It would be much easier if (some) people would simply say “Of course this normally should be kicked back into the legislature for clarification.  But I don’t want to do that because I don’t regard Republican control of the House, and how that control is used, as a legitimate form of rule.”  One may agree, or not, but the nature of the case is pretty clear.

Instead we read irrelevant blog posts and tweets about how the experts meant to have subsidies at all levels all along.  Of course they did.  But did Congress know what it was doing in a detailed sense, one way or another?  Hard to say, personally I doubt it, and Alex says no.  The basic starter hypothesis here is that many of them knew this was a health care bill, it would extend coverage, it had a mandate, it had some subsidies, it had a Medicaid expansion, it had some complicated cost control, it was approved by leading Democratic Party experts, it met some CBO standards, and beyond that — if you pull out those who were confused on the details of the exchanges and the subsidies do you still have majority support?  I doubt it.  Most absurd of all are the tweets asking the critics to show Congress intended no federal-level subsidies.

So, to return to the title of this post, the import of the Gruber fracas is to show that if he can be confused (more than once, at that, and is “confused” even the right word?) a lot of ACA supporters in Congress probably were confused too.

So given that across-the-board subsidies are not written into the bill formally, and given the importance of precedent, and rule of law, why not kick the matter back into the legislature for redrafting?  Which brings us back to the first paragraph of this blog post…

I have drawn on some Ross Douthat tweets in thinking through this post.

What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits — but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges.

There is more detail here, from Peter Suderman, along with the video and also the fuller context for those (such as myself) who have not been following this issue very closely.

From Becker, Philipson, and Soares (pdf):

GDP per capita is usually used to proxy for the quality of life of individuals living in different countries. Welfare is also affected by quantity of life, however, as represented by longevity. This paper incorporates longevity into an overall assessment of the evolution of cross-country inequality and shows that it is quantitatively important. The absence of reduction in cross-country inequality up to the 1990s documented in previous work is in stark contrast to the reduction in inequality after incorporating gains in longevity. Throughout the post–World War II period, health contributed to reduce significantly welfare inequality across countries. This paper derives valuation formulas for infra-marginal changes in longevity and computes a “full” growth rate that incorporates the gains in health experienced by 96 countries for the period between 1960 and 2000. Incorporating longevity gains changes traditional results; countries starting with lower income tended to grow faster than countries starting with higher income. We estimate an average yearly growth in “full income” of 4.1 percent for the poorest 50 percent of countries in 1960, of which 1.7 percentage points are due to health, as opposed to a growth of 2.6 percent for the richest 50 percent of countries, of which only 0.4 percentage points are due to health. Additionally, we decompose changes in life expectancy into changes attributable to 13 broad groups of causes of death and three age groups. We show that mortality from infectious, respiratory, and digestive diseases, congenital, perinatal, and “ill-defined” conditions, mostly concentrated before age 20 and between ages 20 and 50, is responsible for most of the reduction in life expectancy inequality. At the same time, the recent effect of AIDS, together with reductions in mortality after age 50—due to nervous system, senses organs, heart and circulatory diseases—contributed to increase health inequality across countries.

That reminder is from Aaron Schwartz.  And of course that is the Becker, yet another contribution from Gary Becker.

Do note, by the way, that medical progress is usually egalitarian per se.  A common metric is something like “health outcomes of the poor” vs. “health outcomes of the rich,” and that may or may not be moving in an egalitarian direction.  But very often the more incisive metric is “health outcomes of the sick” vs. “health outcomes of the healthy,” and of course most medical treatments are going to the sick.  The more desperate is the lot of the sick, the more likely that medical progress is egalitarian per se.

Technological decline seems more plausible [as a cause]; see this Brookings Institution paper for the extended argument. Basically, health-care innovation is expensive, and for roughly the last decade, we’ve been doing less of it. As old innovations come off patent or are refined into cheaper and better versions, costs fall.

If you think health-care innovation is all useless me-too drugs, you should be pleased that we’re getting less of it. As it happens, I don’t think that’s the case, so while I’m pleased about the budget impact, I’m less pleased at the prospect of fewer new medical technologies. The good and the bad news is that the authors of that Brookings paper don’t necessarily expect the experience of the last decade to be continued in the future — good, because “whee, new treatments!” And bad, because, well, money.

The most worrying possibility is that this reflects a broader slowdown in how fast everything can grow. Certainly, it’s clear that the Great Recession caused a major slowdown in health-care costs everywhere; if you graph the data from the Organization for Economic Cooperation and Development, there’s a sharp, across-the-board inflection point in 2009.

There is more here.

…when it comes to health care spending, the picture is starting to look more global. After decades when health spending in the United States grew much faster than it did in other Western countries, a new pattern has emerged in the last two decades. And it has become particularly pronounced since the economic crisis. The rate of health cost growth has slowed substantially since 2000 in every high-income country, including the United States, Canada, Britain, France, Germany and Switzerland, according to data from the Organization for Economic Cooperation and Development.

