Category: Law

Is a Russian price cap a good idea?

That is the topic of my latest Bloomberg column.  Here is the basic idea:

Say the price of oil is $100 per barrel, and extraction costs Russia $50 per barrel. The profit on that oil is $50 per barrel. Now assume a price cap of $70 per barrel. Russian profit falls to $20 per barrel — but still, the oil will be produced. A finely tuned price control would redistribute income toward buyers of Russian oil, without much interfering with oil supply.

Enforcement would have to be through maritime services, such as insurance for the carrying ships.

But I am not sold on its workability or efficacy:

One problem is how to set the cap at the right level. The plan is to set a fixed cap, rather than at some percentage discount to world oil prices. As world oil prices change, it would therefore be necessary to adjust the cap, preferably quickly. Given that it has taken months to agree to the idea of a cap, it remains to be seen if this would be possible. And things only get worse if the Western coalition against Russia splinters, or if the relevant bureaucracies are slow.

If the price cap ends up too low and Russian oil is taken off world markets altogether, that could significantly worsen what is already a serious global economic downturn.

A second problem is that Russia might simply sell the oil to nations not participating in this agreement to cap prices, most notably China and India. But selling more to those countries might require Russia to lower the price. And while China and India are unlikely to join the G-7 plan, the very existence of the price cap gives them bargaining leverage over Russia.

The bottom line, however, remains: Any decline in Russian government revenue might be considerably less than what a plan to cap the price of oil might indicate. And that’s not even considering whatever Russia might earn from selling oil on the black market. Nations outside the G-7 would have an incentive to buy tankers, self-insure them and use them to ship Russian oil without the price cap.

But the major issue is one of escalation…

In any case worth a ponder, there are further arguments in the piece.

FDA Deregulation Increases Safety and Innovation and Reduces Prices

In an important and impressive new paper, Parker Rogers looks at what happens when the FDA deregulates or “down-classifies” a medical device type from a more stringent to a less stringent category. He finds that deregulated device types show increases in entry, innovation, as measured by patents and patent quality, and decreases in  prices. Safety is either negligibly affected or, in the case of products that come under potential litigation,  increased.

After moving from Class III (high regulation) to II (moderate), device types exhibited a 200% increase in patenting and FDA submission rates relative to control groups. Patents filed after these events were also of significantly higher quality, as measured by a 200% increase in received citations and market valuations. These effects do not spill over into similar device types.1 For Class II to I deregulations, the rate of patent filings increased by 50%, though insignificantly, and the quality of patent filings exhibited a significant 10-fold improvement, suggesting that litigation better promotes innovation.

…Down-classification yields considerable benefits, as the proponents of deregulation would predict, but what of product safety? Perhaps counterintuitively, I find that deregulation can improve product safety by exposing firms to more litigation. Despite some adverse event rates increasing after Class III to II events (albeit insignificantly), Class II to I events are associated with significantly lower adverse event rates.3 My analysis of patent texts also reveals that inventors focus more on product safety after deregulation. These results suggest that litigation encourages product safety more than regulation…

Some background. Medical devices are regulated under three categories. New types of devices (new, not necessarily high risk) are highly regulated Class III devices which must go through a pre-market approval process to prove safety and efficacy (like new drugs). The pre-market approval process is time-consuming and expensive but it comes with one significant benefit, federal preemption of state tort action, i.e. these devices are shielded from product liability. Class II devices are devices that are judged to be substantially equivalent to an already approved device–proving equivalence also takes time and money but it’s less onerous than proving safety and efficacy de novo. Note that device manufacturers often make their devices less innovative so they can be approved as Class II devices rather than as Class III devices. Class II devices are mostly also protected against tort litigation. Class I devices are not FDA-approved and are subject to tort litigation.

