Economics

Economics

The Facebook Model for Socialized Health Care

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Screen Shot 2015-02-26 at 5.06.17 PMAs government involvement in U.S. health care deepens—through the Affordable Care Act, Meaningful Use, and the continued revisions and expansions of Medicaid and Medicare—the politically electric watchword is “socialism.”

Online, of course, social media is not a latent communist threat, but rather the most popular destination for internet users around the world.

People, whether out of fear for being left behind, or simply tickled by the ease with which they can publicize their lives, have been sharing every element of their public (and very often, their private) lives with ever-increasing zeal. Pictures, videos, by-the-minute commentary and updates, idle musings, blogs—the means by which people broadcast themselves are as numerous and diverse as sites on the web itself.

Even as the public decries government spying programs and panics at the news of the latest massive data-breach, the daily traffic to sites like Facebook and Twitter—especially through mobile devices—not only stays high, but continues to grow. These sites are designed around users volunteering personal information, from work and education information, to preferences in music, movies, politics, and even romantic partners.

So why not health data?

Bigger Hospitals Mean Bigger Hospitals with Higher Prices. Not Better Care.

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Hospitals are busily merging with other hospitals and buying up groups of doctors. They claim that size brings efficiency and the opportunity to deliver more “value-based” care — and fewer unnecessary services.

They argue that they have to get bigger to cut waste. What’s the evidence that bigger hospitals offer better value? Not a lot.

If you think of value as some combination of needed services delivered for the right price, large hospitals are no better than small hospitals on both counts.

The Dartmouth Atlas of Health Care and other sources have shown time and again that some of the biggest and best-known U.S. hospitals are no less guilty of subjecting patients to useless tests and marginal treatments.

Larger hospitals are also very good at raising prices. In 2010, an analysis for the Massachusetts attorney general found no correlation between price and quality of care.

study published recently in Health Affairs offered similar results for the rest of the country: On average, higher-priced hospitals are bigger, but offer no better quality of care.

The ACO Delusion

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flying cadeuciiAccountable care organizations (ACO’s) promise to save us.  Dreamed up by Dartmouth’s Eliot Fisher in 2006, and signed into law as a part of the Patient Protection and Affordable Care Act (PPACA) in 2010, we have been sold on the idea that this particular incarnation of the HMO/Managed Care will save the government, save physicians and save patients all at the same time.  I dare say that Brahma, Vishnu and Shiva together would struggle to accomplish those lofty goals.  Regardless of the daunting task in front of them, the brave policy gods who see patients about as often as they see pink unicorns, chose to release the Kraken – I mean the ACO – onto an unsuspecting public based on the assumption that anything was better than letting those big, bad, test ordering, hospital admitting, brand name prescribing  physicians from running amuck.

I realize I am being somewhat harsh towards the creators of the ACO morass.  But, while they all may be well-meaning, hard-working folks that own a Harvard crimson sweater, their intent is to fundamentally change how health care is provided – this mandates a withering evaluation.  As Milton Friedman aptly said, “One of the great mistakes is to judge policies and programs by their intentions rather than their result.”  Thus, with little regard to intent, and with an eye on the end result, I say unequivocally : ACO’s do not work.

We Spend More on Health Care Than Other Rich Countries but Have Worse Outcomes?

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flying cadeuciiHere it’s argued that we need to retire the health care fallacy, “We spend more on health care than other rich countries but have worse outcomes.” The fallacy implies U.S. health care is deficient in spite of being costly. Indeed our health care costs too much, but there is little evidence that our care is less effective than care in other countries. On the other hand, there’s plenty of evidence that our social determinants of health are worse.

The argument segues off a recent article by Victor Fuchs. The case is presented by using a simple linear model to explore how life expectancy might change when we substitute the numbers of other countries’ determinants of health for U.S. numbers. After making these substitutions and holding health care spending constant the model predicts U.S. life expectancy is right there with the other OECD countries, 81.6 years compared to their average 81.4 years. This what-if modelling makes clear what should be obvious but the fallacy hides, that health care is only one part of population health.

