…competitive conduct changes quickly as the number of incumbents increases. In markets with five or fewer incumbents, almost all variation in competitive conduct occurs with the entry of the second or third firm…once the market has between three and five firms, the next entrant has little effect on competitive conduct.
That is from Bresnahan and Reiss, “Entry and Competition in Concentrated Markets.”
Part of their method is to compare doctor and dentist pricing practices across towns of different size, and thus across different numbers of providers. Then they see where bigger numbers makes a difference in terms of pricing. Plumbers and tire dealers are considered too. One lesson seems to be that market concentration has to rise to very high levels to make a big difference in outcomes.
If you are wondering, the “sweet spot” for a town to have a single dentist or doctor is population between 700 and 900, at least circa the early 1990s.
Where India Goes, a book about the problem of open defecation in India, is the best social science book I have read in years. Written by Diane Coffey and Dean Spears, Where India Goes, examines an important issue and it does so with a superb combination of human interest storytelling and top-notch empirical research made accessible.
Drawing on the academic literature, Coffey and Spears show that open defecation sickens and kills children, stunts their growth, and lowers their IQ all of which shows up in reduced productivity and wages in adulthood.
The dangers of open defecation are clear. Moreover, Gandhi said that “Sanitation is more important than independence” and Modi said “toilets before temples,” yet in India some half a billion people still do not use latrines. Why not? Jean Dreze and Amartya Sen (2013), offer a typical explanation:
In 2011 half of all Indian households did not have access to toilets, forcing them to resort to open defecation on a daily basis…
The phrasing presents the problem as a lack of access that forces people to resort to open defecation. From this perspective the solution seems obvious, provide access. After all, if you or I had access to latrines we would use them so if someone else isn’t using latrines it must be because they don’t have access. A bit of thought, however, dispels this notion.
Latrines are not expensive. Many people in countries poorer than India build their own latrines. If access is not the problem then building latrines may not be the solution. Indeed, India’s campaign(s) to build latrines have been far less successful than one might imagine based on the access theory. Quite often latrines are built and not used. Sometimes this is due to poor construction or location but often perfectly serviceable latrines are simply not used as latrines. In fact, surveys indicate that 40 per cent of households that have a working latrine also have at least one person who regularly defecates in the open (Coffey and Spears 2017).
For many people in India, open defecation is preferred to latrine use. The reasons relate to issues of ritual purity and caste. Latrines in or near homes are considered polluting, not in a physical so much as a spiritual or ritual sense. Latrine cleaning is also associated with the Dalit (out)-caste, in itself a polluting category (hence untouchable). That is, the impurity of defecation and caste are mutually reinforcing. As a result, using or, even worse, cleaning latrines is considered a ritual impurity. The problem of open defecation is thus intimately tied up with Hindu notions of purity and caste which many do not want to discuss, let alone condemn.
In the villages the idea of open defecation is also associated with clean air, exercise, and health. Thus, in surveys “both men and women speak openly about the benefits of open defecation and even associate it with health and longevity.” Even many women prefer open defecation if only because it gives them a chance to get out of the house and have some freedom of movement.
Eventually, flush toilets and sewage will eliminate the problem of open defecation, but many people will die before sewage comes to rural India. Building latrines is not enough but is there an opportunity for an Indian entrepreneur? If standardized latrines were bundled with service contracts and provided by professional, uniformed workers who emptied the latrines mechanically (and thus had dignity), demand could well be high. A Walmart for latrine construction and management.
Coffey and Spears, however, offer no silver bullets. Problems brought about by belief and behavior are usually more difficult to solve than material problems. Nevertheless, by demonstrating the importance of the problem and by facing the causes squarely, Coffey and Spears have done India a tremendous service.
The Texas Legislature just enacted landmark health care reforms by opening the state to telemedicine. This success shows that states have great power to improve health care without waiting on Washington. This is especially important as the Affordable Care Act (ACA, or “Obamacare”) grows more unstable and neither party in Congress seems capable of responding.
