Medicine

Department of Uh-Oh

by on April 16, 2014 at 12:31 am in Data Source, Economics, Medicine | Permalink

A four-year slowdown in health spending growth could be coming to an end.

Americans used more medical care in 2013 as the economy recovered, new reports show. Federal data suggests that health care spending is now growing just as quickly as it was prior to the recession.

“We’re at the highest level of growth since the slowdown began,” Paul Hughes-Cromwick, a senior health economist at the Altarum Institute, which tracks health spending. “You have to go back seven years to see growth like this.”

There is more here, from Sarah Kliff.  Note that is only from one quarter, however.  Kevin Drum remains more sanguine.

The Census Bureau, the authoritative source of health insurance data for more than three decades, is changing its annual survey so thoroughly that it will be difficult to measure the effects of President Obama’s health care law in the next report, due this fall, census officials said.

The changes are intended to improve the accuracy of the survey, being conducted this month in interviews with tens of thousands of households around the country. But the new questions are so different that the findings will not be comparable, the officials said.

An internal Census Bureau document said that the new questionnaire included a “total revision to health insurance questions” and, in a test last year, produced lower estimates of the uninsured. Thus, officials said, it will be difficult to say how much of any change is attributable to the Affordable Care Act and how much to the use of a new survey instrument.

“We are expecting much lower numbers just because of the questions and how they are asked,” said Brett J. O’Hara, chief of the health statistics branch at the Census Bureau.

With the new questions, “it is likely that the Census Bureau will decide that there is a break in series for the health insurance estimates,” says another agency document describing the changes. This “break in trend” will complicate efforts to trace the impact of the Affordable Care Act, it said.

Obviously with a big new law you need new questions too, I suppose, plus the old questions ought not to hang around.  You can read more here.

As a side note, I have been reading far too many blog posts about “numbers enrolled” as a metric of success for Obamacare.  That has never been a good test of the serious criticisms (and defenses) of ACA.

I thank Megan and Garett for the pointers.

Addendum: You should read this update from Vox, though I am not satisfied with the Administration’s response.

Hi Professor Cowen,

I am a loyal MR reader and I wondered if you could comment on the following situation:

I am a 3rd year medical student, and for the purposes of this question, let’s assume I have equal interest and ability in the various medical specialties.  In order to create the greatest good for the greatest number of people through my work in medicine (i.e., the highest return to society), what specialty should I pursue?  I should add that, although I intend to practice in the U.S., I am open to devoting as much of my free time/vacation as possible to pro bono medical activities, and further, that I wish to do the interventions myself (instead, for example, or just making lots of money and then donating the proceeds to some other charitable activity).  In attempting to answer this question, I’ve been looking at DALYs and QALYs associated with various medical interventions (e.g., cataract surgery).  Am I going about answering this question the right way?  Any thoughts?

An interesting corollary would be asking what job, in any field, has the highest return to society.  Is there any literature on this?

The fundamental institutional failure to overcome is that many lives “out there” are pretty happy, and very much worth living, but those individuals do not have enough money to afford reasonable doctors.  If you are seeking to maximize social welfare, look to step into some of these gaps.

But which gap in particular?

The second binding constraint, in my view, is that most people won’t in fact go through with their plan to do a lot of social good.  That means you too.  So you wish to seek out a form of do-gooding which is incentive-compatible over the long run, or in other words which is fun for you or rewarding in some other way.  This second consideration is likely to prove decisive.

For instance you might decide the fight against dengue (just an example to make a point, not an actual net assessment) is the way to go, based on a narrow cost-benefit analysis.  But it is hard as a field worker to really, fully protect yourself against dengue.  And getting dengue can be very bad indeed.  As you age, the pressures not to go into the field will mount.  You might do more good by pledging your efforts to fight a malady which you can help fix without so much direct risk or exposure to yourself, let’s say infant mortality.

