Rosanna Smart, a job market candidate from UCLA, has a very interesting job market paper (pdf) on this question.  Here is the abstract:

Almost half of the US states have adopted \medical marijuana” laws (MMLs),and 58% of Americans now favor marijuana legalization. Despite public support, federal law continues to prohibit the use and sale of marijuana due to public health concerns of increased abuse, drugged driving, and youth access. Using evidence from MMLs, this is the first paper to study whether growth in the size of legal marijuana markets affects illegal use and its associated health consequences. By collecting new data on per capita registered medical marijuana patient rates, I investigate how state supply regulations and changes in federal enforcement affect the size of this legal market. I then study how illegal marijuana use and other health outcomes respond to changes in legal availability. I find that growth in the legal medical marijuana market significantly increases recreational use among all age groups. Increased consumption among older adults has positive consequences in the form of an 11% reduction in alcohol- and opioid-poisoning deaths. However, increased consumption among youths leads to negative externalities. Raising the share of adults registered as medical marijuana patients by one percentage point increases the prevalence of recent marijuana use among adolescents and young adults by 5-6% and generates negative externalities in the form of increased traffic fatalities (7%) and alcohol poisoning deaths (4%).

Those results are consistent with my intuitions.  When it comes to “those who already are screwed up,” namely the older generation, it is best to shunt them off into pot, compared to the relevant alternatives.  But when it comes to the younger generation, the new norm that “pot is OK” may in fact not be best in the longer run.  So in sum,while I (TC, not the author necessarily) favor marijuana decriminalization, we should hold mixed moods towards its practical effects.

Kidney-DiseaseThe latest issue of the American Journal of Transplantation has an excellent and comprehensive cost-benefit analysis of paying kidney donors by Held, McCormick, Ojo, and Roberts. Earlier, Becker and Elias estimated that a payment of $15,000 per living donor would be sufficient to eliminate the US waiting list. The authors adopt a larger figure of $45,000 for living donors and $10,000 for deceased donors and find that even at these rates paying donors generates benefits far in excess of costs.

In particular, a program of government compensation of kidney donors would provide the following benefits (quoting from the article):

  • Transplant kidneys would be readily available to all patients who had a medical need for them, which would prevent 5000 to 10 000 premature deaths each year and significantly reduce the suffering of 100 000 more receiving dialysis.
  • This would be particularly beneficial to patients who are poor and African American because they are considerably overrepresented on the transplant waiting list. Indeed, it would be a boon to poor kidney recipients because it would enable them to reap the great benefits of transplantation at very little expense to themselves.
  • Because transplant candidates would no longer have to spend almost 5 years receiving dialysis while waiting for a transplant kidney, they would be younger and healthier when they receive their transplant, increasing the chances of a successful transplantation.
  • With a large number of transplant kidneys available, it would be much easier to ensure the medical compatibility of donors and recipients, which would increase the success rate of transplantation.
  • Taxpayers would save about $12 billion each year. Dialysis is not only an inferior therapy for end-stage renadisease (ESRD), it is also almost 4 times as expensive pequality-adjusted life-year (QALY) gained as a transplant.

Opioids for the masses?

by on November 24, 2015 at 1:45 am in Data Source, Economics, Law, Medicine | Permalink

This has long seemed to me an understudied topic, so I was interested to read the job market paper of Angela E. Kilby, who is on the market this year from MIT.  And she does what I like to see in a paper, namely try to figure out whether some practice or institution is actually worth it.

The background is this: “…In the face of concerns that undertreatment of pain was a “serious public health issue,” medically indicated use of these drugs over the past 15 years has increased dramatically, and attitudes have liberalized towards the use of opioids for chronic non-cancer pain.”

When it comes to the increased use of opioids, she finds the following trade-offs:

1. Since 1999, there has been a fourfold increase in drug overdose deaths linked to opiod pain relievers.  In 2013, the number of opiate-linked overdose deaths was 25,117, a higher number than I was expecting.  (But note that most of these can no longer be reduced by the feasible interventions under consideration.)