Telemedicine can improve health and lives—especially in a sprawling state with vast, thinly populated areas. As high-quality video conferencing and remote telemetry become more sophisticated and less expensive, telemedicine offers high-quality care without the need for face-to-face contact in many (not all) situations.
Since an episode of cardiac arrhythmia, I’ve carried a $99 device (AliveCor.com) that conducts clinical-quality electrocardiograms, analyzes them, and gives one-touch, low-cost access to professional help. My then-92-year-old mother’s life was probably saved by an iPad FaceTime conversation with her grandson (an M.D.), who sensed the onset of sepsis. Low-cost digital stethoscopes, blood pressure cuffs, and other devices can plug into smartphones or tablets, transmitting information directly to teledoctors.
…Senate Bill 1107 allows patients to receive prescriptions from doctors whom they meet for the first time via electronic means.
Here is more from Robert Graboyes.
Three articles on medical breakthroughs, or not, caught my eye. The Wall Street Journal discusses a breakthrough in cancer therapy using HIV to target cancer cells. The news is mostly good but the lead researcher worries that it was only luck which prevented the FDA from ending the research prematurely:
Cytokine-release syndrome almost ended the therapy in its infancy. In 2012, Dr. June’s first pediatric patient, 6-year-old Emma Whitehead, developed a 106-degree fever and experienced multiple organ failure. “We thought she was going to die,” he recalls.
A blood analysis showed high levels of the cytokine interleukin-6, or IL-6. “I happened to know because of my daughter’s arthritis that there was a drug that could target IL-6—that had never been used in oncology,” Dr. June recalls. Fortunately, the children’s hospital where Emma was being treated had the medication, Tocilizumab, on hand. “We wouldn’t have had it at the adult hospital because it wasn’t approved at that point for adult conditions.”
Within hours of receiving the drug, Emma awoke from her coma. “It was literally one of those Lazarus conditions,” Dr. June says. Eight days after receiving the CAR T-Cell injection, she went into remission. Two weeks later, she was cancer-free. She’s now 12 and thriving.
Tocilizumab “saved the field” as well as the girl, Dr. June says. “If the first patient dies on a protocol and nobody’s been cured, you’re over.” Regulators, he adds, always “err on the side of caution.” That irks him, since most of his patients would die without the experimental treatments: “Our FDA regulations are made so that you can never have more than about 30% of people get sick with serious side effects. I think we don’t have enough leeway for side effects when you have a potentially curative therapy.”
In my TED talk I argued that the richer China and India are the better it will be for US cancer patients because the bigger the market the greater the incentive to research and develop new drugs. US patients may also get a second benefit. China is big enough to move world R&D which previously was true only for the US and to a lesser extent (because of price controls) the EU. Since the US has by far the largest pharmaceutical market the FDA is a regulatory hegemon. With China we may get to see for the first time a serious alternative to the FDA. And according to some observers, China’s approval process is less-risk averse.
Some of those [new trials] are in the U.S., but more are taking place in China. “There’s a lot more people there, so you can do a lot more trials,” Dr. June says. “But they also put more of their GDP into medical therapy, particularly CAR T-cells.” Beijing’s drug-approval process is easier, too.
I don’t know whether that is true, but it’s a hopeful sign.
In another story, Lawrence Reed has the inspiring story of Bill Halford who has developed a not-yet-approved vaccine for Herpes. Herpes can be incredibly painful and it infects over one million people a year but the route to a vaccine has not been easy:
Impatient with Washington, Halford injected himself, his family and a group of ten herpes patients. None of his family exhibited any ill effects, evidence that the vaccines were safe. All the sufferers enjoyed dramatic pain relief, suggesting effectiveness. The early success of his research led him to co-found, along with film-maker and entrepreneur Agustin Fernandez, a company known as Rational Vaccines, Inc. (RVx)). Its mission is to fight the herpes epidemic worldwide, using the live, attenuated strains that Halford created.
Peter Thiel is a lead investor in Rational Vaccines. Sadly, Bill Halford contracted cancer and died this year at just age 48. I hope his company will carry the ball over the goal line.
