for a benign growth and his treatment for an ulcer meant they could not be covered for these conditions for five years.

More insurers are applying these "pre-existing condition" limits. Employers and insurers alike are cutting coverage or making it more expensive. So one American in six or seven lacks health insurance, and as many have inadequate insurance.

Diana Seeger of Grand Rapids, Minn., tells of being too poor to buy private health insurance but not poor enough to qualify for government assistance. In fact, Medicaid, the federal-state program for -- supposedly for -- the poor, now covers only 41 percent of all those below the poverty line.

"If you've never raised a family without medical insurance and don't qualify for Medicaid," she says, "it may be difficult for you to understand the terror parents face when they awake to find a crying baby is running a temperature of 106 degrees.

"Six years ago, I was pregnant. My husband was a logger bringing home $9,000 a year. We had no health insurance. This meant that when the time came we had to go 84 miles to a hospital. We didn't make it. I went into labor and wound up at an Indian clinic. They didn't even have oxygen. The doctor called an ambulance from a hospital five miles away, which we had just passed. By the time David was delivered, he had been deprived of oxygen for eight to 10 minutes. As a result, he was severely brain damaged. When he was 3, he died."

More than ever, such de facto rationing is affecting the kind of medical care those without health coverage get. "The poor can no longer expect the same standard of care as the middle class," says Bruce Vladeck, president of the United Hospital Fund of New York City. "Indigent patients at a New York public hospital will be moved to an eight-to-20-bed ward two days after surgery. They'd better hope that a family member shows up to assist in nursing."

Some rationing is indirect. The hospital of the University of California at Irvine gave so much uncompensated care that it posted security guards to divert indigent women in labor to other hospitals. But public hospitals, the main recipient of such patients, are almost all overwhelmed and underfinanced.

Some rationing is more direct. The District of Columbia government can no longer afford the overtime payments to keep public clinics open at night, and the clinics sometimes run out of medicines. In May, the federal government ran out of money for emergency vaccinations for a spate of epidemics of measles.

And rationing has impacts. After California cut 270,000 persons from its Medicaid rolls, Robert Brook and Rand Corp. associates followed 186 people who had lost their coverage and 186 who still had it. In a year's course, seven of the uncovered but none of the covered died. "They basically died because they ran out of medicine for blood pressure or diabetes or whatever and suffered the consequences," Brook says. He calculates that the policy change may have caused 5,000 to 10,000 deaths yearly.

Princeton economist Uwe Reinhardt calls this "Social Darwinism," a system in which those with good health coverage survive.

Physician Harvey Fineberg, dean of the Harvard School of Public Health, puts it this way: "When we see a baby who needs a liver transplant appear on TV, we want to do anything possible to help that child. But public health has no visible victims."

Not quite true. Some children die of measles. There is needless infant mortality among the poor. Breast cancers remain undetected because of poor public coverage for mammograms.

But, yes, the victims are invisible in that we do not see them on television.

The Cost Engine

The question now becomes: must we ration further?

This is inevitable, say many authorities, when the cost of care climbs despite all efforts -- cost containment, competition, "managed care" -- and the U.S. has built the world's most expensive health system while leaving at least a fourth of the population uncovered or poorly covered. Some reasons for the runaway costs:

More and mightier machinery. Every medical technology is proliferating: liver, lung and bone marrow transplants, expensive drugs, multimillion-dollar imaging machines. Infant intensive care units alone cost $2.6 billion a year to keep thousands of babies alive to become healthy children -- and many to become something less.

More old people. Americans 65 and older, 12 percent of the population, consume 36 percent of the health dollar. Their number is increasing so fast, so many are living into the eighties and nineties, that the cost of their care -- unless curtailed -- will become three times greater by 2040. Thirty percent of all Medicare dollars are spent in the last year of life, many of them for what one doctor calls "$100,000 funerals" -- last-ditch treatments for people sure to die anyway.

More social disorder. Emergency wards in many city hospitals are jammed. Doctors call them "knife and gun clubs" as they struggle to repair the bullet-torn, largely uninsured victims of urban violence. Thousands of disabled "crack babies" and other drug-damaged infants languish in hospitals. Treatment of AIDS cost $3.3 billion last year, could cost $6.5 billion next year as cases mount, then climb into double digits.

In 1960, health care consumed 5 percent of the gross national product, and this year will approach 12 percent at a rate of increase twice that of inflation. Almost unanimously, economists and politicians call this unsustainable. "Every dollar spent on health care is a dollar that cannot be spent on something else," says economist Lester Thurow. "At some point, health care expenditures must slow down to the rate of growth of the gross national product."

So we hear the predictions that we are heading toward explicit rationing for everyone: Economist Reinhardt: "At some point, we will ration." Former Surgeon General C. Everett Koop: "I think you have to face rationing." David Seitzman, 1988-89 president of the D.C. Medical Society: "I believe {rationing} is the only way to disperse our resources -- especially public resources -- equitably."

Rep. Willis Gradison of Ohio, a principal Republican health figure: "The lines are already getting drawn. In the minds of some citizens, it's just a question of who you ration."

