Category: Medicine

In England, this new cognitive approach to psychosis and the efforts of Hearing Voices Network are independent of each other, and are sometimes at odds.  H.V.N.’s leading members, for instance, frequently criticize even sympathetic academic researchers for being insufficiently political.  Yet both approaches share a similar purpose in seeking to place voice-hearing within the continuum of normal human experience – one, in order to better treat patients, the other, out of a firm conviction that hearing voices need not interfere with leading an otherwise “normal” life. [emphasis added]

Of course that refers to hearing voices that aren’t actually there.  Here is the full and fascinating story.  It advises people who wish to talk back to the voices to carry around cell phones.

How extreme must a single weirdness be, before a person can’t much function in the real world or be counted as "normal"?

Many people (Jon Chait also) argue that France has the best health care system in the world.

As of 2003, the average income of a French physician was estimated at $55,000; in the U.S. the comparable number was $194,000.

A visit to a GP’s office (half of the doctors in France are GPs) had a reimbursement capped at 20 Euros, again circa 2003.  It is not hard to pay ten times that amount in the U.S.

Did I mention that health care is a labor-intensive industry?

This is the major reason why French health care is cheaper than U.S. health care.  France also spends less per unit on other inputs, such as prescription drugs.

Note that France still spends more than all or most other European systems, namely about 11 percent of gdp. 

When comparing health care outcomes, France only does slightly better than many Mediterranean countries with obviously non-enviable health care systems.  It is not obvious that France does better on health care outcomes than Japan, again a country with non-enviable health care institutions.  In other words, France spends lots of money making people feel good about their health care processes, with only very marginal measured health care results.  The United States also spends money on customer comfort, albeit in a more expensive and less egalitarian way.

It is easy to argue that the French system is better than that of the United States.  But a defender of the French system must, in reality, fight "a war on two fronts," to paraphrase Derek Parfit.  The French system does not, by the standards which have been erected in the debate, appear noticeably better than many other cheaper systems around the world.  It does spend more money producing "customer satisfaction" and papering over some of the obvious inhumanities of the cheaper systems.  That’s why it is easy to hold up as a model.

The disconnect arises because single-payer defenders wish to use international data to compare health care systems — France > U.S. — while pushing under the table the more radical (apparent) implications of that data, namely that France is spending far too much as well.

If we are going to be umm…transitive here, let’s have the debate where it belongs: expensive health care with marginal impact on measured health outcomes vs. saving lots of money and giving people much less in the way of health care services.  I do think there is a good case for the latter, though looking toward the future I would myself prefer the former. 

I might add I do favor taking action to lower doctors’ wages in the United States.  Letting in a greater number of qualified foreign doctors is step number one.  But if we’re going to criticize the U.S. system for its costliness, let’s put the blame where it belongs.

The FDA will soon stipulate that researchers who accept more than $50,000 in corporate grants, contracts and consulting fees cannot sit on FDA advisory committees.  This will rule out many current advisors.

First, I wonder how this fits into the old Sam Peltzmann story that the FDA is too conservative in approving new drugs.

Second, what if we reformed in the opposite direction?  Why not do away with all the mandatory drug trials and the like, and simply let drug companies purchase approval for new drugs?  Think of the companies as posting bonds, and of course they still can be sued ex post if the drug harms somebody.  The companies still will have reason to conduct their own tests.  Set the price high if you wish.

To be sure, how much a company will pay for approval will depend on expected profits, not social welfare.  But even with market power there is usually some connection between those two magnitudes.  Or maybe the fear of lawsuits won’t deter poorly capitalized companies, but at the very least we could let the corporate giants take this path.

Some companies might be too overconfident about their drugs.  If you believe that, I hope you are buying puts on them.  Other companies might have excessively short time horizons.  If you believe that, I hope you are loading up on drug companies with heavy R&D and raking in your excess returns.

So does this idea have any takers?  If not, why not? 

Addendum: Matt Yglesias argues regulation is a substitute for litigation.

…is a single payer system actually any cheaper, once the deadweight costs of…taxes are taken into account?

More here, this man would warm the heart of Doug Gibbs.  I recall learning that deadweight losses from taxation are about 20 percent of revenue raised, which is just about the size of overhead costs for the private insurance industry.  Don’t ignore this sentence either:

The French system, the one that is generally rated as being number 1 globally, is neither single payer nor single provider.

