Archive for the ‘Health Economics’ Category

cultural genocide and Aboriginal health

Monday, March 14th, 2016

Large-scale immigration can have profound effects on the physical and mental health of natives. Canada’s Aboriginals are painfully aware of this. (more…)

a plea for funding Britain’s NHS

Saturday, February 27th, 2016

A member of the British House of Lords, writing to the editor of the Financial Times, pleas for adequate funding of the National Health Service (NHS). Interestingly, he calls for funding from a hypothecated (earmarked) tax rather than from general government revenue. The hypothecated tax exists, but is not used for its intended purpose.

Sir, …. Part of the reason [we spend too little on the National Health Service] is that its costs rise faster than gross domestic product …. Yet as the Office of Budget Responsibility has pointed out, … the share of spending on health and social care as a proportion of GDP is actually declining. The problems of the NHS are greatly aggravated by [Chancellor of the Exchequer] George Osborne’s declared aim: to shrink the state.

As Norman Lamb MP has argued, we should convert national insurance contributions [NICs] into a special, progressive health and social care tax. NICs no longer fund health and pensions, … but still survive as a separate, inefficient, regressive tax on jobs, which increases both business costs and unemployment.

The Treasury dislikes hypothecated taxes because they hamper the most efficient allocation of public funds to where they are most needed or give best value for money. But these arguments are overwhelmed by the greater willingness, or less unwillingness, to pay for what we value. The NHS is one of our most cherished institutions.

The great American judge Oliver Wendell Holmes once said: “Taxes are the price we pay for a civilised society.” A special health and social care tax could not be a better example.

Dick Taverne, “Our cherished NHS is a special case, deserving of a hypothecated tax“, letter to the editor, Financial Times, 27 February 2016 (metered paywall).

Baron Taverne (born 1928) sits in the House of Lords as a Liberal Democrat.

obesity and the price of oil

Saturday, February 20th, 2016

Oil prices have fallen from $100 to $30 a barrel. Conventional wisdom is that this is  bad for producers but good for consumers. Tim Harford, the FT “undercover economist”, points out that this is not strictly true. Low oil prices also have adverse consequences for consumers of the product, including increased levels of obesity.

Charles Courtemanche, a health economist at Georgia State University, has found a correlation between low gasoline prices and high obesity rates in the United States. That is partly because, when oil prices are high, people may get out of their cars and walk, cycle or get public transport. Cheap gasoline, on the other hand, puts disposable income into the pockets of families who are likely to spend it on eating out. Low oil prices may make us fat.

Tim Harford, “The consequences of cheap oil“, Financial Times, 20 February 2016 (metered paywall).

Adam Cifu on ending medical reversal

Wednesday, February 17th, 2016

I just listened to the following podcast, which I found very interesting and informative. The topic is medical research, but there are lessons for economic research. You can download it at iTunes or at the link below. Enjoy!

Why do so many medical practices that begin with such promise and confidence turn out to be either ineffective at best or harmful at worst? Adam Cifu of the University of Chicago’s School of Medicine and co-author (Vinayak Prasad) of Ending Medical Reversal explores this question with EconTalk host Russ Roberts. Cifu shows that medical reversal–the discovery that prescribed medical practices are ineffective or harmful–is distressingly common. He contrasts the different types of evidence that support or discourage various medical practices and discusses the cultural challenges doctors face in turning away from techniques they have used for many years.

Adam Cifu on Ending Medical Reversal“, EconTalk Episode hosted by Russ Roberts, 15 February 2016.

(under)funding the NHS

Thursday, February 11th, 2016

Britain’s National Health Service (NHS) is in crisis because the institution lacks adequate funding, writes FT columnist Philip Stephens. The NHS budget has, it is true, increased somewhat faster than the rate of inflation, but it has been falling as a share of GDP, at a time when increasing demands are placed on it.

Things are about to worsen. … NHS spending is budgeted to fall to 6.6 per cent of gross domestic product in 2020 compared with 7.3 per cent in 2014. …. So a society that is at once becoming wealthier, older and demanding more healthcare will be spending less and less.

International comparisons tell the same story. Those who laud the French or German health systems usually overlook the fact that these countries spend about 11 per cent of GDP for the service. If private spending is added to the NHS budget the figure for Britain is 8.5 per cent. Little wonder the NHS lags behind its neighbours on performance in treatment such as cancer care.

Philip Stephens, “Doctors cannot be blamed for the NHS cash crisis“, Financial Times, 10 February 2016 (metered paywall).

the struggle for single-payer health care

Monday, January 18th, 2016

The US has nearly universal, single-payer health insurance for everyone from age 65. The programme is known as Medicare. It is not quite universal because there is a requirement that the beneficiary (or spouse) have a minimum of forty quarters (ten years) of contributions to Social Security.

