Category: Medicine

It turns out many of the studies are wrong: "The common error was to lump into the group of "abstainers" people who were once drinkers but had quit."

Addendum: Elsewhere on EconLog we are given notice of Greg Mankiw’s new blog, for his Econ 10 course at Harvard.

Cousin Alex says the FDA is paternalistic.  Yah, it is paternalistic.  Paternalism is good. 

You know what would happen without vater FDA?  Herr Trudeau sells 1.5 million copies of Natural Cures "They" Don’t Want You to Know About, that’s what happens.  When left to their own thinking die volk swarms to an ex-con who has been banned from the airwaves by the FTC for marketing "Japanese" marine coral with claims that it can cure cancer, heart disease, high blood pressure, lupus, and other illness.  If it were up to me this guy would be jailed.  But the FTC can’t stop him from selling his book.  Silly first amendment.  Don’t you Americans know the truth is more important than free speech?

Libertarians say how can you trust people to make decisions about toothpaste but not about their own health?  Zat is an easy one.  No one buys toothpaste out of fear.  But sick people don’t think rationally they are emotional they hold out hope, even the kind of hope that "they" don’t want them to know about.  Father FDA must protect them.

Libertarians will respond that the tort law protects consumers from fraud.  Need I tell you who has the best book on the problems with tort law?

Have the government pay for all health care expenditures above 15% of
adjusted gross income, and cover 100% of health care expenditures by
people living under 200% of the poverty line.

This preserves the market in most health care services–happy HSA
advocates! It is progressive, and provides universal coverage–happy
single-payer advocates! It directs coverage to those who really need
it–the very sick–without a middle class subsidy–happy Jane! And it
preserves market prices for almost everything from hospital beds to
surgical procedures, since a significant fraction of the market will be
paying their own way. That keeps the government from having to set
prices, which as Soviet Russia showed us, is generally a bad idea. Most
importantly (from my perspective) it preserves the market for
innovations in drugs and medical equipment.

Here is the full post.  My guess is that this needs to be defined across wealth rather than
income, if only to a) cover the retired elderly, and b) prevent people
from tanking their incomes when family members get sick.  It could
therefore resemble extreme means-testing for Medicare, one of my
favorite ideas.  Except it would treat young and old on the same plane.

One worry I’ve had about means-testing is the implicit tax hike on wealth creation.  How
steeply would this implicit tax rise, as health care consumes a growing percentage of gdp?  And when suppliers are charging the often-identifiable eligibles (what percent of the population lies below 200% of the poverty line, and how do they dress?), what kind of controls must we impose on the contracts?  Would any doctor or hospital down here in Cajun country have free prices?  If the government set prices too low, would these noble crawfish-boilers end up with greater access to care?

Addendum: Read her post on why HSAs and single-payer plans are unlikely to lower health care costs.  Second addendum: Read Arnold Kling as well.

Panel data econometric methods are used to investigate how the risk of death from acute myocardial infarction (AMI) varies with macroeconomic conditions after controlling for demographic factors, fixed state characteristics, general time effects and state-specific time trends. The sample includes residents of the 20 largest states over the 1979 to 1998 period. A one percentage point reduction in unemployment is predicted to raise AMI mortality by 1.3 percent, with a larger increase in relative risk for 20-44 year olds than older adults, particularly if the economic upturn is sustained. Nevertheless, the much higher absolute AMI fatality rate of senior citizens implies that they account for most of the additional deaths. This suggests the importance of factors like air pollution and traffic congestion that increase with economic activity, are linked to coronary heart disease and may have particularly strong effects on vulnerable segments of the population, such as the frail elderly. AMI mortality risk quickly rises when the economy strengthens and increases further if the favorable economic conditions persist. This is consistent with strong effects of other short-term factors on heart attack risk and with health being a durable capital stock that is affected by flows of lifestyle behaviors and environmental conditions whose effects accumulate over time.

Here is the paper.

"Any dummkopf can see we should value human life at replacement cost, not willingness to pay in a market setting.  (If P > MC, due to monopoly, MC is the correct measure of value, especially if we can produce more of the stuff.)  And what is the replacement cost required to get another baby into the world?  A pittance.  We should spend half as much on health care as we are doing now, perhaps less. 

Let’s institute rationing, and yes nationalization of either insurance or service provision are possible means to that end.  Let’s give everyone access to basic preventive care but limit or perhaps even ban all expensive life-prolonging procedures.  At the same time, our other policies should be pro-natalist, and that includes a favorable environment for religion and restricted vacation time, not just dollar bonuses for kids and free public education.  No good utilitarian can resist that conclusion.

Yes, that treats human lives as interchangeable, but if you don’t buy that, you have no business defending the economic approach to human life in the first place.  (The Devil in Goethe’s Faust: "Warum machst Du gemeinschaft mit uns, wenn Du sie nicht durchfuehren kannst?")

