Category: Medicine

Means testing for Medicare

Let’s first quote Mark Thoma’s response to my column; it is indirectly a good summary of what I argue:

I believe the political argument that giving everyone a stake in the
program helps to preserve it has more validity than Tyler does, market
failures (some of which hit all income groups) probably play a larger
role in my thinking about government responses to the health care
problem than in his, and I have more confidence than Tyler that a
universal care system has the potential to lower costs.

And now here’s me:

…the idea of cutting some government transfers provokes protest in
some quarters. One major criticism is that programs for the poor alone
will not be well financed because poor people do not have much political
power. Thus, this idea goes, we should try to make transfer programs as
comprehensive as possible, so that every voter has a stake in the
program and will support more spending.

But even if this argument
holds true now, it may not be very persuasive when Medicare costs start
to push taxation levels above 50 percent. A more modest program, more
directly aimed at those who need it, might prove more sustainable in
the longer run.

Americans have supported the growth of many
programs aimed mainly at the poor. Both Medicaid and the Earned Income
Tax Credit have grown rapidly in size since their inception. The idea
of helping the poor and not having the government take over entire
economic sectors was the original motive behind welfare programs, in
any case.

Furthermore, the argument for comprehensive and
universal transfer programs does not meet the ideal of democratic
transparency. If taking care of the poor is the real value in welfare
programs, those programs should be sold as such to the electorate. We
shouldn’€™t give wealthier people benefits just to €œtrick€ them, for
selfish reasons, into voting for greater benefits for everyone, the
poor included.

Here is another point:

Advocates of health care reform tend to be long on ideas for expanding
care and access, but short on practical solutions for cost control. The
argument is often made that single-payer health care systems in Canada
or Europe are cheaper than health care in the United States. But
Medicare is already a single-payer plan, yet its costs are
unsustainable.

Note that I am calling for higher benefits for the poor and lower benefits for higher-income groups.  That’s not a popular stance, not even with egalitarians.  In fact I view the contemporary left as oddly ill-prepared on the health care issue.  Electorally speaking, the issue is fully 100 percent in their court (and they are used to pressing it aggressively), until of course they get their way and have to "meet payroll," so to speak.  One attitude is to cite Europe and think that the production possibilities frontier can expand under better management of the U.S. system, even as you cover an extra 40 million people.  Another attitude is to face the notion of trade-offs. 

Here is the full column.  (By the way, I think that HSAs are ineffective as health care reform and that the so-called "right" is floundering on
this issue, just to get in my equal opportunity smack on the blog.)

Addendum: You can make a good argument that (some) public health programs are the best health care investment of all; I just didn’t have enough space in the column to cover that issue.

Second addendum: Greg Mankiw didn’t read so closely.  It’s not "an income tax surcharge on sick, old people."  It’s a reallocation of benefits toward people of greater need.  Is any benefit less than infinity an "income tax surcharge"?

Third addendum: Here is Paul Krugman on the topic.

More Sex is Safer Sex

In More Sex is Safer Sex Steven Landsburg famously argued (based on work by Michael Kremer) that if more people, especially more sexually conservative people, had sex the AIDS epidemic could be reduced.  Landsburg wrote:

Imagine a country where almost all women are monogamous, while all men
demand two female partners per year. Under those circumstances, a few
prostitutes end up servicing all the men. Before long, the prostitutes
are infected; they pass the disease on to the men; the men bring it
home to their monogamous wives. But if each of those monogamous wives
were willing to take on one extramarital partner, the market for
prostitution would die out, and the virus, unable to spread fast enough
to maintain itself, might well die out along with it.

In The Wisdom of Whores (see also my earlier post) Elizabeth Pisani says that such a country exists, it’s Thailand, and the results of more sex was safer sex – exactly as Landsburg argued. Here’s Pisani’s story:

Thailand used to fit the the classic ‘virtuous girls, philandering boys’ model.  At the start of the 1990s, 57 percent of twenty-one-year-old men in Northern Thailand trooped off to the brothel to do their philandering.  More than half the sex workers who soaked up their excess energy were HIV-infected….

Then…the Thai economy boomed.  Girls were getting better educations than ever before…Educated girls were waiting longer before getting married, but not before having sex.  By the end of the 1990s, 45 percent of girls aged 15-21 in northern Thailand admitted to having sex with boyfriends before marriage, compared to less than a tenth of that in a nationwide survey in 1993.

…So at the end of the decade, we have a lot more premarital sex and not all that much condom use with girlfriends.  But now that these young, cash-strapped guys can have sex without paying, they’ve stopped handing over cash for sex.  By the end of the 1990s, only 7 percent of young men were paying for sex, and HIV prevalence in sex workers had come down too.

