Category: Medicine

Changing Views on Organ Prohibition

by  Alex Tabarrok in

I spoke recently at the Kidney and Urology Foundation of America on using incentives to increase organ donation.  Also speaking was Nancy Scheper-Hughes, the courageous UC Berkeley detective/anthropologist responsible for busting international rings of organ traffickers.

Scheper-Hughes is well known as an opponent of kidney vending, especially because it has often involved the exploitation of poor people in the developing world (fyi, there is no question that exploitation has occurred even if you take the view, as I do, that payment per se is not exploitation.)  In her impassioned talk, Scheper-Hughes presented many pictures of poor people with large scars.  

Thus, I was very surprised that Scheper-Hughes favors a trial of compensation for deceased donation and is even supportive of a trial for compensated live donation saying:

"There are penalties for buying, selling and brokering the sale of organs in this country, but still it goes on, often with an attitude of 'don't ask, don't tell.' I believe that if the laws are not going to be followed, then the laws should change. First, though, a controlled study must take place, in an ethical manner, with a sample of volunteer organ donors being compensated appropriately."

As with alcohol and drug prohibition, many people who do not favor organ sales are coming to recognize that a regulated market or compensation system could be preferable to an illegal market.

Addendum: My powerpoint slides Using Incentives to Increase Organ Donation, cover the problem and some potential solutions which are being adopted around the world.  Also included at the end are some slides especially designed for teaching this material in a principles of economics class.

Tolerating male homosexuals lowers HIV

by  Tyler Cowen in

Andy Francis and Hugo Mialon, both at Emory, report their latest research:

We empirically investigate the effect of tolerance for gays on the spread of HIV in the United States. Using a state-level panel dataset spanning the mid-1970s to the mid-1990s, we find that tolerance is negatively associated with the HIV rate. We then investigate the causal mechanisms potentially underlying this relationship. We find evidence consistent with the theory that tolerance for homosexuals causes low-risk men to enter the pool of homosexual partners, as well as causes sexually active men to substitute away from underground, anonymous, and risky behaviors, both of which lower the HIV rate.

That piece has recently come out in the Journal of Health Economics.

Is there a flypaper effect for public health-based foreign aid?

by  Tyler Cowen in

If you give people, or a government, money to do one thing, they might reallocate some of those funds to their preferred marginal expenditures.  A recent study published in Lancet, co-authored by Christopher Murray and Chunling Lu, suggests this is what happens with many instances of foreign aid:

"For every $1 of DAH [development assistance for health] given to government, the ministry of finance reduces the amount of government expenditures allocated to the ministry of health and other government agencies that engage in health spending by about $0.43 to $1.14," they write. "From the global health community's perspective, this means that to increase government health spending by $1, global health funders need to provide at least $1.75 of DAH."

Furthermore debt relief does not increase domestic government health care spending but grants to NGOs, unlike direct foreign aid to governments, do increase such spending.  A summary of the study is here.  Here is an abstract and a gated link.

Why the Massachusetts mandate is stronger than the federal mandate

by  Tyler Cowen in

Reihan Salam pursues the issue:

Reader Jim Fair kindly pointed me to an important provision in the Massachusetts law that is not present in ACA, as I understand it. The following is from a summary provided by Healthinsuranceinfo.net:

  • If you buy individual health insurance through Commonwealth Choice you may face a pre-existing exclusion period. No pre-existing condition exclusion period can be applied unless you have a break of 63 or more days of continuous coverage. Pre-existing condition exclusion periods can last up to 6 months. Commonwealth Choice plans can look back 6 months to see if you actually received care or treatment for a condition. In addition, pregnancy can be considered a pre-existing condition in individual health insurance. Genetic information cannot be considered a pre-existing condition.
  • No preexisting condition exclusion period can be imposed if you are HIPAA eligible.

This strikes me as a powerful disincentive to going without coverage that effectively strengthens the mandate. 

