Map of life expectancy at birth from Global Education Project.

Thursday, December 31, 2009

I got nothin' . . .

But Tony Judt has something, looking back and looking ahead (through a glass darkly). Warning: It's a fairly long essay. Here's my money quote:

We are entering, I believe, a new age of insecurity. The last such era, memorably analyzed by Keynes in The Economic Consequences of the Peace (1919), followed decades of prosperity and progress and a dramatic increase in the internationalization of life: "globalization" in all but name. As Keynes describes it, the commercial economy had spread around the world. Trade and communication were accelerating at an unprecedented rate. Before 1914, it was widely asserted that the logic of peaceful economic exchange would triumph over national self-interest. No one expected all this to come to an abrupt end. But it did.

We too have lived through an era of stability, certainty, and the illusion of indefinite economic improvement. But all that is now behind us. For the foreseeable future we shall be as economically insecure as we are culturally uncertain. We are assuredly less confident of our collective purposes, our environmental well-being, or our personal safety than at any time since World War II. We have no idea what sort of world our children will inherit, but we can no longer delude ourselves into supposing that it must resemble our own in reassuring ways.

We must revisit the ways in which our grandparents' generation responded to comparable challenges and threats. Social democracy in Europe, the New Deal, and the Great Society here in the US were explicit responses to the insecurities and inequities of the age. Few in the West are old enough to know just what it means to watch our world collapse. We find it hard to conceive of a complete breakdown of liberal institutions, an utter disintegration of the democratic consensus. But it was just such a breakdown that elicited the Keynes–Hayek debate and from which the Keynesian consensus and the social democratic compromise were born: the consensus and the compromise in which we grew up and whose appeal has been obscured by its very success.

If social democracy has a future, it will be as a social democracy of fear. Rather than seeking to restore a language of optimistic progress, we should begin by reacquainting ourselves with the recent past. The first task of radical dissenters today is to remind their audience of the achievements of the twentieth century, along with the likely consequences of our heedless rush to dismantle them.

This is unsettling, but it is not despairing. Judt wants us to recommit ourselves to the urgency of building a human society that works and can endure. How's that for a new year's resolution?

The R Word

So that brings us to the dreaded “R” word. If those other countries aren’t making people pay out of pocket, and everybody has good comprehensive insurance, then why are they spending less? Oh no, they must be rationing health care! Death panels! Nazi euthanasia! Put grandma on an ice floe!

Let’s get a grip. In the first place, we already ration health care. We ration everything. You can only get as much stuff as you have money to pay for or the skill and will to steal. According to one recent calculation there are 45,000 excess deaths in the U.S. every year because people don’t have adequate health insurance. I can’t assess whether that number is accurate but surely the number is not zero.

So Canada and those European countries must be rationing health care some other way. How do they do it? To begin with, here in the U.S., doctors are paid for doing stuff, so we get a lot of procedures and high tech imaging. But a whole lot of it doesn’t do any good at all. Elsewhere reimbursement policy doesn’t favor overutilization, but rather sensible utilization. For example, physicians in the UK are all on salary and hospitals are on an annual budget.

Here’s one example – doctors routinely send middle aged men with no symptoms of heart disease for what are called myocardial perfusion tests, where they inject radioactive die into your veins, have you exercise on a treadmill, and then use the radioactivity to create an image of the blood flow to the heart. However, there is simply no evidence that this has any value whatsoever. It does, however, expose people to radiation. There is no safe level of radiation. There is a risk of cancer associated with this radiation dose, however small it may be for the individual.

So here is the estimable Norton Hadler’s first principle of rationing:

If some medical or surgical act does not advantage me or my family or my patients, it shouldn't be done. I don't care how well it is done, how cheaply it is done, how efficiently it is done; if it doesn't work, don't do it.

Okay, that ought to be easy enough for people to accept. Next I'll get to the hard stuff.

Wednesday, December 30, 2009

Moral Hazard and Co-pays

Now, on with the intro course.

I have mentioned Moral Hazard as the fear that people will buy insurance only after they get sick. Now let me introduce another way in which the term is used regarding health insurance. This is the idea that people will over-consume health care because somebody else is paying for it. Hey, it’s free, I’ll have the champagne! It is often argued that the way to contain medical costs is to make people pay more out of pocket.

Well, before we even think about the logic, that argument fails on the rather convincing criterion of being inconsistent with observable reality. As I have already indicated, Americans already pay more out of pocket for health care than people anywhere in the world, but nevertheless we spend more in total. In the real world, not the imagination of the ideologue, raising out of pocket costs absolutely does not result in lower medical expenditures. Insisting that it does is what’s called magical thinking: It must be true because I believe it. But it isn’t true. How can this be? What about economics 101, price elasticity of demand, and all that?

Well it ought to be obvious, I think. Just because my insurance would pay for me to have a coronary artery bypass graft, a PET scan, have three vertebrae fused, or a bowel resection doesn’t mean I’m going to run out and get them all. On the other hand, that really expensive stuff that drives much of medical spending is largely impervious to out-of-pocket cost. If your doctor says you need it, you’ll do it even if you have to take out a second mortgage. Yet less expensive procedures, which aren’t accompanied by desperation but might actually be cost effective or even cost saving, are price elastic, such as taking medication for high blood pressure.

My previous insurer, which happened to be Blue Cross/Blue Shield of Massachusetts, charges $250 for a colonoscopy in its standard plan. That's more than enough money, obviously, to discourage a lot of people from getting one. Every foregone colonoscopy saves them quite a bit of money, since the provider is probably charging them close to a grand. It means they can offer a lower premium compared to a hypothetical competitor that charged a more affordable co-pay, or none at all.

Now, it is difficult to imagine that anyone would go out of his or her way to get a colonoscopy that wasn't medically indicated just because it was cheap. We would only consider undergoing such an onerous experience because our doctor told us it was in our own best interest. The $250 can only make us refuse.

Some readers may dispute this, but it is generally accepted by the people who study these matters that screening colonoscopy, starting at age 50 and then at intervals depending on what is found the first time, is highly cost-effective from a social standpoint. It can actually prevent cancer from occurring in the first place, because the doctor removes pre-cancerous lesions during the procedure. That puts it way ahead of a mammogram. And it can detect cancers at an early stage when they are highly curable, whereas colon cancer detected after it becomes symptomatic is very bad news indeed.

So why doesn't the insurance company want me to have a colonoscopy? Because they figure, by the time I get cancer, I won't be their problem any more. I'll probably be on Medicare, actually, but even if I'm not there is a very good chance I will have changed jobs and be on a different private plan. (As indeed was the case.) So what is cost effective from the point of view of society as a whole is that there be no cost barrier to getting a colonoscopy; when it's indicated, people should do it, because the cost is well worth it and indeed, it might even save money in the long run. But that is not cost effective from the point of view of the insurance company, which doesn't want to pay for my colonoscopy on the pretty good bet that ultimately, they won't have to pay for my cancer.

Bottom line: Co-pays and deductibles do discourage people from using services or taking medications, but don't cause them to make those choices wisely, and can even result in higher costs in the long run. The way to trim waste is to manipulate provider incentives, not consumer incentives. Again, remember, what they taught you in Economics 101 was completely wrong.

Time out for a bit of Shmoozing

Thanks for the discussion. Let me exercise my privilege of the host and sum up my own thoughts in response here.

I'm definitely in favor of encouraging healthful behaviors and encouraging people to take care of their own health. For the most part, however, I don't think charging people more for health insurance if they screw up is the best way to do it. The case of obesity is particularly salient since it's a growing, devastating epidemic that threatens the gains we have made in population health. But it's ineffective, as well as misdirected, in my view, to think of it as a failure of personal responsibility. It's a disease that results from the interaction of a genetic endowment shaped on the African savanna, with an environment flooded with low nutritional quality, high calorie density foods and sedentary jobs. The vast majority of obese people desperately want to lose weight, and many of them try repeatedly, and repeatedly fail. Raising their insurance premiums isn't going to solve the problem.