….In short, more women having premarital sex equals less HIV.

Pisani cites neither Landsburg nor Kremer so I believe her account is independent.  Note that Pisani also credits Thailand’s successful condom program.

Krugman gets a Rotten Tomato

Paul Krugman is attacking Milton Friedman (again) for rotten tomatoes.  Here’s Krugman in 2007:

These are anxious days at the lunch table. For all you know, there
may be E. coli on your spinach, salmonella in your peanut butter and
melamine in your pet’s food and, because it was in the feed, in your
chicken sandwich.

Who’s responsible for the new fear of eating?
Some blame globalization; some blame food-producing corporations; some
blame the Bush administration. But I blame Milton Friedman.

…Without question, America’s food safety system has degenerated over the past six years.

and here he is today repeating himself:

Lately, however, there always
seems to be at least one food-safety crisis in the headlines – tainted
spinach, poisonous peanut butter and, currently, the attack of the
killer tomatoes.

How did America find itself back in The Jungle?

I was curious so I collected data from the Center for Disease Control on Foodborne Disease Outbreaks from 1998-2006.   The data only go back to 1998 because in that year the CDC changed its surveillance system creating a discontinuity but note that we are covering a chunk of the Clinton years and are well within the time frame over which Krugman says the safety system has degenerated.  Here’s the result:

Foodoutbreaks

What we see is a lot of variability from year to year but a net downward trend.  You can also look at cases per year which are more variable but also show a net downward trend.  No evidence whatsoever that we are back "in The Jungle."

The Wisdom of Whores

She explained, as if to an enthusiastic but slightly dim child, that a waria who is hanging around on a street corner to be interviewed by a research team is a waria who is not with a client.  ‘You are talking to all the dogs, obviously’.

Not something I learned in the lecture halls of London…but Ines is quite right.  Our sample is biased towards the ‘dogs,’ who get picked up less than the cuter girls.  So the study results underestimate the true number of clients per seller…

Ines’s comments…prodded us into changing the sampling strategy…now we work with the powers-that-be (the mami, the pimps, the brothel owners) to arrange off-hours time for data collection.  The principle….is that you are not cutting into people’s work time, so there is less chance of talking only to the remnant sex workers who can’t get a client.

“What’s Wrong With You?”

Don’t get sick anywhere but at home:

…doctors in Tanzania complete less than a quarter of the essential checklist for patients with classic symptoms of malaria, a disease that kills 63,000-96,000 Tanzanians each year.  The public-sector doctor in India asks one (and only one) question in the average interaction: "What’s wrong with you?".  In Paraguay, the amount of time a doctor spends with a patient has nothing to do with the severity of the patient’s illness…these isolated facts represent common patterns…three years of medical school in Tanzania result in only a 1 percentage point increase in the probability of a correct diagnosis…One concern with measuring doctor effort through direct observation is that the doctor may work harder in the presence of the research team.

That is from "The Quality of Medical Advice in Low-Income Countries," by Jishnu Das, Jeffrey Hammer, and Kenneth Leonard, in the Spring 2008 issue of the Journal of Economic Perspectives.  The editor is now Andrei Shleifer and this issue is one of the best in a long time.

Hail Emily Oster!

The paper is titled "Hepatitis B Does Not Explain Male-Biased Sex Ratios in China"; here is the abstract:

Earlier work (Oster, 2005) has argued, based on existing medical
literature and analysis of cross country data and vaccination programs,
that parents who are carriers of hepatitis B have a higher offspring
sex ratio (more boys) than non-carrier parents. Further, since a number
of Asian countries, China in particular, have high hepatitis B carrier
rates, Oster (2005) suggested that hepatitis B could explain a large
share (approximately 50%) of Asia’s missing women". Subsequent work
has questioned this conclusion. Most notably, Lin and Luoh (2008) use
data from a large cohort of births in Taiwan and find only a very tiny
effect of maternal hepatitis carrier status on offspring sex ratio.
Although this work is quite conclusive for the case of mothers, it
leaves open the possibility that paternal carrier status is driving
higher sex offspring sex ratios. To test this, we collected data on the
offspring gender for a cohort of 67,000 people in China who are being
observed in a prospective cohort study of liver cancer; approximately
15% of these individuals are hepatitis B carriers. In this sample, we
find no effect of either maternal or paternal hepatitis B carrier
status on offspring sex. Carrier parents are no more likely to have
male children than non-carrier parents. This finding leads us to
conclude that hepatitis B cannot explain skewed sex ratios in China.

