Archive for the ‘Health Economics’ Category

the high price of pills for cancer

Monday, May 1st, 2017

The Financial Times has a must-read column in today’s paper on the pricing of drugs for treatment of cancer. The article is gated, but those who register without charge are allowed to download three FT articles each month. This article is long, and very informative. It might be a good use of one of your free downloads this month. (more…)

the long lives of South Koreans

Saturday, April 22nd, 2017

I somehow missed this interesting column from Bryan Harris, chief of the FT’s Seoul bureau. Asia is amazing. The continent is changing rapidly, and not just in China. (more…)

the US epidemic of “deaths of despair”

Thursday, March 30th, 2017

The 23 March 2017 Brookings paper, “Mortality and morbidity in the 21st century”, authored by Princeton Professors Anne Case and Angus Deaton, has attracted considerable attention from bloggers. Much of the reaction has been negative, very critical of the study.

Case and Deaton found that the US is experiencing an epidemic of  “deaths of despair”, concentrated in middle-aged White, non-Hispanic persons with high school education or less.

Noah Smith, a PhD Candidate in Economics at the University of Michigan (and journalist at Boomberg News), writes that the Case-Deaton finding holds up well against their critics. I agree.

[I]t’s rapidly becoming conventional-wisdom in some circles that the Case-Deaton result is bunk – one person even called the paper a “bogus report” and criticized me for “falling for” it.

But most of the critics have overstated their case pretty severely here. The Case-Deaton result is not bunk – it’s a real and striking finding.

Noah Smith, “The blogs vs. Case-Deaton“, Noahpinion, 29 March 2017.

Click on the ungated link above for details.

charts of the day

Thursday, March 23rd, 2017

The US is experiencing an epidemic of high mortality, concentrated in middle-aged White, non-Hispanic persons with high school education or less. This is self-inflicted harm, and is frightening. It is Trump’s political base, and conditions are deteriorating quickly.

https://www.brookings.edu/wp-content/uploads/2017/03/bpea_20170323_case_deaton_fig1_5share.png

https://www.brookings.edu/wp-content/uploads/2017/03/bpea_20170323_case_deaton_fig1_11share.png

For further information, see Alison Burke, “Working class white Americans are now dying in middle age at faster rates than minority groups“, Brookings Institution, 23 March 2017.

Case and Deaton’s full paper can be downloaded here.

America’s accidental healthcare system

Sunday, March 19th, 2017

The USA has a very inefficient healthcare system that is also the most expensive in the world. About two-thirds of the population receive health insurance as employer-based benefits. Benefits are not taxable, and came into being as a way to attract workers when wages were frozen during the second world war.

FT columnist Rana Foroohar has written an excellent column that explains why the system works so poorly and why neither Obamacare, nor the Republicans’ proposed replacement, can mend it.

America has a healthcare market that is not anywhere close to what Adam Smith would have considered functional. It has almost no price transparency (you don’t get a bill until weeks or months after you’ve made treatment choices), is controlled by vested interests (doctors, pharmaceutical and insurance companies) who exert monopoly power against the businesses and consumers they are supposed to service, and is highly fragmented and inefficient.

All this contributes to the fact that the economic implications of rising health costs on not just individuals, but American business itself, have been poorly understood. In the 1950s, healthcare made up only 7 per cent of total worker compensation; today, it’s 20 per cent. Given that, it is no surprise that as healthcare costs in the US have gone up, wages have stagnated.

Rana Foroohar, “Employers can help fix American healthcare“, Financial Times, 20 March 2017 (metered paywall).

Turkish-American journalist Rana Foroohar (born 1970) is the FT Global Business Columnist.

Ms Foroohar calls on employers to ‘help fix’ the broken healthcare system. She ignores the single-payer solution because it “is still an ideological leap too far for US business.” But Medicare for the elderly, and Medicaid for the poor, exist. These (despite opt-out provisions) are single-payer systems that cost less than employer-based insurance plans. Reform of US healthcare can be done with a simple reduction of the age of eligibility for Medicare from 65 years to zero. Employer-based benefits could continue for benefits not covered by Medicare, such as private or semi-private hospital rooms. Importantly, they could also be taxed as part of employee remuneration.

repealing and replacing Obamacare

Saturday, February 25th, 2017

A draft bill to repeal and replace Obamacare has been leaked to the press. According to “The Hill”:

The bill would eliminate subsidies for people to obtain coverage, and federal funds for states to expand Medicaid would be phased out in 2020. The mandate for people to buy insurance would also be killed.

Peter Sullivan, “Leaked ObamaCare bill outlines GOP plan“, The Hill, 24 February 2017.

That’s the “repeal” part. According to “The Hill”, here is the gist of the replace part:

The plan calls for a tax credit, which would increase based on a person’s age, to help recipients afford insurance. The credit would be between $2,000 and $4,000. ….

In contrast to ObamaCare, the credits are not based on income, which Democrats argue means not enough help is given to low-income people to be able to afford coverage. Republicans say income-based credits discourage work.

The tax credits are per year, not per month, and they are flat, increasing only with age. (Note also, that tax credits are useless to the unemployed, or the very poor, who have little or no income tax to pay.) As an alternative to the individual mandate, the plan allows insurance companies to charge applicants an additional 30% on premiums if they wait until they are sick to sign up. (more…)

Breitbart News

Sunday, February 5th, 2017

I promised to read opinion pieces written by those whose views differ sharply from mine, beginning with Breitbart News. Well, this is a beginning. I confess it is the first time that I have ever read Breitbart News, and it was an interesting experience. Much of it seems, to me, to be satire, except that it isn’t. (more…)

chart of the day

Tuesday, January 17th, 2017

US healthcare is in urgent need of reform not only because medical costs are high, but also because expenditure is concentrated in a small segment of the population Expenditure per person is high, even though most of the population has very restricted access to healthcare services.