By the way, let’s drive down pharmaceutical prices.  Subsidizing babies is a cheaper way of producing more years of life.

Yup, it’s all about churning out those Quality-Adjusted Life Years.  Current unborns may feel hypothetical or contingent to you, but I tell you, they are just as real as I am.  And when those people come into existence — if they come into existence — they will be more real than I am.

At best, even assuming away the usual market failure issues, market-driven health care allows people to invest too many real resources keeping themselves alive.  You can kick and scream all you want, but at the end of the day you cannot escape this obvious overinvestment.  The problem is that the market works, in the sense of getting people what they want.  And if government involvement can save on insurance company overhead at the same time, or alleviate adverse selection, so much the better."

Tyrone is so depressed, and so unhappy with who he is, that he comes up with drivel like this.  Why did I even pass on the request?  After jotting down these notes, Tyrone told me that if push ever came to shove, I should not spend more than $8000 keeping him alive.  Of course I refused to agree; what would I do without him?  What would my wife do without him?  And what kind of person would you think I am, to sell him for mere dollars and cents?

Addendum: Here is Will Wilkinson’s health care plan.

The authors offer up two main points:

1. We get only 55 percent of recommended medical attention [TC: hey, didn’t an earlier Rand study show us that more care doesn’t translate into better health care outcomes?]

2. "Those with annual family incomes over $50,000 had quality
scores that were just 3.5 percentage points higher than those with
incomes less than $15,000….insurance status had no real effect on
quality."

This should make everyone uncomfortable, but most of all those who think that access to health insurance is a panacea.  Here is the press release, the piece is in The New England Journal of Medicine.  Am I supposed to believe the following?:

• Overall quality scores for blacks were 3.5 percentage points higher than for whites.
• Overall quality scores for Hispanics were 3.4 percentage points higher than for whites.
• Blacks had higher scores than whites for chronic care (61 percent vs. 55 percent).
• Blacks had higher scores for treatment than whites (64 percent vs. 56 percent).
• Hispanics were more likely to receive screening than whites (56 percent vs. 52 percent).

The authors say yes this really is true.  Previous studies usually focused on expensive and invasive one-time procedures, such as bypass operations, where whites do have a (narrowing) advantage.  If nothing else, this piece should convince us how little we understand the health care sector.

Our tissues turned out to be unusually compatible for nonrelatives and,
when her Internet donor dropped out, I moved from backup to actual
donor. We have our surgeries tomorrow morning.

Here is more, and here on LD.  Here is Virginia’s new job for Atlantic Monthly. 

Last week Paul Krugman defended the VHA as a model for national health care policy; Brad DeLong has some critical excerpts.  I am skeptical for a few reasons:

1. It is widely acknowledged that this system did not work well for a long time.  If we are going to cite examples, should we judge them by lifetime performance, or by performance-right-now?  In this case I view the relative efficiency of the now-moment as the exception, and not as a readily available constellation that national policy will replicate.

2. VHA saves a great deal by bargaining down prices of prescription drugs.  If done on a national level, this will cause the supply of such drugs to contract, perhaps significantly. NB: Supply elasticity can be high even with (especially with?) evil, scheming, profit-soaked monopolists.  And don’t forget "current cash-flow" models of investment, which are eagerly invoked by the left in other contexts, such as tax policy.

3. For a variety of reasons (see the excellent comments on Brad’s post), VHA pays doctors much less than usual.  I am more than willing to consider the hypothesis that doctors at the national level earn too much.  But I cannot imagine a healthy process by which a federal single-payer or nationalization plan will bargain down this sum significantly without all hell breaking loose.  Do not forget what neo-Keynesians tell us about the morale effects of nominal wage cuts, much less large real and nominal cuts bundled together.

4. In general, local or restricted health care plans can bargain down prices with less loss of quality and innovation than if that same bargaining were done at the national level.  That follows from the economic theory of high fixed costs and segregated markets.

I do think the VHA warrants further study.  But I would like to see these questions answered before regarding it as a positive model for reform.  Comments are open…

The Washington Post reports:

President Bush will propose that Americans be allowed to take tax deductions on more of their out-of pocket medical expenses, as part of an initiative the White House believes will rein in soaring health costs by shifting responsibility toward individuals, according to congressional and other sources familiar with the administration’s thinking.

The new tax breaks for personal health spending, to be included in the 2007 budget Bush will release in less than two weeks, are designed to help the uninsured and to allow people with insurance to write off a greater portion of the money they spend on co-payments, deductibles and care that is not covered. Under current tax rules, people can deduct medical expenses only if they exceed 7.5 percent of their adjusted gross income.