We should hold up Emily Oster as a role model of a truth-seeker.  If the abstract does not make it clear, Emily Oster first won her fame by reporting the opposite result about sex ratios.  Here are our previous posts on Emily Oster.

A more general lesson, of course, is simply how difficult it is to get at truth.  This is a well-defined data set with a (more or less) well-defined answer.  Most policy questions aren’t so tractable.

Letter to the NEJM

The issue of off-label prescribing is heating up again.  A recent article in the New England Journal of Medicine by Randall Stafford made the case for greater regulation.  I am concerned that the benefits of off-label prescribing are not fully appreciated.  Dan Klein and I wrote a letter to the NEJM – which they declined to publish – in response.  Here’s the letter:

Dear NEJM,

R.S. Stafford writes that off-label prescribing “permits innovation in clinical practice … offers patients and physicians earlier access to potentially valuable medications and allows physicians to adopt new practices based on emerging evidence.”  Nevertheless, he calls for greater FDA regulation.

In contrast, we argue that the efficacy of off-label usage suggests that less FDA regulation of first or on-label usage would increase innovation and offer patients earlier access to new medications. 

Off-label prescribing is regulated by the judgments of doctors, medical researchers, industry, the patient community, and patients.  This system offers patients a more nuanced approach to care than a top-down approach.  We should extend this approach to new drugs as well as to new uses for old drugs.

Our perspective is bolstered by a large survey of physicians which demonstrates strong support for off-label prescribing and considerable support for reducing FDA regulations on new drugs.

Daniel Klein
Alexander Tabarrok
George Mason University

Make dentistry cheaper

Can you see what is coming?:

But to the Alaska Dental Society and the American Dental Association, the clinic is a place where the rules of dentistry are flouted daily. The dental groups object not because of any evidence that the clinic provides substandard care, but because it is run by Aurora Johnson, who is not a dentist. After two years of training in a program unique to Alaska, Ms. Johnson performs basic dental work like drilling and filling cavities.

Here is much more.  Get this:

The number of dentists in the United States has been roughly flat since 1990 and is forecast to decline over the next decade. A study last year from the Centers for Disease Control showed that Americans’ dental health was worsening for the first time since statistics began to be kept.

In Alaska, the A.D.A. and the state’s dental society had filed a lawsuit to block the program that trained people like Ms. Johnson, who are called dental therapists. The groups dropped the suit last summer after a state court judge issued a ruling critical of the dentists. But the A.D.A. continues to oppose allowing therapists to operate anywhere in the lower 49 states. Currently, therapists are allowed to practice only in Alaska, and only on Alaska Natives.

The opposition to therapists follows decades of efforts by state dental boards, which are dominated by dentists, to block hygienists from providing care without being supervised by dentists.

The dental associations say they simply want to be sure that patients do not receive substandard care. But some dentists in public health programs contend that dentists in private practice consider therapists low-cost competition. In Alaska, the federally financed program that supplies care to Alaska Natives pays therapists about $60,000 a year, one-half to one-third of what dentists typically earn.

The Alaska program is small, with fewer than a dozen therapists practicing so far. But the early results are promising, according to dental health experts who are studying the program.

As someone who has spent a lot of time at the dentist, I very much like the assistants and I think of the dentist himself as a kind of middle-level manager and salesman.

I thank Greg Rehmke for the pointer.

The McCain health care plan

Mr. McCain’s health plan centers on eliminating the tax breaks for
employers who provide health insurance for their workers – a marked
departure from the current system – and giving $5,000 tax credits to
families to buy their own insurance. His goal in shifting from
employer-based coverage to having people buy their own policies is to
encourage competition and choice, and to drive down the costs of health
insurance.

Here is more.  Portability is good but so many of the uninsured families do not pay $5000 in taxes.  Will this boil down to a subsidy to those who don’t need it or to health insurance vouchers?  InTrade says there is a 39.6 percent chance we will find out.  And here is some vagueness:

Mr. McCain proposed that the federal government work with the states to
cover those who cannot find insurance on the open market. With federal
financial assistance, states would be encouraged to create high-risk
pools that would contract with insurers to cover consumers who have
been rejected on the open market.

Here is more detail; in part it sounds like revived HillaryCare (part I), but only for the high-risk cases rather than for the entire population.  The "notches" problem is obvious as people at the relevant margin hold out for the subsidized pool, thereby making the pool size larger and larger.

McCain also emphasizes lifestyle as a factor behind health; that’s empirically important — more so than health care — but after cutting various stupid subsidies the government should not be the main driver there.  Megan McArdle comments overall.

