Category: Medicine

I haven't read it, but I've read various people summarizing it.  A few observations:

1. CBO scoring is a very useful institution, for purposes of fiscal discipline, but you shouldn't confuse it with true cost estimates.  Often a negative CBO score isn't as bad as it sounds and a positive CBO score isn't as good as it sounds.  The deadweight cost of taxation matters, and we should fear future government insolvency, but at the margin a revenue transfer is simply that — a revenue transfer and not a social cost per se.

For instance a "cheaper" bill often just means that the insurance mandate carries a higher implicit tax.  For some families — I believe in the range of 60,000 for a family of four — the mandate will consume 13% of income as it currently stands.  That's a big tax increase — yes I will call it that — and it's not on the super-rich. 

2. The main benefit of the bill is greater financial security, vis-a-vis health care expenditures, for many U.S. households.  This doesn't show up as a benefit in standard estimates of gross revenue flows.

3. The bill will, over time, create a economic and political dynamic that turns health insurance companies into regulated public utilities.  You might think this is good or bad, but its one of the most important changes.

4. I fear what else might end up jammed into the required insurance policy.  The political dynamic here has not been thought through very well and this will be important for the long-run fiscal impact.

5. Ezra Klein discusses some harmful employment disincentives in the current bill.

6. The Baucus bill, and some of its cousins, is a bit like cap and trade in the sense that it postpones a lot of the expenditure-cutting pain into the future.  If Obama — a relatively popular President with a Democratic Congress — can't do it now why should we think we will find fiscal discipline in the future?  With revisions this problem is likely to become worse.  The proposed pilot programs for cutting costs I view as postponements of tough decisions, not impressive starts on the problem which will be pursued scientifically.

7. How will the mandate evolve if income
inequality increases?  What if, in a distant future, "roughly equal
health care access" means the mandate consumes forty percent of middle
class income and thus proves unworkable?  What here is the "morally
objective" account of the medical needs of the poor and what here is
the "historically and socially conditioned account" of the medical
needs of the poor?  Or do we stick at rough health services equality by squishing, taxing,
or otherwise limiting the gold-plated plans?  Is that move politically sustainable
as a revenue source?

8. Let's say the previously uninsured do start getting more and better care.  Soon we will need to think very hard about increasing the supply elasticity of doctors.  This is an under-reported angle, but once the plan is in full swing the difficulty of getting to see a good doctor will be a story.

9. My best guess is that the Baucus bill will cement a dysfunctional health care system into place at the provider level.  Of course it is reasonable to believe we wouldn't have scrapped our dysfunctional system in any case, but still the case for the bill blends into the case for many aspects of the status quo more than many bill advocates would like.

An alternative view, and a view I do not dismiss, is that the Baucus bill will lead the U.S. to abandon fee-for-service medicine at many margins.  If true (and at the very least this is true probabilistically), this may be the most important long-run effect of the bill, for better or worse.  Also note that we get to these changes, most likely, only by bringing the program to the brink of fiscal collapse.

If you are evaluating the bill, think rigorously about the future scenario for health care as a whole.  Choose your probabilities and match them to an assessment of each outcome (cement in dysfunctional system, overturn dysfunctional system with something possibly better or possibly worse).  Don't in your mind mix and match mutually exclusive outcomes to either a) feel better about the bill or b) villainize the bill.

In late October I'm supposed to talk on this topic at the National Institutes of Health.  It's not so much a lecture (this is not my area) as me offering some introductory remarks — from the perspective of an outsider — and then serving as discussion leader.

What should I read?  Do you have any particular points to offer on this topic?  I (and the NIH) thank you in advance for the assistance.

Megan and Andrew Sullivan are having a squabble about how much it cost (and here).  I would remind everyone of this recent research result:

In spite of its relatively low benefit levels, the Medicare Part D benefit generate $3.5 billion of annual static deadweight loss reduction, and at least $2.8 billion of annual value from extra innovation.  These two components alone cover 87% of the social cost of publicly financing the benefit. 

And here's another research result:

Overall, a $1 increase in prescription drug spending is associated with a $2.06 reduction in Medicare spending.

