Medicine

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.

Following the CBO report that Obamacare will induce many people to leave the workforce or cut back on their hours, I have read numerous blog posts suggesting this is benign or possibly even favorable.  After all, why should people be forced to work just to keep their health insurance?  Imagine a 57-year-old man, freed from the necessity to grub for pay at a second-class retail job, which he had to take just to get insurance to cover the bills for his periodic back treatments.

Alternatively, when I read about demand-side shocks which induce unemployment, I am reminded of the work of Alan Krueger.  In two papers, one of which is quite recent, and does not stem from the Heritage Foundation, Krueger shows rather convincingly that the unemployed maintain reservation wages which are simply too high.  They would be better off lowering those wages, being more realistic, accepting work, and getting back on their feet again.  In other settings (not considered by Krueger), other workers seem to be too slow to move to new areas for new jobs, given the costs of being unemployed long-term.

A lot of Keynesians try to maintain the communication of the feeling (if not the outright statement) that demand-driven employment shocks have very little to do with the choices of workers but that is closer to wrong than right.  (By the way, sarcastic comments about soup kitchens causing the Great Depression belie an understanding of both this argument and of contemporary search models for the labor market.)

OK, given all that, when those workers, hit by negative shocks, do not rush to go back to work at lower reservation wages, we then read a portrait of hysteresis, despair, and soul-crushing joblessness, a psychic swamp so difficult to escape that even summoning up the strength to go back to work may be difficult.

In other words, would-be workers irrationally undervalue the benefits of having a job and they also underestimate the costs of remaining unemployed.

Now let’s switch settings.  A benefit shock comes along, positive for many people, and it induces many of them to work less or not work at all.  How happy should we be?  And here I mean happy at the margin, due to their change in employment decision.

People, it is rather difficult to have it here both ways.  I guess it is possible that workers are irrational in changing their employment decisions in response to changes in relative dollar wage opportunities, but rational when changing their employment decisions in response to changes in relative benefit opportunities.  It really is possible.  But are any of you actually arguing that or holding some deep-seated reason for believing in that difference, other than perhaps the reason this post might have induced you to come up with?  No, I see one assumption about a destructive choice in one context and the opposing assumption about a beneficial choice in the other context, without much regard for the tension or contradiction between those two assumptions.  A lot of you may be subbing in general feelings — “unemployment is terrible,” and “ACA is good,” and simply transferring those general feelings to feelings about the respective marginal changes in employment in each case.  That is a fallacy and dare I say it is a “mood affiliation” fallacy?

And by the way, the distinction between a substitution effect and an income effect is a little tricky in this context.  But providing ACA-subsidized health insurance for non-workers is in general a substitution effect which switches them out of working in a way that, if pro-ACA stories about adverse selection and uninsurability are true, a simple equivalent cash grant would not.

A simpler possibility is that people undervalue the long-term benefits of having a job and thus in both settings the contraction in employment is a quite negative outcome.  That is then very bad news for ACA, if only in expected value terms.

I am reading what people write on this topic and seeing massive fog through my spectacles, a bit on both sides of the debate in fact.

Addendum: Ross Douthat made a good point:

At 500,000-800,000, I wasn’t *that* troubled: http://nyti.ms/1exzxlm  At 2-2.5 million, I am. Is there a # that would trouble @CitizenCohn?

Ross has additional comments here.

The Affordable Care Act will also reduce the number of fulltime workers by more than 2 million in coming years, congressional budget analysts said in the most detailed analysis of the law’s impact on jobs.

The CBO said the law’s impact on jobs would be mostly felt starting after 2016. The agency previously estimated that the economy would have 800,000 fewer jobs as a result of the law.

The impact is likely to be most felt, the CBO said, among low-wage workers. The agency said that most of the effect would come from Americans deciding not to seek work as a result of the ACA’s impact on the economy. Some workers may forgo employment, while others may reduce hours, for a equivalent of at least 2 million fulltime workers dropping out of the labor force.

That is from The Washington Post.

Addendum: Annie Lowrey adds comment.

Maybe not so much.  That is a new paper by Michael Frakes and Anupam B. Jena, the abstract is here:

Despite the fundamental role of deterrence in justifying a system of medical malpractice law, surprisingly little evidence has been put forth to date bearing on the relationship between medical liability forces on the one hand and medical errors and health care quality on the other. In this paper, we estimate this relationship using clinically validated measures of health care treatment quality constructed with data from the 1979 to 2005 National Hospital Discharge Surveys and the 1987 to 2008 Behavioral Risk Factor Surveillance System records. Drawing upon traditional, remedy-centric tort reforms—e.g., damage caps—we estimate that the current liability system plays at most a modest role in inducing higher levels of health care quality. We contend that this limited independent role for medical liability may be a reflection upon the structural nature of the present system of liability rules, which largely hold physicians to standards determined according to industry customs. We find evidence suggesting, however, that physician practices may respond more significantly upon a substantive alteration of this system altogether—i.e., upon a change in the clinical standards to which physicians are held in the first instance. The literature to date has largely failed to appreciate the substantive nature of liability rules and may thus be drawing limited inferences based solely on our experiences to date with damage-caps and related reforms.

There is an ungated version of the paper here.