As experience develops with new devices such that new devices turn out to be not especially risky, the FDA sometimes deregulates or down-classifies these devices from Class III to Class II or from Class II to Class I. Rogers studies these down-classifications by comparing what happens to the down-classified device category to a control group of similar devices that were not down-classified. The control group is critical and Rogers shows that his results are robust to defining the control group in a variety of plausible ways. Some of the key results are shown in the following figure:

Nicely we see that device submissions and new entry occur very quickly once a device is down-regulated which indicates that firms have ideas and products on-the-shelf but they are dissuaded from entering the market by the onerous pre-market approval process. Most likely, these are products and firms which produce devices for the European market which tends to be less regulated and they enter the US market only when costs are reduced. Patenting also increases in the down-regulated device category and–exactly as one would expect–this takes more time.

Safety declines non-significantly if at all from Class III to Class II deregulations and increases for Class II to Class I deregulations. That makes the welfare comparisons easy because deregulation appears to be all benefit and no cost. Note, however, that I have always argued that drugs and devices are actually too safe–that, is we could save more lives on net by approving more drugs and devices even if safety went down. That’s a hard sell, however, but it’s clearly true that given the results here we should deregulate or down-classify many more products even if safety declined on the margin. Too much safety is risky. That’s also the upshot of my paper on off-label prescribing which shows that it’s often the FDA-unapproved off-label use which is the gold-standard treatment in fast moving fields of medicine.

Rogers argues that safety increases for Class II to Class I deregulations because liability is a stronger deterrent on the margin than regulation (and he provides some evidence for this view in that safety increases more among larger firms that are less judgment proof than small firms). Without denying that mechanism my view is that innovation itself increases safety. As I noted above, medical device manufactures often do not use the latest technology in their products because this would threaten the “substantial equivalence” test so you get devices that are actually less safe and also more costly to manufacture than necessary. In essence, substantial equivalence anchors new technologies to old technologies thus preventing movement, even movement towards safety and lower prices.

Rogers also has an excellent and unusual paper (with Jeffrey Clemens) on directed innovation in artificial limbs due to the civil war! That paper and this one show a real focus on digging deep into the data to unearth important and unusual sources of insight. N.B.! Parker Rogers is on the job market.

Addendum: See my many previous posts for more useful references on the FDA, especially Is the FDA Too Conservative or Too Aggressive.

*A Man of Iron*

The author is Troy Senik and the subtitle is The Turbulent Life and Improbably Presidency of Grover Cleveland.  Here is one excerpt:

At the age of forty-four, the only elected office Grover Cleveland had ever held was sheriff of Eric County, New York — a role he had relinquished nearly a decade earlier, returning to a rather uneventful life as a whorkaholic bachelor lawyer.  In the next four years, he would become, in rapid succession, the mayor Buffalo, the governor of New York, and the twenty-second president of the United States.  Four years later, he would win the popular vote but nevertheless lose the presidency.  And in another four, he’s become the first — and to date, only — president to be returned to office after having been previously turned out.

His normal work hours were from 8 a.m. to 3 a.m. (p.31).  And he was broadly libertarian:

He would be the final Democratic president to embrace the classical liberal principles of the party’s founder, Thomas Jefferson.  Cleveland believed in a narrow interpretation of the Constitution, a limited role for the federal government, and a light touch on economic affairs.  To casual observers, such an approach is often mistaken for do-nothing passivity…that epithet, however, represents a fundamental misunderstanding of his presidency.

…Over the course of his two terms, this led to an astonishing 584 vetoes, more than any other president save Franklin Roosevelt…In his first term alone, Cleveland vetoed more bills than all twenty-one of his predecessors combined.

I am happy to recommend this book, you can buy it here.  I am also happy to recommend the new book by Stacy Schiff, The Revolutionary: Samuel Adams, New Yorker coverage here.

Treason!

The International Shipping panel of the Maritime Transportation System National Advisory Committee, a quasi-official advisory board, is not happy with the Cato Institute and Mercatus.

The Dispatch: After a March 21, 2020 meeting, the international shipping subcommittee sent draft recommendations to the Transportation Department’s Maritime Administration, according to a document the Cato Institute recently obtained from the government. The document, reviewed by The Dispatch, broadly discusses the problems of an aging U.S. fleet and insufficient shipping capacity.

Nestled among bullet points recommending policy changes to fix those problems is one labeled, “Unequivocal support of the Jones Act.”