Furthermore, with few exceptions it just isn't possible to determine each individual's behavioral risk profile. Maybe you maintain a perfect body weight, don't smoke, and don't have any obvious risk behaviors the insurance company can use to raise your premiums, but it turns out you drag race on the state highway at 3:00 am every Saturday morning, or have unsafe sex with strangers 3 times a week. It's just an impractical strategy.

It is true that young people today may be at higher risk for poor health than their parents because of prevalent obesity, sedentarism, a drug culture that is in some ways more dangerous than the hippie days, really crappy diets, etc. But the fact is this isn't going to result in poor health until later in life. Their medical expenses right now are still low. To me, this just strengthens the argument that age rating is contrary to generational justice. You may resent paying more than you are likely to cost today, but you will get older, or at least you hope to, and then you'll be holding the other end of the stick. And those folks who are older today are your parents and grandparents and aunts and uncles and teachers, and hey -- you owe them something. You'll expect some gratitude when you get older as well.

On the other hand, if you're just starting out on your career or taking time to do good works as a community organizer or whatever it may be, and don't have much money, fine -- I have always been a very strong advocate for progressive financing. You should pay according to your resources, which would be the case in a tax-funded system, or a system with subsidies such as Congress is working on. (Don't know if they'll be adequate, but the principle is there.) But if you're a hot shot investment banker in your 20s, I say you should pay and pay and pay.

Tuesday, December 29, 2009

One more reason why it's tough to be alone

Okay, so why hasn't that plane crashed? Why does health insurance still exist?

The main reason is a curious structural fact about how most of us get private health insurance here in the U.S. Our employers negotiate with the insurance companies and sign a contract to cover their workforce, or as much of it as they want to cover. That means we come pre-packaged into groups, called risk pools. Obviously employers want to attract and retain employees based on their value to the company and don’t want to get involved in medical underwriting if they can help it. Of course they have to balance that against cost so they do generally tolerate things like no coverage for pre-existing conditions in their contracts, and they might endorse a break for non-smokers, that sort of thing. But generally everybody gets the same benefits, or chooses from the same menu, and pays the same share of the premiums.

There are some perverse effects, however. A company’s premium cost each year may be adjusted by its recent history of medical losses, which is called experience rating. That could lead a company to disfavor older employees, or try to find ways to get rid of people with chronic conditions such as HIV, or avoid hiring them. It’s illegal, but that doesn’t mean it can’t happen.

However, this means that if you’re trying to buy insurance as an individual, without being part of a group, you have a very tough time. You will get the full Monty medical underwriting. For most people, it’s pretty much impossible.

Second, there is regulation. States can constrain medical underwriting and require minimum benefit packages, by law. Note another common conservative proposal, to allow companies to sell policies across state lines. This is presented as a way of increasing competition and benefiting consumers, but we already know what happens when you allow unregulated competition. In other words, they’re lying to you. So regulation is actually good for the insurance business. If your competitors face the same regulations, you can still make your profit. But of course they’ll always try to find ways to cheat, and they do.

So what’s the first step toward fixing this mess? Get everybody into the same risk pool. Now insurance can do what it’s supposed to do. If you require community rating -- which means everybody in the state or region or however you want to define it pays the same price -- you eliminate all that nonsense about pre-existing conditions, risk factors and recissions. Now, if insurance companies want to compete on price, they have to find other ways of holding their costs down. That could be good or bad, but it won’t leave whole groups of people out in the cold. For it to work, however, you also need to mandate at least a minimum set of benefits and severely limit caps and co-pays; otherwise they could offer a very low-cost but fairly useless package that would appeal only to young and healthy people, and you wouldn’t have everybody in the same pool after all.

Now, someone could argue that this is unjust because if young and healthy people want insurance, they will have to pay more for it than they would otherwise – they’re subsidizing the older generation. You might come up with a defensible objection to eliminating age rating, but I don’t think the justice argument works – we’re all going to be older some day, or we hope we will anyway, and then we can collect on the up-side of the proposition.

But, there’s still a problem. What if those young and healthy people decide not to buy insurance at all, until something goes wrong and they actually need it? This is called Moral Hazard, although I’m not sure that it really has anything to do with morality. Now the whole beautiful picture is ruined again. You aren’t getting those lower cost customers into the pool to help subsidize the higher cost people, and when they're hit by a bus we're still going to have to pay.

So if you’re going to enforce community rating, you need to require people to buy insurance. Another way to accomplish the same thing is to tax people and then give them insurance, like civilized countries do. There really isn’t any important practical difference but for some reason, in the U.S., it’s harder to pass something called a tax than it is to pass something called a mandate.

Either way, conservatives tend not to like it because it appears to constrain liberty by requiring people to use their money in a certain way. Now your personal moral calculus might happen to balance out differently, and you might just say that it’s worth the impairment of liberty for the sake of justice over the life course and the subsidy to old and sick people who need it more. But if that doesn’t persuade, there are strong counterarguments that liberty is not really impaired by such a requirement because of the externalities we discussed earlier – all of society is made more prosperous and happy, enhancing liberty in general – and also because of the consequences of a principle called the Rule of Rescue, which I will get to shortly.

Monday, December 28, 2009

The (very) visible hand

Okay, back on track. Let's say you run an insurance company. Most people today are covered by for-profit insurance companies. Most of the Blue Cross/Blue Shield companies have been converted to for-profits. The largest health insurance company in the U.S., WellPoint, owns the Blue Cross/Blue Shield brand in 16 states. It’s a publicly traded corporation and they put the stock price on the front page of their web site, right next to a tab leading to investor info. So obviously your mission is to make money for the owners and executives, just like any other corporation.

Your revenue is premiums, and you have expenses for administration, marketing, and paying for health care, which you call “medical losses.” (Really.) So you want to keep those medical losses as low as possible. Marketing costs money but if it can more than pay for itself in additional premiums from people who will produce low medical losses, you’ll spend that money. A good part of the expense of administration is devoted to reducing claims, as I’ll explain momentarily, so once again, you don’t mind spending that money if it more than pays for itself. I you have competition (and you might not) you'll compete on price to the extent that any customers you can draw from the competition will still cost you less than the premiums they pay. You might think (as Republicans claim) that the last point means that competition among insurance companies is good for consumers. But let’s see how that actually works.

Let’s try a thought experiment. Imagine the little town of Wagawaga out there on the prairie, where happy corn-fed people bake pies all day. Everybody has health insurance, that pays for what they need, and everybody pays the same price. There’s even competition. Let’s call the companies, oh, I don’t know, BluePoint and WellCross.

The executive at BluePoint has a brilliant idea: raise the price for people over 50. Sure, BluePoint will lose business, but it all happens to be customers who tend to cost more in medical losses. Driving those people away allows BluePoint to lower the price for people under 50, and still increase its profits, so WellCross suddenly has a big problem: They have more of the expensive customers and fewer of the inexpensive ones. Their medical losses go way up in relation to their revenues, so they are forced to adopt the same pricing policy as BluePoint and while we’re at it, let’s get rid of some other higher cost customers. Maybe we can charge more to people with high cholesterol, or a family history of cancer . . . So Bluepoint retaliates by dumping people whose medical losses exceed a certain amount in the pat year. And so it goes, back and forth until . . .

This is called the Death Spiral. Every person who tries to buy insurance gets a comprehensive assessment of exactly how much their health care is likely to cost in the coming year, and they are charged exactly that much plus enough for profit, administration, and marketing. That might seem fair to somebody, somewhere, but the fact is, under those circumstances, there is essentially no reason for anybody to buy insurance – certainly not anybody who really needs it, because they already have a chronic illness or are at high risk. They know insurance will just cost them more than not having any.

So unregulated competition among insurance companies doesn’t produce consumer choice, lower costs, or anything else that’s good. Sorry Milton Friedman. Competition among insurance companies is bad. It harms consumers. Medical underwriting means charging people according to indicators of risk, whether it be age, obesity, smoking, blood lipids, etc.; denying coverage for conditions you already have, an idea which can be stretched as far as you like; and canceling insurance when people actually get sick. In other words, you didn’t have insurance after all, you just paid the company money.