2. The increased use of opioids seems to pass a cost-benefit test, compared to the passage of a tougher Prescription Monitoring Plan.  With a host of caveats and qualifiers, she measures the pain reduction and other benefits from looser regulation at $12.1 billion a year and the costs of higher addiction rates, again from looser regulation, at $7.3 billion per year.

There is much more to it than what I am reporting, and in general I believe economists do not devote enough attention to studying the topic of pain.

UnitedHealth may exit the provision of ACA plans:

The nation’s largest health insurance provider, UnitedHealth Group, dealt a blow to the Affordable Care Act on Thursday when it warned it may stop offering coverage to individuals through public exchanges after taking a big hit to the bottom line from disappointing enrollment and the law’s unexpected effects.

The insurer’s withdrawal from the Obamacare exchanges would force some 540,000 Americans to find coverage from another provider.

UnitedHealth (UNH) downgraded its earnings forecast, bemoaning low growth projections for Obamacare enrollment and blaming the federal health care law for giving individuals too much flexibility to change plans.

People who purchase insurance through the public exchanges are typically heavy users of their plans, draining insurers’ profits, analysts say.

In a sharp reversal of its previously optimistic projections, UnitedHealth suspended marketing of its Obamacare exchange plans for 2016 — which the company has already committed to offer — to limit its exposure to additional losses.

“We see no data pointing to improvement” in the financial performance of public-exchange plans, UnitedHealth CEO Stephen Hemsley said on a conference call, though he added that “we remain hopeful” the market will recover.

The move comes amid indications that insurers are absorbing steeper costs than they expected from plans offered to individuals through the public exchanges, which are purchased online.

The average premium for medium-benefit plans offered to 40-year-old non-smokers is set to rise 10.1% in 2016, according to the Kaiser Family Foundation.

…Even though UnitedHealth wasn’t a major player yet on the ACA exchanges, the fact that it priced plans conservatively and entered cautiously made its statements more significant, said Katherine Hempstead, who heads the insurance coverage team at the Robert Wood Johnson Foundation.

“If they can’t make money on the exchanges, it seems it would be hard for anyone,” Hempstead said.

But that is not all the news.  There is also:

In many Obamacare markets, renewal is not an option

Shopping for health insurance is the new seasonal stress for many

Health care law forces business to consider growth’s costs

Many say their high deductibles make their health insurance all but useless

and my own Obamacare not as egalitarian as it appears

All five are from the NYT, the first three being from the last two or three days, the other two from last week.  They are not articles from The Weekly Standard

To put it bluntly, I don’t think the mandate part of the bill is working.  These are mostly problems which decay and get worse, not problems which self-correct.

On UnitedHealth, here is commentary from Megan McArdle.  Here is Bob LaszewskiHere is Vox.

That is the title of an Arnold Kling blog post, it runs like this (I am not adding an extra layer of indentation):

“With this:

Speaking this week at the EmTech conference in Cambridge, Massachusetts, Editas CEO Katrine Bosley said the company hopes to start a clinical trial in 2017 to treat a rare form of blindness using CRISPR, a groundbreaking gene-editing technology.

…The condition Editas is targeting affects only about 600 people in the U.S., says Jean Bennet, director of advanced retinal and ocular therapeutics at the University of Pennsylvania’s medical school.

I don’t think that the FDA is prepared for what is coming.”

Robert Pears of the NYT writes:

Obama administration officials, urging people to sign up for health insurance under the Affordable Care Act, have trumpeted the low premiums available on the law’s new marketplaces.

But for many consumers, the sticker shock is coming not on the front end, when they purchase the plans, but on the back end when they get sick: sky-high deductibles that are leaving some newly insured feeling nearly as vulnerable as they were before they had coverage.

“The deductible, $3,000 a year, makes it impossible to actually go to the doctor,” said David R. Reines, 60, of Jefferson Township, N.J., a former hardware salesman with chronic knee pain. “We have insurance, but can’t afford to use it.”

In many states, more than half the plans offered for sale through, the federal online marketplace, have a deductible of $3,000 or more, a New York Times review has found. Those deductibles are causing concern among Democrats — and some Republican detractors of the health law, who once pushed high-deductible health plans in the belief that consumers would be more cost-conscious if they had more of a financial stake or skin in the game.

My previous column on related issues, “Obamacare not as egalitarian as it appears,” is here.