You will note a difference here between pledges of individual effort and pledges of money.  A money pledger, thinking in game-theoretic Nash terms, will realize that effort pledgers will resist the fight against dengue.  That is all the more reason why throwing money at the fight against dengue may bring high returns, namely that at the margin not enough is being done from the side of volunteer and quasi-volunteer labor.  (In general this distinction creates a problem with talking up one kind of cause over another, namely that labor and money face differing incentives and should hear different messages of encouragement.)

You will note also that in a second best optimum, field workers will appear to be “consuming too many perks.”  At the same time, donated funds should be trying to push field workers out of their comfort zones, at least on the margin.

I would add two final points.  First, if you have a reasonable chance of being a research superstar, that may be the path to follow.

Second, if you are not already attached, spent time cultivating social circles (aid work, World Bank, vegetarians, etc.) where you are likely to meet a partner or spouse who will support a similar vision to help the world.

Addendum: David Henderson adds comment.

I was intrigued by the new paper by Adam Leive, called “Dying to Win? Olympic Gold Medals and Longevity.”  The main results are these:

This paper investigates how status affects health by comparing mortality between Gold medalists in Olympic Track and Field and other finalists. Due to the nature of Olympic competition, analyzing performance on a single day provides a way to cut through potential endogeneity between status and health. I first document that an athlete’s longevity is affected by whether he wins or loses and then detail mechanisms driving the results. Winning on a team confers a survival advantage, with evidence that higher mortality among losers may be due to poor performance relative to one’s teammates. However, winning an individual event is associated with an earlier death. By analyzing the best performances of each athlete before the Olympics, I demonstrate that an athlete’s performance relative to his expectations partly explains the earlier death of winners in individual events: on average, Olympic Gold medalists expected to win, but losers exceeded their expectations. Conversely, athletes considered “favorites” but who fail to win die earlier than other athletes who also lost. My results are robust to estimating a range of parametric and semi-parametric survival models that make different assumptions about unobserved heterogeneity. My central estimates imply lifespan differentials of a year or more between winners and losers. The findings point to the importance of expectations, relative performance, surprise, and disappointment in affecting health, which are not highlighted by standard models of health capital, but are consistent with reference-dependent utility. I also discuss potential implications for employment contracts in terms of a trade-off between ex post health and ex ante incentives for productivity.

The paper is here, and for the pointer I thank the excellent Kevin Lewis.

There is a new NBER Working Paper by Mark Duggan, Amanda Starc, and Boris Vabson, here is the abstract, with the bold emphasis added by me:

Governments contract with private firms to provide a wide range of services. While a large body of previous work has estimated the effects of that contracting, surprisingly little has investigated how those effects vary with the generosity of the contract. In this paper we examine this issue in the Medicare Advantage (MA) program, through which the federal government contracts with private insurers to coordinate and finance health care for more than 15 million Medicare recipients. To do this, we exploit a substantial policy-induced increase in MA reimbursement in metropolitan areas with a population of 250 thousand or more relative to MSAs just below this threshold. Our results demonstrate that the additional reimbursement leads more private firms to enter this market and to an increase in the share of Medicare recipients enrolled in MA plans. Our findings also reveal that only about one-fifth of the additional reimbursement is passed through to consumers in the form of better coverage. A somewhat larger share accrues to private insurers in the form of higher profits and we find suggestive evidence of a large impact on advertising expenditures. Our results have implications for a key feature of the Affordable Care Act that will reduce reimbursement to MA plans by $156 billion from 2013 to 2022.

There is an ungated version here (pdf).

Still Burned by the FDA

by on March 21, 2014 at 7:30 am in Economics, Law, Medicine | Permalink

Excellent piece in the Washington Post on the FDA and sunscreen:

…American beachgoers will have to make do with sunscreens that dermatologists and cancer-research groups say are less effective and have changed little over the past decade.

That’s because applications for the newer sunscreen ingredients have languished for years in the bureaucracy of the Food and Drug Administration, which must approve the products before they reach consumers.

