Bob Fogel on life expectancy and health policy

Chicago Booth School economic historian Bob Fogel writes on how to think about longevity, his thoughts on likely health breakthroughs in the near future and on how to think about health expenditures and health policy. There is wisdom throughout.

I took Bob's class on "business ethics in historical perspective" when I was in graduate school and thoroughly enjoyed it. Despite the title, what it really was about was the general history of ethical movements in the US. That subject matter formed a natural outgrowth of Bob's famous research on slavery and the civil war. I read his second civil war book, Without Consent or Contract, late in graduate school. It changed my views in many ways and also sharpened my sense of the valuable toolkit that economic historians bring to the economics discipline as a whole.

Common ground on health care?

A nice column from Greg Mankiw pointing out obvious (outside the beltway) things like the conceptual equivalence of taxing X and subsidizing not X and of "means testing" and progressive tax increases.

We disagree a bit, I think, on the "death panels". I think money that the government takes by force from taxpayers should only be spent on treatments that pass cost-benefit tests. Individuals, or insurance companies not spending government money, should, of course, be free to spend money on other things.

And there should have been some mention of the fact that really, in their hearts, everyone knows that medical care should not be tax preferred. That (with some competition from the WW2 price control legacy of having insurance run through employers) is surely the most idiotic aspect of our current setup.

On sibling fixed effects ...

An interesting abstract:

"Long Term Effects of Health Investments and Parental Favoritism: The Case of Breastfeeding"

JASON M. FLETCHER, Yale University - School of Public Health

This paper re-examines the effects of breastfeeding on long term educational outcomes using longitudinal data on siblings. While family fixed effects allow controls for all shared family factors, these estimators are sensitive to compensating or reinforcing behaviors by parents. These biases may be particularly important for estimating the effects of parental investment such as breast feeding, where sibling discordance may be difficult to treat as a random outcome and may result in persistence in differential investments between siblings.

This paper uses a unique question asked to adolescent siblings about parental favoritism to adjust for potential reinforcing behavior by parents. Standard fixed effects estimates suggest important long term educational effects of breastfeeding, however these effects are uniformly eliminated after focusing on families who treat siblings equally. These findings shed light on the mechanisms linking associations between breastfeeding and longer term outcomes.

Hat tip: Charlie Brown

Health effects of health insurance

The result noted by Ezra Klein in his column is actually pretty well known in the literature. If Obamacare survives the court challenges, I think there will be a lot of surprise among non-specialists when it turns out not to affect health outcomes very much. Behavior, such as eating, exercising, smoking, sleeping and stress, along with public health measures related to things like clean water and safe food, actually matter a lot more.

200 years of progress in a few minutes

A very cool video from BBC 4 on what has happened to the relationship between life expectancy and income over the past 200 years.

One can, of course quibble about the different scales on the horizontal and vertical axis, and with the failure to note the lagging progress of sub-Saharan Africa amidst all the optimism at the end.

And then life expectancy is itself a very odd thing, based as it is on strong synthetic cohort assumptions.

But worth watching in any case, just for the graphical presentation.

Hat tip: Ken Troske

Biased research on smoking ...

Here is an example of why moving all research from the drug companies to government funded labs and university researchers will not solve the problem of biased research.

Though one should not omit the possibility that the researchers hired by Health Canada to do the research simply were not very good or did not include on their team someone familiar with survey design. An easy way to deflate nearly any applied economist doing research using survey data is to start asking about the details of the data collection, either in terms of the sampling or in terms of the survey structure and question wording.

The Surgeon General

Every time the surgeon general says something stupid like this, that is obviously not supported by the scientific evidence, it has a negative spillover effect on all other scientific claims the government tries to make, including the ones that are actually true.

There should be some sort of internal tax on this foolishness, or else, perhaps even better, this rather ridiculous office should be eliminated entirely.

Take two placebos ...

Reuters reports on the FDA's reaction to a new drug aimed at the "female viagra" market.

The most interesting bit is actually this:

Boehringer, a privately held German drugmaker, said its data showed the drug provided a meaningful benefit for women who are bothered by their low sex drive and have limited options. The number of satisfying sexual experiences rose to an average of 4.5 per month from 2.8. For placebo patients the rate jumped to 3.7. Women took the drug for six months.

Unlike the drug, the placebos have, of course, no side effects.

I'll confess I've always wanted to find the time to read more about the placebo effect, which strikes me as quite important and also quite a puzzle for current medical models.

