Category: Medicine

Can one change one’s mind on the health care mandate?

I never have, but some people have, see this post too.  I don’t care to guess at their motives (which are totally cynical), but let’s consider this as a question in pure logic.  It is harder to make a mandate work when a) health care costs are high, and b) income inequality is high.

a) The higher are health care costs, the more the mandate is forcing lower income consumers to buy an inefficiently high quantity of medical care.  (Forcing everyone to buy the same quality toothpicks is not a big deal, but forcing everyone to buy the same quality car, or house, is tougher to pull off.)  Of course subsidies offset this problem to some extent, but the poor person still may be worse off or only marginally better off, the subsidy is itself costly, the subsidy raises fairness questions, in a pluralistic health care system the subsidy may cause inefficient burden-shifting into the subsidized sector, and the subsidy involves higher implicit marginal tax rates as it is phased out for higher income classes.

b) The higher is income inequality, the more serious are the problems discussed in a).

Circa 2080, imagine a world with two classes, the very rich and the fairly poor.  The very rich pay thirty percent of their $1 million a year incomes on health care.  The fairly poor earn $100,000 a year.  How are we supposed to roughly equalize health care consumption?  Does it make sense to give the fairly poor 3/4 of their real income ($300,000 out of a total of $100,000 cash plus $300,000 health care benefits) in the form of health care benefits?  And could we enforce that with a mandate + subsidy?  Probably not.

Of course both health care costs and income inequality have been rising in this country.  It is a critical question — and one which remains unanswered — at which margins these problems kick in decisively.

Under “Medicaid for everybody plus private cash top-offs,” this same problem does not arise, but there is also less egalitarian redistribution.  I would favor that blend over a mandate.

Here is related commentary from Ezra Klein.  Here is related commentary from Andrew Sullivan.

The new Florida Medicaid plan

It has passed the legislature, there is a 1/20 summary here, and an ungated piece here.  Here are a few salient points:

1.Most of the patients will be moved into managed care.

2. In most cases malpractice awards — for Medicaid patients only — will be capped at $300,000.

3. “Last month, the federal government advised legislators to choose the payment system that would guarantee that a percentage of the money, in this case 90 percent, would go to patient services. Instead, the Legislature chose the other option: to share profits with managed-care companies.”

By what percentage will the real value of Florida Medicaid benefits be eroded?  What does this imply about the future political equilibrium of where spending cuts will come?  Will Medicaid as we know it survive?

It remains to be seen whether the Federal government, which has the ability to veto the plan, will approve the proposal.

“Consumer-driven” health care

…the US isn’t even close to being the leader in consumer-driven medicine, if by that you mean cost-sharing and purchasing decisions; in the rich world, that would almost certainly be Switzerland, where consumers patients not only pay heavily out of pocket, but purchase their own insurance, as both Kaiser and Cato will tell you.

That’s from Megan McArdle, with a good chart at the link.  Krugman decries the “patient as consumer” model, but oddly he once wrote a whole column praising the Swiss health care system:

…a Swiss-style system of universal coverage would be a vast improvement on what we have now [pre-ACA, at the time]. And we already know that such systems work.

Niklas Blanchard had an excellent post, “Sometimes Patients are Consumers…”  And Will Wilkinson comments.

Even in a system such as the French, actual health care decisions are very often driven by choosing individuals, even if government ends up paying the bill.

Markets in everything the culture that is Denmark

The Spermbike.

It is intended as an environmentally friendly way to carry sperm to fertility clinics scattered around Copenhagen.

But is it actually environmentally friendly or is it, as is so often the case, an advertising gimmick?  The bike has its own cooler and:

Producing the Sperm Bike was no easy task. It was constructed by the Danish company 10 Tons – who specialise in zoological and botanical models as well as paleontologic reconstructions, including full-size whales and dinosaurs.

With the tail, the bike is 2.9 metres long and fully-loaded with… um… sperm… it weighs 50 kg.