…The agency has not expanded its list of approved sunscreen ingredients since 1999. Eight ingredient applications are pending, some dating to 2003. Many of the ingredients are designed to provide broader protection from certain types of UV rays and were approved years ago in Europe, Asia, South America and elsewhere.

If you want to understand how dysfunctional regulation has become ponder this sentence:

“This is a very intractable problem. I think, if possible, we are more frustrated than the manufacturers and you all are about this situation,”

Who said it? Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research! Or how about this:

Eleven months ago, in a hearing on Capitol Hill, FDA Commissioner Margaret A. Hamburg told lawmakers that sorting out the sunscreen issue was “one of the highest priorities.”

If this is high priority what happens to all the “low priority” drugs and medical devices?

The whole piece in the Washington Post is very good, read it all. I first wrote about this issue last year.

Addendum: See FDAReview.org for more on the FDA regulatory process and its reform.

Sentences to ponder

by on March 19, 2014 at 12:01 pm in Data Source, Medicine, The Arts | Permalink

Artists grew up in households w/typically higher incomes than doctors did…

There is more information here, along with a picture, and the original story here.

Addendum:  Cowen and Tabarrok once wrote on this topic.

Crack cocaine estimate of the day

by on March 18, 2014 at 5:55 pm in Law, Medicine | Permalink

At present, no more than about 200 young people start using crack-cocaine each day. Ten years ago, the corresponding estimated daily rate was 1,000.

That is from this paper, via Kevin Lewis.

That is a new paper by Susan F. Lu & Huaxia Rui, here is the abstract:

Despite heated debate about the pros and cons of online physician ratings, very little systematic work examines the correlation between physicians’ online ratings and their actual medical performance. Using patients’ ratings of physicians at RateMDs website and the Florida Hospital Discharge data, we investigate whether online ratings reflect physicians’ medical skill by means of a two-stage model that takes into account patients’ ratings-based selection of cardiac surgeons. Estimation results suggest that five-star surgeons perform significantly better and are more likely to be selected by sicker patients than lower-rated surgeons. Our findings suggest that we can trust online physician reviews, at least of cardiac surgeons.

The pointer is from Andres Marroquin.

Here is one part of it:

There is something else we could do to promote universal health insurance: We could allow everyone — regardless of income — to enroll in Medicaid, and at the same time allow everyone on Medicaid to leave the program, claim the tax credit, and buy private insurance. This, of course, is the “public option” that the Left has been clamoring for. It’s hard to understand why conservatives are so resistant to it: If a private insurer can’t outperform Medicaid, it doesn’t deserve to be in the market.

The specific tax-credit levels I am proposing are the Congressional Budget Office estimates of the cost of enrolling new people in Medicaid. Under my proposal, people who are already eligible could use their tax credit to buy in, no questions asked, but people with higher incomes might have to pay a premium on top of their tax credit if they have higher-than-average expected costs. Health status wouldn’t be considered, but age and other factors would be. To prevent gaming of the system, no one would be able to move from one plan to another at a premium that is way below his total expected costs. (See below.)

This proposal may appear to be unconservative, but in fact it is consistent with minimizing the role of government. Medicaid would be an insurer of last resort, but, beyond their uniform tax credit, people who are not poor but enroll in Medicaid would not be getting an entitlement. They would have to pay their own way.

The full post is here.

Amy Goldstein reports:

The new health insurance marketplaces appear to be making little headway in signing up Americans who lack insurance, the Affordable Care Act’s central goal, according to a pair of new surveys.

Only one in 10 uninsured people who qualify for private plans through the newmarketplaces enrolled as of last month, one of the surveys shows. The other found that about half of uninsured adults have looked for information on the online exchanges or planned to look.

…The McKinsey survey shows that of people who had signed up for coverage through the marketplaces by last month, about one-fourth described themselves as having been without insurance for most of the past year. That 27 percent, while low, compares with 11 percent a month earlier.

There is more here.  You will note that a low rate of sign-up is distinct from a rate of sign-up skewed toward the elderly and the sick.  In this sense we still do not know how the new law is doing, though in a broader sense a low rate of sign-up should not be considered good news.