The US spends far more on health per person than any other country (measured at purchasing power parity), yet the life expectancy of the American population is shorter than in other countries that spend far less.

Americans spend five times more than Chileans, yet their lifespan is shorter than Chileans by roughly five years. ….

The chart … hides another peculiarity of US healthcare: the top 5 per cent of spenders account for almost half of all healthcare spending.

Federica Cocco, “The problem with US healthcare in one chart“, Financial Times, 17 January 2017 (gated paywall).

average and median life expectancy

Wednesday, December 21st, 2016

An important unpaid resource of the Financial Times is its stable of intelligent, observant readers. Here is an example. Last week the paper published an op-ed written by British-Indian science journalist Anjana Ahuja.

Today, the FT published the letter of a reader who caught an error in Ms Ahuja’s column.

[Anjana Ahuja] states that “most American babies born in 1900 failed to live past 50”: it is true that life expectancy in the US in 1900 was approximately 47 years. However, it needs to be recalled that a life expectancy calculation is an average or mean; to be precise, a weighted average expected number of years of future life as of a given point in time, in this case, birth. However a claim about the age below which the majority of a given birth cohort will die, is a statement about the median age at death rather than the mean age at death.

Life expectancy calculations at birth, especially those calculated before the mid-20th century, can deviate significantly from the corresponding median ages at death due to the effect of infant and childhood mortality rates. As it turns out the calculated median age at death for the US 1900 birth cohort was more like 56 or 57.

Peretz Perl, “How life expectancy calculations deviate“, letter to the editor, Financial Times, 21 December 2016 (metered paywall).

This is an important point. The mean simple average) and the median measure different things. To illustrate with an exaggerated, hypothetical case, suppose we have a sample of 100 individuals born in the same year, 40 of which die at age 5, 50 at age 50 and 10 at age 70. The average (mean) life expectancy at birth for this cohort would by 34 years. But the median life expectancy would be 50 years. Why? Because this is the life expectancy of the median person, i.e. the life expectancy of the 50th person (the median!), arranging all individuals in order of their years of life.

I may be wrong, but my impression is that few in a population of supposedly well-educated people are able to distinguish between a mean (simple average) and a median. If Ms Ahuja, who has a PhD in space physics, confuses the two measures, anyone can.

The median is useful concept. I think it should be taught in middle school, or even earlier.

Alas, life expectancy changes over time, typically increasing, so calculation of the median for a specific cohort becomes more difficult. Mr Perl goes on to explain that, for this reason, the  “’calculated’ median understates the actual historical median age at death for that cohort”:

That’s because the standard calculation for such a median age at death assumes that the probabilities of death at each age are frozen at the rates that were applicable in the year of calculation — in this case 1900. The true median age at death for the 1900 US birth cohort was dramatically impacted by the ongoing improvements in longevity as the cohort made its way through the 20th century.

For example, the probability that an American born in 1900 who had survived to the age of 40 would die before age 41 was significantly lower when he or she actually reached age 40 in 1940 than what it was thought to be in when they were born in 1900, and so on. The actual median age at death to which most Americans born in 1900 survived was closer to 60.

Mr Perl displays an impressive knowledge of demography and statistics, far beyond what might be expected even from a Financial Times reader! I googled “Peretz Perl” and discovered he is an actuary at New York-based TIAA-CREF, one of the largest pension funds in the world. That explains everything.

We cannot all become actuaries. But it should be possible for all of us to distinguish between a mean and a median. The concepts are not difficult and, in my opinion, could be taught to students from an early age.

medicare in Canada

Thursday, September 8th, 2016

Medical care in Canada is widely praised, and is indeed excellent, especially compared to the costly medical care system of its southern neighbour. Slowly and illegally, though, in some provinces the system is becoming less universal. If this trend continues, access to basic health care in Canada will depend more and more on price (ability to pay) rather than need.

Dr Ryan Meili, a Saskatchewan physician, appeals for the federal government to restore the universality of medicare by enforcing existing legislation (the Canada Health Act).

Extra-billing in Ontario, private MRIs in Saskatchewan and user fees in Quebec: violations of the Canada Health Act are on the rise across the country. Canadian doctors are concerned about the impact of this trend not only on their patients, but on our public health care system as well.

…. Provinces that are not in compliance [with the conditions for payment under the Canada Health Act] are to be penalized with a reduced Canada Health Transfer (CHT) payment.

This year’s report showed that in 2014-15, the only province that received such a penalty was British Columbia. Their CHT payment was docked $241,637 ….

In Ontario alone, the frequency of such charges has grown at an alarming rate …. [I]ndependent health facilities (e.g. eye surgery, colonoscopy, diagnostic and executive health clinics) charged extra fees for medical consultations, examinations, diagnostic testing and other manners of “upgraded services.” These fees are for services that are covered by the health system. This is otherwise known as extra-billing, a practice that is against federal and provincial law.

Despite these contraventions, … Ontario has never been penalized. ….

User fees, access charges, extra billing all come down to the same thing — inequitable access to Canadian health care.

Charging patients at the point of care for medically necessary services strikes at the heart of the principle that access to health care should be based on need rather than ability to pay. It undermines equity, increases system costs and reduces public commitment to universal coverage. ….

It is time … to ensure medicare will be there for all Canadians in their time of need.

Ryan Meili, “It’s Time For The Federal Government To Enforce The Canada Health Act“, The Blog, Huffington Post, 4 April 2016.

Dr Meili (born 1975) is a family physician. He teaches at the University of Saskatchewan’s College of Medicine, where he heads its Division of Social Accountability.

HT Chris Willmore.