Medicine

My health care question

by on July 31, 2017 at 1:41 am in Data Source, Medicine | Permalink

In the United States, Medicare starts at age 65.  So to the extent health care improves health outcomes, we should see a noticeable uptick in results as people reach 65, at least relative to the trajectory of aging they otherwise would experience.  Of course many other national health care systems treat 64 and 65-year olds as the same, so we can compare the American case to those alternatives.  That would give us a better sense of the relative performance of single-payer coverage, no?

Has such a study been done, and if so what did it yield?

A good sentence fragment

by on July 26, 2017 at 1:27 pm in Economics, Medicine | Permalink

Nothing in Arrow predicts higher expenditures. In fact, it predicts fewer expenditures because markets will partially breakdown (not exist)

That is from Jeremy Horpedahl on Twitter.

Mr. Ferretti, 36 years old, and Mr. Lopez, 44, had enjoyed themselves under the supervision of a doctor for what some are calling a brosectomy—a vasectomy with friends in a cushy setting of couches, snacks, big-screen TV, and in some clinics, top-shelf liquor.

Here is the WSJ story.  And:

The University of Utah Health in Salt Lake City has run March Madness promotions for the past three years. It offers a vasectomy package that includes a Utah Jazz basketball ticket giveaway, goody bags and basketball-shaped ice packs. This year, its surgeons performed more than three times as many vasectomies in March compared with the average number done in the other months through May, according to the health center’s internal marketing data.

They promised us flying cars, and all we got was…

That is the topic of my latest Bloomberg column, here is one excerpt:

As outlined by the blog Random Critical Analysis, U.S. health-care expenditures go well beyond what the U.S.’s relatively high per capita GDP might lead us to expect. But viewed through the lens of consumption behavior, American health-care spending is typical of this nation’s habits and mores. Relative to GDP, Americans consume a lot more than Europeans, and our health-care spending is another example of that tendency.

And to channel Megan McArdle:

Furthermore, we shouldn’t take the lower health-care spending in many European nations as a sign of better health-care policy. It’s a reflection of a broader cultural difference. If the U.S. someday did move to a single payer system for health care, it probably would be a relatively expensive version of that idea. The U.S., of course, does have a partial single payer system through Medicare, and it is still more expensive per beneficiary than its European equivalents.

Keep in mind that high consumption expenditures also help explain various “anecdotes of outrage,” such as billings for $400 band-aids and the like.  To some extent such charges are fraud, and to some extent they are simply an unusual allocation of fixed costs.  Both practices are more likely in a non-Spartan society keen on spending a lot of money on health care and the very latest.

Here is the podcast and transcript (no video), Atul was in top form.  We covered the marginal value of health care, the progress of AI in medicine, whether we should fear genetic engineering, whether the checklist method applies to marriage (maybe so!), whether FDA regulation is too tough, whether surgical procedures should be more tightly regulated, Michael Crichton and Stevie Wonder, wearables, what makes him weep, Knausgaard and Ferrante, why surgeons leave sponges in patients, how he has been so successful, his own performance as a medical patient, and much more.

Here is one excerpt:

COWEN: A lot of critics have charged that to get a new drug through the FDA, it takes too many years and too much money, and that somehow the process should be liberalized. Do you agree or disagree?

GAWANDE: I generally disagree. It’s a trade-off in values at some basic level. In the 1950s, we had no real FDA, and you had the opportunity to put out, to innovate in all kinds of ways, and that innovation capability gave us modern cardiac surgery and gave us steroids and antibiotics, but it also gave us frontal lobotomies, and it gave us the Tuskegee experiment and a variety of other things.

The process that we have regulation around both the ethics of what we’re doing and that we have some safety process along the way is totally appropriate. I think a lot of lessons about when the HIV community became involved in the FDA process to drive approaches that smoothed and sped up the decision-making process, and also got the public enough involved to be able to say . . . That community said, “Look, there are places where we’re willing to take greater risks for the sake of speed.”

People are trying to treat the FDA process as a technical issue. When what it is, is it’s an issue about what are the risks we are genuinely willing to take, and what are the risks that we’re not?

And:

COWEN: The idea of nudge.

GAWANDE: I think overrated.

COWEN: Why?

GAWANDE: I think that there are important insights in nudge units and in that research capacity, but when you step back and say, “What are the biggest problems in clinical behavior and delivery of healthcare?” the nudges are focused on small solutions that have not demonstrated capacity for major scale.