But what kind of income is it?:

Also, Perez could pay lower tax rates on the income if it were treated as long-term capital gains. Eggs could be considered property she had possessed since birth, in which case the sale could be seen as a long-term capital gain.

If they’re not considered property until removed from her body, the eggs could be seen as generating short-term gains.

Richard Carpenter, Perez’s San Diego-based attorney, said the judge said after the trial that the capital gains questions wouldn’t apply in this case.

I like the phrase “future sperm tax certainty” from the title of the piece.  There is more here, from Richard Rubin.  For the pointer I thank Vic Sarjoo.

Spanish patients, like all Europeans, will now be able now choose which EU country to seek treatment in. The Cabinet last week approved a decree that implements an EU directive on cross-border healthcare. Under the system, patients will advance the money for their treatment abroad, but can request a reimbursement from their own country.

The directive aims to go one step beyond the emergency treatment already covered by the European Health Card and let patients choose another member state for specific, non-emergency treatment.

Spain however has concerns:

The State Council, the government’s key advisory body, has this week warned the government that the measure may put a major strain on Spain’s resources. “Given that our country is a recipient country for tourists, it seems likely that this could lead to an increase in demand for healthcare,” the State Council report on the law change says, which could result in “longer waiting lists.”

Additionally, reimbursement will not necessarily cover the total amount charged by the foreign hospital; instead Spanish authorities will use the official rates of each regional health service. Spain does not have a common set of rates; rather, each regional government sets its own public tariffs.

It might over time lead to higher prices.  Here are some other possible implications:

Spain’s private health system could be the main beneficiary of this new system…This is because “prestigious and renowned” private health centers could get added clients now that member states have to reimburse their citizens. Of course foreigners could choose the public health system, but it would mean long waiting lists under the same conditions as Spanish patients.

Medical fees at both public and private hospitals in Spain are lower than in many other European countries. “It could well be that for Scandinavia it is cheaper to send patients to Spain,” notes Rivero.

There is more here.  There is plenty of further information here, but only very recently has this cross-border directive been moving to a scale where it might make a real difference.  Spain for instance seems to be a country which is cheap enough, sunny enough, and reliable enough to draw significant business.

Is soccer good for you?

by on February 9, 2014 at 11:10 am in Economics, Medicine, Sports | Permalink

Doerrenberg and Siegloch say maybe so, especially if you are unemployed:

We examine the effect of salient international soccer tournaments on the motivation of unemployed individuals to search for employment using the German Socio Economic Panel 1984–2010. Exploiting the random scheduling of survey interviews, we find significant effects on motivational variables such as the intention to work or the reservation wage. Furthermore, the sporting events increase perceived health as well as worries about the general economic situation.

An ungated version is here, and the pointer is via Kevin Lewis.

Dmitri Linde joins Alexander Berger and Virginia Postrel as altruistic kidney donors who advocate for lifting the ban on financial incentives. Here is Linde:

Two policies would address the shortfall of kidneys in the U.S.: instituting a priority-scoring system for donors and their kin and paying donors.

Israel pioneered the former in 2012. Prioritizing organ allocation by donor status—a system that economist Alex Tabarrok termed “no give, no take”—incentivized people to register as organ donors. It also removed a hurdle to living donation: The incentive to abstain because of a hypothetical (What if my son needs a kidney?) went away since the policy guarantees that a donor’s kin will be prioritized in the event that they need a transplant. The results? Both living and deceased donations have gone up, and the number of people who have died on the waitlist fell by 30% between 2010 and 2013.

To obviate the kidney shortage, we should heed the recommendation of Nobel Prize-winning economist Gary Becker and others by making it legal to compensate donors.

Linde donated a kidney with the aid of the excellent National Kidney Registry. The registry matched him to a recipient whose own willing but incompatible donor donated to another patient in need. Bravo Dmitri.

Here are previous MR posts on organ donation.