This idea is slightly funny.  The premise is that people don’t pay enough of their medical bills when they have private insurance.  The way to get them out of insurance is to…um…pick up part of their medical bill.  Admittedly the percentage of third-party payment would fall, at least if this works as planned.  But note we are making the government the new insurer.  I also predict the tax deduction will evolve into a credit which will evolve into…Yikes!

That is not all.  Health savings accounts will be expanded and:

Bush intends to propose changes to allow people to keep their insurance, without extra cost, if they change jobs or decide to start a business, building on a decade-old law that was designed to make health coverage more "portable."

I have no idea what is the underlying premise as to whether people overinvest or underinvest in private sector health insurance.  I will blog more details of this as they become available.  In the meantime, Arnold Kling shares my doubts.

Positive time preference is not the constraint it once was:

You can’t take it with you. So Arizona resort operator David Pizer has a plan to come back and get it.

Like some 1,000 other members of the "cryonics" movement, Mr. Pizer has made arrangements to have his body frozen in liquid nitrogen as soon as possible after he dies. In this way, Mr. Pizer, a heavy-set, philosophical man who is 64 years old, hopes to be revived sometime in the future when medicine has advanced far beyond where it stands today.

And because Mr. Pizer doesn’t wish to return a pauper, he’s taken an additional step: He’s left his money to himself.

With the help of an estate planner, Mr. Pizer has created legal arrangements for a financial trust that will manage his roughly $10 million in land and stock holdings until he is re-animated. Mr. Pizer says that with his money earning interest while he is frozen, he could wake up in 100 years the "richest man in the world."

…To serve clients who plan on being frozen, attorneys are tweaking so-called dynasty trusts that can legally endure hundreds of years, or even indefinitely. Such trusts, once widely prohibited, are now allowed by more than 20 states — including Arizona, Illinois and New Jersey — and typically are used to shield assets from estate taxes. They pay out funds to a person’s children, grandchildren and future generations.

The chilling new twist: In addition to heirs or charities, estate lawyers are also naming their cryonics clients as beneficiaries. If they come back to life after being frozen, the funds revert back to them. Assuming, that is, that there are no legal challenges to the plans.

That is from The Wall Street Journal, January 21 2006, p.A1.  Of course if you take the St. Petersburg Paradox literally, you should chop off and freeze your head for a very long time; there is some chance of enormous wealth at the end.

Addendum: Here is the full article.

David Bell and David Blanchflower report:

On almost all measures of physical health, Scots fare worse than residents of any other region of the UK and often worse than the rest of Europe. Deaths from chronic liver disease and lung cancer are particularly prevalent in Scotland. The self-assessed wellbeing of Scots is lower than that of the English or Welsh, even after taking into account any differences in characteristics. Scots also suffer from higher levels of self-assessed depression or phobia, accidental death and suicide than those in other parts of Great Britain. This result is particularly driven by outcomes in Strathclyde and is consistent with the high scores for other measures of social deprivation in this area. On average, indicators of social capital in Scotland are no worse than in England or Wales. Detailed analysis within Scotland, however, shows that social capital indicators for the Strathclyde area are relatively low. We argue that these problems seem unlikely to be fixed by indirect policies aimed at raising economic growth.

Here is the full paper, but there is no dummy variable for who eats deep-fried Mars bars.  Here is the Strathclyde Hilton.  On another note, I’ve long thought that the Scots and Irish are central to understanding the evolution of the American national character.

Elsewhere on the NBER front, here is a new paper on self-deception and voting.

Thus, of the 13 confirmed and 5 excluded [recent Indonesian] cases, 13 or over 72% of these [avian flu] cases were in familial clusters.

In contrast, only about 1/3 of the cases in southeast Asia were from familial clusters through the spring of this year.  This dramatic increase in cases from clusters shows that H5N1 is being more efficiently transmitted and this efficiency can also be seen in recent cases from China, Thailand, and Vietnam.

Here is the longer discussion.  Now "more efficient transmission" need not mean human-to-human transmission.  It could mean you catch avian flu more readily from the family collection of birds.  Still, in expected value terms, this is not good news.  (You can ask whether the familial clusters all get sick at the same time, or whether there are lags; the latter implies a greater likelihood of human-to-human transmission.  I have not seen a formal treatment of this issue, although Henry has made various worrying remarks on this score.)

Niman is pessimistic, and often makes controversial claims, but his credentials are strong.  Here is an expert assessment of Niman.  Here are Henry’s periodic updates.

Here is Indonesia, closing a U.S.-run bird flu lab, just after the U.S. promised $10 million more in funding for the lab.  Good idea.

Here is a Chinese report:

Although human cases of bird flu are mounting in China, the virus here
is currently stable, not mutating toward a form readily transmissible
among humans, a top Chinese government scientist said.

Not as reassuring as they wanted it to sound.  Here is a story on the extreme trustworthiness of China.

If you missed it the first time around, here is my policy paper on what we should be doing about avian flu.