Glasgow fact of the day

by on November 11, 2015 at 2:07 am in Books, Data Source, Medicine | Permalink

For 1998-2002, male life expectancy in the Calton district of Glasgow was fifty-four.

For those same years, male life expectancy in the well-off district of Lenzie, Glasgow was eighty-two, a rather large gap.

For purposes of contrast, by the way, at that time average life expectancy for men in India was sixty-two, eight years longer than for Calton.

That is all from Michael Marmot, The Health Gap: The Challenge of an Unequal World, pp.24-25.

Here is Adam Davidson:

I was just at two Amish weddings and would add a few observations:

– I wonder what they’d find for a later cohort. Amish folks born between 1890 and 1921 were almost all farmers. Today, fewer than 10% are. Most have far more sedentary jobs–though not as sedentary as mine. But they still eat as if they were out in the fields all day. Obesity is rampant and growing. Also, the diet has changed. The Amish eat a lot of processed, brand name food. They do have their own kitchen gardens, but salads are covered in dressing and cheese. In many homes, every meal (even breakfast!) comes with pie as desert.

– Nobody is left alone in old age. I had a long talk with an older Amish woman who couldn’t believe that, in NYC, some people live alone, interact with no close relatives or friends, have no one to watch over them. Her husband told a story of a very ornery old man with no children or wife who nobody likes but, still, people visit regularly to make sure he’s OK and to give him comfort.

– They absolutely use hospitals for urgent and emergent care. There are big fundraising auctions all the time to help those with big bills. And the church district will also help.

Yes, that is the Adam Davidson.

Here is my latest NYT Upshot column, on the topic of the Affordable Care Act.  Here is what is to me the key excerpt:

But there is another way of looking at it, one used in traditional economics, which focuses on how much people are willing to pay as an indication of their real preferences. Using this measure, if everyone covered by the insurance mandate were to buy health insurance as the law dictated, more than half of them would be worse off.

This may seem startling. But in an economic study, researchers measured such preferences by looking at data known as market demand curves. Practically speaking, these demand curves implied that individuals would rather take some risk with their health — and spend their money on other things — partly because they knew that even without insurance they still would receive some health care. These were the findings of a provocative National Bureau of Economic Research working paper, “The Price of Responsibility: The Impact of Health Reform on Non-Poor Uninsureds” by Mark Pauly, Adam Leive, and Scott Harrington; the authors are at the Wharton School at the University of Pennsylvania.

One implication is that the preferences of many people subject to the insurance mandate are likely to become more negative in the months ahead. For those without subsidies, federal officials estimate, the cost of insurance policies is likely to increase by an average of another 7.5 percent; even more in states like Oklahoma and Mississippi. The individuals who are likely losers from the mandate have incomes 250 percent or more above the federal poverty level ($11,770 for a single person, more for larger families), the paper said. They are by no means the poorest Americans, but many of them are not wealthy, either. So the Affordable Care Act may not be as egalitarian as it might look initially, once we take this perspective into account.

I should stress that, at this point, I don’t see any realistic alternative to trying to improve ACA.  Still, I find it distressing how infrequently this problem is acknowledged or dealt with, probably from a mix of epistemic closure, a “health insurance simply has to make people better off” attitude, and a dose of “let’s not give any ammunition to the enemy.”  In fact, I think a lot of Democratic-leaning economists and commentators are doing a real disservice to their own causes on this one.

It’s worth noting that Kentucky, one of the best-functioning ACA state exchanges, just elected a Republican governor who very explicitly pledged to tank the current set-up as much as possible, Medicaid too.  I think it’s time to admit this is not just Tea Party activism or Hee Haw political stupidity, rather a large number of the people subject to the mandate simply are not better off as would be judged by their own preferences.  And that is not a secondary problem of Obamacare, it is a primary problem.

Interestingly, I found the NYT reader comments on my piece to be fairly supportive, which is not always the case.  There’s a good deal of “this happened to me, too,” and not so much raw invective about whatever defects I may have.

I think it is a big mistake to argue Obamacare is on the verge of collapse, or whatever other exaggeration of the day may be at hand.  Still, I don’t find the current set-up of the exchanges to be entirely stable, at least not in terms of ongoing popularity, much less consumer sovereignty.