Attracted to Evil?

by  Alex Tabarrok in

In transcranial magnetic stimulation (“TMS”), a coil of wire is placed near the head. Alternating current flowing through the coil induces a magnetic field with a strength of up to 2.5 teslas (one tesla is 20,000 times the strength of the earth’s magnetic field). The field passes harmlessly through the skull and influences the electrical Brain_magnetsignals passing among neurons in the brain.

(Image and quote from Progress Daily.)

TMS has been used to stimulate or suppress different centers of the brain including those involved with attention, language and memory.   A new paper in PNAS used TMS to disrupt part of the brain involved in judging intention and morality.  Here is a summary:

Magnets can alter a person's sense of morality, according to a new report in the Proceedings of the National Academy of Sciences. 

Using a powerful magnetic field, scientists from MIT, Harvard University and Beth Israel Deaconess Medical Center are able to scramble the moral center of the brain, making it more difficult for people to separate innocent intentions from harmful outcomes….

Magnetic fields made people judge outcomes more than intentions.

The effect was small and temporary but no less disturbing especially if the effect could be made to operate at a distance.  Perhaps the tin-foil-hat-people have had it right all along.

Sometimes third-party payment *lowers* cost

by  Tyler Cowen in

Really. There is a new paper by Mark Duggan and Fiona Scott Morton — "The Effect of Medicare Part D on Pharmaceutical Prices and Utilization." — in the just-arrived issue of the American Economic Review.  

The point is that large buyer groups, structured incentives for patients to consume certain products, and formularies ("a mechanism that allows a buyer to identify a therapeutically similar treatment as a viable substitute for a patented treatment") all can help lower cost.  These institutions are cited as reasons why Medicare D has cost about twenty percent less than expected; the third party can institute these procedures more effectively than can individuals paying out of pocket, or so the data in this paper indicates.

Ideally much more of the health care sector should work this way, although usually it doesn't.

You'll find earlier versions of the paper here.  The references are also a good place to start for catching up on some of the major papers in health care economics over the last ten years.

China diabetes fact of the day

by  Tyler Cowen in

It's not surprising to see China as "number one" in so many things, but I was surprised by the magnitude of this development:

According to the report, more than 92 million adults in China have diabetes, and nearly 150 million more are well on their way to developing it. The disease is more common in people with large waistlines and in those who live in cities, the report indicates.

"For every person in the world with HIV there are three people in China with diabetes," said David Whiting, an epidemiologist with the International Diabetes Federation, who was not involved in the research.

The Federation projected last year that some 435 million people would have diabetes by 2030. "With this new study, we're going to have to rerun our estimate," Whiting told Reuters Health.

The full story is here.

The extreme tension in Caplanian thought

by  Tyler Cowen in

Bryan writes:

Fortunately, the government can handle this problem without spending trillions or heavily regulating the insurance or medical industries.   All it needs to do is provide a means-tested subsidy to make private health insurance more affordable for those who need it most.  The subsidy should be based on income, wealth, chronic health status – and, given Balan's focus on the deserving poor – on past and current behavior.  People who engage in voluntary risky behaviors – smoking, drinking, over-eating, mountain-climbing, violence, etc. – should receive a smaller subsidy, or no subsidy at all.  The same goes for people who failed to buy long-term insurance when they were healthy and employed, then ran into health or financial troubles. 

First, I am worried about a governmental process which first judges the "deservingness" of each poor person before setting the proper subsidy.  Do they videotape your life as you go along, or do they convene a Job-like trial when you submit receipts for reimbursement?

Second, causality is so often difficult to determine in medicine.  Say a poor guy had a heart attack but he ate grilled meats for thirty years.  Was that irresponsible behavior or not?

Third, and most of all, Bryan loves to stress the heritability of intelligence, income, and even life expectancy, among other variables.  But how can your parents be your fault? 

This is a fundamental tension in Caplanian thought, namely the desire to promote intuitions of both meritocracy/desert and facts about heritability.  Bryan can't have it both ways.

You can leave your comments on this post here.