Beneath it: “Charge all past and present members of the Cato and Mercatus Institutes with treason.

If these rent-seeking gangsters think this is going to dissuade Cato and Mercatus scholars from continuing to attack the awful Jones Act they are very much mistaken.

Irresponsible Gain of Function Research

Scientists at Boston University have grafted the new Omicron spike protein onto the old SARS-Cov-2 virus creating a new and deadlier version of Omicron.

bioRXiv: The recently identified, globally predominant SARS-CoV-2 Omicron variant (BA.1) is highly transmissible, even in fully vaccinated individuals, and causes attenuated disease compared with other major viral variants recognized to date1-7. The Omicron spike (S) protein, with an unusually large number of mutations, is considered the major driver of these phenotypes3,8. We generated chimeric recombinant SARS-CoV-2 encoding the S gene of Omicron in the backbone of an ancestral SARS-CoV-2 isolate and compared this virus with the naturally circulating Omicron variant. The Omicron S-bearing virus robustly escapes vaccine-induced humoral immunity, mainly due to mutations in the receptor49 binding motif (RBM), yet unlike naturally occurring Omicron, efficiently replicates in cell lines and primary-like distal lung cells. In K18-hACE2 mice, while Omicron causes mild, non-fatal infection, the Omicron S-carrying virus inflicts severe disease with a mortality rate of 80%. This indicates that while the vaccine escape of Omicron is defined by mutations in S, major determinants of viral pathogenicity reside outside of S.

Some of the headlines (here, here, here and here) aren’t making clear that the newly created chimeric virus is deadlier than Omicron (in mice) but less deadly than the ancestral strain. Nevertheless, in my view, this is gain of function research that should have come under extra scrutiny. The authors, however, did not go through P3CO review, a rule requiring agencies under HHS to review grant applications for any research on “a credible source of a potential future human pandemic.” More specifically:

The HHS Framework for Guiding Funding Decisions about Proposed Research Involving Enhanced Potential Pandemic Pathogens (HHS P3CO Framework)(link is external) was established in 2017 to guide funding decisions on proposed research that is reasonably anticipated to create, transfer or use potential pandemic pathogens resulting from the enhancement of a pathogen’s transmissibility and/or virulence in humans, called ePPP research.

I think this research qualifies. Frankly, the authors of the study were irresponsible. Boston University also failed terribly in its oversight. I also put some blame on Anthony Fauci for evading and obfuscating earlier gain of function research in a way that suggested very little falls under this category. (Rand Paul was right about this). Note, I am not taking a position on whether this research should have passed P3CO review but it should have been subject to review. I am also well aware that BSL-3 labs are heavily regulated, greatly increasing the cost of useful research. Overregulation is a real cost than can make us less safe and secure.

Nevertheless, if there is even a 5% chance that the SARS-CoV-II pandemic started with a lab leak–and don’t trust anyone who tells you the probability is less than 5%–then we need more care and scrutiny of research on potential pandemic pathogens. Furthermore, the United States must lead if we are to have any influence at all on what happens elsewhere in the world.

Why so much drug use in the United States?

That is a question from a loyal reader, and he does not mean pharmaceuticals rather illegal drugs.  I can see a few hypotheses:

1. Americans consume more of almost everything.  Including health care.  We are simply a nation of consumption, for longstanding cultural reasons and supported by our higher wealth and our ability to save through human capital and rising asset prices, thus enabling more spending.  So we are going to spend more on illegal drugs too.  In fact illegal behavior with the prescription drugs themselves is one of the fastest-growing drug problems in the United States.

1b. Americans also take way more legal prescription drugs than their counterparts in other countries.  Under one estimate, Americans consume 80 percent of the world’s painkillers.

2. Corporate interests, including Big Pharma, are in America relatively strong, including politically strong, and relatively prominent in advertising.  Some of those companies have worked hard to accustom you to the idea that you ought to “take something.”

