Category: Medicine

State-run health insurance plans

This article in The New York Times offers some detail on the government-run insurance plans at the state level.  I learned:

1. Three dozen state governments currently run such plans and they do not in general drive private insurance companies out of business.  In California, the largest such plan, two-thirds of all eligible people choose the privately-run health insurance plans.

2. The state-run plans are usually administered by a major private insurance company, which has authority to negotiate payment rates with doctors and hospitals.  In this regard the forthcoming Obama proposal might be quite different.

3. These plans are not especially effective at controlling costs.

4. The North Carolina plan now requires a significant bailout.

5. Some people (this is now my esoteric reading) view the state-run plan as a way of forcing private insurance companies to bargain down reimbursements much further than they have done.  It's a monopsonistic social means of opting for lower expenditures and lower returns for the medical sector.

Charities in everything

Have you ever wondered what percent of charities involve actual positive externalities?

Susan spent months in front of her computer on MyFreeImplants.com,
a Web site where women who want breast augmentation can connect with
“benefactors” willing to contribute to the cause, sometimes a dollar at
a time. In May she was one of two Las Vegas women who went under the
knife on donations alone.

Do they also offer naming opportunities?  Here is the story.  The thanks go to a loyal MR reader, who by the way is now blogging again.

Betting markets in everything

A Buckinghamshire man diagnosed with terminal
cancer is to collect a second winning payout of £5,000 after betting he
would stay alive.

Jon Matthews, 59, from Milton Keynes, was
diagnosed with mesothelioma, a cancer linked to asbestos, in 2006 and
told he had months to live.

He placed two bets, each with a £100 stake at odds of 50/1, that he would be alive in June 2008 and in June 2009.

A third wager will earn him a further £10,000 if he lives until 1 June 2010.

The widower will collect his second lot of £5,000 winnings on Monday.

The full story is here and I thank Leonard Monasterio for the pointer.  Of course you are implicitly betting on your life each time you make an investment or a long-range plan.

The relative value of health care

In a 2003 study, another Dartmouth team, led by the internist
Elliott Fisher, examined the treatment received by a million elderly
Americans diagnosed with colon or rectal cancer, a hip fracture, or a
heart attack. They found that patients in higher-spending regions
received sixty per cent more care than elsewhere. They got more
frequent tests and procedures, more visits with specialists, and more
frequent admission to hospitals. Yet they did no better than other
patients, whether this was measured in terms of survival, their ability
to function, or satisfaction with the care they received. If anything,
they seemed to do worse.

That’s because nothing in medicine is
without risks. Complications can arise from hospital stays,
medications, procedures, and tests, and when these things are of
marginal value the harm can be greater than the benefits. In recent
years, we doctors have markedly increased the number of operations we
do, for instance. In 2006, doctors performed at least sixty million
surgical procedures, one for every five Americans. No other country
does anything like as many operations on its citizens. Are we better
off for it? No one knows for sure, but it seems highly unlikely. After
all, some hundred thousand people die each year from complications of
surgery—far more than die in car crashes.

To make matters worse,
Fisher found that patients in high-cost areas were actually less likely
to receive low-cost preventive services, such as flu and pneumonia
vaccines, faced longer waits at doctor and emergency-room visits, and
were less likely to have a primary-care physician. They got more of the
stuff that cost more, but not more of what they needed.

Gambling on the Future

A conversation with the ten year-old.

"For the third time.  Do your homework."

"I HATE homework.  Why should I do it!"

"You need to do your homework so you can get into college and get a good job."

"Oh, Dad," (exasperated), "by the time I'm ready to go to college I'll be able to download the answers directly into my brain in twenty seconds!"

Now here is Gary Becker on fat ten-year olds.

…the negative health consequences of being overweight and even obese will generally be significantly lower for children than for adults. The reason is that aside from very extreme obesity, the really harmful effects to overweight children will not usually kick in for another 25 or more years when they are in their forties or older. However, one can reasonably expect sizable progress during the coming decades in the development of drugs, such as lipitor, that will reduce the health consequences of high cholesterol and excess weight for heart conditions, diabetes, and some cancers. From that perspective, perhaps even ignorant and impulsive children are not acting so stupidly by indulging themselves in their eating since the future will likely see the development of drugs that will alleviate many serious medical conditions.

So who is most (ir)rational, my ten-year old, the fat-ten year old or the great Gary Becker?

Stuff they don’t teach in graduate school

Chris Blattman has a problem to do with his research that they just don't teach about in graduate school.  Which type of anti-malarial drugs should he provide for his research assistants?

I have more and more research assistants in the field these days, and it would
be really fantastic if none of them fell deathly ill because of, well, my
research papers.

Here's the question. We have at least two perfectly
common anti-malarial options–doxycycline and mefloquine–each of which cost a
few cents each. They've been around a while, so we know what to expect. Doxy:
sun sensitivity in the occasional case, and no milk in your coffee that morning
(which is a tragedy). Mefloquine: crazy dreams among a few (including
me).