How mandate penalties will be enforced

by  Tyler Cowen in

From the Joint Committee on Taxation:

The penalty is assessed through the Code and accounted for as an additional amount of Federal tax owed. However, it is not subject to the enforcement provisions of subtitle F of the Code. The use of liens and seizures otherwise authorized for collection of taxes does not apply to the collection of this penalty. Non-compliance with the personal responsibility requirement to have health coverage is not subject to criminal or civil penalties under the Code and interest does not accrue for failure to pay such assessments in a timely manner.

There is much more discussion here and I thank Joe Kristan for the pointer.  Megan McArdle adds comment.  Maybe the legal issues here are not yet clear, but so far it is not looking good.

Ahem!

Leave your comments here.

Is the mandate penalty large enough?

by  Tyler Cowen in

Reihan offers some discussion.  He also links to the Massachusetts page on penalties, for instance:

2009 tax penalties for adults above 300% of the federal poverty level are based on 1/2 the cost of the lowest-priced Commonwealth Choice plan.  They are:

  • $52 each month or $624 for an entire year for individuals aged 18-26.
  • $89 each month or $1068 for the year for individuals 27 or older.

Those are higher penalties than for the Obama plan, which doesn't go up to $695 for a few years (update: Austin Frakt offers more numbers here).  Still, media coverage may be a bigger issue than the size of the fee.  If national media run stories about people who avoid the mandate and prosper, the practice could spread.  Massachusetts media have not had the same power or influence.  Keep in mind also that "right-wing media" may promote this point for political reasons.

Plenty of people cheat on their taxes.  Plenty of people lied on their mortgage applications.  That all said, I don't know how people will react on this one.

How about businesses?  John Cassidy offers what seems to be the clincher:

Take a medium-sized firm that employs a hundred people earning $40,000 each–a private security firm based in Atlanta, say–and currently offers them health-care insurance worth $10,000 a year, of which the employees pay $2,500. This employer’s annual health-care costs are $750,000 (a hundred times $7,500). In the reformed system, the firm’s workers, if they didn’t have insurance, would be eligible for generous subsidies to buy private insurance. For example, a married forty-year-old security guard whose wife stayed home to raise two kids could enroll in a non-group plan for less than $1,400 a year, according to the Kaiser Health Reform Subsidy Calculator. (The subsidy from the government would be $8,058.)

In a situation like this, the firm has a strong financial incentive to junk its group coverage and dump its workers onto the taxpayer-subsidized plan. Under the new law, firms with more than fifty workers that don’t offer coverage would have to pay an annual fine of $2,000 for every worker they employ, excepting the first thirty. In this case, the security firm would incur a fine of $140,000 (seventy times two), but it would save $610,000 a year on health-care costs. If you owned this firm, what would you do? Unless you are unusually public spirited, you would take advantage of the free money that the government is giving out. Since your employees would see their own health-care contributions fall by more than $1,100 a year, or almost half, they would be unlikely to complain. And even if they did, you would be saving so much money you afford to buy their agreement with a pay raise of, say, $2,000 a year, and still come out well ahead.

This implies the current version of the plan won't work without stronger penalties.  In principle, I understand that it can be advantageous to dump many more people onto the exchanges, but not if so many of them end up getting such large subsidies.  Cassidy adds:

Even if the government tried to impose additional sanctions on such firms, I doubt it would work. The dollar sums involved are so large that firms would try to game the system, by, for example, shutting down, reincorporating under a different name, and hiring back their employees without coverage. They might not even need to go to such lengths. Firms that pay modest wages have high rates of turnover. By simply refusing to offer coverage to new employees, they could pretty quickly convert most of their employees into non-covered workers.

Typepad comments are still down (sorry!), but you can leave your comments here, sorry for the extra click which is required.

From the comments

by  Tyler Cowen in

Steve S writes:

Steve Entin at the National Center for Policy Analysis has written on the very issue of the subsidies vs the tax exclusion. His conclusion:

Adding the subsidies for premiums and cost sharing, the family getting the health exchange policy would receive a total subsidy of $17,400, while the family receiving employer-based insurance would receive a total subsidy of $4,143.

That is a huge differential. The whole piece is here: http://www.ncpa.org/pdfs/Health-Insurance-Exchange-Subsidies-Create-Inequities.pdf

File under "Not a political equilibrium."