For those who are keeping track, this is a medical post and not a sex post. In case you were wondering.

Hat tip: Charlie Brown (from whom I stole the title)

The cutting edge of AIDS prevention in Africa

From the Nyasa Times and from my colleague Rebecca Thornton.

Note the role of simple, and in this case as in so many others misleading, bivariate correlations in confusing the Malawian policy discussion.

Legal challenges to the health care legislation

Libertarian law professor Randy Barnett offers some thoughts about possible legal challenges to the recently passed health care legislation.

I do not see much coming out of this. The court is not going to overturn Wickard v. Filburn, the New Deal era decision in which it ruled that growing food on your own land for your own use constitutes interstate commerce. Put differently, in substance it ruled that the interstate commerce clause gives the federal government unlimited power to regulate economic activity, subject only to the minor limits imposed by the Court's favorites among the Bill of Rights. Find that in the Federalist Papers! There have been some tiny retreats in recent years but I suspect the court is still smarting enough from Bush v. Gore that it would not touch anything as controversial as this.

Still more on health care

The Economist's Democracy in America blog on bipartisanship in the aftermath. I am puzzled at the quote from Russ Douthat who appears to believe that some democrats think the health legislation will actually reduce the deficit. I give the democrats credit for more intelligence than that; really, they are just lying on this one. That is what politicians (and advocates) often do. I think the democrats have in mind a sort of reverse of the Republican idea (long since empirically disproved) that if you cut taxes, eventually spending must fall. Instead, the democrats hope that if you expand spending enough, eventually taxes must rise.

Doug Holtz-Eakin in the NYT on the budgetary misrepresentation underlying the health legislation. Doug deserves a lot of credit for doing policy work rather than cashing in on his Rolodex (for the young ones, a device for holding phone numbers written on paper and business cards). The opportunity cost he is paying is a large one.

Finally, Jay Cost on the potential political vulnerabilities of the legislation. A lot could change between now and the time the real spending kicks in, but I suspect that the Republicans and their Blue Dog friends will not be able to accomplish much in the way of rolling back the legislation. Most of what needs to be done the Republicans have spent months opposing, though there could be progress on the minor issue of tort reform. The bottom line is that once people have their subsidies, they are very hard to really ever take away, particularly when the recipients are well organized and politically powerful, as with hospitals, drug companies and doctors. Just look at the farmers, the great welfare queens of the hills and prairies.

More on health care

Greg Mankiw is a bit more temperate than I was yesterday and puts more emphasis on philosophy. I don't think this is really about philosophy for most people. I think it is about leadership and responsibility. My point yesterday is that one could have universal coverage without busting the bank and with less in the way of negative efficiency effects than the bill we are getting. To get to such a bill would have required real leadership in the form of telling the public the truth instead of lies and fantasies, accepting less generous coverage more consistent with fiscal reality and good government and being honest about (and passing at the same time) some combination of tax increases and cuts in other things, such as Medicare Part D. I think the a solid majority of the public would have supported such a package and it would thus have had the additional virtue of not being as polarizing.

David Warsh compares the health care bill to the creation of the Fed. I do not see this at all. The bill we got is a tax and spend bill, not an evidence and efficiency bill.

Health care legislation

It appears that the massive health care legislation is set to pass, after much fuss and bother. Only in America would it come down to fetuses in the end.

It might surprise some readers that I actually support (inexpensive) universal coverage. We have already made a decision that we will not let people, or rather US citizens, go without certain types of health care. Such uncompensated care is paid for by the government or is socialized via the higher private insurance premiums that result from some people going bankrupt or otherwise not paying. Given that we have made this decision, one which I do not, at a general level, disagree with, we should do so in a thoughtful, organized and evidence-based way, rather than in the current dishonest, piecemeal and silly way. Requiring people to buy health insurance makes sense for the same reason that requiring them to buy auto insurance does: if you do not, some people will not buy it but will get into accidents anyway. For reasons beyond the scope of this post I think it makes more sense to require the purchase of a minimal private health insurance plan, with a subsidy for those who cannot afford to do so, than to institute a single payer or a completely government run system. Indeed, a serious reform would have replaced both Medicare and Medicaid with exactly this. I would then have the government define the minimal insurance package by setting an affordable dollar value and having a panel of health care experts and economists figure out what to buy with it. If people wanted more insurance, they could of course buy policies that provided more coverage than the government minimum with their own funds. Simple and easy. And there is no need for it to add, on net, to the deficit, if accompanied by, for example, the removal of the part of the Medicare Part D donut that (insanely) provides first dollar coverage of prescriptions, by the ending of the tax subsidy for health insurance and/or by setting the dollar value of the basic plan below current Medicare levels.