3.  America has borders with Mexico and the Caribbean, which makes it harder to keep out illegal drugs.

4. Price! (Duh)  Somewhere recently I saw price estimates for cocaine in various countries (might anyone recall the link?).  It was cheaper in the United States than elsewhere.  We are a large market, have economies of scale, and are great at retail and marketing.  Many other things are cheaper here to, which in turn brings us back to #1.

5. Compared to say Germany or Denmark, there are fewer people “looking out for you.”  Americans are more likely to move away from family and friends, and more likely to live “in the middle of nowhere.”  We are lonelier, maybe not at the median but on the left hand side of the distribution.  Our demand for therapists is pretty high too.

6. Student life can be more competitive in the United States than in Canada or Europe, and that may induce many Americans teens to use amphetamines, which are more popular in America.

7. America is in general a high-variance country, due to large market size, ethnic diversity, relatively open and competitive markets, and the looseness of many of its social norms.  A higher-variance country will have many more people clustered in the unsatisfactory behavior patterns.

7b. Along related lines, American teens are more frequent users of illegal drugs than are European teens.  But American teens also have amongst the lowest rates of smoking and drinking.  So some of us are very disciplined, others much less so, again reflecting the high variance of both inputs and outcomes.

8. Americans are keener to try new products, relative to most of the rest of the world.  Along these lines, we have relatively big problems with the newer opioids and synthetic drugs.  Heroin historically has often been a bigger problem in Europe, and that is hardly a new drug.  In era of new drugs, as we currently are living in, this will nudge the balance toward Americans doing drugs more.

9. American teens have more disposal income to spend, compared say to European teens.  This may come from either jobs or from parental allowances.  Furthermore, the European youth, especially in Italy, are more likely to live at home for many more years.  That probably limits illegal drug use.  Americans are more likely to go away for college to “a campus,” and “a dorm,” a horrible institution if you think about it for too long.

What else?

Telemedicine is Dying

Bloomberg: Prior to the Covid era, telehealth accounted for less than 1% of outpatient care, according to the Kaiser Family Foundation. Telehealth services have since surged, at their peak accounting for 40% of outpatient visits for mental health and substance use.

Unfortunately, as I warned last year telemedicine is being wound back as regulations which were lifted for the pandemic emergency are put back into place.

Telemedicine exploded in popularity after COVID-19 hit, but limits are returning for care delivered across state lines.

…Over the past year, nearly 40 states and Washington, D.C., have ended emergency declarations that made it easier for doctors to use video visits to see patients in another state, according to the Alliance for Connected Care, which advocates for telemedicine use.

…To state medical boards, the patient’s location during a telemedicine visit is where the appointment takes place. One of MacDonald’s hospitals, Massachusetts General, requires doctors to be licensed in the patient’s state for virtual visits.

I know people who have had to travel over the Virginia/Maryland border just to find a wifi spot to have a telemedicine appointment with their MD physician. Ridiculous.

As I wrote earlier:

….telemedicine innovations pioneered during the pandemic should remain as options. No one doubts that some medical services are better performed in-person nor that requiring in-person visits limits some types of fraud and abuse. Nevertheless, the goal should be to ensure quality by regulating the provider of medical services not regulating how they perform their services. Communications technology is improving at a record pace. We have moved from telephones to Facetime and soon will have even more sophisticated virtual presence technology that can be integrated with next generation Apple watches and Fitbits that gather medical information. We want medical care to build on the progress in other industries and not be bound to 19th and 20th century technology.

Plod has a bunch of questions

From my request for requests, here goes:

– What does the NYT do well? And conversely what are they bad at?
– What is your theory on the rising lack of male ambition?
– Why do modern fantasy authors (Martin, Rothfuss, others) not finish their works?
– If you were chief economist czar of the US, what is the policy would you implement first? In the UK?
– Will non-12-tone equal temperament music ever become popular?
– What do you think will become of charter cities like Prospera?

I will do the answers by number:

1. The New York Times can publish superb culture pieces, most of all when they are not pandering on PC issues. Their music and movie reviews are not the very best, but certainly worth the time.  International coverage is high variance, but they have plenty of articles with information you won’t find elsewhere. Some of the finest obituaries.  The best parts of the Op-Ed section are indispensable, and the worst parts are important to read for other reasons.  Perhaps most importantly, the NYT has all sorts of random articles that are just great, even if I don’t always like the framing.  Try this one on non-profit hospitals.

