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JONA's Healthcare Law, Ethics, & Regulation:
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A Review of Current Health Care Funding Models

Crigger, Nancy J.

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From the William Jewell College, Liberty,MO.

Corresponding author: Nancy J. Crigger, PhD, ARNP-BC, William Jewell College, Liberty,MO(e-mail: criggern@william.jewell.edu).

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Abstract

ABSTRACT: As healthcare expenses grow, concern about how government and private agencies decide to allocate funds for healthcare resources and services also grows. Decisions for healthcare funding are not made arbitrarily but are based on sound ethical principles and practical considerations. This article is a review of 5 ethically based healthcare funding models discussed in the literature that are currently used to justify funding choices. If healthcare professionals and managers are better informed about the ethical reasoning behind funding choices, they could better determine which resource allocation alternatives to support.

But where should we spend our resources? Although healthcare professionals have a duty to advocate for all healthcare recipients to receive a fair share of resources, the author concludes that our greater duty as a profession is to the good of society as a whole. Balancing allocation decisions by considering all of the competing healthcare funding models and the ethical bases for them is suggested rather than to advocate too strongly for favored models.

As the costs of national healthcare increase, concern about allocation of funds increases as well. Because governments and insurance companies do not give people cash for healthcare, these agencies are responsible for determining what care will be reimbursed.1-3 The representatives who make funding decisions about reimbursement are expected to be reasonable, just, and competent when they develop or revise healthcare policy with the overall purpose of improving the health of all people.4,5 Policies and allocation decisions are not easy. In today's society, reimbursement or funding decisions have grown so complex that some experts believe that funding should be determined by a multidisciplinary team.6

Because many healthcare providers are not directly involved in the complexity of healthcare decision-making about allocation of funds, they maybe frustrated about reimbursement decisions. Healthcare managers and professionals may feel that they are unequally yoked: they have limited input on funding decisions, yet these same decisions greatly impact their ability to provide care for the clients. Healthcare professionals and managers may question why some healthcare services are reimbursed, whereas other needed care is limited or denied.7,8 Unless a healthcare provider is involved in funding decisions or keeps up with the extensive literature on the subject, the ethical reasons behind funding decisions may be unclear.

A thorough but nonexhaustive review of the literature yielded a limited number of ethical arguments for or against policies for determining the ways in which the funding could best be spent. In this discussion, the term "healthcare funding model" is used to refer to a complex of beliefs about healthcare or recipients of healthcare that influence, either positively or negatively, healthcare allocation decisions. These models can be either individually valued or valued by consensus of groups or institutions. Without exception, the ethical justifications in the reviewed literature are based on the principle of justice and/or consequence (outcome).

The purpose of this article is to review the ethical arguments for 5 existing healthcare funding models (Table 1): Traditional Disease Model, Expansion Models, Prevention/Personal Responsibility Model, Social Fairness Model, and Potential/Age-Rationed Model. Introduction of these healthcare funding models occurs after a brief discussion of managed care and justice, concepts central to understanding funding allocation. Each model is presented objectively and may include arguments that support or refute the particular model. The final section examines the duty of healthcare providers and managers to influence policy-making decisions for resource allocation.

Table 1
Table 1
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US Healthcare: Professionalism to Managed Businesses

The growth of for-profit managed care has resulted in dramatic changes in healthcare services over the last 20 years.9 Managed care, although often noted for problems rather than solutions, has reduced rising healthcare costs.8 Capitation rather than fee-for-service and the shift from hospital to community-based care have reduced costs.