What is in the process of being passed now is very much not a thoughtful, or reasonable or evidence-based way to obtain universal coverage without busting the budget. If reform means making things better then it is not reform, and it is certainly not any sort of great progressive victory. It is an insurance purchase requirement, which may not even last through the courts, a whole bunch of spending, a whole bunch of unfunded mandates to the states, a whole bunch of changes to what insurance companies can do that will raise premiums, some implicit transfers from the young to the relatively old via the design of the subsidies, and some other assorted bits. It is not about cost-control nor about using evidence to guide what gets paid for nor about fixing the welfare reducing inefficiencies in the present system, such as the tax subsidy to health insurance. The only positive thing one can say is that it probably will not directly reduce innovation in the health sector, which some of the proposals on the table at various points likely would have. It may, of course, reduce economic growth via tax increases at the state and federal levels and thus reduce innovation indirectly. On the other hand, because the scheme essentially represents a subsidy to health care demand, it could even increase innovation.

Moreover, the whole process leading up to the vote today has been rife with lies by those advocating for the policy. Those lies include the fake future Medicare cuts included in the legislation to make the budget scoring look good and, more generally, pretty much all claims about cost-cutting. There was also a lot of lying about Americans without health care, when in fact what there are is Americans without health insurance. In most cases, though not all, these are not the same. There were also a lot of ridiculous claims about the likely effects of the reform on health outcomes and on bankruptcies. Americans are sick because they smoke, eat both too much and the wrong things and rarely exercise, not, in the main, because they lack health insurance. Similarly, Americans, again in the main, go bankrupt because they are irresponsible with credit, not because they get sick.

At the same time, the Republicans performed completely disreputably as well. The three aspects of the proposal they went after: the requirement to purchase insurance, the "death panels" designed to bring some evidence to bear on what gets covered and the cuts to medicare, are or were, before they were cut out, the good bits, not the bad ones. And, really, prating on about socialism while defending Medicare in its present form and after passing Medicare Part D under Bush II, let alone after starting two voluntary wars, is pretty rich, and pretty ridiculous.

The whole lot of them, Democrats and Republicans, ought to resign in shame. This is a debacle on the order of the Iraq War or Medicare Part D or, going back into the distant past, on the order of Prohibition or of setting up Social Security as a pay-as-you-go system rather than a forced savings system. The public will continue to bear this burden long after the current crop of congressional ideologues, hucksters, morons and sleazebags is gone from the scene.

Some related thoughts from Megan McArdle at the Atlantic.

Taxing tobacco

Recent UM Ph.D. Adam Cole points me to this interesting study on tobacco taxes produced by the US Treasury Department.

For me, the most interesting bit is in the appendix. The study authors would like to estimate the volume of cigarettes consumed in the US on which tax has not been paid. One reasonable way to do this starts with using administrative data to determine the number of cigarettes on which federal taxes are paid. Administrative data works well here because federal taxes are paid at the production site and careful records are kept. The number of cigarettes consumed, in contrast, can be estimated using data from a nationally representative survey, in this case the National Health Interview Survey (NHIS), a data set widely used in research in health economics.

The problem is that when you do this, you discover that the number of cigarettes consumed lies well below the number on which taxes are paid - see Table 4. Given that cigarettes degrade in quality when stored reasonably rapidly, which indicates that the excess cigarettes are not being stored by consumers, this finding suggests that the NHIS measure of cigarette consumption has a downward bias, presumably due to "non-classical" measurement error in smoking incidence and/or (probably and) in number of cigarettes smoked conditional on reported incidence. The study does about the only thing one can do in this situation, which is to present estimates - see Table 5 - of the lost tax revenue as a function of assumptions about the downward bias in the NHIS consumption measure. One obvious recommendation here is to improve our knowledge of the degree of downward bias in smoking consumption measures by doing some sort of validation study. More generally, this study provides a nice example of how research on measurement, which might seem rather arcane, actually has a real world payoff.

The other bit of the study that stands out to me is this:

Recommendation 3: Allow enforcement officials to pay investigative expenses with proceeds gained through undercover operations.