For the pointer I thank James Hohman.

Chopin’s Sonata #2

Democrats and Republicans are joining to oppose one of the most important features of President Obama’s new deficit reduction plan, a powerful independent board that could make sweeping cuts in the growth of Medicare spending.

There is a growing move to do away with the board and that move enjoys widespread support:

Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, called it “a rationing board” and said Congress should not “delegate Medicare decision-making to 15 people appointed by the president.” He said Mr. Obama’s proposal would allow the board to “impose more price controls and more limitations on providers, which will end up cutting services to seniors.”

Here is the article (1/20).   Here is Chopin’s Sonata #2.  On the brighter side, here are outlines of a budget deal under discussion.

Medicare and adverse selection

Brad DeLong attempts a Theory of Mind task:

Tyler Cowan [Cowen] would probably say: tough. If you were born with a tendency toward high cholesterol you ought to have known that by age 20 and been busily saving all your life in order to pay the extra expected costs of treating your heart diseases. But I don’t think the rest of us are willing to say that a bad dice roll in the genetic lottery plus an absence of foresight should doom you to an early, untreated death.

Since I believe none of that, I will offer no grade.  Nor do I believe in privatizing Medicare, as another part of Brad’s post (“In Tyler Cowen’s world, those who want to buy Medicare almost surely cannot. The market to sell and buy medical risk is unlikely to exist.”) seems to suggest and it was only last week that I distinguished my view from this, endorsing the Yglesias-Krugman argument that privatized vouchers bring higher costs.

I do believe in a core set of Medicare services, topped off with the ability to choose how much of your extra benefit comes in the form of either Medicare or Social Security benefits (cash).  It is nonetheless an interesting question whether that system would encounter adverse selection as a major financial problem.  A few points:

1. When it comes to the elderly, adverse selection as a problem is overstated.  The real problem is usually a high degree of information about many conditions, so often insurance is difficult per se.  It’s not the asymmetry of information that is the core issue, it is the existence of lots of information, and that is one of Arrow’s subtler points.  That distinction matters a good deal for mechanism design.

2. An old person might know better his health care condition, but not know better his expected health care costs.  That is a critical distinction.  You can’t reach age 60 and credibly say: “I’ve been healthy so far, I guess my lifetime health care costs will be low.”  It’s not even clear whether the healthy or the unhealthy will have lower health care costs in their later years; the unhealthy might die rather quickly and decisively.  Adverse selection on the grounds of health care costs need not be high and arguably actuaries can estimate those as well as the individual himself.

3. Perhaps most importantly, adverse selection in this context doesn’t have to be a problem; if low cost people take some cash it could be that the system is working well (if only on grounds of equity), not badly, and remember this is all tax-financed.

4. You can imagine patients visiting a combined doctor/financial analyst service at age sixty and asking for the best information and whether they should take the cash or the fuller Medicare package, possibly leading to adverse selection in terms of program finances.  But a lot of people don’t listen to their retirement planners either.

5. When choosing a future benefits package, if impatience for cash (one cognitive bias) outweighs overestimation of the value of medical care (another cognitive bias), my preferred system will work not so well.  If the net bias is runs the other way, the system will capture some but not all available gains from trade.

6. The general approach of “give everyone some basic benefits for free, and then allow everyone to top off at some opportunity cost” applies to food (food stamps), education (free K-12), housing, and now, with ACA, to health coverage for the non-elderly, among other areas.  And yet many people think the approach is morally outrageous.  The correct way to proceed is not to lash out, but to start by admitting in which spheres the approach makes sense, and then seeing how far outwards those arguments can radiate.

Do Cellphones Cause Brain Damage?

Siddhartha Mukherjee, author of the acclaimed The Emperor of All Maladies: A Biography of Cancer, asks do cellphones cause brain cancer? Mukherjee does a good job laying out different research designs–experimental, epidemiological, retrospective and prospective case-control studies–and their potential confounds. The best extant studies find little, no, or even a small beneficial effect, and thus Mukherjee concludes that as of now the evidence remains “far from convincing.”