Have you ever heard that Medicare, or single-payer systems in Europe, have much lower overhead costs than does private insurance?  Don’t fall for that trick.  My NYT column drives home what ought to be a familiar point:

Medical insurance, whether private or government, is always going to be
faced with a fundamental problem: patients and doctors will try to get
the most out of any system.  When they aren’t paying directly, patients
will seek extra care and doctors will be happy to oblige.  To deal with
that problem, health care systems can offer services indiscriminately
and write off the resulting losses, spend money on monitoring, or limit
services and prices.  An analogous problem is faced by retail stores:
they must either put up with theft, hire security to limit theft, or
carry lower-value items.

Tiffany’s, which sells diamonds, has higher overhead costs than does a 7-11 store.  When you work through the different options, the overhead costs can be shifted or transformed, but they don’t go away:

Just as some items are harder to shoplift than others, so some medical
services are less prone to overuse.  European systems are relatively
good at providing prenatal care or mending someone hit by a car.  Few
people would try to get these services unless they were really needed.
No one but an expectant mother, for instance, will show up for a
prenatal checkup; nor would excess prenatal checkups cost a great deal.
The unwillingness of European systems to spend on overhead means they
will do best specializing in these kinds of services.

When it comes to expensive, discretionary health care benefits, single-payer systems are more likely to resort to queueing, lack of comfort or convenience (compare U.S. and European hospital rooms) or to remove the service altogether.  My conclusion:

…as populations age and the value of medical technology grows, the
overhead costs of private insurance will prove an increasingly wise
investment.  For all its high immediate expenses, the American health
care system is looking toward the future rather than the past.  In the
long run, the hidden and indirect costs of single-payer systems are
harder to measure and thus are ultimately harder to control.

I should note that I drew the point about young vs. old (see the full article) from a Bloggingheads.TV dialogue (Megan McArdle vs. Henry Farrell), though it was not possible to cite that in the published piece.

Addendum: Mark Thoma offers commentary and Paul Krugman cites.

…the sickest patients are the least liked by doctors, and…very sick people sense this disaffection.  Overall, doctors tend to like healthier people more.

That is from Jerome Groopman’s new and excellent How Doctors Think.  The book claims that by asking your doctor better questions, you can help him or her overcome cognitive and emotional biases.  For instance doctors too frequently assume that the recent cases they have seen constitute a real trend, or they too quickly assume that what they see fits a known medical pattern.  Here is one story on the book.  Here are Groopman’s New Yorker articles.  Here is Groopman summarizing the book in The New Yorker.

We propose several definitions of affordability and examine the
implications of alternative definitions for estimates of the proportion
of uninsured who are unable to afford coverage.  We find that, depending
on the definition, health insurance was affordable to between
one-quarter and three-quarters of the uninsured in the United States in
2000.

That is Kate Bundorf and Mark Pauly, here is the paper.  The pointer is from the new AEI magazine, The American, which so far has been consistently interesting.

From MR comments:

Japanese Americans have the longest measured life expectancy on this
planet.  Mormons live 10 years longer on average than Europeans.  Black
men in the US live 8 less on average than Hispanic men…they [Americans] can get
“cheap” European care if they like, just create extremely bad American
HMO insurance, or don’t buy health care at all and go to Public
hospitals.  The reason the European systems are cheaper is not that they
magically have less costs, it is that they give the consumer much less
health care.  Of course the people in the US that go to public hospitals
in the US are not the same kind of people that consume government
health care in Europe.  This makes the health outcome different, even if
the quality of the health care is not.

Link here.  Another reader writes:

The single largest group (30% of all the [un]insured) are Hispanics. 
Hispanics have the same (actually slightly higher) life expectancy as
the average American.

Life expectancy statistics are tricky, but these claims hold up under the scrutiny of Google.  More importantly, the claims "sound right wing" but actually they provide the best argument for single-payer health insurance to be found: "The link between health and health care is murky, so let’s just save money on our health system."

That is another example of Stories You Won’t Often Hear. 

I’ve yet to see a fully convincing answer.  Of course this is not the kind of low-cost, government-run system we would end up with in the United States, but we can still debate whether Europe should switch to some other system, and for the time being perhaps the answer is no…

Should they simply wait for the day when health care matters more than it currently does?

It is underway, from Iowa, here is one story.  And here is a betting market in how much a pandemic would damage the Dow, about ten percent it seems.

"Medicare for Everybody" is becoming a slogan in the left-wing blogosphere.  Does it sound so bad?  Surely private insurance deserves a whacking for its high overhead costs and its general willingness to not cover people, screw people over, and deny just claims. 

But also recall it was only a few years ago that the federal government expanded Medicare coverage to prescription drugs.  Private insurance has been covering prescription drugs for — what — about twenty-five years?