The kind of nudge capability is something we’ve built into the stuff we’ve done, whether it’s checklists or coaching, but it’s been only one. We’ve had to add other tools. You could not get to massive reductions in deaths in surgery or childbirth or massive improvements in end-of-life outcomes based on just those behavioral science insights alone. We’ve had to move to organizational insights and to piece together multiple kinds of layers of understanding in order to drive high-volume change in healthcare delivery.

Definitely recommended, this was one of my favorite “episodes.”

As their budgets strain, communities have begun questioning how much money and effort they should be spending to deal with overdoses, especially in cases involving people who have taken near-fatal overdoses multiple times. State and local officials say it might be time for “tough love”: pushing soaring medical costs onto drug abusers or even limiting how many times first responders can save an individual’s life.

“It’s not that I don’t want to treat overdose victims, it’s that the city cannot afford to treat overdose victims,” said Middletown Council Member Daniel Picard, noting this industrial town in northern Butler County might have to raise taxes in response to the crisis.

Often, the only thing separating whether an overdose victim goes to the hospital instead of the morgue is a dose of naloxone, also known by the brand name Narcan, a medication that can reverse the effects of opioid overdoses.

Two doses of an injectable form of naloxone, Evzio, cost $4,500, up from $690 in 2014. The price of other forms of the drug, including the nasally administered Narcan, typically range from $70 to $150 per dose, officials say.

…Here in Ohio, first responders say it’s not uncommon for overdose victims to have previously been revived with naloxone at least a half-dozen times.

…Picard, the council member, has proposed a controversial three-strikes policy in which first responders wouldn’t administer Narcan to repeated overdose victims.

Here is the Tim Craig at WaPo story.  I do not know what is the proper response to such opioid cases, or how much money should be spent.  I do know that somewhere, somehow a line has to be drawn.  And if you are reading a discussion of health care policy that does not acknowledge such a line, and set out possible standards for it, beware of sophistry and illusion.

This Buzzfeed article on unauthorized poop transplants has much of interest:

A spate of studies over the last decade have convinced microbiologists and doctors that “fecal microbiota transplantation,” or FMT, works for at least one disease: a deadly bacterial infection in the gut known as Clostridium difficile, or C. diff. No one knows whether the procedures work on other conditions, though dozens of clinical trials are testing them on people with irritable bowel syndromeCrohn’s diseaseobesitydiabetesepilepsyautism, and even HIV.

The science is advancing rapidly, with more and more scientists excited about the potential and potency of fecal matter and the microbes in it. The FDA regulations on these procedures, however, keep them out of reach for most patients: Since 2013, the agency has banned doctors from doing fecal transplants on anything except C. diff.

A rogue clinic in Tampa, however, provides the carefully sourced material and explains to patients how the procedure is done. Since the procedure is simple, lots of experimentation is going on which upsets some people.

Poop from an unscreened stranger could carry serious infections, like hepatitis or gonorrhea, or dormant viruses.

No doubt–this is why we also ban sex and french kissing.

I suspect that many of the so-called treatments are crazy but people do a lot of crazy things. It’s odd that we allow some crazy things and ban others—even more that the crazy things we allow are sometimes socially useless while the crazy things that we ban are sometimes socially valuable.

The case for banning extreme sports, for example, is much stronger than the case for banning extreme medicine. Extreme sports don’t provide much benefit to the rest of humanity, other than some entertainment of questionable social value. Extreme medicine, on the other hand, has the potential to improve all our lives and at the very least is a useful warning about what not to do. Yet, extreme sports are lauded, or at least treated as mostly your own business (we do put some regulations on boxing and race car driving), while extreme medicine is heavily regulated and socially frowned upon.

My attitude is the reverse. You want to risk your life climbing without ropes? Knock yourself out–but don’t expect any support from me. I won’t even watch Alex Honnold because I think that what he does is Russian roulette and I do not approve. But, you want to risk your life trying an unapproved medical treatment? Sir, I salute you. Give that man a Nobel prize.

Medicaid isn’t worth its cost–that’s not my evaluation that’s what people who use the program think, at least as far as we can tell from their actions. Joshua D. Gottlieb and Mark Shepard review the evidence at Econofact, which aims to be a dispassionate and non-partisan review of the evidence on a variety of issues. We have also covered these issues before but seeing it all together is valuable.

The cost is large:

The Medicaid program cost about $532 billion in 2015 to cover 74 million people, or almost one in four Americans. The average full-benefit enrollee cost about $6,400 per year to cover in 2014.