They can limit claims in other ways. I’ll talk about the issue of co-pays a bit later, for now I’ll just say that they are generally justified as making consumers aware of the costs of medical services and turning us into careful shoppers. We’ll see about that.

Well, the death spiral hasn’t really happened. All of that nasty stuff does go on, it's a bumpy ride, and lots of people have been thrown out of the plane, but it hasn't crashed into the ground. The insurance industry still exists and it has customers. I'll explain why that is next time.

Wednesday, December 23, 2009

Deck us all with Boston Charlie

The next post in the current series is a pretty important one, so I'm going to hold off until people are likely to have time for such serious endeavors. Meanwhile, I expect to be disconnected from Your Intertubes for a couple of days, so look for me again on Sunday or thereabouts. (And whether or not I post here on Sundays, you can check out my regular Sunday post on Iraq Today. No, the war is not over and we haven't won.)

And, this is a good time for lurkers to come out! I know you're reading, so go ahead and leave a comment and let us know what you think. Even if you think I'm full of crap. I've been doing this for a few years now and let me tell you, it's a lot more fulfilling when people react.

For those of you too young to know about Pogo, you were born too late. It was Pogo who first said, "We have met the enemy and he is us."

And, he gave us the world's most beloved Christmas Carol.

Deck us all with Boston Charlie,
Walla Walla, Wash., an' Kalamazoo!
Nora's freezin' on the trolley,
Swaller dollar cauliflower alley-garoo!

Don't we know archaic barrel,
Lullaby Lilla boy, Louisville Lou?
Trolley Molly don't love Harold,
Boola boola Pensacoola hullabaloo!

Bark us all bow-wows of folly,
Polly wolly cracker n' too-da-loo!
Hunky Dory's pop is lolly gaggin' on the wagon,
Willy, folly go through!

Donkey Bonny brays a carol,
Antelope Cantaloup, 'lope with you!
Chollie's collie barks at Barrow,
Harum scarum five alarum bung-a-loo!

Merry Crispness!

It makes me sick

Although,as I said yesterday, the social environment is a very powerful determinant of health, in the U.S. we tend to think more about the physical environment. I suspect that's because it doesn't force us to ask questions that are quite as difficult. Nevertheless, the physical environment is important. Since we’ve cleaned up some of the worst offenses of the industrial revolution, it’s not as big an issue in the U.S. as it once was, but in much of the world, malnutrition and contaminated water slaughter children by the millions every year. Here, motor vehicle crashes and other unintentional injuries still take a dreadful toll, and you’d be surprised how much death and disease results from exposure to motor vehicle exhaust. (Check out the CAFEH study for some interesting info.)

Obviously, the physical environment is shaped strongly by the social environment and it's often hard to tell them apart. Are people in hazardous occupations, or harmful food environments where junk food is cheap and fresh produce unavailable, facing risks from the social or physical environment?

Now let's turn to personal characteristics and behaviors. Of course, we have our genetic endowment, which predisposes us to particular health problems as it interacts with our environment. Worst of all, each and every one of us is born with a progressive, incurable, ultimately fatal disease which will eventually cause us to lose lean muscle mass, lose skin tone, suffer declining immunological function, declining cognitive function, slower healing and recovery from injuries, and yes, we’re all going to die.

So what about those areas of personal responsibility? Libertarians will tell you that a lot of what drives our health status is individual choice. We should be left alone to make those choices, and to suffer or enjoy the consequences. I’m not going to get into the question here of whether free will is an illusion, but we are obviously not entirely autonomous. To a considerable extent, we do what is considered normal or respectable in our social milieu. We also don’t necessarily know exactly what’s good for us. And corporations, in order to extract money from us, will often deceive us about that. Tobacco companies spent literally billions over decades to persuade us that smoking wasn’t really dangerous, and kids today are subjected to thousands of commercials every year for junk food.

And, people get addicted. It’s common to blame addicts for their situation but that is a false view of human behavior. Our behaviors are driven by specific pathways in the brain that get hijacked by addiction. It’s very difficult to overcome. And finally, do we really want to make people bear the burden all their lives of choices they made when they were young and foolish, as we all have been?

So is tobacco a feature of the social environment, the physical environment, or personal behavior? It's all three, of course.

Ultimately, our good or bad health is largely a matter of chance: where we happened to be born, into what circumstances, with what genes, into what society, every random thing that happens to us. It doesn't matter who you are or what kind of personal responsibility you believe in, something bad might just happen to you.

So that’s where insurance comes in. Libertarians will say, “Why should everybody have health insurance? We don’t have a third party to buy our groceries.” Truly, I’ve heard that said. Well, it’s because of the immense disparities in people’s need for health care. It could be a little, it could be a lot, it could be catastrophic. Furthermore, there is a gradient over the life course. Without insurance, most people who really needed a lot of health care couldn’t possibly afford it. And, as I said at the beginning, if we depend on people to buy it out of their pocket it will be underproduced – there will be all those negative effects for the whole society of people not getting care they need. Note that underproduction in this case refers not to the sheer quantity, which in our country is too much, not too little; but rather to the right stuff at the right time. This is a very important distinction.

So next time: How insurance markets work. And no, it is absolutely nothing like Joe Lieberman wants you to believe.

Tuesday, December 22, 2009

A highly efficient post . . .

. . . in two parts. First, let me clean up one more small point about the bogosity of economics as taught to freshmen and believed by pundits and politicians everywhere. This is the assertion that the "free market" allocates resources "efficiently." This statement is not even wrong. It is meaningless, even assuming (as economists are wont to do) that the "free market" actually exists or could exist.

The concept of efficiency only makes sense if you first specify what it is you are trying to achieve. If I stipulate that I want to build a 1,400 foot house with a full basement, two bathrooms, two bedrooms, with 2x6 framing, an 800 square foot sunroom, two woodstoves, passive solar design, etc., it then makes sense to talk about how to get it done in the least amount of time or for the least amount of money, or both assuming the goals are not incompatible.

If I want to claim that a market is efficient, I first have to simulate what results I want from it. If you believe that the market should deliver you a Mercedes Benz, or feed all the hungry kids in Africa, and those things aren't happening, then the market is not efficient, no matter what anybody else tries to tell you. End of discussion. There is absolutely no argument from the theory of the idealized market to any conclusion that its results must be proper, good, just, appropriate, moral, Christian, natural, or any other assertion about values. If you don't like the result, then you don't have to, and any claim about "efficiency" is utter balderdash.

Whoo. Now that I've cleared the air about that, let us move on to the determinants of health. (Don't worry, this is all part of one logical, coherent argument. Give me time.) Although these categories are somewhat arbitrary and in fact they are mutually interpenetrating, as we say, it is conventional to think about the determinants of health in three parts:

  • the social and economic environment,

  • the physical environment, and

  • the person’s individual characteristics and behaviors.

To keep this post to a conventionally blogistic length, I will deal only with the social environment today. Important components include people's income and social status -- which of course can vary by gender, ethnicity and caste as well as occupation and position in formal hierarchies; level of formal education; social supports from family, friends and community; the person's culture with its accompanying customs and traditions; exposure to interpersonal violence; and all that sort of thing.

One of the most interesting observations social scientists have made, and this is now pretty well established, is that the level of inequality in a society is an independent predictor of population health, regardless of the absolute level of wealth. In other words, a person with an income of 500 bars of gold-plated latinum per year will tend to be healthier and live longer, all other things being equal, in a society with low inequality, in which most people have an income not very different, than in a society in which most people get only 200 bars of latinum per year and a small number get 10 million. The latter society, by the way, is kind of like ours, which is one reason why we are less healthy than the Europeans and Canadians.

I will get on with the rest of it tomorrow. Meanwhile, stay efficient.

Monday, December 21, 2009

The World Turned Upside Down

Actually, the world is still right side up. It's the junk economics that permeates our political culture that is upside down.

The obvious question raised by yesterday's post is why those people in the lower spending regions aren't getting such great benefits from Medicare as the people in the higher spending regions. Obvious, but completely wrong. It turns out the people in the lower spending regions get better health care than the people in the high spending regions. According to Fisher, Goodman, Skinner and Bronner, with the Dartmouth Atlas of Health Care, in higher spending regions:

Technical quality

-- Adherence to evidence-based care guidelines worse.