Should we all be taking Metformin? Metformin is a diabetes drug but researchers have found that the people taking the drug also get dramatically fewer cancers. Here is Wired:
What they discovered was striking: The metformin-takers tended to be healthier in all sorts of ways. They lived longer and had fewer cardiovascular events, and in at least some studies they were less likely to suffer from dementia and Alzheimer’s. Most surprising of all, they seemed to get cancer far less frequently—as much as 25 to 40 percent less than diabetics taking two other popular medications. When they did get cancer, they tended to outlive diabetics with cancer who were taking other medications.
As Lewis Cantley, the director of the Cancer Center at Weill Cornell Medicine, once put it, “Metformin may have already saved more people from cancer deaths than any drug in history.” Nobel laureate James Watson (of DNA-structure fame), who takes metformin off-label for cancer prevention, once suggested that the drug appeared to be “our only real clue into the business” of fighting the disease.
It’s not just Wired. Here is the title of a recent meta-analysis:
Metformin reduces all-cause mortality and diseases of ageing independent of its effect on diabetes control: a systematic review and meta-analysis.
Metformin is already approved so it could quickly be used off-label but there is a big problem with anti-aging drugs–there is currently no way any anti-aging drug can get approved.
The assembled scientists and academics focused on one obstacle above all: the Food and Drug Administration. The agency does not recognize aging as a medical condition, meaning a drug cannot be approved to treat it. And even if the FDA were to acknowledge that aging is a condition worthy of targeting, there would still be the question of how to demonstrate that aging had, in fact, been slowed—a particularly difficult question considering that there are no universally agreed-on markers.
The FDA should provide a path to approve anti-aging drugs but if not maybe the CFDA will.
I will be doing a Conversation with Tyler with her. On the off chance you don’t already know, here is a brief Wikipedia summary of her work:
Mary Roach is an American author, specializing in popular science and humor. As of 2016, she has published seven books,: Stiff: The Curious Lives of Human Cadavers (2003), Spook: Science Tackles the Afterlife (2005) (published in some markets as Six Feet Over: Adventures in the Afterlife), Bonk: The Curious Coupling of Science and Sex (2008), Packing for Mars: The Curious Science of Life in the Void (2010), My Planet: Finding Humor in the Oddest Places, Gulp: Adventures on the Alimentary Canal (2013), and Grunt: The Curious Science of Humans at War (2016).
So what should I ask? I thank you in advance for your inspiration.
President Donald Trump named Tomas Philipson, an economist at the University of Chicago who has specialized in health-care policy, to the three-member Council of Economic Advisers on Monday.
Mr. Philipson briefly served as an adviser to the Trump transition team last fall on health-care matters and was a senior economic adviser to the head of the Food and Drug Administration and the Centers for Medicare and Medicaid Services during the George W. Bush administration. Mr. Philipson is the co-founder of Precision Health Economics, a consultancy. He is professor of public policy at the University of Chicago’s Harris School of Public Policy and a director of the Health Economics Program at the university’s Becker Friedman Institute for economic research.
Mr. Trump’s nominee to lead the CEA, Kevin Hassett, hasn’t been confirmed by the Senate. His nomination cleared the Senate Banking Committee with only one lawmaker, Sen. Elizabeth Warren (D., Mass.), voting against him in June.
The two other members of the CEA aren’t subject to Senate confirmation and typically serve for around two years. Mr. Trump hasn’t announced the third member of the council, which has advised presidents for over seven decades on the economic impact of their policies.
That is from the WSJ.
According to a study recently published in The Review of Economic Studies, access to legal marijuana may significantly reduce academic performance.
The study took advantage of a natural experiment in the Dutch city of Maastricht. In 2011, the city sought to pull back some of the marijuana tourism going to its coffee shops, where marijuana sales are legally tolerated. So through the local association of cannabis shop owners, it banned some foreigners of certain nationalities from buying pot at these venues.
This let researchers Olivier Marie and Ulf Zölitz, in the cleverly titled “‘High’ Achievers? Cannabis Access and Academic Performance,” compare the academic outcomes of Maastricht University students with varying levels of access to legal pot.
What they found: The students who weren’t allowed to legally access marijuana saw their grades significantly improve, especially in classes that require numerical and mathematical skills.