People with access to the program use a lot more healthcare than other similar people

The Oregon Experiment found that gaining Medicaid uniformly increased health care use: including hospitalizations (by 30 percent), emergency room use (by 40 percent), physician office visits (by 50 percent), and prescription drugs (by 15 percent). This evidence stands in contrast to the conventional wisdom that providing health insurance could reduce costs by eliminating ER visits. Of course, understanding whether this additional care is worth it requires a comparison of these real costs to the benefits provided.

The health benefits appear to be real but modest:

The evidence is mixed on whether having Medicaid improves beneficiaries’ health. The Oregon Experiment did not find statistically significant evidence of improvements in physical health measures, such as blood pressure and blood sugar after two years of coverage. But it did find large improvements in mental health and self-reported health. Other studies examining the introduction of Medicaid or its expansion over time have found that Medicaid reduces mortality (of infants during the expansion of Medicaid eligibility for low-income children between 1984-1992; of adults during the expansion of Medicaid coverage for childless adults in Arizona, Maine and New York between 2000-2005; of teenagers who benefited from expansions of Medicaid to children during the early 1980s; and of infants and children in the 1960s and 1970s following the introduction of Medicaid) and improves health later in life (for instance among teenagers who benefited from the expansion of coverage as children). But these studies lack the gold-standard randomized design of the Oregon Experiment so should be interpreted with greater caution.

Health benefits may not be the most important benefits:

One important role for Medicaid is to provide risk protection, shielding enrollees from the financial impact of particularly adverse health events, which is the most fundamental role of an insurance product. Researchers seem to agree that access to Medicaid does improve financial security.

So how does one evaluate the tradeoffs? One way is to look at how users value the program.

Recent evidence indicates that beneficiaries value Medicaid at less than its full cost. One source of evidence comes from Massachusetts’ low-income health insurance exchange, where researchers could observe how much charging higher premiums for Medicaid-like coverage led enrollees to drop out: at least 70 percent of enrollees valued insurance at less than their own cost of coverage. A second source of evidence used economic models to quantify how much beneficiaries valued the benefits of Medicaid in the Oregon Experiment. In this case, the researchers found that beneficiaries valued Medicaid at about one-fifth of its cost.

Benefits are valued at only one-fifth the cost!  Why so low?

The literature suggests two explanations. First, Medicaid provides less complete choice of doctors and hospitals than other insurance, partly because of its low reimbursement rates (see this article for instance). Second, many of the benefits of Medicaid go to medical providers who would otherwise provide uncompensated or unpaid care to the same people.

The authors don’t mention this but if users don’t value the program highly because they would have gotten similar care for free in some other way, then the cost of Medicaid isn’t as high as it appears, because much of it is a transfer from taxpayers to medical providers or others who might otherwise foot the bill. Nevertheless we would probably design Medicaid very differently if we thought about it as (another) subsidy to medical providers rather than as a subsidy to the poor and sick.

It doesn’t follow from anything that has been said that Medicaid should be eliminated or even cut back (let alone that current efforts are the best way to do this). Nevertheless, if I told you that Program X costs $5 for every $1 in value transferred to recipients you would probably agree that Program X was in need of reform.

Addendum: Aaron Carroll and Austin Frakt offer a more optimistic review of the health evidence.

From Twitter I see this statistic:

Ratio of mean health care spending in richest quintile to mean health care spending in poorest quintile

For the United States, as reported, that ratio is 0.884 for ages 25-64, and for 65 and up the ratio has two varying estimates, from 0.87 to 0.9.

If I am understanding the numbers and presentation correctly, that indicates more health care spending on the poorest quintile than the wealthiest quintile (for below 25 however the ratio is 1.3, namely more spending on the wealthy).

I believe this comes as a surprise to many people, though it is arguably intuitive, since poor people become sick more often, and furthermore sick people are more likely to lose income.

I tracked down the source paper by Eric French and Elaine Kelly (pdf), and it does seem to be true, noting that the numbers exclude long-term care for the elderly.  By the way, that piece is full of fascinating, under-reported medical expenditure statistics, for other countries too.

A number of points suggest themselves:

1. You still might feel we are neglecting the health care of the poor, but I am not sure the majority of the American public would react that way, upon hearing these numbers.  Usually the poor get less of things, as measured by expenditures, even if they might “need” it more.  Health care is an exception to what is otherwise a pretty general rule.  I believe it should be such an exception, but to what degree?  I see a lot of pretty aggressive intuitions out there, mostly without serious justification or without any presentation of what the stopping point should be.