On the other side of the ledger, the metro and sports sections I do not very much read (probably they are OK?).  The business section has long been skimpy, and is not currently at its peak.  Historical coverage with racial angles can be atrocious.  The worst Op-Eds are beyond the pale in their deficient reasoning, and there are quite a few of them.  On “Big Tech” the paper is abysmal, and refuses to look the conflict of interest issues in the eye.  They just blew it on a new Covid study.  The book review section used to be much better, I think mainly because it has become a low cost way to appease the Wokies.

2. Male ambition in the United States is increasing in variance, not waning altogether.  But on the left hand side of that distribution I would blame (in no particular order): deindustrialization, women who don’t need male financial support anymore, marijuana, on-line pornography, improved measurement of worker quality, the ongoing rise of the service sector, too much homework in schools, better entertainment options, and the general increasing competitiveness of the world, causing many to retreat in pre-emptive defeat.

3. Male fantasy writers do not finish their works because those works have no natural ending.  There is always another kingdom, a lost family member, a new magic power to be discovered, and so on.  And the successful fantasy authors keep getting paid to produce more content, and their opportunity cost is otherwise low.  Why exactly should they tie everything up in a neat bow, as Tolkien did with the three main volumes of LOTR?

4. For the United States, I would have more freedom to build, massive deregulations of most things other than carbon and finance, and much more high-skilled immigration, followed by some accompanying low-skilled immigration.  For the UK I would do broadly the same, but also would focus more on human capital problems in northern England as a means of boosting economic growth.

5. Non-12-tone equal temperament music is for instance very popular in the Arabic world, and has been for a long time.

6. I have been meaning to visit Prospera, but have not yet had the chance to go.  I expect to.  My general worries with charter cities usually involve scale, and also whether they will just get squashed by the host governments, which almost by definition are dysfunctional to begin with.  Most successful charter cities in history have had the support of a major outside hegemon, such as Hong Kong relying on Britain.

My Conversation with the excellent Walter Russell Mead

Here is the audio and transcript, here is the summary:

He joined Tyler to discuss how the decline of American religiosity has influenced US foreign policy, which American presidents best and least understood the Middle East, the shrewd reasons Stalin supported Israel, the Saudi secret to political stability, the fate of Pakistan, the most likely scenario for China moving on Taiwan, the gun pointed at the head of German business, the US’s “murderous fetishization of ideology over reality” in Sub-Saharan Africa, the inherent weakness in having a foreign policy establishment dominated by academics, what he learned from attending the Groton School, and much more.

Here is one excerpt:

COWEN: How would you change or improve the training that goes into America’s foreign policy elite?

MEAD: Well, I would start by trying to draw people’s attention to that, over the last 40 years, there’s been an enormous increase in the number of PhD grads engaged in the formation of American foreign policy. There’s also been an extraordinary decline in the effectiveness of American foreign policy. We really ought to take that to heart.

COWEN: Do you think of it as an advantage that you don’t have a PhD?

MEAD: Huge advantage.

COWEN: How would you describe that advantage?

MEAD: I don’t really believe in disciplines. I see connections between things. I start from reality. I’m not trying to be anti-intellectual here. You need ideas to help you organize your perceptions of reality. But I think there’s a tendency in a lot of social science disciplines — you start from a bunch of really smart, engaged people who have been thinking about a set of questions and say, “We’ll do a lot better if we stop randomly thinking about everything that pops up and try, in some systematic way, to organize our thinking of this.”

I think you do get some gains from that, but you see, over time, the focus of the discipline has this tendency to shift. The discipline tends to become more inward navel-gazing. “What’s the history of our efforts to systematize our thinking about this?” The discipline becomes more and more, in a sense, ideological and internally focused and less pragmatic.

I think that some of the problem, though, is not so much in the intellectual weaknesses of a lot of conventional postgrad education, but simply almost the crime against humanity of having whole generations of smart people spend the first 30, 35 years of their lives in a total bubble, where they’re in this academic setting, and the rule . . . They become socialized into the academy, just as much as prisoners get socialized into the routines of a prison.