I do not need to repeat to loyal MR readers that prescription drugs are about the most useful and most life-saving of all forms of treatment.  Loyal readers also will know that greater Medicare access, as measured by more doctor visits, doesn’t seem to improve health care outcomes.  But drugs do.

So when it comes to the one thing that really works, government insurance was twenty or more years behind private insurance.

In case you didn’t already know.

Are you familiar with the early musical works of Steve Reich, you know the taped loop recordings, like "It’s Gonna Rain"?  A phrase is repeated over and over again.

The next time you hear "Medicare for Everybody" I want you to also hear:

"So when it comes to the one thing that really works, government
insurance was twenty or more years behind private insurance."

"So when it comes to the one thing that really works, government
insurance was twenty or more years behind private insurance."

"So when it comes to the one thing that really works, government
insurance was twenty or more years behind private insurance."

Etc.

I thank a loyal MR reader for making this point to me.

Oh, had I mentioned that the 21st century is supposed to be the century of the biomedical sciences?

To extend [health care] coverage without changing these [cost-inflating] dynamics would add on another $77 billion of spending beyond what it should cost.

That is Ezra Klein, his post has some interesting data.  Note that while we might shift some of the financial burden of pharmaceuticals to Europe and elsewhere, this hardly qualifies as a global welfare improvement.  There are plenty of other ways to redistribute money from foreigners.  I am, however, struck by this bit:

Another $147 billion in increased spending, much of it a consequence of
the fee-for-service system, wherein doctors are paid based on how many
procedures they recommend and carry out.  Doctors with equity in
facilities where they can co-refer cases conduct between two and eight
times more tests than those without equity interests.

Some of this is third-party payment, but more generally the consumer as monitor is often either insane or asleep.  To get what is really wrong with health care markets, we must turn to the academics, not as analysts but rather as examples:

One 47-year-old professor, a classic blunter who had received a
diagnosis of prostate cancer, told me: "I would be insulted if some guy
read 15 papers on theoretical physics, my own field, and then came in
and asked me to help him design an experiment.  And I expect the same of
my doctor.  I pay her.  Let her sit down and tell me exactly what I need
to know — what are my choices and what do they mean?  That’s her job.  I
have other things to do."

Many consumers just don’t want to face the stark realities of how they are doing.  How about letting me make the health care decisions for a randomly chosen partner, and vice versa?  Here is much more, via Craig Newmark.  On related topics, here is Arnold Kling.

Paul Krugman writes:

Mr. Edwards goes two steps further.  People who don’t get insurance from their employers would… purchase insurance through “Health Markets”: government-run bodies negotiating with insurance companies on the public’s behalf. …

Why is this such a good idea? …[M]arketing and underwriting – … screening out high-risk clients – are responsible for two-thirds of insurance companies’ overhead.  With insurers selling to government-run Health Markets, not directly to individuals, most of these expenses should go away, making insurance considerably cheaper.

If I understand correctly, when it comes to the health markets, private companies would process the payments but government is the residual claimant, bears the financial burden of high-risk customers, and calls the final shots.

This passage by Krugman is an object lesson in why many economists disagree.  I read this and think:

"My god, once government covers insurance company losses, incentives for cost control will vanish."

I’m willing to add: "Cost control doesn’t work very well today, I admit," without changing my net assessment:  "Yes, things can always get worse, furthermore implicit rationing might be the result.  A reformed private option can work better than the American status quo.  Let’s not lock ourselves out of those potential gains."

Many economists to the left of me are more worried about saving on the overhead costs.

No one serious believes in central planning any more, but the intellectual roots of this disagreement are to be found in those debates.

Addendum, from the comments: "Huh? Wouldn’t the screening expenses be replaced by the expense of insuring high-risk people who could no longer be excluded from the pool? And isn’t it safe to assume that the latter expense exceeds the former, for otherwise insurers would keep the high-risk people in the pool rather than pay for the trouble of screening them out?"

Or should this post be titled "Department of Uh-Oh"?

Indonesia, which has had more human cases of avian flu than any other country, has stopped sending samples of the virus to the World Health Organization, apparently because it is negotiating a contract to sell the samples to an American vaccine company, a W.H.O. official said yesterday.  The strains of the H5N1 virus circulating in Indonesia are considered crucial to developing up-to-date vaccines and following mutations in the virus.

Here is the story.  At the very least, is it not better to release the information but require a payment of royalties from any company using it profitably?  Or since the virus has a 60-70 percent fatality rate in Indonesia, maybe they might go back to simply giving the information away…?

Here is further commentary, perhaps the Indonesians are resentful that they would not be able to afford any resulting vaccine.  If this entire episode does not convince you that IP law is out of control, I don’t know what would.