Both papers are from very reputable sources.  Left-wingers focus on the "giveaways" in this plan and conservatives focus on the cost or maybe they don't walk to talk about it at all.  It's a little late to go through all the usual pro and con arguments on the policy as a whole.  I'd just like to note that – relative to its reputation – the Medicare prescription drug benefit is one of the most underrated government programs of our time.  If the goal is to cut or check Medicare spending, and I think it should be, we should do it elsewhere in the program.

It's also possible that the prescription drug benefit will do more for peoples' health (as opposed to their financial security) than will the Obama plan.  Try getting people to consider that.  The debate has become very emotional and not for the better.

I am more than willing to listen to criticisms of those cited studies.  But in the meantime it seems I should rationally believe what I do.

Here is a related post of relevance.

It turns out the hard problem is getting a man back from Mars, not sending him there.  The return trip could cost hundreds of billions extra.  It turns out Lawrence Krauss had the same idea I did:

If it sounds unrealistic to suggest that astronauts would be willing to
leave home never to return alive, then consider the results of several
informal surveys I and several colleagues have conducted recently. One
of my peers in Arizona recently accompanied a group of scientists and
engineers from the Jet Propulsion Laboratory on a geological field
trip. During the day, he asked how many would be willing to go on a
one-way mission into space. Every member of the group raised his hand.

…We might want to restrict the voyage to older astronauts, whose
longevity is limited in any case. Here again, I have found a
significant fraction of scientists older than 65 who would be willing
to live out their remaining years on the red planet or elsewhere. With
older scientists, there would be additional health complications, to be
sure, but the necessary medical personnel and equipment would still
probably be cheaper than designing a return mission.

Let's take bets on that happening.

Elsewhere on the health care front, consider Massachusetts:

State-subsidized health insurance for 31,000 legal immigrants here will no longer cover dental, hospice or skilled-nursing care under a scaled-back plan that Gov. Deval Patrick announced Monday.

It was only two days ago I vowed "no more health care blogging" but I never said "no more health care book blogging," so here goes.  Daniel Callahan's notable Taming the Beloved Beast: How Medical Technology Costs are Destroying Our Health Care System soon will be out.  Here is his position:

I can sum up what I want to say in some simple propositions.  First, ways must be found to return to more basic levels of medical care for ever more patients (e.g., to emphasize prevention and primary care) and to make it more difficult to receive medical care at the higher levels (e.g., advanced expensive cancer treatments or heart repairs).  Second, the priorities for technologically oriented health care should begin with children, remain high with adults during their midlife, and then decline with the elderly.  Third, if the medical care received during those first two stages of life is good, the elderly will have a high probability of a good old age even if advanced technologies are less available to them.  Fourth, health care cannot be reformed, or costs controlled, without changing some deeply held underlying values, particularly those of unlimited medical progress and technological innovation.

I don't like his anti-innovation take in the fourth point but there's a lot of truth to what he says.  It's also the case that the public knows, at some level however incoherent, how prevalent such reasoning is in the thought leaders of the Democratic Party.  The Democrats are right about the need to constrain Medicare expenditures, but the more they attack Republican stupidity and lies, the further they are from understanding why Americans now trust them less with health care reform than before. 

The Hansonian analysis of the discourse is that one needs to signal a more extreme symbolic affirmation with the proper "showing that you care" values than what the other side is doing.  The Republicans have the more extreme rhetoric and in fact people are used to the idea of lies — very used to the idea of lies — dare I say welcoming of the idea of lies? — when it comes to "showing how much you care."  To attack them as liars is to play into their hands.  To pose as The Reasonable Technocrat, as Obama has done in response, is to play into their hands even more.

Here is one quasi-answer:

But so far, cooperatives have been defined in the health-care debate
primarily in terms of what they are not: They would not be run by the
government.

That may make the cooperatives more politically palatable to
conservatives, as well as to some Democrats such as Conrad, who fear
that the public option may be a bridge too far. But it also presents
new challenges: Cooperatives would face potentially greater difficulty
getting off the ground and obtaining discounted rates from doctors and
hospitals, observers say.