A key question is what happens moving forward.  One option, which I had not initially expected, is for the exchanges to narrow and evolve into an expanded version of some of the earlier plans for a segregated high-risk pool.  In that case, the argument would morph from “don’t worry, enough people will sign up for the exchanges” into “the welfare effects here are still positive, because fortunately not everyone signs up for the exchanges.”  The high risk pool would then at some point require additional subsidies.  In the past, I argued that the penalties for not signing up were too low, but under this scenario it may be desirable to lower rather than raise those penalties.

We’ll see.  The piece covers other issues as well, do read the whole thing.

Here is Megan on the costs of ACA plans.  Here are some interesting calculations from Jed Graham.

Or is that the infra-marginal value?:

…we have compared lifespan in the Old Order Amish (OOA), a population with historically low use of medical care, with that of Caucasian participants from the Framingham Heart Study (FHS), focusing on individuals who have reached at least age 30 years.

Analyses were based on 2,108 OOA individuals from the Lancaster County, PA community born between 1890 and 1921 and 5,079 FHS participants born approximately the same time. Vital status was ascertained on 96.9% of the OOA cohort through 2011 and through systematic follow-up of the FHS cohort. The lifespan part of the study included an enlargement of the Anabaptist Genealogy Database to 539,822 individuals, which will be of use in other studies of the Amish. Mortality comparisons revealed that OOA men experienced better longevity (p<0.001) and OOA women comparable longevity than their FHS counterparts.

That is from a 2012 PLOS paper, by Braxton D. Mitchell,, via Ben Southwood.

Minor Vapists

by on November 4, 2015 at 10:30 am in Economics, Medicine | Permalink

The Yale School of Medicine reports on some of the benefits of vaping and some of the costs of bans:

More than 40 states have banned the sale of electronic cigarettes to minors, but a new study out of the Yale School of Public Health indicates that these measures have an unintended and dangerous consequence: increasing adolescents’ use of conventional cigarettes.

Using data from the National Survey on Drug Use and Health, the research finds that state bans on e-cigarette sales to minors yield a 0.9 percentage point increase in rates of recent conventional cigarette use by 12 to 17 year olds, relative to states without these bans.

“Conventional cigarette use has been falling somewhat steadily among this age group since the start of the 21st century. This paper shows that bans on e-cigarette sales to minors appear to have slowed this decline by about 70 percent in the states that implemented them,” said Abigail Friedman, assistant professor of public health and the study’s author. “In other words, as a result of these bans, more teenagers are using conventional cigarettes than otherwise would have done so.”

The paper by Abigail Friedman is forthcoming in the Journal of Health Economics (working paper version).

Hat tip: Mitch Berkson.

Gina Kolata from the NYT reports:

Something startling is happening to middle-aged white Americans. Unlike every other age group, unlike every other racial and ethnic group, unlike their counterparts in other rich countries, death rates in this group have been rising, not falling.

That finding was reported Monday by two Princeton economists, Angus Deaton, who last month won the 2015 Nobel Prize for Economic Sciences, and Anne Case. Analyzing health and mortality data from the Centers for Disease Control and Prevention and from other sources, they concluded that rising annual death rates among this group are being driven not by the big killers like heart disease and diabetes but by an epidemic of suicides and afflictions stemming from substance abuse: alcoholic liver disease and overdoses of heroin and prescription opioids.

The original research is here (pdf).

As a leader I would never institute a one-child policy, which I consider to be an immoral restriction on personal liberty.  But if we ask whether this policy had benefits for China, it absolutely did.

For instance the policy made China a more educated society more rapidly.  It is simple economics that putting a lot of money into the education of each child is easier to do with a single child than with three or for that matter seven kids.  The effects of the one-child policy are illustrated through a natural experiment of sorts.  Chinese children who ended up born into twin pairs showed significantly slower rates of schooling progress, worse grades, lower chances of college enrollment, and worse health.  These differences do not follow mainly from the lower birth weight of twins or other birth-related problems (though that is one factor), but rather they stem from the lower resources which are invested in children in larger families.

See Rosenzweig and Zhang, Review of Economic Studies 2009.