The Fuchs Essay 
Victor Fuchs’s recent essay1 impressed me. He wrote of the lack of a positive relationship between life expectancy and health care expenditures (HCE) in OECD countries. A chart was included for empirical support. I liked the idea behind the chart which demonstrated his point using data from select countries and our 50 states. Professor Fuchs has written on this topic for years (e.g., in his 1974 book “Who Shall Live?”). I posted on the fallacy in March 2013 but was not as nuanced.2

Interview with Mark Pauly: Part 1

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Community Rating – The Worst Possible Way To Do a Good Thing

I have a grudging respect for health economists, “grudging” because, like many doctors, I want my pieties unchecked. Health economists check our pieties with quantitative truths. They describe the way the healthcare world is – a view from 29, 000 feet, pour cold water on the way we think the world should be, and guide, with abundant disclaimers, the way we can make things better. It’s unwise climbing Everest without a Sherpa, nor is it wise reforming healthcare without listening to health economists from across the political spectrum.

President Trump, along with the Republican House and Senate, will be dismantling the Affordable Care Act (ACA). In a sense, President Trump is not just descending Everest, a treacherous feat in its own right, but scaling a peak arguably more dangerous than Everest. Despite their differences, Mr. Obama and Mr. Trump share one commonality – an implicit distrust of the health insurance industry.

How did the American health insurance industry become so vilified? This is, in part, because necessity is the father of all vilification. Insurers are a necessary evil in a country where there’s still deep mistrust of the government. Partly, this is because we transfer our angst about the uncertainty of our future, the dice which plays with our lives, to insurers who are in the business of rolling the dice. But mostly it’s because the misdeeds of the insurance market have been grossly exaggerated, and the benefits of the market have been attenuated by a few damning anecdotes. This is what Mark V. Pauly (MVP), Professor of Health Economics at the University of Pennsylvania, and one of the most eminent health economists of his generation, believes.

Cancer and Moonshot Economics

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The Obama Administration’s cancer “moonshot” initiative, announced in January and now being debated in Congress, comes at a time of significant advances in cancer treatment and a spurt of cultural attention to the disease.

A batch of new immunotherapy drugs approved in the last few years, such as Bristol-Myers Squibb’s Opdivo and Merck’s Keytruda, are being widely touted as breakthrough medicines—and aggressively advertised to both doctors and the public.  Jimmy Carter’s unexpected remission from melanoma that had spread to his liver and brain is attributed to Keytruda.

At the same time, a cancer memoir (When Breath Becomes Air by Dr. Paul Kalanithi) tops The New York Times nonfiction best-seller list.  The Death of Cancer by Dr. Vincent DeVita, a former director of the National Cancer Institute, has also garnered positive reviews and wide attention for its critical assessment of today’s cancer research establishment.

Before these two books, John Green’s 2012 novel The Fault in Our Stars—the touching story of two teens with cancer—was widely acclaimed and read, especially after it was made into a blockbuster movie in 2014.

The administration’s initiative comes at a significant time for me personally, too.  My brother, 70, was diagnosed with stage IV lung cancer 10 months ago.  Unlike Jimmy Carter, one of the new immunotherapy drugs (Opdivo) did not defeat his cancer.  He continues to fight for his life.  As with so many families, cancer has stalked ours.  My sister died of colon cancer in 2006, age 54.  My mother died of lung cancer in 1985, at 65.  Like anyone over age 60, I’ve seen friends suffer and succumb, their lives cut short.  And I’ve battled two cancers myself, melanoma (localized) and a salivary gland tumor.

What Zeke Missed on an Annual Physical

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flying cadeuciiIn January, Ezekiel Emanuel – one of the country’s foremost health experts – threw a presumptive grenade into the national discourse: the annual physical is worthless. As we watched the initial burst of reactionary fervor following hisNew York Times opinion piece, we weren’t quite sure what to think.