The American academy is actually a terrible place for coming to understand how world politics works. Recently, I had a conversation with an American official who was very proud of the way that the US had broken the mold by revealing intelligence about Russia’s plans to invade Ukraine, and pointed out how that had really helped build the NATO coalition against Russian aggression, and so on.

So far as he goes, it’s true. But I said, however, if you really look at the total message the US was projecting to Russia in those critical months, there were two messages. One is, “We’ve got great intelligence on you. We actually understand you much better than you think.” It was shocking. I think it shocked the Russians. But on the other hand, we’re saying, “We think you’re going to win quickly in Ukraine. We’re offering Zelenskyy a plane ride out of Kyiv. We’re pulling out all our diplomats and urging other countries to pull out their diplomats.”

The message, actually the totality of the message that we sent to Putin is, “You are going to win if you do this.”

And this, on what makes for talent in the foreign policy arena:

…you can’t know too much history. A hunger for travel. I think too many foreign policy types don’t actually get out into the field nearly as much as they should. Curiosity about other cultures. A strong grounding in a faith of your own, which can be a secular ideology, perhaps, in some cases, but more often is likely to be a great religious tradition of some kind.

A very good conversation.  And I am happy to recommend Walter’s new book The Arc of a Covenant: The United States, Israel, and the Fate of the Jewish People.

The market for property insurance vs. climate change

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

One of the classic rejoinders to worries about climate change is the claim that people can move out of highly vulnerable areas into safer areas. Maybe the world will not be willing to accept hundreds of millions of climate-change refugees, but within the US, perhaps people can move from storm-prone Florida to the northern Midwest, or to wherever might prove appropriate, including safer parts of Florida. The US, after all, has a longstanding tradition of individual mobility. And many parts of the country have the space and infrastructure for additional residents.

For such migration to have any effect on the costs of climate change, however, price signals have to be active and relatively undistorted. That is, some set of market prices has to be giving people impetus to leave one place for another. And policymakers have not been letting insurance markets perform their proper work in this regard.

And on the details:

Currently the market for Florida property insurance is in a pretty bad way. This year six relevant insurance companies went insolvent, and for Florida underwriting losses have run more than $1 billion for each of the last two years. Not surprisingly, insurers have been cutting back their coverage in the state or leaving altogether. The end result is that homeowners are finding it much harder to get coverage and finding it much more expensive when they do. None of this should come as a surprise, given the immense damage wrought by Hurricane Ian and previous storms.

Yet politics is stifling market adjustments. Florida has a state-run insurer of last resort, called Citizens Property Insurance Corp. Not surprisingly, that insurer has financial problems of its own, and in May Governor Ron DeSantis oversaw an additional $2 billion in reinsurance support for the company’s efforts. In other words, the state government is stifling the market signals that might induce some of the state’s homeowners to leave for drier pastures.

But don’t put your hopes in the Florida gubernatorial election. DeSantis’s Democratic rival, Charlie Crist, has criticized the governor for not doing more on the property insurance front and has proposed 90-day emergency insurance coverage for residents. That would stifle market incentives all the more.

I should note that water subsidies for the Southwest are another example of the same general phenomenon.

Are Immigrants more Left leaning than Natives?

We analyze whether second-generation immigrants have different political preferences relative to observationally identical children of citizens in the host countries. Using data on individual voting behavior in 22 European countries between 2001 and 2017, we characterize each vote on a left-right scale based on the ideological and policy positions of the party receiving the vote. In the first part of the paper, we characterize the size of the “left-wing bias” in the vote of second-generation immigrants after controlling for a large set of individual characteristics and origin and destination country fixed effects. We find a significant left-wing bias of second-generation immigrants, comparable in magnitude to the left-wing bias associated with living in urban (rather than rural) areas. We then show that this left-wing bias is associated with stronger preferences for inequality-reducing government intervention, internationalism and multiculturalism. We do not find that second-generation immigrants are biased towards or away from populist political agendas.