Here is the full Vox story. I strongly believe it is morally wrong to throw people in jail for smoking such substances, but still policy decisions have real consequences, we should know what those are, and I am not convinced that full availability of marijuana is the optimal approach.
Here are ungated copies, noting there have been significant revisions in the paper along the way.
In the United States, Medicare starts at age 65. So to the extent health care improves health outcomes, we should see a noticeable uptick in results as people reach 65, at least relative to the trajectory of aging they otherwise would experience. Of course many other national health care systems treat 64 and 65-year olds as the same, so we can compare the American case to those alternatives. That would give us a better sense of the relative performance of single-payer coverage, no?
Has such a study been done, and if so what did it yield?
Nothing in Arrow predicts higher expenditures. In fact, it predicts fewer expenditures because markets will partially breakdown (not exist)
That is from Jeremy Horpedahl on Twitter.
Mr. Ferretti, 36 years old, and Mr. Lopez, 44, had enjoyed themselves under the supervision of a doctor for what some are calling a brosectomy—a vasectomy with friends in a cushy setting of couches, snacks, big-screen TV, and in some clinics, top-shelf liquor.
Here is the WSJ story. And:
The University of Utah Health in Salt Lake City has run March Madness promotions for the past three years. It offers a vasectomy package that includes a Utah Jazz basketball ticket giveaway, goody bags and basketball-shaped ice packs. This year, its surgeons performed more than three times as many vasectomies in March compared with the average number done in the other months through May, according to the health center’s internal marketing data.
They promised us flying cars, and all we got was…
That is the topic of my latest Bloomberg column, here is one excerpt:
As outlined by the blog Random Critical Analysis, U.S. health-care expenditures go well beyond what the U.S.’s relatively high per capita GDP might lead us to expect. But viewed through the lens of consumption behavior, American health-care spending is typical of this nation’s habits and mores. Relative to GDP, Americans consume a lot more than Europeans, and our health-care spending is another example of that tendency.
And to channel Megan McArdle:
Furthermore, we shouldn’t take the lower health-care spending in many European nations as a sign of better health-care policy. It’s a reflection of a broader cultural difference. If the U.S. someday did move to a single payer system for health care, it probably would be a relatively expensive version of that idea. The U.S., of course, does have a partial single payer system through Medicare, and it is still more expensive per beneficiary than its European equivalents.
Keep in mind that high consumption expenditures also help explain various “anecdotes of outrage,” such as billings for $400 band-aids and the like. To some extent such charges are fraud, and to some extent they are simply an unusual allocation of fixed costs. Both practices are more likely in a non-Spartan society keen on spending a lot of money on health care and the very latest.
Here is the podcast and transcript (no video), Atul was in top form. We covered the marginal value of health care, the progress of AI in medicine, whether we should fear genetic engineering, whether the checklist method applies to marriage (maybe so!), whether FDA regulation is too tough, whether surgical procedures should be more tightly regulated, Michael Crichton and Stevie Wonder, wearables, what makes him weep, Knausgaard and Ferrante, why surgeons leave sponges in patients, how he has been so successful, his own performance as a medical patient, and much more.
Here is one excerpt:
COWEN: A lot of critics have charged that to get a new drug through the FDA, it takes too many years and too much money, and that somehow the process should be liberalized. Do you agree or disagree?
GAWANDE: I generally disagree. It’s a trade-off in values at some basic level. In the 1950s, we had no real FDA, and you had the opportunity to put out, to innovate in all kinds of ways, and that innovation capability gave us modern cardiac surgery and gave us steroids and antibiotics, but it also gave us frontal lobotomies, and it gave us the Tuskegee experiment and a variety of other things.
The process that we have regulation around both the ethics of what we’re doing and that we have some safety process along the way is totally appropriate. I think a lot of lessons about when the HIV community became involved in the FDA process to drive approaches that smoothed and sped up the decision-making process, and also got the public enough involved to be able to say . . . That community said, “Look, there are places where we’re willing to take greater risks for the sake of speed.”