By the way, the one-child policy was not the main reason why Chinese fertility fell.  Between 1970 and 1979, before the policy was put in place, the total fertility rate fell dramatically from 5.9 to 2.9.  After the policy was introduced, the total fertility rate actually fell more gradually than during that earlier stretch, settling into 1.7 by 1995.  The best estimate we have is that the one-child policy lowered Chinese births by an average of 0.33 per woman, which is a noticeable but not drastic change.

Even in purely practical terms, it is highly likely the policy has been obsolete for some while.

See Therese Hesketh, Li Lu, and Zhu Wei Xing. “The Effect of China’s One-Child Family Policy after 25 Years.” New England Journal of Medicine, September 15, 2005, 1171-1176, and Marjorie McElroy and Dennis Tao Yang. “Carrots and Sticks: Fertility Effects of China’s Population Policies.” American Economic Review, May 2000, 389-392.

Mississippi will be ground zero for ObamaCare’s individual mandate to buy coverage or pay a tax penalty.

The state already is near the bottom when it comes to the percentage of the subsidy-eligible individuals who are enrolled via — just 38%. Now Mississippi’s subsidized premiums are about to jump far more than any of the 36 other states using

For 30-year-olds in Yazoo City earning about $25,000 (214% of the poverty level), the after-subsidy cost of the cheapest bronze plan will spike by $554, or 60%, in 2016.

There is more here.  To be sure that is lemon picking from the data, but in politics the people who suffer the most often end up with the biggest say.  Furthermore the reported seven percent average rate hike is not so small either, so perhaps the Mississippi story will resonate.  Here is more on the ambiguity in the numbers on reported rate increases.  Still, this is not developing in a favorable manner.

Competition Compounded

by on October 23, 2015 at 7:28 am in Current Affairs, Economics, Law, Medicine | Permalink

ArsTechnica: Turing Pharmaceuticals, the company that last month raised the price of the decades-old drug Daraprim from $13.50 a pill to $750, now has a competitor.

Imprimis Pharmaceuticals, Inc., a specialty pharmaceutical company based in San Diego, announced today that it has made an alternative to Daraprim that costs about a buck a pill—or $99 for a 100-pill supply.

Good news. Competition is working. But I was puzzled. In Generic Drug Regulation and Pharmaceutical Price-Jacking, I argued that competition was slow because the FDA makes it expensive and time consuming to get a generic drug approved for sale in the United States. Was I wrong about the difficulty of generic entry? No.

The drug that Imprimis Pharmaceuticals is selling is not FDA-approved. A bit of background is in order. Even today some drugs need to be tailor-made. A patient, for example, might not be able to swallow a pill so a licensed pharmacist may create for a specific, individual patient a small batch of the drug in liquid form. A pharmacy that does this kind of work is called a compounding pharmacy.

Compounding pharmacies have a long and tendentious history with the FDA. The FDA has always claimed that a new drug is a new drug, even one created only for a specific individual. Thus, the FDA has always said that it has the right to regulate compounding pharmacies just like manufacturers of new drugs. In practice, however, the FDA allowed the industry to proceed with little regulation.

In the 1990s some compounding pharmacies began to create large batches, especially of drugs in short supply, as a way of avoiding the FDA process. The FDA worried about quality control, however, and it re-evaluated its traditional hands off approach. A political battle then ensued in which Congress and the Supreme Court also had their say. In 2012, fungal meningitis outbreaks caused by poor quality control at the New England Compounding Center brought these issue to public attention and resulted in greater regulation of compounding pharmacies, albeit with clearer regulations on when a compounding pharmacy may sell large quantities.

Imprimis Pharmaceuticals did not apply for approval to sell a generic version of Daraprim. As I argued earlier, that would take years and cost millions of dollars. Instead, it is doing an old-style end-run of the FDA process by offering its alternative under the compounding pharmacy laws. That means that it can only sell to order, on a patient by patient, prescription by prescription basis. Since Daraprim is not widely used this may work. Indeed, I hope this end run works but my reading of the act is that compounders can only supply drugs in large quantities if they are on the FDA’s shortage list. Perhaps the FDA will look the other way, however, in order to send Turing and similar firms a message.