Health outcomes

-- Mortality higher following acute myocardial infarction, hip fracture, and colorectal cancer diagnosis.

Physician perceptions of quality

-- More likely to report poor communication among physicians and inadequate continuity with patients.
-- Greater difficulty obtaining inpatient admissions or high-quality specialist referrals.

Patient experience

-- Worse access to care and greater waiting times. (“paradox of plenty”
-- No difference in patient-reported satisfaction with ambulatory care.
-- Worse inpatient experiences.

* High- and low-spending regions were defined as the U.S. hospital referral regions in the highest and lowest quintiles of per capita Medicare spending as in Fisher (2003).

Why do you have to wait longer where supply is more plentiful? Because utilization is even higher. Isn’t this the exact opposite of what your Economics 101 professor told you?

Why yes it is. Reality is not cooperating with that theory of the Free Market. And one of the key reasons is that it is suppliers, not consumers, who control demand in health care. Now, of course most physicians perceive themselves as acting in the best interest of their patients. However, they get paid for doing stuff. What is more, specialists get paid a whole lot more for irradiating you and slicing and dicing you than primary care docs do for listening to you and giving healthy advice. Therefore, we have more specialists than other countries and fewer primary care doctors, and we spend more on the zapping and cutting as a result. Doctors aren’t necessarily conscious of this but it’s just human nature. Surgeons think you need surgery, radiologists think what you really need is radiation, oncologists think you need chemotherapy. It’s unlikely that they’ll think you shouldn’t do anything, but often that’s the best course.

Now, conservatives and some physicians talk a lot about how fear of malpractice suits drives overutilization. I won't get into that in any depth right now because it would be a bit of a digression, but the problem has been greatly exaggerated. Total malpractice payouts per capita in 2001 were $16 in the U.S., $12 in the UK, and $10 in Australia. Not a huge difference, and maybe we just have more malpractice? Adding the cost of defending malpractice suits and insurance underwriting expenses, malpractice payments are less than 5% of health care spending in the U.S.

The conventional wisdom is that malpractice premiums have steadily risen and now constitute a crisis for medical practice. American Medical Association (AMA) surveys of self-employed physicians from 1970 to 2000 indicate that premiums were lower in 2000 than in 1986. There is a commonly accepted range of estimates, that from 44,000 to 98,000 Americans die every year from avoidable errors made in hospitals. The number who are injured, including many serious injuries, is obviously much higher. The vast majority of these incidents do not result in any malpractice claims at all. We have a problem in that the only method we have available for compensating people who are injured by medical errors is malpractice litigation. That's bad for both patients and doctors, and it should be fixed, but it is absolutely not an important reason for our high and out of control health care spending.

But I digress. The last quite substantial influence on utilization is the local peer culture, basically. It’s just the way we do things here in Walla Walla Wash or Kalamazoo. In order to appreciate how this can be, you need to know that most of what physicians do is actually not based on clear evidence; it’s based on conventional wisdom, personal habits and proclivities, accepted practice. People are surprised to learn that we’ve actually needed a movement toward evidence based medicine in recent years, because it has not been the standard all along.

Next time: Efficiency, and the causes of health.

Sunday, December 20, 2009

Consumer Sovereignty

I haven't posted much on Stayin' Alive on weekends lately, but due to enforced hibernation you get a bonus post today. As I said last time, we don't buy medical services -- or have our insurance pay for them -- because we enjoy having our livers resected, we generally do it because we feel compelled.

Source: Jason M. Sutherland, Ph.D., Elliott S. Fisher, M.D., M.P.H., and Jonathan S. Skinner, Ph.D., Sept. 9 2009

So here are figures on Medicare spending, depending on people’s self-reported health status. Obviously, as you might expect, people who are in poor health use more services. Just as obviously, they don’t do so out of choice. They are not exercising their liberty, on the contrary, their liberty is constrained by their condition. (Figures on privately insured people would show a similar relationship, but they are not as readily available. Of course pregnancy and childbirth, as well as sickness, drive part of the cost for younger women, but that doesn't contradict the principle.) (You'll also note that Medicare spending is concentrated among people in the last year of life, but that doesn't mean it's all wasted. If we could perfectly predict who is about to die, we might be able to save some money on futile measures, but we generally can't predict very well. More on all that later.)

So yes, sick people cost more, but that's not the whole story.

This is another graph from the same article by Sutherland and colleagues. Here we see that Medicare spending varies enormously by region of the country. However, it is not the case that people in the higher spending regions tend to be sicker; or at least that's a very small part of the reason. Here's how they explain it:

[I]n regions where there are more hospital beds per capita, patients will be more likely to be admitted to the hospital—and Medicare will spend more on hospital care. In regions where there are more intensive care unit beds, more patients will be cared for in the ICU—and Medicare will spend more on ICU care.
And the more CT scanners are available, the more CT scans patients will receive. . . [I]n regions where there are relatively fewer medical resources, patients get less care—and Medicare spends less. So geography becomes destiny for Medicare patients.

So evidently, it is not consumer choice that is driving the demand for medical services. It's something else, something they never told you about in Economics 101. Something is very fishy about that relationship between price, supply and demand that the guy in the bow tie lectured about. In fact, it's even fishier than you may already be thinking. More on this anon.

Friday, December 18, 2009

Real World Economics

Listen up, ye Sons of Liberty!

Markets are not natural phenomena, or forces of nature. Markets are social constructions -- institutions created by humans, maintained by humans, shaped and controlled by humans.

All markets are regulated.

In complex societies, all markets depend on sustained, intrusive government intervention in order to function.

The only question is what form that intervention takes, and who benefits.

Markets are not separate from politics: their nature is controlled by the political institutions on which they depend for their existence.

The idealized market, even if it could exist, which it cannot, has no relationship to justice.

It is true of all markets that they do not resemble the fictitious entity presented in Economics 101, but this happens to be particularly easy to see in the case of health care. Let's start with that notion of externalities. Again, these are not the exception or a minor issue in the market for any good or service, but I don't want to get side tracked.

When a person receives health care, assuming it is effective, obviously that person benefits, and might be willing to pay something for it, assuming she or he had the money. But a whole lot of other benefits happen to other people as well. Here is just a partial accounting.

An obvious one is communicable disease control. If you cure or prevent an infection in one person, you can end up protecting a whole lot of people who have nothing to do with the medical encounter. Furthermore, the patient may be in the workforce, and his or her good health may contribute to the prosperity of all. Paid employment aside, people care for children and sick or disabled relatives, keep house, do volunteer work, help out friends – all sorts of good works that aren’t part of the money economy.

And, other people – family and friends -- might just care what happens to a sick person, and feel distress if they don’t get proper care, or can no longer be friends and companions. Furthermore some of us may feel bad about the sufferings of the unfortunate in general, and feel good about being part of a society that provides basic, compassionate care for everybody. And the last item I’m going to list is that it just isn’t very pleasant to have to step over sick and dying people all the time or pass mentally ill and disabled beggars on every corner. Actually if you live in the city you’ll find that you actually do a fair amount of that, right here in the Greatest Country on Earth.

So health care is in fact a mixed good (as are most goods, after all). If we had to depend on people to buy only as much of it as they could afford, or felt inclined to buy, it would be underproduced from a societal point of view – all of us would be losers.

Okay, let’s deal with a couple more assumptions. Obviously, as patients, we don’t have perfect information. That’s why we go to the doctor in the first place. The doctor has expertise we don’t have. Most of us have no way of knowing whether the doctor’s diagnosis and prescription are correct, because we don’t have a medical degree. Some of us are in a position to be better informed than others, but unfortunately, some of us also think we know more than we really do.