People are trying to treat the FDA process as a technical issue. When what it is, is it’s an issue about what are the risks we are genuinely willing to take, and what are the risks that we’re not?
COWEN: The idea of nudge.
GAWANDE: I think overrated.
GAWANDE: I think that there are important insights in nudge units and in that research capacity, but when you step back and say, “What are the biggest problems in clinical behavior and delivery of healthcare?” the nudges are focused on small solutions that have not demonstrated capacity for major scale.
The kind of nudge capability is something we’ve built into the stuff we’ve done, whether it’s checklists or coaching, but it’s been only one. We’ve had to add other tools. You could not get to massive reductions in deaths in surgery or childbirth or massive improvements in end-of-life outcomes based on just those behavioral science insights alone. We’ve had to move to organizational insights and to piece together multiple kinds of layers of understanding in order to drive high-volume change in healthcare delivery.
Definitely recommended, this was one of my favorite “episodes.”
As their budgets strain, communities have begun questioning how much money and effort they should be spending to deal with overdoses, especially in cases involving people who have taken near-fatal overdoses multiple times. State and local officials say it might be time for “tough love”: pushing soaring medical costs onto drug abusers or even limiting how many times first responders can save an individual’s life.
“It’s not that I don’t want to treat overdose victims, it’s that the city cannot afford to treat overdose victims,” said Middletown Council Member Daniel Picard, noting this industrial town in northern Butler County might have to raise taxes in response to the crisis.
Often, the only thing separating whether an overdose victim goes to the hospital instead of the morgue is a dose of naloxone, also known by the brand name Narcan, a medication that can reverse the effects of opioid overdoses.
Two doses of an injectable form of naloxone, Evzio, cost $4,500, up from $690 in 2014. The price of other forms of the drug, including the nasally administered Narcan, typically range from $70 to $150 per dose, officials say.
…Here in Ohio, first responders say it’s not uncommon for overdose victims to have previously been revived with naloxone at least a half-dozen times.
…Picard, the council member, has proposed a controversial three-strikes policy in which first responders wouldn’t administer Narcan to repeated overdose victims.
Here is the Tim Craig at WaPo story. I do not know what is the proper response to such opioid cases, or how much money should be spent. I do know that somewhere, somehow a line has to be drawn. And if you are reading a discussion of health care policy that does not acknowledge such a line, and set out possible standards for it, beware of sophistry and illusion.
This Buzzfeed article on unauthorized poop transplants has much of interest:
A spate of studies over the last decade have convinced microbiologists and doctors that “fecal microbiota transplantation,” or FMT, works for at least one disease: a deadly bacterial infection in the gut known as Clostridium difficile, or C. diff. No one knows whether the procedures work on other conditions, though dozens of clinical trials are testing them on people with irritable bowel syndrome, Crohn’s disease, obesity, diabetes, epilepsy, autism, and even HIV.
The science is advancing rapidly, with more and more scientists excited about the potential and potency of fecal matter and the microbes in it. The FDA regulations on these procedures, however, keep them out of reach for most patients: Since 2013, the agency has banned doctors from doing fecal transplants on anything except C. diff.
A rogue clinic in Tampa, however, provides the carefully sourced material and explains to patients how the procedure is done. Since the procedure is simple, lots of experimentation is going on which upsets some people.
Poop from an unscreened stranger could carry serious infections, like hepatitis or gonorrhea, or dormant viruses.
No doubt–this is why we also ban sex and french kissing.
I suspect that many of the so-called treatments are crazy but people do a lot of crazy things. It’s odd that we allow some crazy things and ban others—even more that the crazy things we allow are sometimes socially useless while the crazy things that we ban are sometimes socially valuable.
The case for banning extreme sports, for example, is much stronger than the case for banning extreme medicine. Extreme sports don’t provide much benefit to the rest of humanity, other than some entertainment of questionable social value. Extreme medicine, on the other hand, has the potential to improve all our lives and at the very least is a useful warning about what not to do. Yet, extreme sports are lauded, or at least treated as mostly your own business (we do put some regulations on boxing and race car driving), while extreme medicine is heavily regulated and socially frowned upon.