Despite the economic gains, many people are concerned about managed care and its business-like approach to healthcare. Prior to managed care, institutions and healthcare workers provided service out of altruism and professional obligation to society.10,11 Some ethicists claim that business approach is ethically incompatible with the healthcare providers' professional obligation to serve. According to Pelligrino,12 today's market economy exchanges the ethic of professional obligation for the ethic of business. In a business environment, healthcare is a commodity and the entitlement to services is the ability to pay.12-14 Therefore, managed care as business may further compromise access and allocation of healthcare to the poor and uninsured15 and the absence of universal coverage may be inherently unjust in providing services for all.16

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Justice and Outcome as Ethical Measures in Healthcare

The ideal of justice or fairness has been woven into the fabric of many societies and ethical ideals for centuries and is not a quality that is unique to any one theory. The word "justice" originally meant law.17 Principled or deontological theories and utilitarian theories18,19 clearly imply impartial treatment and equal respect for all rather than partiality for any privileged individuals or groups. Bentham, a utilitarian and contemporary of Mill, tersely expressed the quality of justice as "everybody counts for one, nobody for more than one (Mill, p. 60)." Justice or fairness is a principle to consider with all ethical decisions, yet more than a principle. Hare20 and other philosophers in this century advocate justice embedded in a logical process called universalizability, similar to the Kantian categorical imperative that is applied as a standard to all ethical principles rather than a principle itself.21

Justice, whether principle or process, is an ideal quality for society. A just society is one in which all people are treated fairly and alike before the law, about welfare, resource allocation, and opportunity. No person should have more of societal burden or benefit than anyone else should. Some positions toward substantive justice, that is, when it is applied in a real world, are that people who have limited circumstances or constraints have more burden and therefore should receive more benefit as compensation.22 To be fair or just means that these persons are given more to bring them to equal terms with others who do not have limitations. Thus, justice in some situations may mean giving more to those who have less.

The practical goal of the current US healthcare system and the policies for distribution of benefits (funding) is based on the ethics of justice and the practical utilitarian principle of outcomes for the greater good: improve the health of all recipients, but do it so that the outcomes have the greatest possible benefit for the common good.5,15

As professionals, the goal of healthcare has traditionally been narrower; we focus on the primacy of the individual patient as the recipient of care. This ethical commitment remains the same for healthcare professionals in administrative roles and in practice whether they are providing care as a service or as a business.8 Thus, the goal of meeting individual patient's needs and desires may create tension when set within a framework of the common good for society.23

For the purposes of this article, justice and fairness are used interchangeably. The 5 healthcare funding models discussed in the next sections have established ethical arguments based on justice and utility/outcome. We now examine each of the healthcare funding models (Table 1) and the ethical support or refutations for them.

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Competing Healthcare Funding Models

Traditional Disease Model

The traditional way that funding agencies have considered reimbursement is the disease oriented-what Parens22 called the hard-line or normal function model. For this article, the model is called the Traditional Disease Model. This traditional model holds that a person is limited in functioning because of disease, and healthcare should restore or rehabilitate the individual to enjoy, as close as possible, the range of life choices he would have had without this pathologic condition. The justice in providing care and rehabilitation is to allow the individual equal opportunity to pursue happiness by recovering as much as possible from the disabling conditions that result from disease.

This model is most familiar to healthcare and is usually described as medical conditions like myocardial infarction, diabetes mellitus, or bronchitis. In past years, the Traditional Disease Model was the relatively unopposed method of healthcare funding allocation and is clearly based on justice as discussed in the preceding paragraph. An individual with diabetes mellitus, for example, has less ability to function or a higher risk for future problems and should receive greater healthcare services so that he can have a comparable quality of life to an individual who does not have a disease.

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Expansion Models

Expansion Models are individually described in the ethical literature but, for simplicity, are similar enough to be subsumed under a general term, "expansion models." Expansion Models are healthcare funding models that extend our previously existing understanding of the major health concepts of health, disease, and/or treatment. Expansion Models broaden or "expand" the current healthcare concepts to include funding for health services that are not considered for funding under the traditional, narrower definitions of these terms. There are 3 types of Expansion Models: Enhancement/Well-being Model, Techno-Utopia Model, and Complementary Therapy Model.