The world’s health-care systems are also converging in important ways. New drugs and medical advances, which were once adopted locally and spread more slowly, are now experiencing international launches. Medical technology companies are increasingly global, and seeing regulatory approval in many markets at once. Strategies that can reduce the need for expensive hospital stays, such as performing surgeries in outpatient clinics, are expanding around the world.

Findings from medical research and the ways that doctors practice are also spreading faster and wider. “We’re learning from other countries, and the best practices take a year or two to diffuse, whereas in the past they might have taken five or 10 years,” said Gerard Anderson, a public health professor at Johns Hopkins. “We’re getting a convergence because of a more rapid diffusion of information.”

Two recent papers highlighted the trend. One in The Journal of the American Medical Association compared the United States with countries in the O.E.C.D. Its author, David Squires of the Commonwealth Fund, a New York health care research group, concluded that the similarities in spending growth suggested that “the factors that stimulated the slowdown in the United States also affected other industrialized countries.”

The other paper, from the O.E.C.D.’s own economists, made a similar point, highlighting that what really differentiates the United States from other countries is the high prices we have long paid for medical care, not big differences in how doctors are treating their patients.

That is all from Margot Sanger-Katz at The Upshot.  I would note that those mechanisms of transmission still seem a little murky to me.

Peter Orszag: We have had incredibly good news over the past three to five years. If I’d been told when I was director of either CBO or OMB that we would have a 12-month period when Medicare spending was basically flat in nominal terms — and therefore on an inflation-adjusted, per-beneficiary basis, significantly negative — I would have thought impossible and yet that’s exactly what we’re living through.

If this continues, it’s massive — everything you think you know about the nation’s long-term fiscal gap would be wrong.

That is from Vox, there is more here.  Note that since Medicare spending is slowing down too, this phenomenon probably is not just from slow economic growth.  From Wonkblog (don’t get confused) here is further commentary, arguing the fiscal gap still will be a problem.

*The Falling Sky*

by on July 15, 2014 at 2:06 am in Books, Education, Medicine, Philosophy | Permalink

The subtitle is Words of a Yanomami Shaman, and the shaman is Davi Kopenawa from the Amazon, with transcription and assistance from French anthropologist Bruce Albert.  Imagine 487 pp. of a highly intelligent, articulate shaman telling you what he thinks, and perhaps more importantly telling you what he thinks about.  Here is one bit:

As children, we gradually start to think straight.  We realize that the xapiri [spirits] really exist and that the elders’ words are true.  Little by little, we understand that the shamans do not behave as ghosts without a reason.  Our thought fixes itself on the spirits’ words, and then we really want to see them.  We take hold of the idea that later we will be able to ask the elders to blow the yakoana into our nostrils and give us the xapiri’s songs.  This is how it happened for me a long time ago.  The spirits often came to visit me in dreams.  This is how they started to know me well.

For those who are willing to swerve in the direction of the mystical, I recommend this strongly, read the Amazon reviews at the first link above.  Here is a brief excerpt from one: “This is an astonishing book, a gripping story, and a poetic revelation of an entirely different world view than our own. Every single page sparkles with provocative meditations on the impact that industrial societies have on the environment and the role of Yanomami shamans in protecting it for the sake of all humanity.”  You won’t find cost-benefit analysis here.  Here are some selections from the book.  Here is one blog review from LSE.  Google is not turning up too many other reviews, but this came out in late 2013 and it is a truly significant work deserving of further attention and it is rather dramatically under-reviewed.

There is a new NBER paper by Scott Cunningham and Manisha Shah:

Most governments in the world including the United States prohibit prostitution. Given these types of laws rarely change and are fairly uniform across regions, our knowledge about the impact of decriminalizing sex work is largely conjectural. We exploit the fact that a Rhode Island District Court judge unexpectedly decriminalized indoor prostitution in 2003 to provide the first causal estimates of the impact of decriminalization on the composition of the sex market, rape offenses, and sexually transmitted infection outcomes. Not surprisingly, we find that decriminalization increased the size of the indoor market. However, we also find that decriminalization caused both forcible rape offenses and gonorrhea incidence to decline for the overall population. Our synthetic control model finds 824 fewer reported rape offenses (31 percent decrease) and 1,035 fewer cases of female gonorrhea (39 percent decrease) from 2004 to 2009.

Alas, I do not see ungated versions on Google, or maybe try this one (pdf).

I have read a good deal on this topic and I am not very satisfied with most of it, from either side.  Too often citing and then refuting weaker claims from the other side is conflated with showing that one’s own view is right.  Here are a few issues we ought to consider and indeed focus on:

1. Five to ten years from now, how much do we think employment will have gone down as a result of ACA?  (That is from the employer mandate, high implicit marginal tax rates because of the subsidies, and also from a lesser need to stay employed to have health insurance.)  By the way, you can’t in other contexts believe strongly in rigidities and then confidently point to a small employment response within a one year time frame and claim to know these labor market effects are small ones.