Whether this would end up as a public plan under a different name, I cannot say and indeed it seems that maybe no one knows.  Ezra Klein tries to clear up some issues. 

I am in any case puzzled by the topic.  If, say, rescission is a major problem, why do not health insurance customers seek out health insurance mutuals or co-ops, both of which offer the possibility of greater consumer control and thus less opportunism from the supplier. 

Note that mutual banks were quite common before the rise of deposit insurance and mutual life insurance companies played major roles in the history of the industry.  So mutual and co-op forms can arise when the market agency problem is severe.  Why don't health insurance mutuals or co-ops take over the sector today for that matter?  But hey, wait, Blue Cross and Blue Shield do in fact have long histories as co-ops.

So what went wrong?  If you read the Mark Pauly quotation on p.2 of the first link, it seemed that health care customers did not in fact end up controlling the co-op (or mutual).  The managers ran the show in their own interest.  Maybe so, but then will health insurance customers do so much better controlling or influencing a government-run plan?

There is thus an unusual implicit claim on the table.  It runs something like this: decisive customers, with exit rights, cannot control a health insurance co-op.  Those same individuals, in their roles as voters, being non-decisive, and with fewer exit rights, can control a government-run health insurance system, co-op or not.

I can think of some models in which that claim is true, but I would not want to go to the mat for them. 

Here is someone else asking why we don't buy health insurance from mutuals.  It's an underexplored question.

Addendum: Mark Thoma makes some excellent related points.

Let's say you favor one of the health care plans currently under consideration.  Should you believe it would have been easier to switch to your favored plan in, say, 1972 rather than today?  I suspect the answer is yes or maybe even "very yes."  And probably you are stressing the imperative for change now rather than ten years from now.  That strikes me as an internally consistent set of views.

Yet I worry.  The implication is that the reform in the U.S. won't work nearly as well as in Europe, which made the switch to a different system much earlier on.  How much less well would a U.S. switch work?  I haven't seen useful estimates of this. 

Are there any data for the null hypothesis that past some point countries — for better or worse — simply cannot or will not change the basics of their health care institutions?

Almost everyone thinks that the French health care system is better than the British health care system.  What is the chance that the British could be persuaded to switch?  (Although I cannot imagine the rhetoric: "under the French health care system, Jean-Dominique Bauby would have been put to death.")  What does this say about health care reform more generally?

One unintended byproduct of the current U.S. debate is that the British will dally in reforming their NHS.  It is now harder for them to admit they have a relatively bad system.

By David Goldhill, here is one bit:

How am I supposed to be able to afford health care in this system?
Well, what if I gave you $1.77 million? Recall, that’s how much an
insured 22-year-old at my company could expect to pay–and to have paid
on his and his family’s behalf–over his lifetime, assuming health-care
costs are tamed. Sure, most of that money doesn’t pass through your
hands now. It’s hidden in company payments for premiums, or in Medicare
taxes and premiums. But think about it: If you had access to those
funds over your lifetime, wouldn’t you be able to afford your own care?
And wouldn’t you consume health care differently if you and your family
didn’t have to spend that money only on care?

Here is another:

From 2000 to 2005, per capita health-care spending in Canada grew by 33
percent, in France by 37 percent, in the U.K. by 47 percent–all
comparable to the 40 percent growth experienced by the U.S. in that
period. Cost control by way of bureaucratic price controls has its
limits.

His preferred reform reminds me of Brad DeLong's plan, namely universal catastrophic care combined with required HSAs at lower levels of expenditure.

Perhaps Turkmenistan takes the prize:

In 2003, "President for Life" Saparmurat Niyazov decided that poor,
landlocked Turkmenistan's medical costs were too high and that its
healthcare system urgently needed reform. The country had already
suffered from a shortage of doctors, and the only qualified ones were
in cities, Niyazov said on a public radio address.

So, in a
frankly insane healthcare reform effort, he restricted the public's
access to care by replacing up to 15,000 doctors and nurses with
unqualified military conscripts. The next year, he ordered hospitals
and clinics outside of the capital, Ashgabat, to close — even though
the vast proportion of Turkmenistan's population lives in rural areas.
The BBC quoted him as saying, "Why do we need such hospitals? If people
are ill, they can come to Ashgabat." He also implemented fees and
created an "unofficial" ban on the diagnosis of certain communicable
diseases, like hepatitis.