Trade aside, so far I’ve yet to see many actual policy proposals from the McCain camp.  Mostly I’ve seen attempts to signal that they won’t do anything too offensive to the party’s right wing.  Very few of these trial balloons seem to be ideas that McCain had expressed much previous loyalty to.  I don’t even think we should be analyzing these statements as policy proposals.  We should be wondering why the Republican Party has given up on the idea of policy proposals.

Progress on Dual Tracking?

One hundred leading European officials in health regulation, the
pharmaceutical industry, and the health media will gather in Stockholm
March 27 to discuss a new proposal that would enable patients to gain
faster access to life-saving drugs not yet approved by regulators.

One track of this new proposal, known as "Dual Tracking," provides
that patients and their doctors try to minimize risk by using only
approved drugs as they do now. On the other track, patients and doctors
can choose not-yet-approved drugs that have passed safety trials.
Patients would be able to balance their own preferences for risk with
substantial new opportunities for health improvement. (Quoted here.)

See Bart Madden’s More Choices, Better Health (pdf) for a very good explanation and defense of the dual tracking proposal.

Sherry Glied’s new health care paper

It is one of the best health care papers in recent times, it is here, I cannot find an ungated version.  Glied reminds us that only about 1/3 of American health care spending comes from private insurance.  Moving to international comparisons, the more general point is that:

…there is no persistent and regular relationship between the structure of system financing and the rate of growth in per capita health expenditures in a health system…the efficiency of operation of the health care system itself appears to depend much more on how providers are paid and how the delivery of care is organized than on the method used to raise the funds.

In other words, as I’ve stressed before, the health care cost problem comes from immediate suppliers, namely doctors and hospitals, and not from health insurance companies.

The best parts of the paper concern equity.  It is GPs which help the poor, not additional spending on technology or surgery; see p.18 for other comparisons along these lines.  Furthermore, and this you should scream from the rooftops, consider this:

…patterns of health service utilization in developed countries suggest that the marginal dollar of health care spending — money used to purchase high tech equipment or specialist services — is less progressively spent than the average dollar.

In other words, egalitarians should not allocate marginal government spending to health care.  And there is evidence that the more a government spends on health care, the less it spends helping people in money ways.  That is, there is crowding out. 

Finally, Glied offers a summary comparison:

Putting $1 of tax funds into the public health insurance system
effectively channels between $0.23 and $0.26 toward the lowest income
quintile people, and about $0.50 to the bottom two income quintiles.
Finally, a review of the literature across the OECD suggests that the
progressivity of financing of the health insurance system has limited
implications for overall income inequality, particularly over time.

Highly recommended.

Should we waive legal liability for FDA-approved drugs?

So asks Megan McArdle.  The argument runs as follows:

I don’t understand quite why FDA approval of drugs and medical devices
hasn’t long provided legal safe harbor for their manufacturers. The
defects that show up, such as the Vioxx and Fen-Phen problems, are
discovered long after approval precisely because they’re so rare that
they don’t show up in ordinary clinical trials. If the government
experts, who are presumably highly motivated to avoid catastrophes,
can’t spot the danger, why do we expect the drug companies to?

I can think of three possible rebuttals:

1. We simply can’t trust the bureaucrats to find the flaws with drugs.  But note this is inconsistent with both the rhetoric of FDA defenders ("the FDA can work") and FDA critics, who argue we are overinvesting in drug safety as it is.

2. Lawsuits encourage the companies to look for problems once a drug is already approved.  Regulation does not.

3. People need lawsuits as a way of emotionally striking back.  If they are denied that privilege, they will demand ridiculously oversafe levels of regulation in the first place.  In this view regulation is as much about building consumer confidence in a health care system as it is about protecting people.

I do not currently have a view on this matter.  Do you?  Kevin Drum is opposed.

Why not increase this penalty?

The headline reads: "Health Insurer Must Pay $9 Million for Canceling Sick Woman’s Policy." 

The article has gory details about company employees being given cancelation quotas and bonuses, apparently regardless of whether the cancelations were merited under the terms of the initial policy.

If you think that health insurance policies are unjustly canceled fairly frequently (and yes I can believe this), surely this penalty should be much higher.  The cancelers are rarely caught, so a simple application of law and economics suggests severity not leniency.  For a large health insurance company a $9 million fine is peanuts.

As far as I can tell, credibly stiffer fines have not been tried.  In other words, the government does a poor job at enforcing the health insurance contract.

You might hold a theory that the government judiciary will malfunction in such a way but a health care government bureaucracy would not make mistakes of comparable importance.

I do not hold such a theory.  When it comes to health care reform, I would like to start with the enforcement of contracts based on rational and just penalties.