1b. How will the effort to introduce greater equality of health care consumption fare if wage and income inequality continue to rise?  Will this attempt at consumption near-equalization require massively distorting incentives?

2. Given your answer to #1, and given how much employment itself boosts health, will ACA even have improved overall health in America?  What outcome indicators might show this?

3. Given that prices in the individual insurance market already seem to have gone up 14-28 percent, and may go up more once political scrutiny of insurance companies lessens, what is the overall individual welfare calculation from this policy change?  I mean using actual economic policy analysis, of the CBA sort, not just noting that more people have health insurance.

4. Given supply side constraints, how much did ACA increase the consumption of health services in the United States?  (I take the near-universal bafflement over the first quarter gdp revision a sign of how poorly we understand what is going on.)  And how good or bad a thing is the ongoing but accelerated shift to narrow provider networks?

5. How much of the apparent slowdown of health care cost inflation is a) permanent, b) not just due to the slow economy, and c) due to ACA?  Or how about d) the result of trends which have been operating slowly for the last 10-20 years?

Is there one of these questions we know the answer to?  Know the answer to much better now than before?

“This study finds total marijuana demand to be much larger than previously estimated,” Colorado’s study concluded.

And this, which I think suggests the laws in other states are binding for many consumers:

Colorado concluded that visitors account for 44 percent of recreational marijuana retail sales in the Denver area. In the mountains and other vacation spots, visitors to Colorado account for 90 percent of recreational dispensary traffic.

And this, which sounds tautologous, but is not:

“Heavy users consume marijuana much more often, and more intensely, than other consumers,” the study concluded.

Overall heavy users seem to account for about seventy percent of total demand.  Here is some detail:

Colorado’s market numbers bore out survey estimates that most marijuana is consumed by heavy daily users. For example, survey authors estimated that a third of all Colorado’s pot consumers use the drug less than once a month. But that group accounts for just 0.3 percent of the total market, analysts concluded.

The full story is here, the study itself is here.  For the pointer I thank C., who I believe is not part of that seventy percent of market demand.

Sentences to ponder

by on July 10, 2014 at 10:54 am in Games, Medicine | Permalink

Countless times, I have found that it is only during the physical exam that patients reveal what is truly on their mind. Whether it is the cough that they are reminded of now that I am listening to their lungs, or whether it is the domestic violence, the eating disorder or the genital symptoms that they feel comfortable revealing once we are in a more intimate setting — there is something about touch that changes the dynamic.

That is from Danielle Ofri’s interesting piece on the physical exam in medicine, via Jeffrey Flier.

As wearable health monitors become more sophisticated, some companies, rather than sending their CEO to a public hospital for a check-up twice a year, may choose to monitor them remotely. What is good enough for high-performance teams of athletes could come to be seen as essential for executives looking for an edge over rivals.

Shared data will then become tradeable insider information, as Mr Benioff pointed out. The answer to Mr Dell’s query was that Mr Benioff had had a cold and decided to skip his workout. But imagine if, instead, the interruption to his regime had signalled to his network of high-powered friends and investors that he had suffered a stroke.

That is from Andrew Hill at the FT, there is more here, interesting (but gated?) throughout.

As health data become increasingly digital and the use of electronic health records booms, thieves see patient records in a vulnerable health care system as attractive bait, according to experts interviewed by POLITICO. On the black market, a full identity profile contained in a single record can bring as much as $500.

There is more here, none of it reassuring.

Very good sentences

by on June 30, 2014 at 2:16 pm in Data Source, Economics, Medicine | Permalink

If savings for cross-sectional out-of-pocket nursing home expense risk were held in the form of vehicles, it is large enough to account for the entire stock of transportation equipment in the United States.

That prize goes to Karen A. Kopecky and Tatyana Koreshkova.  That paper was just published in American Economic Journal: Macroeconomics as well.

…my reading of the available evidence convinces me that a social policy that channels benefits through work and thereby encourages paid employment has important advantages over a UBI [universal basic income] in helping the disadvantaged to live full, happy, productive, and rewarding lives.

What evidence? Let’s start with the well-established finding that unemployment has major negative effects on well-being, including both mental and physical health. And the effects are remarkably persistent. A study using German panel data examined changes in reported life satisfaction after marriage, divorce, birth of a child, death of a spouse, layoff, and unemployment. All had predictable effects in the short term, but for five of the six the effect generally wore off with time: the joy of having a new baby subsided, while the pain of a loved one’s death gradually faded. The exception was unemployment: even after five years, the researchers found little evidence of adaptation.

Evidence even more directly on point comes from the experience of welfare reform – specifically, the imposition of work requirements on recipients of public assistance. Interestingly, studies of the economic consequences of reform showed little or no change in recipients’ material well-being. But a pair of studies found a positive impact on single mothers’ happiness as a result of moving off welfare and finding work.

There is more here.  And Ross Douthat offers related remarks on whether it really is possible to encourage work — how well have previous welfare reforms succeeded in this end?