2. Those numbers don’t prove anything, least of all normatively.  Still, they do point my attention in the direction of wondering — yet again — if public health programs are not better than spending more on health care coverage of the poor.  Let’s stop or at least limit poor people from getting sick so many more times.

3. That poor people get sick more times, how much of this is a) poor environment including higher stress and exposure to crime, b) genes, c) inability to afford proper preventive care, d) bad decision-making, including diet, lifestyle, and exercise, and e) sickness causing poverty, and f) other factors.  I know of plenty of individual papers on these topics, but would it go over well to write an “apportionment” paper doling out the relative responsibilities?

4. How much should our decisions on the best health care policy depend on the answer to #3?  How many people are even willing to talk about this right now?

5. Why does the ratio flip so significantly toward the wealthy for younger people?  Can we use that fact to make any general inferences about the apportionment outlined in #3?  On the surface, it seems to suggest a significant possible role for d) and e), since those might affect children less.

6. What else?

The original pointer was from a retweet by Garett Jones, the tweet from Houston Euler, the Great Firewall is making direct links to them very costly right now.

To see the problem, consider Brian’s situation. He’s a single adult, age 45, earning $35,000 a year. BCRA (section 102(b)(2)) expects Brian to contribute a little more than 8.3% of that income to purchase a health insurance policy. That’s about $2,911. The federal government would chip in the amount needed to let Brian buy a “median benchmark” policy in his region. That policy won’t be lavish: on average it will pay for 58% of covered expenses, but it might well let Brian avoid bankruptcy if he gets extremely sick. It will also get Brian low, pre-negotiated rates for a lot of medical treatment instead of being subject to astronomical “Chargemaster” prices that hospitals often charge the uninsured. So, if that Bronze policy costs $4,500, Brian would pay $2,911 and the federal government would pay $1,089.

Suppose Brian succeeds at work and gets a $5,000 raise; or suppose Brian gets a part time job to help supplement his income and earns $5,000 more. Now, because his income is $40,000, section 102(b)(2) of BCRA expects Brian to contribute 11.3% of his income to healthcare. Since that’s $4,558, Brian in fact pays for the whole $4,500 policy; the federal government pays nothing. So, although Brian’s raise is $5,000, he pays an extra $1,589 in premiums. His effective marginal tax is almost 32% just from the BCRA alone. When one combines his loss of a subsidy with increased income taxes of $1,488 and an increased payroll tax of $382.50 (double that if Brian’s new job is deemed self-employment), Brian’s gets to keep at most $1,541 of his new $5,000. His effective marginal tax rate is at least 69%. It’s probably even higher if Brian faces state income tax or suffers a phase out of other government income-based benefits.

That is from Seth Chandler.  Ross Douthat has a good bottom-line take on the bill.

Here is a good summary and analysis from Megan McArdle, here is one key part:

But while there are a few things to like in this bill, overall, it’s a mess.  All of the problems created by Obamacare’s architecture remain, and some of the problems will get worse, because lower subsidies, higher deductibles and no mandate penalty probably means that a lot of people will exit the exchanges.  Those people are likely to be the folks we most need to stabilize those exchanges: healthy youngsters who don’t use much health care.  Which means that the exchanges will be at further risk from the death spirals we’ve already seen in some states.

I agree the bill is a bad idea.  That said, I do hope you keep in perspective some of the more, um, lurid critiques running around, including from health care economists (the Great Firewall won’t let me link to Twitter, and right now VPN is down).  You can read them as sociology, however, with a rather chilling effect.

Boston-based DNA sequencing company is offering to decode the complete genomes of newborns in China, leading some to ask how much parents should know about their children’s genes at birth.

Veritas Genetics says the test, ordered by a doctor, will report back on 950 serious early- and later-life disease risks, 200 genes connected to drug reactions, and more than 100 physical traits a child is likely to have.

Called myBabyGenome, the service costs $1,500 and could help identify serious hidden problems in newborns, the company says.

But some doctors say the plan is a huge overstep. “I think it’s vastly premature to peddle a completely unproven set of data, especially to a vulnerable population like neonates,” says Jim Evans, a professor of genetics at the University of North Carolina Chapel Hill.

The problem is that the risk posed by many disease genes remains uncertain. Even if a child has a mutation in a gene, he or she may never be affected, prompting debate among doctors about whether it’s useful to inform parents.

