Category Archives: Economics of Health Care

Will it always be March of 2020?

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Richard Hanania writes,

the burden of COVID-19 falls almost completely on the unvaccinated. The threat to children from the disease is almost 0 regardless of vaccination status, and even closer to literally 0 for those who are vaccinated. It’s also basically 0 for vaccinated adults too. According to an analysis by the AP, in May over 99% of COVID deaths were among the unvaccinated. I’m highly skeptical of long COVID as a serious enough problem to change the cost-benefit analysis, as most of the research on the topic I’ve seen has been extremely flawed, and we should be very doubtful that vaccines that stop almost all hospitalization and death can leave you with a substantial risk of getting a chronic condition that has not been conclusively established as a statistically meaningful problem yet.

I’m all for telling the CDC and public healthocrats where they can stick it. But I personally am in the frame of mind that I was in back in March of 2020. In particular, I am not doing in-person dancing for a while. We have a son-in-law who takes immuno-suppressive drugs and three grandchildren who are too young to be vaccinated. I would like to be able to get together with them with a clear conscience. Note that there was one case of a 5-year old who reportedly died of COVID, with the Washington Post eagerly reporting that this was in Trump country.

Zvi Mowshowitz, the Fantasy Intellectual Teams star who I trust much more than any public healthocrat, writes,

Deaths are going up slower than cases, but faster than one would have hoped.

I think that’s right. On a brighter note, he writes,

The big mystery remains why Delta suddenly peaked and turned around, first in India, and now in the UK and the Netherlands. These turnarounds are excellent news, and I presume we will see a similar turnaround at a similar point, but what’s causing them to happen so quickly? I don’t know.

I would be happy to see a rapid turnaround, but right now things are going in the wrong direction.

Further on, Zvi writes,

The other news here is that Pfizer plans to be calling for booster shots. It seems that a three dose regimen is much more effective than a two dose regimen, now that we’ve had the ability to test such things, and some places are moving to implement this already. The data here suggests that the third dose will bring things back to at least the early stage 96% effectiveness and plausibly even higher. If I am offered a third dose, I will happily accept it.

There is the concern that giving people third doses while others have not had the opportunity even for first doses is not ethical. I respect that perspective, but do not share it, and will leave it at that.

I say fire the head of the CDC and put Zvi in charge, and will leave it at that.

Noah Smith on various topics

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Talking with Eric Torenberg, Noah Smith says “The Fed will not stick to any rules that it officially adopts.” (minute 32) “The Fed will always exercise discretion.”

If I had more time, I would annotate this podcast. Instead, I will make a few other comments.

1. He claims that we don’t restrict supply in health care, and instead the problem is that prices are too high. If the government took over health insurance and drove down prices, all would be well. This is wrong, for reasons I won’t get into here. The analysis I offered in Crisis of Abundance still holds.

2. He claims that the government is not responsible for supply restrictions in higher ed. If Harvard wanted to expand one hundred-fold, it could. But that would dilute its brand. That seems right. But I would say that policy acts as if getting everyone a low-end college degree is like getting everyone into Harvard.

3. He relates productivity growth to energy technology. And a lot of the productivity boom of the 1930s was due to widespread use of oil instead of coal. To me, this seems like possible support for a PSST interpretation of the Great Depression. A lot of jobs, particularly in the agriculture sector, got destroyed by machine substitution (gasoline-powered tractors, for example). And it took a long time to reconfigure the economy to get to full employment.

4. Along these lines, he thinks that improved battery technology is revolutionary.

5. He thinks that MMTers are “meme warriors” and they are correct that the fiscal budget constraint is inflation. That is, the government can spend as much as it wants until its paper causes inflation. This is reasonable. The question is how much we want government to spend and how much we should worry about inflation. On those issues, I differ quite a bit from MMTers.

Economics of health care vs. culture of moral dyad

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My latest essay is on health care policy. My views have not changed since my book was published fifteen years ago. But my understanding of why my views are not going to be accepted has increased over time.

While many other governments limit the availability of the expensive tests and treatments that are routine here, I would prefer instead to see individuals face more of the costs of these procedures and make their own choices to forego them. But this idea runs afoul of the moral dyad that most people use when thinking about health care.

Where to spend health dollars

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Donald Berwick writes,

Decades of research on the true causes of ill health, a long series of pedigreed reports, and voices of public health advocacy have not changed this underinvestment in actual human well-being. Two possible sources of funds seem logically possible: either (a) raise taxes to allow governments to improve social determinants, or (b) shift some substantial fraction of health expenditures from an overbuilt, high-priced, wasteful, and frankly confiscatory system of hospitals and specialty care toward addressing social determinants instead. Either is logically possible, but neither is politically possible, at least not so far.

Pointer from Timothy Taylor.

I agree that medical procedures are less important for longevity than other factors. If we spent money effectively on other factors, then that would be more cost-effective at the margin than spending more on medical services.

But the essay overall is a brief for the Progressive agenda, which I doubt will move the longevity needle in the right direction.

All hail the null hypothesis

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From a couple of years ago, by Jon Baron of the Arnold Foundation (no relation).