And Prof. Robert Veatch of Georgetown University's Kennedy Institute of Ethics: "If we're going to get care delivered at break-even, we're going to have to actually cut into the flesh, not just the fat."

What's Ahead?

Cutting into the flesh, if it comes to that, will radically change the future. Listen to some of rationing's oracles.

William Schwartz, Tufts University medical professor, and Henry Aaron, a Brookings Institution fellow, looked at forces causing health care inflation in the U.S. and other nations, particularly Britain with its bold yet flawed attempt to give care to all. "No matter" what else this country does to try to control costs, they concluded, sooner or later "a significant reduction in the growth of medical spending will require the sacrifice of beneficial services" -- perhaps transplants, perhaps kidney dialysis, perhaps operations -- "not just by the very old but by all of us."

Richard Lamm, while Democratic governor of Colorado, created something of a nationwide shock wave when he was slightly misquoted in 1984 as telling the aged and terminally ill, "You've got a duty to die," rather than bankrupting the nation by continuing to get ultimately futile care.

What he had actually said was: "Like leaves which fall off a tree forming the humus in which other plants can grow, we've got a duty to die and get out of the way with all of our machines and artificial hearts, so that our kids can build a reasonable life."

Whether it was "you" or "we", here for the first time in public perception, a well regarded political figure was saying that all of us must at some point refuse, or be refused, care that might keep us alive for a time, perhaps even years.

Lamm, now director of a University of Denver public policy center, has if anything become more emphatic, saying:

"Let me be blunt. Health care has become an economic cancer eating into every other public function . . . We shall, inevitably, have to decide what is 'appropriate,' not what merely could be 'beneficial' . . . We shall have to balance quality of life with quantity of life, costs and benefits, preventive medicine versus curative medicine . . . Any other alternative will be fiscal suicide."

Ethicist Daniel Callahan of the Hastings Institute is even blunter. In the past three years, he has published two books -- "Setting Limits" and "What Kind of Life?" -- and spoken throughout the land to say:

"Future national priorities should be shifted to education, housing and other societal needs . . . We must begin rethinking our values" toward lesser expectations "rather than unlimited medical progress in ways we cannot afford, bringing us too little happiness."

With Lamm, he urges "an acceptance of the inevitability of death . . . after a natural life span" -- and he proposes that we set an age after which feeble and declining life shall no longer be pursued: "I want to argue that medicine should be used only for the full achievement of a natural and fitting life span -- which can be achieved by the late seventies or early eighties -- and thereafter for the relief of suffering only . . . By then, most people have had a chance to do most of what a human life offers."

He does not want to set an age limit before nationwide discussion -- and enactment of a national health service with vastly improved care of the elderly. He opposes either euthanasia or assisted suicide.

But he was once asked: "If you were a physician who for years had cared for an 86-year-old woman who suddenly develops pneumonia, would you deny her the care she needs?"

"I would probably treat her with antibiotics," he said, "but I would not admit her to intensive care."

A Political Firestorm

Rationing by age?

Robert Butler of Mount Sinai Medical Center, New York, a doctor who has spent his life promoting better care for the aged, calls Callahan's proposal "mischievous -- it provides powerful fodder for anyone who wants to save money on health care. Other critics have called it "intrinsically evil," "Nazi," "Orwellian," "de facto euthanasia," "too near the slippery slope to genocide."

Some economists say rationing by age would be far from enough, that rationing would have to hit the whole population to tame health costs. Lamm does not disagree but emphasizes that: "We cannot afford a system where, on our way out the door, we take $100,000 to $200,000 of our children's limited resources to give us a couple of extra days of pain-wracked existence" . . . We must learn again what the early churchmen called 'the art of dying well.' "

"Die well" to help ration care? It's not a choice most Americans would vote for.

That's the rub in the politics of medical costs. Hard, cold, across-the-board rationing that denies medical care on the basis of age or type of treatment could cause a political firestorm.

So the experts are scrambling now to find alternatives. Among measures at the top of their current list is accelerated research to learn what truly works in medical care and what doesn't -- what's "effective" and what's "cost-effective" -- to develop guidelines about what's worth paying for.

Also widely advocated and on the way: more managed care, meaning refusing to pay for care deemed "unnecessary" or, often, "cost effective." "The minute you ask, 'What's the cost-benefit ratio?' says William Schwartz, "that's rationing.

"You're rationing at any point where you deny useful care."

The New England Journal's Relman advocates "delivery of most medical care by groups of doctors giving prepaid care for acceptable prices."

"Rationing is not going to happen in this country," he says. "It's doomed to fail because it's politically not acceptable, and it's morally unacceptable."

What is politically quite acceptable, it is obvious, is today's de facto rationing of care for the poor, the medical underclass.

As this silent form of rationing may increase, however, so too may the sheer economic imperative of cutting into the health care of almost everyone, the stark unavoidability of medical rationing -- by whatever name or subterfuge -- for all of us.

The years of the '90s should give us the answer.

Next week: resource allocation at the bedside.