There is a new study from West Michigan (pdf), by Leslie A. Muller, Paul Isely, & Adelin Levin, based on questionnaire responses.  I would take this with a grain of salt, but still it is useful information to throw into the pot.  Here is one excerpt:

Many firms have decided however to minimize their exposure to ACA costs by limiting the employees that must be covered. Questions 14a – 14c show that 36 percent of firms are considering (or using) temporary workers, 44 percent are considering or have reduced/limited hiring over the next 12 months, and 51 percent are considering or have already reduced/limited hours so that the employee is considered part-time.

You may find the tables on the last few pages of the paper of interest.  The results are based on fewer than 180 observations and presumably involve some selection bias as well.

The pointer is from W.E. Heasley.

Early data on ACA enrollees

by on January 17, 2014 at 8:37 pm in Current Affairs, Law, Medicine | Permalink

Christopher Weaver and Anna Wilde Matthews report:

Early signals suggest the majority of the 2.2 million people who sought to enroll in private insurance through new marketplaces through Dec. 28 were previously covered elsewhere, raising questions about how swiftly this part of the health overhaul will be able to make a significant dent in the number of uninsured.

Insurers, brokers and consultants estimate at least two-thirds of those consumers previously bought their own coverage or were enrolled in employer-backed plans.

The data, based on surveys of enrollees, are preliminary. But insurers say the tally of newly insured consumers is falling short of their expectations, a worrying trend for an industry looking to the law to expand the ranks of its customers.

I would emphasize that we still don’t really know quite what is going on here.  But the view that everything is now in the clear simply is not warranted by the available evidence.

Hat tip goes to Megan McArdle.

About that Medicare cost slowdown

by on January 14, 2014 at 4:34 pm in Economics, Medicine | Permalink

Medicare today is in worse financial shape than was projected before the cost slowdown began. The recession had a more severe impact in depressing Medicare revenues than it had a helpful effect on Medicare cost growth.

That is from Chuck Blahous.  It is tricky as to whether we are associating the recession with a one-time loss of output, or with an ongoing slowdown in the rate of economic growth (and which caused which?).  Still, on the fiscal front, for the long-term projections, I would say the net bad news has been exceeding the net good news, even though the good news is very welcome indeed.

Megan McArdle has the latest:

This is the plan that Republicans hope to cleverly foil by framing the risk-adjustment provisions [of ACA] as an insurer bailout and repealing them. As designed, the risk-adjustment mechanism was supposed to be revenue-neutral, and that is how the Congressional Budget Office scored it in their last estimate. But unless the demographics of the exchanges improve pretty quickly, the three temporary risk-adjustment programs are probably set to transfer a large hunk of cash to the insurance companies. That’s what the administration, and the insurers, want to happen; it’s how they are going to keep the insurers on board for 2015. Phil Klein at the Washington Examiner points out that Humana Inc.’s latest filing with the Securities and Exchange Commission warns of a “more adverse than previously expected” mix of customers enrolling through the exchange — but it doesn’t change its earnings forecast for 2014. So either it thinks its losses will be trivial relative to overall earnings or Humana thinks the chances of a bailout from the administration are basically 100 percent.

There is more here, including background context if you are not up to speed on this issue.

This is a very good interview, read the whole thing, here is one bit from Laszewski:

There’s a big misconception that this is about young people. That’s baloney. It’s about healthy people. A healthy 20-year-old might only pay a $100 premium. You want healthy 40 and 50-year-olds. The big problem right now is really total enrollment. We only have about 10 percent of the uninsured in here. Insurers think you need more like 70 percent of a pool of people to sign up.

Here is another:

I have an interesting answer for that. I think the mandate is almost worthless because the word is getting around that they can’t really collect it. And by year three, it’s really a lot of money. I think there’ll be real pressure to just get rid of it. I don’t think you can force people to buy this insurance. If they don’t want it there’ll be a political groundswell to get rid of it. So in my mind the individual mandate is kind of irrelevant to this.

And another:

…I do have a concern that people are looking at these plans and not finding value. Some people are looking at paying 10 percent of their income for plans with huge deductibles, and then you have politics of Obamacare and the bad press of the launch and if you put all those things in a bag and mix them up, I am really concerned that the uninsured who are healthy are not finding Obamacare the value they hoped it will be. That’s the real risk for Obamacare.

Read the whole thing, for Ezra’s responses too.

Here is an NBER paper from 2007 — perhaps it is timely today — by Olivier Deschenes and Enrico Moretti:

We estimate the effect of extreme weather on life expectancy in the US. Using high frequency mortality data, we find that both extreme heat and extreme cold result in immediate increases in mortality. However, the increase in mortality following extreme heat appears entirely driven by temporal displacement, while the increase in mortality following extreme cold is long lasting. The aggregate effect of cold on mortality is quantitatively large. We estimate that the number of annual deaths attributable to cold temperature is 27,940 or 1.3% of total deaths in the US. This effect is even larger in low income areas. Because the U.S. population has been moving from cold Northeastern states to the warmer Southwestern states, our findings have implications for understanding the causes of long-term increases in life expectancy. We calculate that every year, 5,400 deaths are delayed by changes in exposure to cold temperature induced by mobility. These longevity gains associated with long term trends in geographical mobility account for 8%-15% of the total gains in life expectancy experienced by the US population over the past 30 years. Thus mobility is an important but previously overlooked determinant of increased longevity in the United States. We also find that the probability of moving to a state that has fewer days of extreme cold is higher for the age groups that are predicted to benefit more in terms of lower mortality compared to the age groups that are predicted to benefit less.

Ungated versions of the paper can be found hereAddendum: The published version is here, with slightly different numbers.