What he doesn’t do, however, is put the risk of cell phone use and brain cancer in context; that’s a real failing because the fact of the matter is that cell phones do cause brain damage. Cell phones cause brain (and body) damage when people use them while driving. Cell phones distract, whether we measure in the lab or on the road, and they distract enough to make cell phone use not all that different from driving under the influence of alcohol (at the illegal level). In marked contrast to the studies on cell phones and brain cancer the studies on cell phones and driving are broadly consistent and suggestive of a small but significant increase in death (your own and that of others). Here’s a review:

In sum, there is a growing body of evidence, including methodologically sound studies of crash risks, that drivers’ cell phone use substantially increases crash risk. Crash risk increases for men and women, young and old, and for hands-free as well as hand-held phones.

Thus, if you want to avoid brain damage from using a cell phone, wear a seat belt. Or better yet, don’t talk and drive. Of course, that is a message people don’t want to hear which is why we focus on brain cancer and turning cell phones off in airplanes.

A Christian Scientist’s guide for opting out of Medicare

You will find it here (pdf), and the broader set of links is here, some of the key material starts at p.10.  There is some general background here.  You can’t get your “money back,” but you can have the payments transferred to a qualified Christian Science care facility.  In other words, Medicare will pay for prayer.  A few points:

1. It would be easy to generalize this idea, and also easy to give people — whether or not they are Christian Scientists — some of their money back in return for forgoing higher levels of care.

2. American society recognizes the right of Christian Scientists not to pursue traditional forms of Medicare.  Can not that principle be extended, and in a way which saves money?

3. There is no public outcry about the horrible life outcomes, and endings, suffered by older Christian Scientists (there is a justified outcry about foregone treatments for the children).  It is not obvious that they have worse or less dignified deaths.  Here is a JAMA paper showing higher death rates for Christian Scientists, although presumably some of that effect is due to withholding care from younger people.  There is more information on the young here.   A Washington State study, cited in the JAMA piece, suggests the overall life expectancy effect of being a Christian Scientist is negative but small.

4. In any case I see no obvious moral repugnance, or public unacceptability, to giving people more money, in return for the equivalent of Christian Scientist health outcomes at later ages.

5. That said, taking the money instead of the Medicare does not (at all) require you to consume zero subsequent health care.

6. Large numbers of American retirees in Mexico and Costa Rica receive a lot or all of their health care without Medicare intervention.  Again, this is not considered scandalous nor are these horrible lives with horrible ends.  I am simply proposing that we pay people to be willing to do this.

7. The Medicare Advisory Board will be able to find only so much “pure fat” in its spending cuts.  And fiscal considerations will require a relatively modest federal mandate, in terms of the number of conditions it covers.  One way or another, letting some people do without massively subsidized care will become a reality (in fact it already is a reality), we are simply debating its scope and the fairness and efficiency principles for its implementation.

8. In the German system, if you don’t sign up at the right time you can be left uninsured.  A German may face this issue when living in the United States, but perhaps returning to Germany, namely when to let coverage lapse.  Again, this does not make for major scandals or unacceptable outcomes.  Some Germans choose to take that chance and of course they save some on the premium, with some risk at the back end.

9. If some individuals take the cash and secede from full Medicare, that frees up medical services, and lowers prices, for others.  The net decline in medical services isn’t as large as it appears at first.

10.  In the comments I read so much about choice biases and hyperbolic discounting, but no one mentions that most people significantly overrate the effectiveness of medical care, relative to the results in the RCT and refereed literature.  The comments themselves are evidence for this proposition.

11. There is nothing sacrosanct about the current division of benefits between Social Security and Medicare.  And no matter how you chop that one up, some important marginal needs are left unsatisfied.