The prophet who is leading the state of Oregon's effort to launch health care rationing is a small-town doctor.

When a 7-year-old boy with leukemia died in 1987 after the state denied him a bone marrrow transplant, John Kitzhaber was both president of the Oregon Senate and an emergency room physician.

"If we pay for transplants now, we will put a very small Band-Aid on a very large iceberg," Kitzhaber said at the time. "But let's not kid ourselves. Many people will die in other ways."

With several groups, he then began what has become a daring attempt to assure basic care, but not every kind of care, for all Oregonians.

First, 61 community meetings were held to discuss medical choices that arise throughout life and at life's end. A thousand people were surveyed and asked to rank various treatments in order of importance. Most of Oregon's citizens placed prevention and early detection ahead of last-ditch efforts, even efforts for a little boy.

Early this year, the project produced a long list ranking medical treatments for 600 conditions, according to probable effectiveness, cost and patients' ultimate well-being.

High- and low-priority procedures? The list was tentative, but among those near the top:


Prenatal care.

Treatment of serious infections.

Early treatment, at least, of many cancers.

Among those near the bottom:

Any treatment, except for comfort, when a patient is near death.

Periodic checkups for adults.

High-cost transplants with uncertain results.

Treatment of varicose veins.

This spring, the legislature overwhelmingly enacted legislation that over a four-year period would not only ration some care according to a final list but also move toward extending basic coverage to all Oregonians by:

Creating a rationing body, a Health Services Commission, to make a priority list of services to be provided for all Medicaid recipients. Those services with the lowest priority would not be provided; how many services would be disqualified would be determined by budget projections. Only the aged and the disabled would be exempt from such rationing and would retain their current benefits.

Expanding Medicaid rolls to add at least 50,000-70,000 now uncovered people so that all those below the federal poverty level (about $6,000 a year for an individual, $12,000 for a family of four) would be guaranteed a basic, but only a basic, level of care. The aim, in Kitzhaber's words: "to change the debate from who's covered to what's covered. If funds are short, we'd have to cut procedures rather than cutting people, the present insidious practice."

Requiring employers to provide at least the same basic benefits for all employees working 17 1/2 hours a week or more, with tax credits to help small employers.

Creating a risk pool financed by health insurers and the state to cover those still left uninsured, including the unemployed and those refused by insurers because of their health.

The care under all these bills would be mainly provided by groups giving "managed care" -- restricting specialist visits, hospitalization and costly procedures -- thus further applying a "cost-benefit" test.

The next step: a legislative committee will meet, perhaps late this year, to review a recommended list of treatments. Then the legislature must decide, based on available funds, where to draw the line above which care would be covered, but below it, so sorry.

The Bush administration or Congress might say "so sorry" first. Federal law says states must provide "all medically necessary services" to Medicaid patients. Oregon must ask the Health Care Financing Administration for a waiver to implement any Medicaid rationing.

HCFA Administrator Gail Wilensky has consistently sounded sympathetic to the plan as a useful experiment, while pointing out that Oregon must meet some difficult federal requirements. But health officials or other administration officials could ultimately say no because of the possible political consequences of frankly denying any services to the poor -- though the law winks at the government's present refusal to cover all the poor.

Congress might also step in. Serious reservations have been expressed by Rep. Henry Waxman (D-Cal.), chairman of a House health subcommittee, and Sen. Albert Gore (D-Tenn.), ardent exponent of transplants for all who need them.

Waxman and Gore worry about targeting the poor. They worry about denying necessary services to children, because the plan's exemption for the elderly might devour the bulk of available Medicaid money, leaving few funds for the young. Waxman has said he is willing to hold hearings, but Gore labels the plan "unethical," "harebrained" and "atrocious."

Other critics -- among them the Children's Defense Fund, the National Right to Life Committee, Stanford health economist Alain Enthoven and University of Minnesota ethicist Arthur Kaplan -- say Oregon would penalize only the poor, while those with good private insurance could continue buying high-cost treatments.

"The health care system is bloated and inefficient," Kaplan says. "Before we ration anybody out of the health care lifeboat, I think we ought to trim that bureaucracy."

Oregon's Republican Sen. Bob Packwood and Democratic Rep. Ron Wyden respond by saying that millions of the poor have already been left out of the lifeboat. "You can't ration for people who get nothing at all," Wyden says.

The Oregon medical and hospital associations support the plan. So do ethicist Daniel Callahan and former Colorado Gov. Richard Lamm.

"Right now, when we run out of money, we redefine the poor by changing eligibility rates," Kitzhaber says. "Or we squeeze {privately insured} people out into the uninsured population . . .

"The issue is not whether we will ration health care but how the rationing takes place . . . Under our program, everyone retains coverage -- universal access. The debate centers on the level of that coverage, on what level we as a society are willing to fund . . .

"Yes, a child dying for want of a liver transplant is sad. But no sadder than a woman nine months pregnant seeing her first doctor in the emergency room, or patients staggered by pneumonia because they couldn't afford a doctor's care for flu." -- Victor Cohn