That is from a new paper by Simone Moriconi, Giovanni Peri, and Riccardo Turati.

From the comments, more on health care

Again this comment is from Sure:

The US does not have a healthcare system. It has several. Medicare is single payer option with overwhelmingly private provision and some alternative administrative choices with a thick skim of secondary overlays of private health insurance. The Indian Health Service is full Beveridge. Kaiser is a single private system with nearly full vertical integration. Tricare is a social insurance model with limited private provision. Employer based healthcare is privately funded (with a generous tax break on said provision), privately administered (subject to millions of pages of regulation), and privately provisioned (with minor exceptions for state funded hospitals and the like). Then we have health sharing which are explicitly not health insurance, but involve “voluntary” assumption of costs by members, often linked by religious belief.

Then you have the growing cash healthcare option where providers take all comers, but only those who can put cash on the barrel because the paperwork is too expensive. And of all the ways healthcare is administered in this country, this and the VA are the only ones that do not run the full gamut of provision (at least not yet).

I have worked for most of these. All of them are larger systems than multiple small European countries. All of them are wildly more expensive than similar mechanisms of provision overseas. All of them suffer from intrusive, expensive meddling by politicians and bureaucrats that result in active degrading of patient care in my experience.

There is no good way to pay for healthcare in the US. Chances are, if you name an option somebody has at least failed to get the necessary buy-in at the state level. If you have some essential feature list, there is almost certainly an option that has already tried it.

Changing who signs the checks seems to make very minimal difference. We chase after crumbs by focusing on if the overall model should be more Kaiser or more IHS or more Medicaid.

The far bigger impact are the patients. We need 500 dollar chairs in the waiting room, to ensure that those with BMIs >50 will not have them collapse underneath their weight. We had to order a larger CT scanner a few years back when it was deemed unacceptable to send patients to the zoo for imaging. Opioid use means that I have to detail a lot of warm bodies to manage patients in withdrawal. I need an order of magnitude more warm bodies for suicide watch that my predecessors required back in the day according to the records (and for “low risk” suicide watches I can use telesitters to monitor multiple patients). I need huge numbers of social work hours because once patients hit the ED I need to deal with the complete lack of social service contact they had while homeless. The psychiatric population is an ever revolving door where I can make them basically normal (albeit low functioning) again with the aid of emergency required antipsychotic medications but will see them relapse once they hit the streets and discontinue care (and will have their best shot at long term recovery only once they victimize enough “good” people to get jailed). And, of course, I need an order of magnitude more expensive home health because everyone is single and estranged from the rest of humanity (most unmarried 30+ patients report having no one who can learn how to change dressings for example).

And, in spite of all this, survival rates for health matched controls are great. You get diagnosed with lung cancer? You survive longer and better in the states than your doppleganger in Britain or France. You need a liver transplant from Hep C? Get it here if you want lower rejection odds.

American healthcare starts with sicker patients and no amount of crafty planning about signing checks or shuffling patients is going to change that.

That was then, this is now…

Six days after Traphagen’s visit, U.S. Customs and Border Protection confirmed that work on the border wall that began under Trump is revving back up under Biden. In an online presentation Wednesday, CBP — the largest division of the Department of Homeland Security and home to the Border Patrol — detailed plans to address environmental damage brought on by the former president’s signature campaign promise and confirmed that the wall will remain a permanent fixture of the Southwest for generations to come.

Here is the full story, median voter theorem blah blah blah, via the wisdom of Garett Jones.

From the comments, on single payer

Single payer’s magic has historically worked via just a few channels:
1. Some amount of monopsony allows the government to bid down medical services below market rates.
2. Political imperatives lead to lower training burdens, lower staffing ratios, and lower certainty in diagnosis and treatment.
3. Obfuscation of possible alternatives diminishes demand for costlier care.