12. Here are comments from Ezra Klein and Kevin Drum and Karl Smith.  Here is my last post on the topic.

Cash grants instead of Medicare?

Matt Yglesias tweets:

Yes, I think converting Medicare into a straight cash grant to seniors makes sense.

They might rather have a servant, or a better car, or an apartment which doesn’t require them to drive, or to eat a better diet or join a better gym. Or maybe they would rather live it up, travel, and perhaps die at a younger age.  That’s what pro-choice means.

On the public choice side, this suggestion would turn seniors into an active constituency for health care cost control.

Nonetheless I propose a more modest version of the idea.  When people turn a certain age, allow them to trade in the current benefits package for a minimalistic package (set broken limbs and offer lots of potent painkillers), plus some of the rest in cash, doled out over the years if need be.  For some people, medical tourism will fill the gap.

But if a person wishes, he or she can keep the extant benefit structure and forgo the cash altogether.  No one is forced to take this deal.

Objections?  You might think that “health” has a special moral status of some kind, but keep in mind “health care” is only one way of many to better health care outcomes, so you still can favor increasing the degree of choice.

Paul Krugman calls for a public provision option in Medicare, a bit like the VA system.  He doesn’t mention letting people choose some cash instead.  We have gone from “Free to Choose” to “Free to Choose more government.”

He makes a good point at the end: “And what would terrify the right, of course, is the likelihood that genuine socialized medicine would actually win that competition.”

What would terrify the left, of course, is the likelihood that genuine privatized cash would actually win that competition.

Agricultural Extortion and Terrorism

Single bottles of wine from La Romanée-Conti, the legendary vineyard of Burgundy, sell for upwards of $10,000. In 2010 the owner received a threat, the vineyard would be poisoned unless the owner paid one million euro. When the owner didn’t pay a map was delivered that identified several vines that had already been poisoned by drill and syringe. The French don’t want to talk about this and for good reason, agricultural extortion is very easy and they fear copycats.

I have thought about this issue on and off for many years beginning with the Chilean grape scare of 1989. In that scare an anonymous caller to the US Embassy in Chile announced that Chilean fruit had been injected with cyanide. The FDA found two grapes with evidence of cyanide poisoning. Exports of fruit from Chile were temporarily banned, millions of pounds of fruit were destroyed and the Chilean fruit industry lost millions of dollars.  Many people now think the call was a hoax and the FDA evidence mistaken but either way the point was demonstrated, it’s easy to create millions of dollars worth of damage.

A few other lesser known cases are even more concerning. In 1996, for example, the police were tipped off that liquid fat at a Wisconsin rendering plant had been contaminated doing some $250 million dollars worth of damage. The criminal probably would never have been caught had not more threatening letters and further contamination followed. Eventually a competitor was charged with the crime.

It would be easy to do billions of dollars worth of damage to crops and animals with little risk of being caught. As the Chilean case indicates, even a hoax can damage. Fortunately, criminals usually aren’t very smart. The vine poisoner mentioned earlier, for example, was caught trying to collect the money. A little bit of economics would have taught him that you can make lots of money from agricultural extortion without ever having to collect from the victim (and no, I am not saying how although it won’t be a mystery to most readers of this blog). Of course, a terrorist doesn’t even have to collect damages to succeed–just a bit of mad cow or corn rust and we are in trouble (and those aren’t even the biggest threats.)

I worry that this one of those dangers that is so threatening we are afraid to worry about it.

Choice-based Medicare cost controls

Let’s say it’s 2027 and I’ve just turned 65.  I fill out a Medicare application on-line and opt for a plan with superior heart coverage (my father died of a heart attack), not too much knee coverage and physical therapy (my job doesn’t require heavy lifting), no cancer heroics (my mother turned them down and I wish to follow her example), and lots of long-term disability.

Is that so terrible an approach?  Is it obviously worse than having the Medicare Advisory Board make all of those choices for me?