Business: Of 13,000 RCTs conducted by Google and Microsoft to evaluate new products or strategies in recent years, 80 to 90 percent have reportedly found no significant effects.[iv]

Medicine: Reviews in different fields of medicine have found that 50 to 80 percent of positive results in initial clinical studies are overturned in subsequent, more definitive RCTs.[v] Thus, even in cases where initial studies—such as comparison-group designs or small RCTs—show promise, the findings usually do not hold up in more rigorous testing.

Education: Of the 90 educational interventions evaluated in RCTs commissioned by the Institute of Education Sciences and reporting findings between 2002 and 2013, close to 90 percent were found to produce weak or no positive effects.[vi]

Employment/training: In Department of Labor-commissioned RCTs that reported findings between 1992 and 2013, about 75 percent of tested interventions were found to have found weak or no positive effects.[vii]

Pointer from Michael Goldstein.

Health care rationing

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My brother-in-law is suffering in pain 24-7 from an injury that could be treated with surgery, but that is now forbidden. I think it is pretty likely that other people are suffering and even dying because they are denied medical care. This is because health care is being rationed, reserved for Covid patients who

a) are not showing up in hospitals in the expected numbers; and
b) might not be treatable if they did show up

I am surprised there is not more outrage about this.

Amish health care spending

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Scott Alexander writes,

Amish people don’t have health insurance, and pay much less than you do for health care. But their health is fine. What can we learn?

He explores various hypotheses, but he does not address my main hypothesis.

In 2006 when I wrote Crisis of Abundance, I asked why health care cost more in 2006 than in 1970. I determined that much of the answer was what I called “premium medicine,” which uses expensive equipment and medical specialists. You can think of getting an MRI when you hurt your back or getting a routine coloscopy screening as recommended at age 65.

Premium medicine contributes a lot to health care spending but relatively little to aggregate health outcomes. Those outcomes are affected more by lifestyle considerations. If in a society you increase substance abuse at the same time as you increase overall use of premium medicine, the net impact on longevity will not be particularly positive.

The Amish philosophy on technology in general is to be late adopters. That is, they do adopt new inventions, but the process is very gradual. My guess is that they are a lot less inclined to use premium medicine.

In my book, I pointed out that in 2006 we could easily afford health insurance that covered only those procedures that were prevalent in 1970. Perhaps the Amish are following that approach.

Cash or health coverage?

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[Note: askblog had an existence prior to the virus crisis. I still schedule occasional posts like this one.]
David A. Hyman and Charles Silver write,

Since Medicaid and Medicare were enacted in the mid-1960s, the United States has spent trillions paying for defined benefits on terms dictated by the health care sector. The results have been decidedly unimpressive. Our proposal to convert Medicaid and Medicare into defined-contribution/cash-transfer programs modeled on Social Security recognizes that people generally know how to help themselves better than health care providers do. We should be giving money to Medicaid and Medicare beneficiaries and let them decide how to spend it.

While we are at it, we could take away the tax advantage of employer-provided health insurance, so that workers receive larger paychecks instead.

The challenges with doing this sort of thing, which the authors recognize, include:

1. Some people have very expensive medical conditions, so that they benefit more from health coverage than from an average cash benefit.

2. There is a major public choice problem, in that health care providers benefit from the current system.

These are the problems that present themselves when one tries to substitute a UBI or existing transfer programs. For the first problem, I recommend turning the problem of special circumstances over to local governments and charities that are closer to the people in need. For the second problem, I do not have a brilliant solution.

General update

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1. My proposal for credit lines is looking better, because the existing approaches are starting out fouled up in red tape and confusion. See the WSJ on mortgage relief. See The American Banker on paycheck protection loans (pointer from Tyler Cowen).

2. Last night, it seemed as though the Administration was considering a masks and scarves approach. But this morning. . .crickets. I guess the opposition is still strong. [UPDATE: this evening, a recommendation to wear face covering when we go out, e.g. to grocery stores.]

3. There are stories that Asian countries that have had success with their initial approaches, including masks, are now worried that they need more social distancing, because virus spread is starting to accelerate. Pointer from a reader.

4. Maybe we are practicing Hansonian medicine* in treating the virus. Tyler Cowen passes along a disturbing letter.

The letter passes along the claim that of patients put on ventilators, 80 percent or more never recover. My guess is that doctors know the characteristics of patients with an extremely low probability of recovery. Putting such patients on ventilators and caring for those patients puts health care workers at risk. At the margin, we may be costing lives.

The letter points out that if other hospital treatments are not working well, then the whole issue of keeping the hospital system from becoming overwhelmed is moot. I suspect that we get some trial-and-error learning value from hospital treatment. Maybe that trial-and-error learning value can produce a triage approach that uses hospital resources effectively. One way to achieve the goal of getting medical resources above “the curve” is to get better at figuring out who doesn’t need treatment and who cannot be treated successfully, so that resources only are used on treatment-worthy patients.

*For those of you new to this blog, Hansonian medicine refers to a meta-analysis by Robin Hanson that finds that when two populations with different intensity of use of medical care are compared, average outcomes do not differ. Hanson’s interpretation (which I am not totally on board with) is that in a population the cases where medical intervention causes harm cancel out the cases where medical intervention helps.