Then we realized why: in our training and burgeoning careers in primary care, neither of us has ever scheduled an “annual physical” for a patient. To us, the notion of such a visit – for scheduled, non-urgent care, and one not specifically for chronic disease management – is already dated. Given current trends in American health care delivery and professional training, we argue it is one that may well soon be obsolete.

But does that obsolescence change the value of that time – whether 15 minutes or 60 – with a patient, on a regular interval? Our perspective from medicine’s emerging front line offers a resounding no.

The most obvious argument for regular primary care visits is preventive care. Dr. Emanuel bases much of his argument on the validity (or lack thereof) of annual physicals. Drawing off that same evidence base, the U.S. Preventive Services Task Force sets recommendations for evidence-based screening in various populations. Even the young and healthy benefit from cervical cancer screening, initiated at 21 years of age and continued every three years provided negative results until the age of 30 (when the recommendations change slightly). Patients with higher risk earn further screenings, based on whether they smoke, their weight, their age and their family history.

A Spoonful of Inequality Helps the Medicine go Down

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The conventional wisdom in the circles I hang out in – pro-Hillary, morally conscious,happy bunnies who pretend to enjoy French wine and opera – is that the greatest scourgeon humanity after the bubonic plague is inequality of wealth. They worship Pope St. John Paul Piketty and canonize Archbishop Paul Krugman. Not only is inequality bad for its own sake, they say, it makes people ill, like medically ill.

Their premise always struck me as specious. I once took them through a thought experiment. Imagine, I said, you time travel to the Bengal famine. There was a lot of equality then – people were equally malnourished. Everyone’s ribs protruded equally because of muscle wasting from marasmus. The loss of protein from kwashiorkor made sure everyone’s belly popped out without prejudice. Starvation because of poverty is a great leveler. It cares little about gender, caste or religion. It is non-judgmental.

Rethinking The Gruber Controversy: Americans Aren’t Stupid, But They’re Often Ignorant — And Why

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flying cadeuciiM.I.T. economist Jonathan Gruber, whom his colleagues in the profession hold in very high esteem for his prowess in economic analysis, recently appeared before the House Committee on Oversight and Government Reform. Gruber was called to explain several caustic remarks he had offered on tortured language and provisions in the Affordable Care Act (the ACA) that allegedly were designed to fool American voters into accepting the ACA.

Many of these linguistic contortions, however, were designed not so much to fool voters, but to force the Congressional Budget Office into scoring taxes as something else. But Gruber did call the American public “stupid” enough to be misled by such linguistic tricks and by other measures in the ACA — for example, taxing health insurers knowing full well that insurers would pass the tax on to the insured.

During the hearing, Gruber apologized profusely and on multiple occasions for his remarks. Although at least some economists apparently see no warrant for such an apology, I believe it was appropriate, as in hindsight Gruber does as well. “Stupid” is entirely the wrong word in this context; Gruber should have said “ignorant” instead.

Interview with Mark Pauly: Part 2

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President Trump and Obamacare

 

 

Healthcare reformers, like the wives of King Henry the 8th, have a thankless job. In a curious inversion of the Tudors, President Trump, who has promised to make healthcare great again, finds himself in the same predicament as the King’s sixth wife who knew what she had to do, just didn’t know how she could do it any differently. Dr. Mark V. Pauly (MVP), Professor of Economics at the University of Pennsylvania, believes President Trump’s options are neither exhaustive, nor exhausted.

The Interview

SJ: I’m quoting from your book Healthcare Reform without side effects “with community rating…doors are open for political and special interests to lobby…Imagination will be stifled…political rent seeking will be rampant.” When I read this paragraph I checked the publication date of your book. It was not 2016. It was 2008 – before the passage of the ACA.

MVP: Unfortunately, the book wasn’t published soon enough before the ACA.

SJ: What, in a nutshell, is the problem with the ACA?