Along comes a fancy-pants new drug, Malarone. It costs $6 a pill,
with insurance, and has to be taken every day. Why would I pay 120 times more
than the generic? Is it 10 times as effective? 1.2 times? Just as effective? As
far as I can tell, there aren't studies on the matter.

The third health care cost fallacy

Let's start with a correct claim:

The fiscal outlook is grimmer than before, therefore we should spend less on health care reform than I used to think.

I'm willing to make a comparable admission when it comes to tax cuts, so will you sign on to this claim about health care and revise your policy prescriptions accordingly?  (Unless of course your previous estimate had forecast the current revenue situation; Nouriel Roubini could claim this.)

If you do not sign on to this claim, you are committing the third health care cost fallacy.  Note also that your support for non-revenue-intensive means of health care reform might well go up, for related reasons.

You will find fallacies one and two here and here.  Might there be TANSTAAFL deniers who commit all three?

Addendum: Megan McArdle offers some related sentences to ponder:

Conversely, if there is some political or institutional barrier which is preventing you from controlling Medicare cost inflation, than that barrier probably is not going away merely because the program covers more people.  Indeed, to the extent that seniors themselves are the people blocking change (as they often are), adding more users makes it harder, not easier, to get things done.

More health care cost fallacies

This comes from Robert Reich but you will find it all over the place:

Social Security is a tiny problem. Medicare is a terrible one, but the
problem is not really Medicare; it's quickly rising health-care costs.

You would think it is hard to resist the fiscal conservatives' core argument — X is slated to grow a lot in cost, therefore we have at least one reason to spend less on X — but such resistance is becoming a growth industry.

There are two simple points in response.  First, it matters whether a given expenditure shows up on the balance sheet of the government or not.  It matters for the incentives of our government, for its credit rating, for future marginal rates of taxation, and ultimately for the future of the health care (or other) sector.

Second, if Medicare were less generous, much less would be spent on health care.  Now you might think that would be a bad result and that of course a debate worth having.  But the mere fact that you favor some amount of Medicare does not lower the cost burden of the amount you favor.  If your preferred policy induces say "40 percent more of health care costs," you can't put all the blame on the preexisting level or path of health care costs.  You also have to accept responsibility for the 40 percent boost or whatever the increment is.

Medical care without third party payment: the autism example

It's a common claim that health care would be more efficient and cheaper if not for third party payment.  Sometimes, yes, but often these claims are overstated, especially when the link between treatment and improvement is murky. 

To consider one example, for the most part autism-related services are not covered by private health insurance.  Government aid is often scarce as well.  Also in Canada medical benefits for autism-related services are quite limited.  So when it comes to autism, this is a fee for service setting for the most part.

And what does this world look like?

1. Services are not especially cheap nor do they seem to be falling in price. 

2. Market participants are not well informed about what works.  Many parents of autistic children pursue hopeless treatments or unvalidated or even refuted theories.  Some of the treatments, such as chelation, are harmful in many cases and yield no benefits.

3. There is lots of innovation — in terms of advertised methods of treatment — but it is unclear, to say the least, what percentage of these innovations succeeds.  Very often it is parents "buying hope."

The point is not that insurance coverage would solve all these problems.  Third party coverage would slant the relative prices toward more mainstream treatments and away from the fads; how good or bad this would be depends on your point of view as to what brings better (worse) outcomes. 

Overall I don't view the autism example as a good selling point for the view that third party payment is the basic problem behind U.S. health care.  Nor do I see critics of third party payment citing autism services as a model example for their ideas.  (By the way, it is an open question how much autism should be an education issue and how much it should be a health care issue; de facto it is often a health care issue but this should not be taken for granted.)

Another lesson is this: the more emotional the issue, the less effective any health care system will be.  Policy discussions of "health care" often require more disaggregation.

Addendum: There is, by the way, a movement afoot to require that private insurance cover some autism-related services, such as ABA.  Given the costs of the treatment, and the unclear link between treatment and results, I would be curious to hear if "universal coverage" advocates would include this in their ideal public policy.  I would say they should admit that any notion of "universal coverage" is value-laden rather than purely descriptive.

How much should we worry about pandemics?

Brett Stephens isn't that worried:

In other words, despite all the processes of globalization that are
said to be leading us toward nature's great comeuppance, trend lines
indicate we are better equipped than ever to minimize the effects of a
pandemic.

Why? Because wealthier people tend to be healthier people, and
because wealthier societies have more to invest in medicine and
research, and because a higher standard of living tends to correlate
with more personal space. Also, because globalization means information
sharing across boundaries, and rapid adoption of best practices, and
greater transparency.