Over the next few days you will read a lot of “downgrade and dismiss” directed at Paul Ryan and his plan and indeed it is quite possible his proposal is not a workable one (I haven’t read it yet).  But don’t fall for the downgrade and dismiss bait, keep on returning to the question of how much individual choice should be allowed into health care cost control.  Why not divvy up the cost control work between the Board and some degree of individual choice across Medicare benefits?  You don’t have to combine that choice with the cost-increasing aspects of Medicare Advantage-like plans.

Many ACA defenders simply do not want to enter into a debate where the framing is “we’re all for cost control, when it comes to Medicare benefit selection it’s a question of government board vs. individual choice.”

I can think of a few reasons why individual choice will sometimes fail as a method of cost control:

1. Individuals have serious misconceptions about the science, or the badness of a particular condition, even in light of government or other third-party advice.  Or perhaps individuals simply do not understand the nature of all of the choices at hand.

2. Perhaps an individual will choose “no coverage for lung cancer,” but the government cannot precommit to the outcome of no coverage.  Of course as cost control becomes more pressing, we’ll have to learn precommitment for at least some issues, one way or the other, so this cannot be a decisive objection. The entire premise behind the discussion is that we cannot cover all treatments through government subsidy.

3. Over time, perhaps a government Board can rebalance the mix of coverage better than an individual can.  People age, possibly lose some mental faculties, science advances, costs change, and so on.

Those are good arguments.  They are good arguments for a mixed system.  They are not good arguments for ruling out all individual choice of benefits.  They are not good arguments for ruling out a scenario like that outlined in the first paragraph of this blog post.

Here is Megan McArdle on the difference between boards and individual choice:

It seems quite likely to me that vouchers are going to be better at controlling health care cost growth than a central committee.  Every committee decision that cuts off a potentially useful treatment (and I’m afraid it can’t all be back surgery and hormone replacement therapy) will trigger a lobbying explosion from affected groups.  Each treatment is a decision with a small marginal cost to the taxpayer; it’s in aggregate that they become expensive.  Which means that the congressional tendency is always going to be to override–and while there are supposed to be structural barriers against this in the bill, they aren’t very strong . . .

Whereas if you put the decision about what treatments to cover in the hands of the patient, the lobbying you face is to increase the overall value of the voucher.  To be sure, this will have a larger (and therefore more powerful) group behind it.  But it will also come with an enormous pricetag, making it much harder for our politicians to rationalize the decision.

There are lots of comments from Reihan here.  Ezra associates the Ryan reforms with Medicare Advantage.  Maybe so, and maybe that’s bad, but we return to how much individual choice should we allow into health care cost control, with or without the cost-increasing aspects of the Ryan plan.

We shouldn’t let “downgrade and dismiss” distract our attention from that fundamental question about individual choice.

General principles for evaluating Medicare reforms

You’ll be hearing lots about the Paul Ryan entitlement reform proposals, but here are a few more general points to keep in mind:

1. As health care develops, it becomes impossible for Medicare (or Medicaid) to cover every treatment.

2. One reform option has government experts rule which treatments are eligible for coverage, with varying degrees of Congressional input.

3. Another option is to let individuals choose in advance which treatments they will be covered for, and which not.

4. #3 can but need not be bundled with voucher and privatization ideas.  Without privatization, the government offers people different Medicare packages and they choose one over the others.  Government may also recommend a Medicare benefits package for an individual, without requiring that it be chosen.

5. Most plausible policy reforms involve some mix of expert restrictions (#2 )and individual choices (#3) and the real question is to figure out the right mix of the two approaches. When evaluating #2, do keep in mind the potential input of Congress, if only as a background threat.

6. Does individual choice (#3) make more sense for nursing homes and dental care (preferences really matter?), but maybe expert judgment (#2) makes more sense for cancer treatments (expertise really matters?)?  I am not endorsing that comparison, it is simply an example to illustrate the issue at hand.