The Veritas test also steps into uncharted territory by making predictions about how children will look and act: how wide their nose will be, whether they will overeat or have a “novelty seeking” personality, and even whether they are likely to go bald decades in the future.

Evans is sharply critical of any effort to predict traits. Especially with psychology, he says, genetic factors aren’t well understood. “You run the risk of predestination based on bad science,” he says. “Frankly, I think it’s a little bit crazy to do genetic tests on your newborn to find out if 40 years from now they are going to be bald.”

Here is the full story, it has further interesting points.

And here is yet another paper suggesting that medical care, or at least some forms of it, has relatively low marginal value.  The subtitle of this one is “Evidence from Mandatory Checkups in Japan” and the authors are Toshiaki Iizuka, Katsuhiko Nishiyama, Brian Chen, and Karen Eggleston.  Here is the abstract:

Using unique individual-level panel data, we investigate whether preventive medical care triggered by health checkups is worth the cost. We exploit the fact that biomarkers just below and above a threshold may be viewed as random. We find that people respond to health signals and increase physician visits. However, we find no evidence that additional care is cost effective. For the “borderline type” (“pre-diabetes”) threshold for diabetes, medical care utilization increases but neither physical measures nor predicted risks of mortality or serious complications improve. For efficient use of medical resources, cost effectiveness of preventive care must be carefully examined.

Here is the NBER link.

If pharmaceutical reciprocity is a good idea for the United States, it’s a great idea for smaller countries. Indeed, this is mostly what happens in practice, even if not by law, since smaller countries can’t afford or justify the expensive US process. Fred Roeder of the Montreal Economic Institute makes the case for reciprocity in Canada:

…reciprocal recognition of drug approval authorities on both sides of the Atlantic would incentivize Canadian, European and American authorities to spend less time and money conducting parallel reviews. If the HPFB, the FDA or the EMA approved a drug, patients in Canada, Europe and America would have immediate access to it — increasing consumers’ choice as new drugs are offered to patients faster and more affordably, with less red tape driving up costs.

A reduction in approval time can be a win-win for patients and firms because a decrease in approval time is an increase in effective patent length without an actual increase in patent length. The numbers below are optimistic, but the idea that streamlining approval can increase profits and stimulate investment is correct:

These market-oriented reforms would not benefit not only consumers, but the pharmaceutical companies as well, expanding the timespan of the patents. On average, new drugs have a mere 10 to 14 years of patent protection remaining by the time they are sold to consumers after they have successfully jumped over all the government hurdles. Streamlining the drug approval process would increase the timespan of patented drugs on the market by 50 to 70 per cent.

Roeder also mentions Bart Madden’s important book Free to Choose Medicine. (For those who don’t know, I am proud to be the Bartley J. Madden chair in economics at Mercatus at GMU.)

BMJ: In a national sample of elderly Medicare beneficiaries admitted to hospital with medical conditions, we found that patients treated by older physicians had higher 30 day mortality than those cared for by younger physicians, despite similar patient characteristics. These associations were found among physicians with low and medium volumes of patients but not among those with high volumes.

…Our findings suggest that within the same hospital, patients treated by physicians aged <40 have 0.85 times the odds of dying (1.00/1.17) or an 11% lower probability of dying (10.8/12.1), compared with patients cared for by physicians aged ≥60 (table 2⇑). This difference in mortality is comparable with the impact of statins for the primary prevention of cardiovascular mortality on all cause mortality (odds ratio of 0.86)39 or the impact of β blockers on mortality among patients with myocardial infarction (incidence rate ratio of 0.86),40 indicating that our observed difference in mortality is not only statistically significant but arguably clinically significant. In addition, if our results are causal, an adjusted risk difference of 1.3 percentage points suggests that for every 77 patients treated by doctors aged ≥60, one fewer patient would die within 30 days of admission if those patients were cared for by physicians aged <40.

The paper has data on over 700,000 Medicare admissions and over 18 thousand hospitalist physicians. Physicians are assigned to patients more or less randomly depending on admission time so there are no significant differences between patients assigned to younger and older physicians. Older physicians are more likely to be male and, of course, to be trained during a different time period so the paper can’t fully distinguish age effects from cohort effects. The authors do find that older physicians who work a lot perform well–perhaps these physicians update their training or perhaps they are a self-selected vigorous sample. Continuing medical education and assessment requirements are probably very valuable.

Hat tip: Eric Topol.