I say think probabilistically, a concept not prominent in his piece.  A one percent chance of one hundred million deaths is, in expected value terms, one million deaths and that is a big deal.  Probably the United States is less vulnerable than it was in 1918, but how many people would die in China, India and many other locales?  How much disruption to trade, travel, and the world economy would take place?  Even in the United States, our public health systems would break down quickly and render many modern medical advances useless (e.g., when would the Tamiflu run out?).  Having lots of living space is wonderful, but it pays off only if people stay home from work and that means dealing with massive absenteeism.  Not pretty.  Better safe than sorry.

Oddly Stephens never mentions that we are living in a raging epidemic now, namely AIDS, which has run for several decades.  For all the virtues of retrovirals, the modern world was quite slow in combating or even checking the disease and still many people, including U.S. citizens, engage in very risky behavior.  Our collective response was not terribly impressive.  Greater wealth does help, but greater wealth also means we should spend more to limit the problem.

Going back to the flu, I was struck by this passage:

In each of the four major pandemics since 1889, a spring wave of
relatively mild illness was followed by a second wave, a few months
later, of a much more virulent disease. This was true in 1889, 1957,
1968 and in the catastrophic flu outbreak of 1918, which sickened an
estimated third of the world's population and killed, conservatively,
50 million people.

I should add that we're not yet "out of the woods" on this wave, since there is a reasonable probability of sustained human-to-human transmission starting in at least one country.  And a virus which lives in many people is a virus which can mutate.

The main thing we should do — invest in public health infrastructure — is in any case a good idea with many possible payoffs, whether a pandemic comes or not.  It is a better investment of money than pursuing the ideal of universal health insurance coverage.  I might add that one of the better arguments for universal coverage is simply that it could lead to better monitoring of some public health issues.

Austrian economics jokes bleg

The Austrians need some good jokes if they're ever going to be taken seriously.

So writes to me one loyal MR reader.  He has a specific and indeed noble reason for wanting these jokes (someday I'll be able to explain but the best jokes will in fact be used publicly).  Although I've been connected to Austrian ideas for a long time, I don't know the jokes.  Nor does Google seem to yield much.

But surely MR readers can deliver in a pinch (Raivo?  Are you there?).  And note that simply listing the name of an Austrian economist you don't like isn't actually that funny.  It should have a punchline something like "I cut off their noses" or "I'm sick and tired of all this bickering about oatmeal," etc.  Puns and limericks are OK too.

I thank you all in advance.

Flu fact of the day

Here is Revere at Effect Measure:

We currently have fewer staffed hospital beds per capita than we did in the last pandemic, 1968 (the "Hong Kong flu").

He offers further wise words and note that this hypothetical projection is one of the better case, mutation-free scenarios:

Now take a bad flu season and double it. To each individual it's the
same disease but now everybody is getting it at once, in every
community and all over the world. In terms of virulence, it's a mild
pandemic. It's not a lethal virus like 1918. But in terms of social
disruption it could be very bad. If twice as many people get sick, the
number of deaths could be 80,000 in the US instead of 40,000. Gurneys
would line the hallways of hospitals and clinics. And absenteeism
amongst health care workers would compound the problem. Infrastructure
would probably survive intact. No need to have your own water supply or
electricity generator. But it would be a very rough ride.

All of this could plausibly happen from this virus without it causing anything more than the usual case of influenza.

The brighter side, sort of

Why is the death rate higher in Mexico?  Maybe it isn't:

Of the 110 million people in Mexico, 1,600 cases have been reported, with about 100 deaths–suggesting a mortality rate of 6 percent. This is almost certainly bad math, as the total case count almost certainly ignores thousands or tens of thousands of other cases that have taken milder courses like those in the United States. It's perfectly conceivable Mexico has actually had 10,000 or 100,000 cases–or even 1 million cases. If so, then the kill rate would be not 6 percent but 0.1 percent (given 10,000 cases) or 0.01 percent (given 100,000 cases). If it's 1 million cases (quite possible if this thing really spreads easily) then the mortality rate is just 1 in 10,000. Meanwhile, because the United States is on high alert–and can take special note of people with recent travel to Mexico–it is probably picking up a fairly high percentage of its cases, including milder instances that would have gone unnoticed in Mexico a few weeks ago.

…For one thing, it's also possible that Mexico is missing, undercounting, or badly underreporting deaths. But if this virus really does spread rapidly, its kill rate is fairly low; and if its kill rate is anywhere near as high as the 100-out-of-1,600 suggests, then it doesn't spread very easily.

Here is the full article.

Addendum: Have the first U.S. deaths arrived?

Sentences to ponder

Cities that instituted quarantine, school closings, bans on public
gatherings and other such procedures early in the epidemic had peak
death rates 30 percent to 50 percent lower than those that did not.

That is from a study of the pandemic of 1918-1919 and here is more, from 2007.  The best place to follow what is going on in Mexico — where such restrictions are now common — is ElUniversal.  People in Mexico are dying of the flu every day; what is the chance that only the benign version of the virus crosses the border?