7. If #5 isn’t being addressed, you’re probably just getting polemics.  Obligatory citation of David Hume, commit it to the flames, etc.

The Matchmaker

The Boston Globe’s Leon Neyfakh has a good piece on Alvin Roth:

Roth has always been interested in the idea that sophisticated theories can be used to solve practical problems. As a graduate student at Stanford University, he earned a doctorate in operations research, which uses math to help organizations run more smoothly. Roth was just 19 when he started at Stanford, having quit high school without graduating at the age of 16 and finished Columbia University in three years. At just 22, he got a job as an assistant professor at the University of Illinois, and in 1977, at just 25, he was granted tenure there….

In the years since, Roth has emerged as a rare figure in the academic world: a theorist willing to dive into real-world problems and fix them. After helping the med students, he designed a better way to assign children to public schools — the system now used by both Boston and New York. He also helped invent a system for matching kidney donors with patients, dramatically increasing the number of donations that take place each year. More recently, he and one of his students have been talking with Teach for America about improving the system it uses to deploy volunteers around the country.

… Inspired by Roth’s work, these rising economists are also setting their sights on real-world problems. Some are looking at dating websites; others are interested in how universities could do better at scheduling their students’ classes. Like Roth, all of them envision a world in which economists, as unlikely as it may seem, are recognized as society’s mechanics.

One minor note, kidney exchanges are great but I wouldn’t describe the increases as “dramatic.” We will need, in addition, other ideas to alleviate the shortage of transplant organs.

Food Safety and Culture

Scientific American has an excerpt from Myhrvold, Young and Bilet’s magnum opus, Modernist Cuisine, in which they discusses the often arbitrary, subjective and culturally bound nature of “food safety” rules and practices.

In decades past, pork was intrinsically less safe than other meats because of muscle infiltration by Trichinella and surface contamination from fecal-borne pathogens like Salmonella and Clostridium perfringens . As a result, people learned to tolerate overcooked pork, and farms raised pigs with increasing amounts of fat—far more fat than is typical in the wild ancestors of pigs such as wild boar. The extra fat helped to keep the meat moist when it was overcooked.

Since then… producers have vastly reduced the risk of contamination through preventive practices on the farm and in meat-processing facilities. Eventually the FDA relaxed the cooking requirements for pork; they are now no different than those for other meats. The irony is that few people noticed—­culinary professionals and cookbook authors included….

After decades of consuming overcooked pork by necessity, the American public has little appetite for rare pork; it isn’t considered traditional. With a lack of cultural pressure or agitation for change by industry groups, the new standards are largely ignored, and many new publications leave the old cooking recommendations intact.

Clearly, cultural and political factors impinge on decisions about food safety. If you doubt that, note the contrast between the standards applied to pork and those applied to beef. Many people love rare steak or raw beef served as carpaccio or steak tartare, and in the United States alone, millions of people safely eat beef products, whether raw, rare, or well-done. Beef is part of the national culture, and any attempt to outlaw rare or raw steak in the United States would face an immense cultural and political backlash from both the consumers and the producers of beef.

…Cultural and political factors also explain why cheese made from raw milk is considered safe in France yet viewed with great skepticism in the United States. Traditional cheese-making techniques, used correctly and with proper quality controls, eliminate pathogens without the need for milk pasteurization. Millions of people safely consume raw milk cheese in France, and any call to ban such a fundamental part of French culture would meet with enormous resistance there….

Raw milk cheese aged less than 60 days cannot be imported into the United States and cannot legally cross U.S. state lines. Yet in 24 of the 50 states, it is perfectly legal to make, sell, and consume raw milk cheeses within the state. In most of Canada raw milk cheese is banned, but in the province of Quebec it is legal.

One point they don’t note is that there may be multiple equilibria–that is, it may be more dangerous to produce raw milk cheese in a country or region without a history of producing raw milk cheese than elsewhere. Still, this is no reason we shouldn’t be eating more horse.