1. Enhancement/Well-being ModelThe Enhancement/Well-being Model broadens the traditional definition of health from providing each individual a functional state whereby they can pursue happiness, as in the Traditional Disease Model to one in which all persons maintain an optimal state of health.22,24 The World Health Organization* defines health even more inclusively as complete physical, mental, and social well-being that is the right, not the privilege, of each individual in our global community.Services that might not be covered under the Traditional Disease Model could be covered through an Enhancement/Well-being Model including cosmetic surgery or sexual enhancement medications.22,25 In Angell's recent book, The Truth About Drug Companies, she addresses the pharmaceutical role in rising healthcare costs. The drug industry is developing drugs that can be marketed to enhance rather to treat disease, like the 3 different male erectile dysfunction medications. These drugs were supposedly developed for a medical condition but have a much wider market as a recreational drug. Angell26 claims that this is a marketing strategy used by drug companies to increase profits.Of course, the criticism of this type of health is that such an outcome-bringing everyone to an ideal state of complete well-being or health-is probably unrealistic in any current healthcare system. With limited resources and with resources already taxed, a greater demand for services would likely go unmet. The question also arises as to whether drugs that enhance performance or surgeries that sculpt physical appearance to meet the societal ideal of beauty ought to be paid for by society and if this funding is truly for the common good.A second practical criticism of the Enhancement/Well-being Model is how to apply it to normal human conditions. For example, should normal aging receive healthcare resources and service? Should we fund hair transplants or facelifts for cosmetic purposes? Should the effects of normal physiological or mental changes over the life span be considered impairment to well-being and health or just a normal change? Is pregnancy prevention, when pregnancy is a "natural" outcome, considered enhancement?The argument in support of the Enhancement/Well-being Model is that it is a more just model because it would provide funding for services that are currently not funded or are given marginal funding. For example, more extensive psychiatric and psychologic care, not funded in the past, would be legitimized as mainstream funding.27 Thus, the Enhancement/Well-being Model would, it is claimed, more fairly allocate funds.

2. Techno-Utopia Model: Sold on ScienceThe Techno-Utopia Model expands the traditional definition of treatment to futuristic thinking, which relies on scientific advances, primarily technology, to create a perfect world.6 Callahan13,28 presents a technological model as the existing medical paradigm in his book, False Hopes: Why America's Quest for Perfect Health Is a Prescription for Disaster. The goal of medicine Callahan claims is perfectionism, consumption, and endless medical progress. The Techno-Utopia Model assumes that all healthcare problems, either natural or created by technological advances, can be solved by future technological advances,6 making the model an elite, self-sufficient, endless stream of problem-solving "progress."The Techno-Utopia Model may be aligned with the Traditional Disease Model discussed earlier and has a strong base of support in our science-enamored society.29 Biochemical, genetic, and molecular sciences are capturing the imagination of a society that is sold on science.30-32 The public views technology as revolutionizing traditional healthcare through radically changing our methods of intervention that will ultimately result in solutions to all healthcare problems.There are 2 ethical arguments against the Techno-Utopia Model. The first is based on outcome and questions the utility-benefit and harm-of using technology without temperance, and the second is potential unfairness in who receives the benefits.Should we treat or reveal knowledge to a person just because it is available? Some ethicists argue that there are limits to technology and its usefulness in our society. For example, some noncurable degenerative neurologic diseases, like Huntington's chorea, can be detected by genetic testing prior to the development of the disease. If a person has the genetic fingerprint to develop Huntington's chorea, the knowledge will not change the onset, course, or treatment of the disease. One asks, in view of no treatment, should such a test even be performed? Some people claim that the benefit of knowing their future is enough although prior knowledge will not change the disease course or outcome. Other people argue against prior knowledge of a noncurable disease, claiming that this information is harmful because it compromises their ability to be insured and causes emotional and mental suffering long before the disease is evident.In addition, new discoveries of more specific medicines, more sensitive laboratory testing, and more effective treatments challenge reimbursement because they are promising but are not proven to have an effect. If the outcomes are not known, the utility and the benefit are unknown as well. Daniels and Sabin33 concluded that there were multiple ways that questionably effective treatments could be considered for funding. They recommended casuistry, or a case-by-case approach, as an effective method. Casuistry may be ethically suitable but may also be prohibitive because it is costly; time and energy are needed to carefully consider individual cases.The second argument against the Techno-Utopia Model is based on justice and its potential to create an even greater gulf between haves and have-nots. Greater technological treatments are expensive and not universally available. Therefore, the more funds that are allocated to technological advancement, the greater the gap grows between the privileged few who receive treatment and the many who do not.34