My attitude is the reverse. You want to risk your life climbing without ropes? Knock yourself out–but don’t expect any support from me. I won’t even watch Alex Honnold because I think that what he does is Russian roulette and I do not approve. But, you want to risk your life trying an unapproved medical treatment? Sir, I salute you. Give that man a Nobel prize.
Medicaid isn’t worth its cost–that’s not my evaluation that’s what people who use the program think, at least as far as we can tell from their actions. Joshua D. Gottlieb and Mark Shepard review the evidence at Econofact, which aims to be a dispassionate and non-partisan review of the evidence on a variety of issues. We have also covered these issues before but seeing it all together is valuable.
The cost is large:
The Medicaid program cost about $532 billion in 2015 to cover 74 million people, or almost one in four Americans. The average full-benefit enrollee cost about $6,400 per year to cover in 2014.
People with access to the program use a lot more healthcare than other similar people
The Oregon Experiment found that gaining Medicaid uniformly increased health care use: including hospitalizations (by 30 percent), emergency room use (by 40 percent), physician office visits (by 50 percent), and prescription drugs (by 15 percent). This evidence stands in contrast to the conventional wisdom that providing health insurance could reduce costs by eliminating ER visits. Of course, understanding whether this additional care is worth it requires a comparison of these real costs to the benefits provided.
The health benefits appear to be real but modest:
The evidence is mixed on whether having Medicaid improves beneficiaries’ health. The Oregon Experiment did not find statistically significant evidence of improvements in physical health measures, such as blood pressure and blood sugar after two years of coverage. But it did find large improvements in mental health and self-reported health. Other studies examining the introduction of Medicaid or its expansion over time have found that Medicaid reduces mortality (of infants during the expansion of Medicaid eligibility for low-income children between 1984-1992; of adults during the expansion of Medicaid coverage for childless adults in Arizona, Maine and New York between 2000-2005; of teenagers who benefited from expansions of Medicaid to children during the early 1980s; and of infants and children in the 1960s and 1970s following the introduction of Medicaid) and improves health later in life (for instance among teenagers who benefited from the expansion of coverage as children). But these studies lack the gold-standard randomized design of the Oregon Experiment so should be interpreted with greater caution.
Health benefits may not be the most important benefits:
One important role for Medicaid is to provide risk protection, shielding enrollees from the financial impact of particularly adverse health events, which is the most fundamental role of an insurance product. Researchers seem to agree that access to Medicaid does improve financial security.
So how does one evaluate the tradeoffs? One way is to look at how users value the program.
Recent evidence indicates that beneficiaries value Medicaid at less than its full cost. One source of evidence comes from Massachusetts’ low-income health insurance exchange, where researchers could observe how much charging higher premiums for Medicaid-like coverage led enrollees to drop out: at least 70 percent of enrollees valued insurance at less than their own cost of coverage. A second source of evidence used economic models to quantify how much beneficiaries valued the benefits of Medicaid in the Oregon Experiment. In this case, the researchers found that beneficiaries valued Medicaid at about one-fifth of its cost.
Benefits are valued at only one-fifth the cost! Why so low?
The literature suggests two explanations. First, Medicaid provides less complete choice of doctors and hospitals than other insurance, partly because of its low reimbursement rates (see this article for instance). Second, many of the benefits of Medicaid go to medical providers who would otherwise provide uncompensated or unpaid care to the same people.
The authors don’t mention this but if users don’t value the program highly because they would have gotten similar care for free in some other way, then the cost of Medicaid isn’t as high as it appears, because much of it is a transfer from taxpayers to medical providers or others who might otherwise foot the bill. Nevertheless we would probably design Medicaid very differently if we thought about it as (another) subsidy to medical providers rather than as a subsidy to the poor and sick.
It doesn’t follow from anything that has been said that Medicaid should be eliminated or even cut back (let alone that current efforts are the best way to do this). Nevertheless, if I told you that Program X costs $5 for every $1 in value transferred to recipients you would probably agree that Program X was in need of reform.
Addendum: Aaron Carroll and Austin Frakt offer a more optimistic review of the health evidence.