And obviously there is not and cannot be perfect competition among health care providers. In medically underserved areas, there is often none at all. Marcus Welby didn’t have any competition, he was the only doctor in his small town, and everybody figured that was beautiful. At the other extreme, many high tech services are available in very few places, and people outside of the major cities may have to travel hundreds of miles to get to them. That includes trauma care, by the way, which can come upon you in an instant, out of the blue. When you’re unconscious and bleeding to death from a car crash, you don’t have a discussion with the ambulance driver about which hospital you want to go to, let alone whether you want to go at all.

And, since medicine is all about expertise, and we can’t evaluate physicians’ expertise, it has to be done for us, by licensing and credentialing bodies. That means the supply of physicians is restricted – you can’t just have random people setting up physicians’ offices. Of course, many people do by claiming to be homeopaths or naturopaths or what not, but they’re probably just stealing.

So what about consumer sovereignty? Everybody has fairly similar basic needs for food, clothing, and shelter, which we satisfy if we can; and then we go on to allocate our remaining income according to our desires. But the need for health care differs radically among individuals, and it’s not something we generally get more of than we need because we want it. For sane people, getting medical interventions is generally unpleasant and to be avoided; we undergo them out of necessity.

Alright, that's a lot of verbiage for one day. Next time, I'll once again have pictures, and we'll talk about how the production and consumption of medical services are really allocated.

Thursday, December 17, 2009

Ptolemaic economics

You are here. Whoops, no you aren't. We used to think so, but the earth is not at the center of the universe after all. Until Copernicus came along and published De revolutionibus orbium coelestium in 1543, astronomers had to reconcile their observations with a set of assumptions that happened to be false. As you can see, they had to add epicycles to the major rotations of the celestial spheres, put the center of rotation somewhere out in space rather than at the center of the earth, and in fact add more and more extra cycles and wobbles and froufrou that aren't even shown in the diagram. In addition to being bad at explaining and predicting, the Ptolemaic system was philosophically misleading. Once we understood that we aren't actually so special after all, our understanding of the very nature of existence began to change, and we experienced The Enlightenment.

Now let me make a personal statement because I tend to get some ad hominem responses about my personal qualifications whenever I say what I'm about to say. I have taken graduate economics courses at three different highly respected universities, and I had to pass qualifying examinations in economics for my Ph.D., which happens to be from Brandeis. So I know damn well how economics is taught and what is inside economics textbooks. This happens to be the same story that is generally accepted by reporters, pundits and politicians, and is bedrock in our political culture. Furthermore, classical conservatism, libertarianism, and neo-liberalism aren't just value systems: they are entirely unsustainable as coherent ideologies without faith in this self-same economic theory with which college freshmen are indoctrinated.

I say faith because economics is really more like theology than it is like science. The professor begins by enunciating a set of assumptions -- postulates, no different from assertions like "The Bible is literally true" or "God is omnipotent," for which no evidence is presented. From these assumptions, an elaborate theory is built which purports to describe reality. When, later on, it is impossible to avoid observing that the theory does not describe reality in one or another specific case, they call that a "market failure," which is supposed to be exceptional, and construct an epicycle.

This is not the procedure of science, which begins by observing reality and then searching for explanations of what is real. Scientific theories are built from data, not snatched out of the air. Scientists come up with new theories to explain new evidence -- e.g., the earth and planets go around the sun -- rather than trying to wrestle reality into conformity with their postulates, like theologians and economists.

Here are some of the assumptions underlying standard economic theory:

  • All costs and benefits to society are captured in transactions between buyers and sellers

  • Perfect information -- buyers know everything about the product and alternatives

  • Perfect competition

  • Consumer sovereignty – consumer choice drives demand

And a grand conclusion: “Free markets” are self-regulating and efficient.

There are more, all equally fallacious. It is not that there are exceptions to these postulates, or that they are a little bit wrong around the edges. They are always false, they have no relationship to reality. Any theory based on these assumptions is false, and the conclusion is not only false, but meaningless. One more thing: the false theory derived from these false assumptions does not, in fact, have anything to tell us about whether the outcomes from this fictitious free market are fair and just, but many economists and most politicians and pundits go from the supposed "is" -- that this fictitious "free market" is somehow the natural state of affairs or the way the world has been given to us by the creator -- to an "ought" -- that whatever outcomes it produces must be the right ones. This unmitigated nonsense lies at the very heart of our political discourse.

Next time, I will smash it all to rubble. As anyone can do.

Wednesday, December 16, 2009

Health care policy 101 -- cont.

Now I hope that I've demonstrated the simple proposition that we are paying twice as much for medical services as comparable societies, and getting worse health outcomes. To our shame, we aren't bearing the burden of our collective failure equally: disparities in health and life expectancy between rich and poor, black and white, are large and persistent. Here's the simplest possible presentation:

What this shows is that, while women on average live longer than men (a biologically determined fact, once you have reasonably safe child birth), in the U.S., white people live longer than black people. (In case the graph is a bit confusing, white men have about the same life expectancy as black women; white women have the highest and black men the lowest.) As you can see, while life expectancy has generally been increasing, the disparities have remained essentially unaffected.

Former Surgeon General David Satcher and co-authors noted in Health Affairs in 2005 that 83,570 Black Americans die prematurely every year who would not die if that mortality gap were eliminated. That is the equivalent of loading a jumbo jet every day and crashing it into the ground with no survivors – week after week, year after year, forever. This is an excruciating national embarrassment. The corporate media -- not to mention Daily Kos -- are full of stories about influenza and rare events such as deaths from food poisoning or unusual medical conditions, but this is going on all the time and it’s largely ignored. I’ll let you speculate about why that is.

But now we come to the problem that has actually gotten the attention of powerful people.

Health Care Spending as Pct. of GDP, U.S.

This is health care spending in the United States as a percentage of GDP. And yes, it has also tended to increase in other countries: new medical technologies come along all the time, and they are usually expensive. People place a high value on cure, if possible, and failing that palliation. We want to live and function well and if there is hope of that we'll pay for it. The problem is that health care has gotten so expensive in the U.S. that under our present system of financing, a lot of people just can't afford it; and politicians and policy wonks are starting to worry about the affordability of Medicare to the federal government and of Medicaid to both federal and state government. Long term, this relentless cost growth is driving more and more people out of the system and threatening public solvency.

Next up: Economics 101

Tuesday, December 15, 2009

We're Number One!

Not! You'll hear a lot of people say that the United States has the best health care system in the world. There must be other reasons why we don't match up well on life expectancy and other indicators of population health. Some will go so far as to say that universal coverage does have something to do with it, and maybe we should try to achieve that, but not at the cost of "rationing" or putting government bureaucrats in charge who will ruin the magnificent edifice created by our private system.

I really don't think so. Here you can see that according to an international survey done just last year, we appear to have the worst health care of all the wealthy countries (there were more countries in the survey but I’ve just showed you a sample). People with chronic illnesses in the U.S. often can’t afford their medications, don’t get appropriate treatments, are least likely to have a regular doctor, and have their time wasted by our disorganized, fragmented system.

Not only that, but we spend more out of pocket. 41% of U.S. respondents had out-of-pocket costs of more than $1,000. Lowest was UK with 4%; Canada was second-highest with 20%. Okay, well even if the patient's experience isn't great, we're still delivering the best technical quality medicine, right? Err. . .

We get bad results from our health care system. These investigators just looked at certain causes of death which can be prevented or delayed by health care, and looked at age-adjusted death rates from these causes alone. As usual, we’re number last.

So what exactly is it that the Republicans in the Senate and Joe Lieberman are determined to preserve? I have even more bad news on that tomorrow.

Monday, December 14, 2009

Setting out on the Long March

It is now becoming increasingly likely that The Right Rev. Joseph Lieberman will exact his revenge on the country he hates by killing meaningful health care reform. I figure I might as well go ahead and wonk y'all out by spending whatever number of posts it takes to lay out the whole story of the mess we're in right now and what we need to do about it. This will be adapted in large part from an address I recently gave to some of the good people of Connecticut who are getting screwed by their junior Senator.

My subject is not actually all that complicated, but it seems complicated because there are some false assumptions buried very deeply in our political culture. It takes a bit of time and effort to expose them, which is why nobody has figured out how to fit the truth about health care onto a bumper sticker. (Believe me, I've been trying to figure out how to do that for more than 20 years.)