3. Complementary Therapy ModelThe Complementary Therapy Model is also based on an expanded definition of treatment. Nontraditional or complementary therapies can be broadly defined as "interventions neither taught widely in medical schools nor generally available in US hospitals."35 Complementary therapy is increasing in frequency of use in the US35 and UK.36 Some experts claim that there is a current trend for conventional methods of treatment to become more pluralistic and for nontraditional therapy to be blended with the traditional.37

In reality, complementary treatment is often used in conjunction with more traditional therapies; thus, complementary, rather than alternative, medicine or treatment is a more correct term. Complementary therapies can be lucrative for practitioners. According to 1 study, more than half of complementary treatments are paid out of pocket by the client,35 which means no reduction of payment by government or insurance and no expense in extensive paperwork. In addition, there are growing numbers of healthcare practitioners, especially nurses, who are themselves practitioners of these therapies.36

The major argument against funding complementary therapies and thus the Complementary Therapy Model is based on outcome-the lack of empirical support and a demonstration that the benefit from the therapy outweighs the harm. Many people are attracted to complementary therapy because it offers hope when hope from traditional therapies maybe exhausted. Complementary therapies often mesh powerful placebo effects with the true effects, making the true effects difficult to determine.38 Use of complementary therapy may cause harm by preventing persons who have curable or treatable problems from seeking more traditional healthcare. In addition, monies that could be used for more proven treatments are channeled into questionable treatment.

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Prevention/Personal Responsibility Model

The Prevention/Personal Responsibility Model for healthcare funding assumes that illness can be prevented or minimized by healthy lifestyles and by early detection and treatment.39 For example, a person chooses not to smoke because he knows the detrimental effects of smoking and he can postpone or avoid the diseases caused by smoking through modifying his behavior. In addition to disease development, factors that contribute to injury are also predictable and part of this model. Alcohol intake and cellular phone use while driving, for example, are predictors of motor vehicle crashes.

The Prevention/Personal Responsibility Model is possible because of our statistical ability to predict risk for development of disease or injury. Because people have the ability to change behaviors, the Prevention/Personal Responsibility Model strongly advocates personal responsibility in health and disease progression. Theoretically, individuals who make healthier choices ideally reduce healthcare consumption and dependence while increasing well-being, control over their life situation, and reducing uncertainty.24,40

A prevention model and its ability to change outcomes are justified by the potential for widespread benefit. An estimated 50% of mortality can be traced to unhealthy habits,41,42 making the potential benefit to the greatest good justification for placing higher value on allocation of resources.

The major justification for prevention approaches to health, like screening and early detection and treatment, is based on benefit with low risk for harm. Theoretically, resources are used more efficiently because the individual benefits by becoming healthier and, if illness occurs, the illness is detected earlier. Unfortunately, research on using the prevention model has not been as effective in changing outcomes as expected.39,43,44

The Prevention/Personal Responsibility Model of healthcare is criticized because, despite knowing the ill effects of their behavior, most people continue risky or unhealthy behaviors.45,46 A failure to change behavior brings another ethical concern to light. If an individual chooses to remain obese despite knowing the health risk, or if an individual with diabetes makes poor food choices, should they be held accountable for their personal contribution to illness? If a person is responsible and chooses not to make healthier choices, does he deserve a reduction in his individual allocation of healthcare resources?

Although holding people accountable for contributing to their own poor health seems harsh, this model is already widespread in allocation of highly limited resources like organ donation. For example, someone who continues to drink alcohol is not a candidate for liver transplant.2

How far can the Prevention/Personal Responsibility Model go toward affecting allocation and access to healthcare? Cook and Greenfield46 reviewed the British position on personal responsibility with chronic illness and called for reexamination, in view of the limited resources, acknowledging that there is a universal right to care but also that limiting care for people who make poor health choices is reasonable and justifiable. Truly the failure of people to take a personal responsibility in their health has contributed to the ever-increasing cost of healthcare and may be 1 avenue, however cruel it seems, to change allocation patterns.31

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Social Fairness Model

Just treatment of persons means that they are equal partakers of the risks and resources including, of course, healthcare. There are 2 submodels subsumed under the Social Fairness Model: the Global Inequality Model and the Disadvantaged Model.