Option 1 means that you pay health professionals worse. There is some utility in this even. But it has some long run consequences that are only now being discovered. First, you see the exit of the most skilled people from medical careers. Second, the physicians unionize (or equivalent) and become political actors. Third, with everyone trying this and some semblance of open borders, it becomes ever harder to keep people in the places you need them (which rarely match the places where the sort of folks who can become Western physicians want to live). At some point you can no longer suppress wages below their natural clearing rate and it becomes ever harder to import foreign talent when other places (e.g. the US) offer a more lucrative immigration option.

US physicians are overtrained. But it also means that as things need ever more understanding to manage, we can deal better with things like CAR-T therapy and the like. And it is not like foreign docs are unaware of these things. As status is the important thing for most educated professionals, there will be continuous pressure towards increasing the prestige of the job at that comes with more training. As much as the government wants to have the minimally trained folks doing as much as possible, single payer countries are starting to see ever more pressure for their physicians, nurses, and the rest to match educational qualifications of the rest of the world.

Tying into all of this is the fact that the alternatives are quite visible. Everyone in the US these days can see an alternative where the masses do not have to pay out of pocket and theoretically fund health care by taxing someone else. But the flip side is also true. Wealthy Britons know that their American friends need not live with chronic pain for years for surgeries the NHS eventually will perform. They know that their American friends get screened more frequently and actually get treatment that cures diseases which are merely managed in Britain. They may still support the tradeoffs that come from single payer, but the days when these sorts of comparisons are no longer discussed are long gone.

Frankly I am always amazed at how much gets attributed to single payer. We know that, at most, only 25% of life expectancy outcomes are due to healthcare. We know that all of the correlates of single payer (e.g. percent of health expenditures paid by government) and health correlates (e.g. life expectancy) get vastly less favorable when you drop the US from the analysis as an outlier. We know that the UK has habitually adopted US practices a decade or so later, once the cost falls into the range where the UK can afford it.

But going forward, I think the old metrics that showed large advantages for single payer are going to continue to slide. Unions (formal or otherwise) are going to militate for higher pay. Governments are going to have to deal with one side of the political spectrum going into hoc to the health employees and the other polarizing to the folks in the disfavored region(s) who are lower priority for healthcare and pay more in taxes for the “giveaways”. And all of it is going to run into the trouble that the developing world is going to have fewer kids and hence fewer physicians while the relative advantage of immigrating is going to continue to fall.

Single payer was overwhelmingly built on the post-World Wars consensus and environment. It operates as a monopsony. What on earth would make us think that it would be stable into the future?

That is from “Sure.”

TC again: There is a natural tendency on the internet to think that all universal coverage systems are single payer, but they are not.  There is also a natural tendency to contrast single payer systems with freer market alternatives, but that is also an option not a necessity.  You also can contrast single payer systems with mixed systems where both the government and the private sector have a major role, such as in Switzerland.

I’ll say it again: single payer systems just don’t have the resources or the capitalization to do well in the future, or for that matter the present. Populations are aging, Covid-related costs (including burdens on labor supply) have been a problem, income inequality pulls away medical personnel from government jobs, and health care costs have been rising around the world.  Citizens will tolerate only so much taxation, plus mobility issues may bite.  So the single payer systems just don’t have enough money to get the job done.  That stance is conceptually distinct from thinking health care should be put on a much bigger market footing.  But at the very least it will require a larger private sector role for the financing.

The Martha’s Vineyard saga

I take slaps at both sides, in my latest Bloomberg column, and here is one of the salvos:

Vineyard residents were certainly very kind and hospitable to the new arrivals before they were moved to the mainland. But altruism can only go so far. A true commitment to egalitarianism would mean constructing more affordable housing, for example, making it possible for not just immigrants but lower-income people to live and work there.

Even before the modest number of Venezuelan arrivals, the island was known for its extreme income inequality. Wages there are below the Massachusetts average, and living expenses prohibitively expensive. Those realities stem from decisions about land use made by the island’s population.

And this:

The larger point, of course, is that the US has too many arrivals living in “immigration limbo.” They can cross the border with an asylum claim and then live in the country while they wait for a slow and somewhat arbitrary judicial system to hear their claim. The US would do better with a system of more ex ante immigration approvals, and fewer hanging cases ex post.

I have never been to Martha’s Vineyard — maybe someday!