This says "Exhibit 3" even though it's Exhibit 1 here, because I stole it from an article in Health Affairs, but that's okay, they want you to do that. The black squares on the right are the states of the U.S., and the gray squares on the left are the other wealthy (and some not so wealthy) countries. It's good to be on the left because it means you're spending less on health care; and it's good to be higher up because it means you're living longer. As you can also see, there is little relationship between spending on health care and longevity in general but the U.S. is an outlier – we break what little trend there is by spending far more and dying much younger. There's a lot of variation among the states, which is also interesting and important (more on that later) but only one of them (Hawaii, if you care to know) compares favorably on life expectancy, and we can forget about the cost comparison.

In future posts, I'll say what I know about why this is, but first we'll spend a little time on getting deeper into the differences between health and health care in the U.S., and abroad. Starting tomorrow.

Creative Invective Contest

I have made a half-hearted and as yet feckless effort to compose a flame worthy of the loathing and disdain I feel for the Dishonorable Joseph Lieberman (Lieberman for Lieberman Party).

It is now apparent that The Last Honest and Godly Man cares for only one thing -- revenge on the Democratic voters of Connecticut who spurned him in 2006, and doing the most damage he possibly can to the Democratic Party, the current Democratic presidency, and the principles of that he once pretended to believe in. Lieberman is a malignant narcissist who takes joy from the deaths of innocents, because they demonstrate his power. There is no more vile and repulsive politician on the earth.

If anyone has anything meaningful to add to that, go to it. I have avoided vulgarity and profanity here, but you're welcome to them in the comments. I detest that man. I detest everyone who doesn't detest him. I detest everyone who doesn't lie awake at night detesting him, and who doesn't dream about detesting him when they finally do fall asleep, and who doesn't dream about detesting everyone who doesn't dream about detesting him. Oh hell, here's some vulgarity after all. I shit in the milk of his mother, his grandmothers, and his great grandmothers unto the seventh generation. May he be flushed down the sewer of history. Feh.

Update: Kevin Drum lays out a recent chronology of the Last Honest Man's virulent mendacity. Is there no limit to the humiliation Harry Reid will endure, or does he actually enjoy it?

Friday, December 11, 2009

Nobody here but us chickens . . .

guarded by the fox. This is a somewhat complicated story, but I'll try to make it simple. I'll try.

In today's BMJ there is a rather unusual Cochrane review of oseltamivir, brand name Tamiflu, which is supposedly an effective treatment for influenza. As co-author Peter Doshi discusses elsewhere in the issue (prescription subscription only), the CDC has stated that oseltamivir reduces the risk of hospitalization and pneumonia; and as part of preparedness for the so-called "pandemic" of H1N1 influenza, spent billions of dollars stockpiling the drug. In the UK, in the midst of the "pandemic" panic, hundreds of thousands of people were given prescriptions for the drug after telephone consultations, without ever seeing a physician.

Oh, wait a minute. What's a Cochrane review, you ask? The Cochrane Collaboration is an international non-profit organization that promotes understanding of evidence based medicine by promoting so-called meta-analyses -- a systematic approach to incorporating results of multiple studies into a stronger overall picture of the effectiveness of drugs and other medical interventions.

So, it turns out that an earlier Cochrane review had found that oseltamivir is effective in reducing complications from influenza in otherwise healthy adults. Roche has claimed that it results in a 67% reduction in complications. Another review by Kaiser et al (not an official Cochrane review) had found that it reduces the risk of hospitalization in both healthy and at-risk subjects. The U.S. Department of Health and Human Services relied on these findings in 2005 to claim that it reduces the risk of hospitalization by 50%, and also reduces mortality. And the Cochrane reviewers had also relied on the review by Kaiser et al

The updated Cochrane review was commissioned as the specter of apocalyptic, civilization destroying H1N1 "pandemic" influenza loomed over humanity. As the review was about to begin, a Japanese physician, Keiji Hayashi, wrote to the Cochrane Collaboration noting that the conclusions about effectiveness were based on the Kaiser review, and that relied on unpublished data held by the manufacturer Roche. Dr. Hayashi found that situation unacceptable, as well he should. So, the new reviewers tried to get that data. Roche gave them an elaborate runaround for several months, during which a vast mist of confusion arose over who had actually conducted the analyses on which the review depended, who had written what articles, what studies even existed, what data existed and what exactly the heck was in it. To this day, it's still a secret, and massively confusing. (Some of the academic physicians who Roche said had overseen the studies claim to have had nothing to do with them.)

So, the new reviewers decided they could only rely on published, peer reviewed data. And, on that basis, while it does appear that oseltamivir shortens the duration of symptoms in otherwise healthy adults, they could not conclude that it reduces the risk of complications or hospitalization. In fact, since most people who have flu-like illnesses do not in fact have influenza (even during the apocalyptic killer H1N1 civilization destroying "pandemic"), it is basically not worth giving it to people in general.

So, based on this sad story, I can only conclude that it is imperative that the pharmaceutical industry be represented on the board of directors of the agency that oversees comparative effectiveness research. Oh wait, that's not what I conclude. I conclude that clinical trials should be done a) independently of drug manufacturers and b) openly and transparently, with all of the data available to anyone, including me. If the drug companies still want to claim that they need a huge markup on their products to finance research and development, fine. They can still put up the money. They just can't be in charge of spending it.

How's that for a compromise?

Thursday, December 10, 2009

With friends like this . . .

I'm all for comparative effectiveness research, as I have made abundantly clear. And I believe at one time or another I may have expressed some mild satisfaction that the otherwise generally crummy health care reform legislation includes some support for CER. A colleague of mine, however, begs to differ:

Currently, scientific research in comparative effectiveness is conducted within the Agency for Healthcare Research and Quality (AHRQ) and within the National Institutes of Health (NIH). Each of these institutions has a long history in this area with appropriate scientific and administrative oversight to carry this out. Topics for review are generated from a panel made up of stakeholders in the process from the patient, payer, provider and industry perspectives and with independent academic and scientific teams to provide an unbiased assessment of relative harms and benefits. This process has been in place for awhile and has resulted in many contributions to evidence on best-practices in healthcare. . . .

The proposed bill would, however, set up a nonprofit Institute unaffiliated with the Federal Government to oversee these duties. We believe that this would create, at great cost and delay, an entity that would not improve upon the structures already available in AHRQ and NIH and would in fact create a confused hierarchy of control and a weakening of the well-functioning groups already present. Furthermore, several of the provisions in the bill mandate oversight antithetical to academic freedom and carrying punitive measures that may scare away many top researchers from these activities.

These measures include the requirement that any research published under contract to the Institute be entirely within the bounds and consistent with the evidence and findings produced in the contract's final report. Failure to abide by this rule will prohibit that researcher from receiving any Institute funds for at least five years. This provision reads as if it could have been written by a totalitarian regime intolerant of any dissent. But one of the hallmarks of the academic process is the freedom to express oneself in civil discourse without fear of retaliation. Such language is certainly not democratic and may in fact be unconstitutional.

A second concerning item in the bill is the requirement that a methodology committee be appointed . . . to establish standards which all researchers would be required to accept. . . Again, this flies in the face of academic freedom and imposes a mandate that may actually at times lead to biased research if the standards are inappropriate. . . .In fact, the Institute of Medicine has already convened a panel of experts representing science, consumers, payers, providers and industry to develop such standards that can serve as a model for future comparative effectiveness reviews.

Third, we object to the composition of a Board of Directors with members from industries whose products will be judged by the results of the reviews undertaken. While industry representatives on advisory panels are desirable, their placement on a Board with authority to allocate the funds, design the studies, and disseminate the results will inevitably lead to conflict of interest and charges of bias. . . .

Yup, looks like the same old song -- the only way Congress is going to do this is to put industry in charge and let them make sure the "scientific" findings don't get in the way of selling useless or dangerous products. This is kind of like -- no, exactly like -- putting drug companies in charge of the FDA.