As a result, an epidemic of the bubonic
plague reportedly broke out (Turkmenistan's highly secretive government
does not allow in organizations like the WHO) and existing rashes of
AIDS, hepatitis, and tuberculosis worsened. At the time of Niyazov's
death from a cardiac infarction in 2006, Turkmenistan had one of the
lowest life expectancies in Asia — less than 60 years.

The full story is here and it lists some other very bad health care reforms.

Didn't I cover this story once before?

One such case was Debbie Hirst’s. Her breast cancer had metastasized, and the health service would not provide her with Avastin,
a drug that is widely used in the United States and Europe to keep such
cancers at bay. So, with her oncologist’s support, she decided last
year to try to pay the $120,000 cost herself, while continuing with the
rest of her publicly financed treatment.

By December, she had
raised $20,000 and was preparing to sell her house to raise more. But
then the government, which had tacitly allowed such arrangements
before, put its foot down. Mrs. Hirst heard the news from her doctor.

“He
looked at me and said: ‘I’m so sorry, Debbie. I’ve had my wrists
slapped from the people upstairs, and I can no longer offer you that
service,’ ” Mrs. Hirst said in an interview.

“I said, ‘Where
does that leave me?’ He said, ‘If you pay for Avastin, you’ll have to
pay for everything’ ” – in other words, for all her cancer treatment,
far more than she could afford.

Officials said that allowing
Mrs. Hirst and others like her to pay for extra drugs to supplement
government care would violate the philosophy of the health service by
giving richer patients an unfair advantage over poorer ones.

I'm not saying Obama wants to do this, I am saying there are some unacceptable features of Britain's NHS (update: the policy was reversed in 2008).  The point is not to compare those features to the problems with the U.S. system.  The point is that everyone is gainsaying the Hawking example without recognizing there have been other people in similar predicaments.  How could such a policy ever have been adopted in the first place?  This is just a reminder, it's not a prompt for you to repeat the familiar story that the U.S. pays more without getting better health care outcomes.

If you want to do a broader comparison, here is more on the NHS and drugs.  Did you know that Rilutek, the main drug (its efficacy is debated) for treating ALS (Lou Gehrig's disease), has been available in the UK since 1997.  It was approved by the FDA in 1995 though covered by Medicare only after the prescription drug bill.  As of 2004, single-payer system New Zealand wasn't offering the drug at all.  If you're wondering, single-payer Canada had approval of the drug in 2000, but with partial early usage in 1995.

By the way, Medicare does cover ALS, even if you're not 65, but various important forms of home adaptation and assistance are left uncovered, as is often the case with Medicare.  It seems the U.S. is the best place for drugs but quite possibly not the best coverage overall for ALS.  If you're looking for one good health care reform, consider dropping the reimbursement rate penalty for home care.

My knowledge of ALS-related issues is not extensive, but aren't such comparisons more interesting than reading another blog post bashing idiots? The more you bash the idiots, the more you are playing into the hands of…the idiots.

This isn't quite news, but here's the latest word, from Samuel Preston and Jessica Ho:

Life expectancy in the United States fares poorly in international
comparisons, primarily because of high mortality rates above age 50.
Its low ranking is often blamed on a poor performance by the health
care system rather than on behavioral or social factors. This paper
presents evidence on the relative performance of the US health care
system using death avoidance as the sole criterion. We find that, by
standards of OECD countries, the US does well in terms of screening for
cancer, survival rates from cancer, survival rates after heart attacks
and strokes, and medication of individuals with high levels of blood
pressure or cholesterol. We consider in greater depth mortality from
prostate cancer and breast cancer, diseases for which effective methods
of identification and treatment have been developed and where
behavioral factors do not play a dominant role. We show that the US has
had significantly faster declines in mortality from these two diseases
than comparison countries. We conclude that the low longevity ranking
of the United States is not likely to be a result of a poorly
functioning health care system.