I have long thought that the easiest way to achieve universal health insurance coverage in the United States is to give Medicare benefits to everyone: remove the contribution requirement and lower the age of eligibility to zero. A social scientist at the University of Chicago points out that achieving this, though technically simple, is not easy to do. Why? Because policy changes create losers and winners. The losers will oppose the reform. If they have sufficient power and wealth, they may successfully block the change.

But doesn’t the “winners and losers” argument apply equally to the Patient Protection and Affordable Care Act, known as Obamacare? And Medicare does have the advantage that it is easier to explain to voters.

For whatever reason, only two US candidates for president endorse Medicare for all: one Democrat (Bernie Sanders) and one Republican (Donald Trump).

Harold Pollack, in an online column, provides insights into why legislating single-payer health insurance is difficult in the United States.

The Hillary Clinton campaign is taking some hard knocks from liberals over its maladroit attacks on Bernie Sanders’ single-payer proposal. In one sense, the knocks are well-deserved. Even if single-payer markedly lowers medical expenditures, … a tax increase of at least 8 percent of GDP would likely be required to finance it.

Yet as proponents rightly observe, these taxes would replace many visible and invisible ways we now provide to support a health sector that consume more than 17 percent of our economy. ….

The pitch for single-payer is admirably simple: We cover every (legal) resident. We mail a Medicare card to everyone. Everyone is covered. That’s a lot easier to explain and market than it is to explain the convoluted structures of Medicaid and state marketplace plans. ….

[There is a problem, though.] A huge reform that creates millions of winners creates millions of losers, too.

As with ACA [Obamacare], the biggest winners would be relatively disorganized low-income people in greatest need of help. The potential losers would include some of the most powerful and organized constituencies in America: workers who now receive generous tax expenditures for good private coverage, and affluent people who would face large tax increases to finance a single-payer system.

Harold Pollack, “Here’s why creating single-payer health care in America is so hard“, Vox, 16 January 2016.

Harold Pollack is a professor at the University of Chicago School of Social Service Administration.

Surprisingly, Professor Pollack fails to mention that Republican candidate Donald Trump supports a single-payer system, and has words of praise for the health-care systems of Canada and Scotland. Unsurprisingly, though, Trump is often rather vague when answering questions on this topic.

the Rosenhan Experiment on sanity in insane places

Friday, November 20th, 2015

As promised, here are excerpts from the famous article of Stanford psychologist David Rosenhan (1929-2012), with an ungated link to the full paper. My comments follow below. (more…)

wasteful spending on medical care

Wednesday, November 18th, 2015

Further to yesterday’s post on high US spending on health care, last night I came across a wonderful example of medical spending that is even worse than useless. It is from a fascinating book by neurologist Oliver Sacks.

In 1973 the journal Science published an article that caused an immediate furor. It was entitled “On Being Sane in Insane Places,” and it described how, as an experiment, eight “pseudopatients” with no history of mental illness presented themselves at a variety of hospitals across the United States. Their single complaint was that they “heard voices.” They told hospital staff that they could not really make out what the voices said but that they heard the words “empty,” “hollow,” and “thud.” Apart from this fabrication, they behaved normally and recounted their own (normal) past experiences and medical histories. Nonetheless, all of them were diagnosed as schizophrenic (except one, who was diagnosed with “manic-depressive psychosis”), hospitalized for up to two months, and prescribed antipsychotic medications (which they did not swallow). Once admitted to the mental wards, they continued to speak and behave normally; they reported to the medical staff that their hallucinated voices had disappeared and that they felt fine. They even kept notes on their experiment, quite openly (this was registered in the nursing notes for one pseudopatient as “writing behavior”), but none of the pseudopatients were identified as such by the staff. [FN 1] This experiment, designed by David Rosenhan, a Stanford psychologist (and himself a pseudopatient), emphasized, among other things, that the single symptom of “hearing voices” could suffice for an immediate, categorical diagnosis of schizophrenia even in the absence of any other symptoms or abnormalities of behavior. Psychiatry, and society in general, had been subverted by the almost axiomatic belief that “hearing voices” spelled madness and never occurred except in the context of severe mental disturbance.

[FN] 1. The real patients, however, were more observant. “You’re not crazy,” said one. “You’re a journalist or a professor.”

Oliver Sacks, Hallucinations (Knopf, 2012), pp. 53-54.

Chapter 4 (pp. 53-73) of Hallucinations can be read in its entirety here.

Belief that “hallucinatory voices are almost synonymous with schizophrenia” is common, explains Dr Sacks on p. 58 but “a great misconception, for most people who do hear voices are not schizophrenic”.