Wednesday, December 09, 2009

Technical fixes gang aft agley

As I keep repeating, reiterating, and saying multiple times, about the worst substance large numbers of humans put into their bodies these days is the solution of sucrose or high fructose corn syrup. These are mass marketed, heavily advertised, ubiquitous, and they are deadly poisons. Examples of these very dangerous, toxic products, are Coca Cola, Pepsi Cola, Dr. Pepper, Gatorade, etc. Now, there's nothing wrong with having some sugar in your diet but if you eat, say, a piece of fruit, you're getting it with fiber, which means a much lower glycemic index; you're getting vitamins and minerals and other good stuff; and you'll feel satiated because you've just eaten some real food. You won't be putting yourself at risk for diabetes, obesity, malnutrition, heart disease and stroke the way you are by drinking soda. If you're thirsty, you can drink water, or you can drink fresh orange juice or grapefruit juice or a smoothy . . .

That's easy enough, it seems to me, but what a lot of people do instead is drink "diet" soda, sweetened with non-caloric substances such as saccharin. David Ludwig, in a JAMA commentary which unfortunately is so much in your interest that you aren't allowed to read it, is not so sure this is a great idea. No, it's not about cancer -- that's been pretty much disproved. It's about nutrition, obesity and diabetes after all.

The problem is that these drinks mess up your bodies hunger and glucose regulation systems. They can habituate people to prefer sweetness, and they sever the connection between tasting sweetness and ingesting calories. Says Ludwig, "One concern is that the dissociation of these physiological events might disrupt the hormonal and neurobehavioral pathways regulating hunger and satiety." It turns out that rodents fed saccharin, compared with those fed glucose, actually got fatter. In another experiment, rats came to prefer saccharin to cocaine. Studies in people have found the same thing -- drinking 21 diet sodas per week, in one study, doubled the risk of developing overweight or obesity over 7 years. In another study, daily consumption of diet drinks increased the risk of diabetes by 2/3.

This is the law of unintended consequences. The right question to ask was not, "How can we make soda taste sweet without calories," it was, "Why does a drink need to taste like 4 ounces of sugar in the first place?"

Give your body what it needs: actual food.

Tuesday, December 08, 2009

One thing is like the other

Amanda Marcotte is a bit puzzled by the passionate commitment of conservatives to global warming denialism, and ends up concluding that a major motivation is just that they like to piss off liberals.

There's likely something to that, but there is a more basic explanation that I'm surprised people seem to miss. The free market ideology at the heart of economic conservatism depends on several assumptions -- all false -- the most important of which, and the most universally and most utterly false, is the assumption of no externalities. If you've had even casual exposure to economic theology (that's what it is, it is not a science), you know that is the assumption that all of the costs and benefits of a transaction are captured within the transaction, that is, felt by the buyer and seller. The supposedly occasional exceptions are called "market failures" which may need to be addressed with some form of regulation but these are unusual. In general, this imagined "free market" allocates resources "efficiently."

It is pretty obvious that the second you acknowledge the reality of anthropogenic global warming, the entire edifice of conservative economic theory is smashed to rubble. The very foundation on which industrial capitalism is built -- burning of fossil fuels -- is not an example of "efficient" allocation, it is in fact systematically destroying the very basis of human existence. Obviously they cannot allow that to be true or everything they have ever said about the economy and the glories of the Free Market is rendered utterly, horrifyingly, abominably false.

And so global warming denialism is pretty much the same thing as denial of evolution. Reality conflicts with faith, and something has to give.

Not very hard to understand after all.

And BTW: Creationism and holocaust denial can go on and on, but global warming denial is of course, a doomed enterprise. Time, unfortunately, will tell. But I will really not like to for them to get their comeuppance the hard way.

Monday, December 07, 2009

One more way a bad health care bill can backfire

As you ought to know by now, the health care legislation taking place in Congress right now is largely modeled on the reform legislation we have been living with in Massachusetts for the past three years. Insurers are required to issue coverage to everyone and they can't do medical underwriting. They can charge more to older customers, however. There is an individual mandate -- everyone must have insurance or pay a fine. There are subsidies for low-income people, but for those who don't qualify for the subsidies, insurers are required to offer a so-called "affordable plan" which has some minimum benefits but also has high co-pays and deductibles.

The net result is that there are people who are forced to buy the "affordable plan," for whom it is not really all that affordable, but what is worse, it doesn't actually cover their health care needs. They are out of pocket for much of routine care, because of the deductibles and co-pays, and they can't afford their share of any major expenses they may incur so they don't get necessary surgery. People over 50, whose premiums are more expensive, may be in this category; so are people on the other end, as it were, students and recent graduates who are impecunious.

The insurance companies are taking advantage of the individual mandate to totally screw students. Sayeth the Globe:

After heavy lobbying by the student group, the state began requiring schools to track and report data they had never before collected. That information was compiled in the report released last month.

It showed that, on average, 30 cents of every premium dollar goes toward profits and administrative costs, compared with 12 cents for plans sold to the general public. The remainder of the premiums is what is used to pay medical bills.

Students attending state schools face the greatest disparity: 45 cents of every insurance dollar they pay goes to profit and administrative costs, according to the state’s data.

Although students are free to buy more expensive policies, many are covered by plans that cap payments at $50,000 a year per injury or illness, leaving them vulnerable to enormous medical debts. Some plans place even lower limits on prescription drugs and doctor visits. The report showed that in the 2008 school year, 951 students exceeded caps for medical services provided outside of hospitals.

BTW, let us name names: Aetna and Nationwide are pocketing the majority of the vigorish. A student writes:

I am a graduate student . . . enrolled in the Aetna Student Health Plan. After months of agonizing stomach pain, I recently learned that I need to have my gallbladder removed.

My plan only covers 80 percent of surgical costs, which may be quite high even for this routine outpatient procedure. I am now faced with an impossible decision: Do I get the surgery soon, but rack up several thousand dollars in debt (on top of my student loans)? Or do I skip the surgery, hope my stomach aches don’t keep me out of class, and pray to find a job with decent health insurance coverage when I graduate in the spring?

I pay more than $3,200 a year for my insurance, plus a school health fee of more than $600 for my primary care. For nearly $4,000 a year, I shouldn’t be forced to suffer through stomach pains because I cannot afford the treatment.

Dear Senator Reid: What do you think will happen to the Democratic Party if you give in to Joe Lieberman and Evan Bayh and pass legislation that does this to all the college students in America? Why do you think that is smart?

Friday, December 04, 2009

Hold the Salt

A meta-analysis in the new BMJ comes to some highly dramatic conclusions. It's recommended that you consume no more than 6 grams of salt a day but lots of people consume twice that much or more. Measurement of salt intake is problematic, but the estimate that falls out of this analysis is that adding 5g of salt a day to your diet increases the risk of stroke by 23%, and of heart disease by about 17%. Most disease endpoints are fairly uncommon, so relative risks of this size translate to low absolute risk, but heart disease is the leading cause of death in the U.S. and stroke is pretty common also. Even if these events don't kill you, you really really really don't want them to happen.

Best of all, lowering salt intake costs absolutely nothing. Once you get used to lower salt cooking, you'll find you don't miss it. Use herbs and black pepper and you'll get all the taste boost you need. You need a pinch of salt for processing in many applications, for example to draw the water out of vegetables in a mirapois, but that's fine. We're talking moderation here.

The difficulty for most people is prepared foods -- canned soups and sauces, packaged meals, that sort of thing, and of course salty snacks. Munch through some potato chips and you're done for the week. These are, of course, among the most heavily advertised "foods." And there's restaurant food, which is also generally full of salt. You want fries with that? (The glycemic spike is probably even worse than the salt load, come to think of it.)

Most people, nowadays, just aren't going to develop the skills and take the time to prepare healthy meals at home very often. That's sad but it's how we live today. The only way to get all that salt out of our diets is to give the food manufacturers and the chefs a real incentive. In other words, once again, it's a public policy and a political issue. I doubt that a salt tax would get anywhere in the present climate, but there may be more politically feasible ways of doing this.