Problem: Currently, tobacco tax enforcement programs are funded principally through agency appropriations or from forfeiture proceeds arising from asset forfeitures in concluded criminal cases. Additional funding through the use of proceeds gained through undercover investigations would expand investigative resources without the use of additional appropriated funds.

Recommendation: Existing law should be amended to authorize TTB to use proceeds gained from undercover tobacco tax enforcement operations to fund its investigations.

I disagree with this bit for the same reason I dislike asset forfeiture laws. I do not think that law enforcement should be a profit center for the government. Making it such strongly enhances the incentives for misbehavior by law enforcement officials.

College and health care

What colleges would be like if they priced like hospitals.

This piece is interesting in both directions. In thinking about health care, I have often wondered to what extent the administrative oddities of the health care industry are the result of antitrust rules (preventing development of common intake forms and the sharing of data) and other regulations. Are there state or federal regulations that limit changes in pricing strategies? I expect so.

In terms of higher education, we do in fact charge different prices for different groups: public universities charge different tuition for in-state and out-of-state residents, for students of different ability levels and family backgrounds, for graduate and professional students and so on. Some of these price differences are public information, others, like scholarship offers, are not. So it is not quite the one-price-fits-all industry implicit in the article. And some places, mostly business schools, do use types of pricing mechanisms to allocate slots in high-demand courses and such. Other times there is rationing at random or by waiting or by major, as with my ECON 406 undergraduate econometrics course.

If I had an alter ego, he might well be a health economist. There are so many interesting questions to study.

Hat tip: Ken Troske

Your medical research dollars at work

Grant McCracken claims he is the last to find out that there is now a prescription drug that makes your eyelashes longer. Apparently not, as I found out from him.

I find myself repeating over and over: do not criticize the leisure activities of others, do not criticize the leisure activities of others ....

Optimal transparency != 1

I agree with Mickey Kaus in regard to the kerfuffle over Obama's foolish and misguided promise to televise the house/senate conference hearings on health care on C-SPAN. There is actually a literature on "secrecy" in political science and the gist of it is that sometimes secrecy yields better outcomes. More practically, as Kaus notes, putting the conference hearings on C-SPAN would simply mean that the action of interest would happen somewhere else.

Obama should not have made this promise, for both political and substantive reasons, but the Republicans do themselves no credit by jumping on it, as they should know better as well.

Warsh on health care reform

David Warsh notes that the bill that seems likely to emerge in the end will have a bipartisan pedigree.

My thought, based on a relatively casual understanding of what is in the bill, is that it is a muddle all around. There are things to like, such as the coverage mandate and the increased coverage and, if it survives, the partial reduction in the health insurance subsidy.

There are things to dislike, such as the fraudulent accounting and the absence of any serious efforts to control expenditures. The flip side of this, to some extent, is that the bill is unlikely to decrease medical innovation, at least in the short and medium run, and might even give it a boost. The bill also helps move the system away from first dollar coverage.

Missing in all the kerfuffle was an opportunity to fix the prescription drug benefit - a good potential source of financing for the increased coverage - and to improve on Medicare and Medicaid by dumping them in favor of the mandatory, regulated private coverage to be imposed on the non-poor and non-old. Also missing are efforts to increase the domestic supply of doctors and nurses and/or to move functions away from both to less expensive nurses aides and other staff whose supply is not artificially limited. That is a very simple form of cost control and would have the side benefit of reducing the flow of medical personnel from developing countries to the US.

And we can be thankful for the absence of a public option; try as I might, I cannot think why the left imagines that this is a good idea.

Health care legislation and populism

Jay Cost has a nice piece on the popular rebellion against the current version of the health care legislation.

The legislation is indeed a mess but I would be happier if the opposition was based on a clear understanding of what a thoughtful reform bill would look like.

Air travel and health care

Jonathan Rauch imagines air travel organized like health care.

One of the big attractions of the Canadian system is its administrative simplicity. You go to a provider (if you can find one taking new patients) and show your card and you're done.

My sense is that health insurance systems in other countries with universal coverage but without a single payer are also substantially simpler on the administrative dimensions highlighted in Rauch's piece.

This suggests that the key is not single payer but some other aspect of regulation. Put differently, I have wondered for some time what aspect of the US health industry regulatory environment prevents it from acting like the airlines? Is it some obscure aspect of antitrust legislation or case law? Is it the lack of national market? Is it state insurance regulators captured by some part of the industry that benefits from this inefficiency? I've never seen a clear discussion on this aspect of the current situation but would like to.