Oliver Wolf Sacks (born 1933) died of cancer on August 30th, 2015. Dr Sacks was British, but spent most of his professional life in the United States. He became professor of neurology at the NYU School of Medicine in 1965 and later, from 2007 to 2012, was professor of neurology and psychiatry at Columbia University.

Dr Sacks was not only a talented professor and researcher; he was also a physician and best-selling author of many books. His autobiographical account Awakenings (1973) in 1990 was adapted into a film with the same title, starring Robin Williams as Dr Sacks and Robert De Niro as one of his patients.

I was able to locate an ungated link to David Rosenhan’s article, and will shortly use it to prepare a TdJ. The results of the experiment are interesting, and rather frightening.

high US spending on health care

Tuesday, November 17th, 2015

Timothy Taylor is upset that the health care debate in the United States largely ignores the fact that the country spends, as a share of GDP, roughly twice as much as the average OECD country. What does the US gain from all this expenditure? Apparently nothing. My hunch is all that high-powered treatment would be useful if it were not concentrated on the ‘fortunate’ few who have access to expensive tests and treatment. I place ‘fortunate’ in quotes because too much medical care can be as harmful as too little.

Here are the concluding paragraphs (and a chart) from Tim’s post. Click on the chart for a clearer view.

There is considerable public debate over how to make sure all Americans have health insurance. But the issue of the enormous costs of the US health care system doesn’t get the same airtime. Sure, there are arguments over how much or why the rate of growth of US health care spending has changed. In the meantime, the US continues to vastly outspend other countries. For example, here’s a figure from the OECD showing health care spending as a share of GDP, 50% higher than any other country and roughly double the OECD average. Based on this data, the US is spending about $8500 per person per year on health care, while Canada and Germany are spending about $4400 per person per year, and the United Kingdom and Japan are spending about $3,300 per person per year.

oecd health
I understand the reasons why high US health care spending doesn’t buy health. But it’s a bitter irony indeed that the extremely high levels of US health care spending are actually causing at least tens of thousands, and quite possible hundreds of thousands, of deaths each year.

Timothy Taylor, “How Many Deaths from Mistakes in US Health Care?“, Conversable Economist, 12 November 2015.

There is much more, with links to even more information, at the link above.

two-tiered versus universal provision of healthcare

Sunday, November 15th, 2015

This weekend’s edition of the Financial Times contains a letter that repeats a common, but erroneous argument levied against universal healthcare. Why insist that everyone receive the same standard of service, even those who able and willing to pay some portion of the higher standard of service they desire?

Sir, It is about time someone in an influential position raised the issue of other forms of revenue for National Health Service funding. I and many colleagues of mine who have lived and worked in The Netherlands and France are tired of hearing about the NHS funding problems, which continue to arise because of the ideological obsession of all our political parties with their belief that medical care must be free to everybody. This is no doubt because of their fear of losing votes if they suggest otherwise.

Those of us fortunate enough to enjoy a reasonable level of private income would be well prepared to contribute to this important service through, for example, GP attendance fees and top up private insurance arrangements as occurs in the Netherlands. It would not be difficult to determine an individual’s private income through the tax authorities and fix an appropriate level above which he or she must make some form of private contribution to the NHS.

Michael Speer, “Obsessed with idea that healthcare must be free“, letter to the editor, Financial Times, 14 November 2015 (metered paywall).

Britain’s National Health Service (NHS) is financed entirely with general government revenue. No-one is forced to use NHS, but if a taxpayer chooses to go to a private clinic or hospital, he or she must pay the entire expense out-of-pocket, either directly or by purchasing private insurance. This is the system that Mr Speer dislikes.

I was about to write a letter to the editor asking why, if people like Mr Speer are willing to contribute to the cost of their own medical care, they are not also willing to contribute to Her Majesty’s treasury in order to alleviate the chronic under-funding of the National Health Service?

I then saw that there was no need to draft a letter, for the Financial Times published the following response from another reader:

Sir, …. Are those people who are reluctant to pay more tax happy to pay into expensive private health insurance, their contributions covering not just healthcare costs but shareholder profits? Are they happy to discover that certain pre-existing conditions are excluded from cover? And if, taking all that into account, they feel better off than paying the extra taxes, are they really content to see the poor, unable to afford the insurances, appointment charges or other suggested costs, receiving only some basic treatment?

Peter Cave “Why is paying tax worse than paying premiums?“, Financial Times, 14 November 2015 (metered paywall).

I did not include the first part of Mr Cave’s letter, as his argument is clear without it. I would emphasize even more, however, the point that allowing the wealthy to pay top-ups for better treatment inevitably lowers standards for treatment of the poor. It is the interest of the poor that the wealthy not be excluded from Britain’s NHS nor (with the same reasoning) from government-funded schools.