The public health benefits are enormous, at essentially no cost. Come to think of it the potential savings in medical costs are enormous. This should be a no-brainer. But of course nothing is happening.

Thursday, December 03, 2009

The Real Pandemic

Actually there are a few of them -- nowadays we seem to take HIV for granted, for example. But one of the biggest and most complex public health challenges facing the U.S. is not an infectious disease. It is of course obesity. Actually, that's a big of an oversimplification. Obesity is associated with too much caloric intake and not enough physical activity; obesity is itself a risk factor for problems such as diabetes, heart disease, and arthritis; and it is also a marker of diet and activity patterns which are direct risk factors. This analysis just published in NEJM gives an easy to understand summary of the impact. (Sorry, abstract only for you riffraff.)

The bottom line is that if current trends continue, the gains in health and life expectancy we are getting from reduced rates of tobacco addiction will be more than canceled out by the rising prevalence of obesity. If we could eliminate smoking and obesity altogether, 18-year-olds today would gain 3.76 years in life expectancy and more than 5 QALYs. (If you've been reading for a while, you know what a QALY is. If not, keep showing up, I'll probably get around to discussing it again.) That's a huge impact compared to the benefit, if any, from screening mammography.

The most important takeaway, for me, is that this is essentially a social, political and cultural problem, not a medical problem. The only effective medical treatment for obesity is stomach reduction surgery, and while the benefits appear to outweigh the harms for some very obese people, that's hardly where we want to go. We need a radically different social environment -- a different food environment, first of all. The food environment is largely shaped by gigantic corporations that spend billions of dollars to sell processed foods that are cheap to make, addictive, and can be sold at a large profit. Children are exposed to thousands of commercials for junk food every year; there are fast food restaurants all over the city that sell cheap poison in the guise of food; and sugar water is served in schools. Public policy can change all that but only if the people go to war against Frito Lay, Coca Cola, CPC International, Kraft Nabisco and the rest of the dirty gang.

Agricultural policy is also essential to this struggle. We subsidize corn and soybeans, a lot of which goes into animal feed, much of the rest into junk food, but not vegetables. The subsidies go to giant agribusiness corporations, and not to small farmers who grow for local markets. The vast monocultures that our policy supports are environmentally and socially destructive as well as nutritionally toxic.

The issue of physical activity has a lot to do with TV and electronic entertainment, of course. Kids who used to go out and play baseball are sitting in front of X boxes. But it also has to do with land use and mass transit. Walkable communities built around transit hubs, with stores, entertainment and parks in walking distance of people's houses, have more active people. I live in one -- Jamaica Plain. I walk to the subway and back every day, I walk to the grocery store and the drug store and the neighborhood restaurants, and to Jamaica Pond, one of the world's great urban parks. That means not only healthier people, but less fossil fuel going out the tailpipe. But we subsidize highways and our mass transit systems are rotting.

These are political issues that go right to the heart of what kind of a world we'll have in fifty years. They are much, much more important than the latest bug that's going around.

Wednesday, December 02, 2009

Interesting Times

Remember Peak Oil? The International Atomic Energy Agency says it's coming in 2030, which means we're supposed to be totally cool with it, but most informed observers don't believe them -- they think it's much more imminent. This guy says it happened last year, but we haven't noticed because the Great Recession has temporarily crushed demand. That doesn't just mean you'll have to buy an electric car. Unless people start thinking very hard about doing something very big very quickly, it means a whole lot of people are going to starve. Come to think of it, peak oil or no, we are going to have a major problem with food production starting very soon, because we have already passed Peak Phosphorus.

Unfortunately, declining global oil production isn't going to stop global warming, which isn't just about having a nice beach day in December. We'd have to spend more than $2 trillion to fix our aging and crumbling bridges, highways, water and sewer works, we have the highest unemployment since the Great Depression and it's just getting worse, and I hope you weren't counting on your pension.

But what the heck, this is a great time to spend $30 billion more a year and get a few tens of thousands of people killed in order to impose a corrupt, oppressive government on some illiterate, impoverished farmers in the remotest corner of the earth, just because, that's all.

But I'll bet you can guess what the screaming, banner headline across the top of the CNN web site is all about. It seems a guy who is highly skilled at hitting a little ball with a stick and making it go where he wants it to was boinking somebody other than his wife. I can't possibly think of anything more important than that, can you?

Tuesday, December 01, 2009

View from the Corner Office

The CEO of our hospital held a "Town Meeting" today to discuss the likely impact on our glorious institution of the health care reform legislation now taking shape in DC. (Oddly, nobody showed up with pictures of Auschwitz, or Obama with a Hitler mustache, and nobody screamed invective at her.) Although our interests and concerns about this are not precisely aligned, like me she is largely agnostic until we see the final bill, since, as she said a few times, "the devil is in the details."

Among the details that get very little public attention are those pertaining to the arcana of the hospital business. Academic medical centers like my employer have a triple mission -- clinical care, teaching, and research. Clinical care at hospitals depends heavily on Medicare funding, since Medicare beneficiaries are heavy consumers of hospital services. However, according to the hospital's accountants, Medicare does not pay the full cost, and Medicare patients are cross-subsidized from private insurance. We also have a children's hospital which has a high proportion of Medicaid patients, and Medicaid pays even less than Medicare.

On the other hand, Medicare pays extra to subsidize "teaching," which actually means the apprenticeships of residents and fellows. It seems odd that this costs extra, since these people are actually cheap labor. Most of their time is spent on patient care, and is reimbursed as such. You might think it would be more expensive for community hospitals that have to pay full-blown physicians to do the same work. Nevertheless hospital accountants everywhere agree that teaching hospitals need this extra dough to make the teaching function work as a business. I'm sorry, I can't actually explain this.

So-called "undergraduate" medical education -- i.e., the four years of medical school -- receives virtually no federal subsidy in the U.S. It's paid for out of tuition, so medical students typically graduate with about $200,000 in debt.

The hospital also claims that the clinical services subsidize the research function. This also seems odd from where I sit -- we have to finance 100% of what we do with grants, all of which come with so-called "indirect costs," that is a percentage that the hospital grabs to pay for its overhead. For federal grants, that's about 2/3 of the direct costs of a research project. It seems to me that we're subsidizing them. But again, I'm not an accountant.

Anyway, our CEO is all for increasing the percentage of people who have insurance, but she and the medical school dean are worried about the likelihood that expanded coverage is to be funded in part by constraining Medicare costs. Right now this consists mostly of eliminating the giveaway to insurance companies contained in the Medicare Advantage program, which is fine. But there are other moves afoot, one of which is to penalize hospitals for short-term re-admissions, another of which is to equalize reimbursement in higher and lower cost regions of the country, which would really hurt us.

There are a lot of moving parts here. Some people argue that the goal of preventing re-admissions may conflict somewhat with the goal of making hospital stays shorter. I'm not a real doctor, but I tend not to agree with that. Getting people out of the hospital sooner is usually good for them -- hospitals are dangerous and unhealthy places to be, especially if you are sick. Avoidable re-admissions usually happen, not because people are discharged too soon, but because discharge planning and follow-up are poor. People need to be counseled about medication adherence and other self-care issues, nurses and doctors need to make sure they know what to do and are able to do it, and people need to be seamlessly transitioned to after care services including outpatient physician visits, any needed home care, social work, etc. I think that reducing re-admissions is a legitimate quality objective and that the hospital can improve its bottom line by achieving it.

Nevertheless they are worried. Medicare is already cracking down on the practice of padding consultation codes (i.e., getting specialist services reimbursed at a higher rate than they should be) and making other efforts to squeeze hospitals. There's a lot of inside baseball going on with the hospitals and medical schools in DC right now, but they don't have the kind of money to spend on buying legislators that Big Pharma and Big Insurance have. So they are sweating bullets.

As I have said many times, what we really need is a radical reorganization of the way we provide and finance medical services. We can put institutions on a sound financial footing -- although they would have to shrink a bit, as there would be less money going to specialty services and procedures -- and improve the patient experience and outcomes, while saving money. But Congress isn't ready to go there. Instead, hospitals feel threatened with the death of a thousand cuts.