1. Global Inequality ModelThe global model of healthcare extends the boundaries of government to what Pogge47 called radical inequality in the world of rich and poor nations. The Disadvantaged Model claims that the developing richer nations have an obligation to poorer nations because of the extreme inequality of life.34,48 For example, persons living in developing nation have a life expectancy that is 3 times less than those living in developed nations.34 Although injustice may be imposed through society, there is an element of natural inequality that is brought about by one's happening to be born into poverty with little chance of rising above life's unfair circumstances. In these situations, people are subject to effects of famines, epidemics, malnutrition, or war to a more severe extent than human counterparts in wealthier nations.The argument for justice for persons in a global community is that the human suffering and need is so great48,49 and the wealth of developed nations is so great by comparison that developed nations should be compelled to respond to the suffering and need. There is little doubt of the woes brought about by poverty.50,51 A global view calls for the government of wealthier nations to respond to the needs of poorer countries through respect and to develop equal partnerships in change and growth. The US government has developed international aid programs to various nations through foreign policy that is directed toward global improvement.The Global Inequality Model is a public health model that extends to a world community; what affects one nation will affect other nations and ultimately the world. Antibiotic resistance, spread of certain infectious communicable diseases, and effects of pollution are all examples of human suffering that affects the global community.52 One practical utility argument against allocating of funds to poorer nations is the risk that the benefit of funds may not be realized. Resources intended for the poverty-stricken may never reach its intended destination and be skimmed or taken in total by corrupt factions within the nation. A prevalent attitude against helping poorer nations is the belief that charity begins and stays at home. Thus, the country's resources should provide for people in our own country that need assistance.34 Benatar53 identified a lack of understanding of other cultures as a strong deterrent to linking health resources and healthcare to a global community.

2. Disadvantaged ModelThe Disadvantaged Model differs from the Global Inequality Model because it is not tied to the injustices of fate but rather to discrimination, which is a social phenomenon that is at the root of all disadvantaged situations. The groups who are most discriminated against in a society are the weakest and most vulnerable. The poor, people of color,54 opposite gender,55 and persons with faith or culture variations may be deprived of their just receipt of society resources or are denied equal access to resources.56

Injustice in healthcare may result from several different reasons-some of which may be unintentional discrimination, like those reported by Morrison et al.57 This research found that pharmacies in non-White communities are stocked with lesser amounts of opiate drugs because of increased risk for theft. Freeman and Payne54 suggest "a subtle form of racial bias," resulting from diminished or unfair allocation, which occurs from systems rather than intentional discriminative practices, and note that these subtle, unintentional forms are more likely to go undiscovered. The socioeconomic environment like non-White communities or managed care settings may themselves be barriers to equity in healthcare.34 Because justice means that each individual has an equal opportunity to pursue happiness and realize health, the government should be responsible to ensure equality for all persons.3,58

Problems of discrimination and ultimately injustice in resource allocation and access can potentially escalate. Managed care has been criticized for further contributing to the injustices of allocation of healthcare resources15 and the disparity in care of the rich versus the poor appears to be growing.50,59

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Potential/Age-Rationed Model

The Potential/Age-Rationed Model as justification for allocation of health resources is probably best documented in the literature and is currently operant in clinical practice.60,61 Well-known and respected ethicists like Veatch,62 Daniels,63 and Callahan64 agree that health allocation should be reduced for older people but disagree on the ethical rationale for rationing care.60 On the other hand, some speak out against age-rationed care and likewise justify their claims.60,61 The arguments for and against rationing of resources are discussed in turn.

There are 3 major arguments to support rationing in the aged. A strong argument for the Potential/Age-Rationed Model is fairness or justice. According to this argument, the elderly deserve fewer health resources because they have used their fair share already by virtue of their age, but younger individuals who have lived fewer years and used fewer resources deserve more resources.

Another justice appeal to limit resources that closely aligns with ageism is intergenerational ethics. Intergenerational ethics claims that each generation has an obligation to conserve resources for the next.65 In a provocative article, Hardwig66 claimed that technological advances and the dependency that results from chronic diseases allow people in today's world to live far beyond what is fair to future generations. Future generations will not have a fair allocation of resources because of the high consumption of previous generations. Hardwig66 claimed that people must get beyond the "individualistic fantasy" to an understanding that individuals live within a context of community and that each choice impacts others within a community or society.

Reducing allocation of resources in the aged is justified based on an outcome argument that the elderly will benefit less from resources given because they have fewer years to live and often are consumers of resources just before death.67 In addition, the elder persons often have a poorer quality of life, which limits the benefit to themselves and the good of society as a whole.

Three major arguments against reducing resource allocation to elders are also justice based. First, the argument to limit resources allocation is sexist because most elder persons are women.61 Second, age does not equate with life quality, so that the good in living nor the love of life for a 20-year-old is no greater than a 70-year-old. Last, the elderly rather than receiving less should receive more resources because they have less ability to pursue happiness and they have generally have contributed to society through their lifetimes.60

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Application of Models

As an illustration, consider what a case might look like if some of the particular models are funded based solely on the models. Not all of the 5 models are used in this example. This is purely a heuristic example and does not reflect funding in our current healthcare system. In real life, most of the models are considered and decisions balance the shared values of each rather than 1 model being used alone. This exercise does illustrate how off balanced a particular model might be if used as the sole consideration for funding.

Mrs G is a 64-year-old woman who lives with her husband. They have a combined income of $30,000. She is a Native American. Mrs G has medical diagnoses of depression, chronic low back pain, varicose veins, and hyperlipidemia and is obese. She smokes 1 pack of cigarettes a day. Medications: Lipitor, St. John's Wort, Multivitamin, and nonsteroidal anti-inflammatory. She is currently attending Weight Watchers and seeing a psychologist for depression, a therapeutic touch practitioner for the back pain, and a physician for management of the hyperlipidemia and varicosities. She would like to have a very new but experimental procedure done to treat her varicose veins.

1. Traditional Disease Model: compensation for physician, partial compensation for psychologist, and no compensation for Weight Watchers, smoking cessation, or the therapeutic touch practitioner. Medication compensation is for the nonsteroidal anti-inflammatory drugs but not for the Lipitor, St. John's Wort, or multivitamins because these drugs are preventative rather than treating disease. The varicose vein surgery would not be covered, as it is a relatively untried procedure but support hose and more traditional surgery would.

2. Prevention/Personal Responsibility Model: compensation for Weight Watchers, smoking cessation, and physician for management of hyperlipidemia; no compensation for psychologist or therapeutic touch practitioner. Lipitor, St. John's Wort, and multivitamins are prevention and are compensated; nonsteroidal anti-inflammatory drugs to treat back pain are not. Funding for the experimental procedure is denied on 2 counts: not prevention and still lacks empirical support of the benefits.

3. Expansion Models, Enhancement/Well-being: compensation for Weight Watchers, smoking cessation, psychologist, and all medications, except St. John's Wort. Surgery if experimental will be questionable (but would be covered under the Techno-Utopia Model). The therapeutic touch practitioner and St. John's Wort will not be compensated because these therapies lack substantial empirical support (but would be covered under a Complementary Therapy Model).

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Nurse Managers, Managed Care, and Ethics of Care

Any one of the 5 models is a worthy channel for available funds as each is directed toward interventions that are for good human and societal ends. Which healthcare funding model has the best ethical grounds for receiving more or less of the precious available funds? Only reason, research, and ethical evaluation answer these questions. Being aware of personal, institutional, discipline biases toward certain healthcare funding models and how those biases influence our ability to fairly evaluate healthcare funding decisions is important. Healthcare providers and managers have a privileged position because we participate in the implementation of policies and are most able to determine their application to healthcare services. Our role as nurse managers and healthcare professionals is to raise awareness of inconsistencies in policy making that might allocate funds unjustly. As individual professionals, we may advocate for specific models when injustices are evident, but our primary ethical obligation as a profession is to have a voice in balancing funding and public policy decisions so that all members of society are served and that the benefit of the resources is optimal for the common good of society and for each individual.

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