Marginal Revolution

Hail Emily Oster!

The paper is titled "Hepatitis B Does Not Explain Male-Biased Sex Ratios in China"; here is the abstract:

Earlier work (Oster, 2005) has argued, based on existing medical literature and analysis of cross country data and vaccination programs, that parents who are carriers of hepatitis B have a higher offspring sex ratio (more boys) than non-carrier parents. Further, since a number of Asian countries, China in particular, have high hepatitis B carrier rates, Oster (2005) suggested that hepatitis B could explain a large share (approximately 50%) of Asia's missing women". Subsequent work has questioned this conclusion. Most notably, Lin and Luoh (2008) use data from a large cohort of births in Taiwan and find only a very tiny effect of maternal hepatitis carrier status on offspring sex ratio. Although this work is quite conclusive for the case of mothers, it leaves open the possibility that paternal carrier status is driving higher sex offspring sex ratios. To test this, we collected data on the offspring gender for a cohort of 67,000 people in China who are being observed in a prospective cohort study of liver cancer; approximately 15% of these individuals are hepatitis B carriers. In this sample, we find no effect of either maternal or paternal hepatitis B carrier status on offspring sex. Carrier parents are no more likely to have male children than non-carrier parents. This finding leads us to conclude that hepatitis B cannot explain skewed sex ratios in China.

We should hold up Emily Oster as a role model of a truth-seeker.  If the abstract does not make it clear, Emily Oster first won her fame by reporting the opposite result about sex ratios.  Here are our previous posts on Emily Oster.

A more general lesson, of course, is simply how difficult it is to get at truth.  This is a well-defined data set with a (more or less) well-defined answer.  Most policy questions aren't so tractable.

Letter to the NEJM

The issue of off-label prescribing is heating up again.  A recent article in the New England Journal of Medicine by Randall Stafford made the case for greater regulation.  I am concerned that the benefits of off-label prescribing are not fully appreciated.  Dan Klein and I wrote a letter to the NEJM - which they declined to publish - in response.  Here's the letter:

Dear NEJM,

R.S. Stafford writes that off-label prescribing “permits innovation in clinical practice … offers patients and physicians earlier access to potentially valuable medications and allows physicians to adopt new practices based on emerging evidence.”  Nevertheless, he calls for greater FDA regulation.

In contrast, we argue that the efficacy of off-label usage suggests that less FDA regulation of first or on-label usage would increase innovation and offer patients earlier access to new medications. 

Off-label prescribing is regulated by the judgments of doctors, medical researchers, industry, the patient community, and patients.  This system offers patients a more nuanced approach to care than a top-down approach.  We should extend this approach to new drugs as well as to new uses for old drugs.

Our perspective is bolstered by a large survey of physicians which demonstrates strong support for off-label prescribing and considerable support for reducing FDA regulations on new drugs.

Daniel Klein
Alexander Tabarrok
George Mason University

Make dentistry cheaper

Can you see what is coming?:

But to the Alaska Dental Society and the American Dental Association, the clinic is a place where the rules of dentistry are flouted daily. The dental groups object not because of any evidence that the clinic provides substandard care, but because it is run by Aurora Johnson, who is not a dentist. After two years of training in a program unique to Alaska, Ms. Johnson performs basic dental work like drilling and filling cavities.

Here is much more.  Get this:

The number of dentists in the United States has been roughly flat since 1990 and is forecast to decline over the next decade. A study last year from the Centers for Disease Control showed that Americans’ dental health was worsening for the first time since statistics began to be kept.

In Alaska, the A.D.A. and the state’s dental society had filed a lawsuit to block the program that trained people like Ms. Johnson, who are called dental therapists. The groups dropped the suit last summer after a state court judge issued a ruling critical of the dentists. But the A.D.A. continues to oppose allowing therapists to operate anywhere in the lower 49 states. Currently, therapists are allowed to practice only in Alaska, and only on Alaska Natives.

The opposition to therapists follows decades of efforts by state dental boards, which are dominated by dentists, to block hygienists from providing care without being supervised by dentists.

The dental associations say they simply want to be sure that patients do not receive substandard care. But some dentists in public health programs contend that dentists in private practice consider therapists low-cost competition. In Alaska, the federally financed program that supplies care to Alaska Natives pays therapists about $60,000 a year, one-half to one-third of what dentists typically earn.

The Alaska program is small, with fewer than a dozen therapists practicing so far. But the early results are promising, according to dental health experts who are studying the program.

As someone who has spent a lot of time at the dentist, I very much like the assistants and I think of the dentist himself as a kind of middle-level manager and salesman.

I thank Greg Rehmke for the pointer.

The McCain health care plan

Mr. McCain’s health plan centers on eliminating the tax breaks for employers who provide health insurance for their workers — a marked departure from the current system — and giving $5,000 tax credits to families to buy their own insurance. His goal in shifting from employer-based coverage to having people buy their own policies is to encourage competition and choice, and to drive down the costs of health insurance.

Here is more.  Portability is good but so many of the uninsured families do not pay $5000 in taxes.  Will this boil down to a subsidy to those who don't need it or to health insurance vouchers?  InTrade says there is a 39.6 percent chance we will find out.  And here is some vagueness:

Mr. McCain proposed that the federal government work with the states to cover those who cannot find insurance on the open market. With federal financial assistance, states would be encouraged to create high-risk pools that would contract with insurers to cover consumers who have been rejected on the open market.

Here is more detail; in part it sounds like revived HillaryCare (part I), but only for the high-risk cases rather than for the entire population.  The "notches" problem is obvious as people at the relevant margin hold out for the subsidized pool, thereby making the pool size larger and larger.

McCain also emphasizes lifestyle as a factor behind health; that's empirically important -- more so than health care -- but after cutting various stupid subsidies the government should not be the main driver there.  Megan McArdle comments overall.

Trade aside, so far I've yet to see many actual policy proposals from the McCain camp.  Mostly I've seen attempts to signal that they won't do anything too offensive to the party's right wing.  Very few of these trial balloons seem to be ideas that McCain had expressed much previous loyalty to.  I don't even think we should be analyzing these statements as policy proposals.  We should be wondering why the Republican Party has given up on the idea of policy proposals.

Progress on Dual Tracking?

One hundred leading European officials in health regulation, the pharmaceutical industry, and the health media will gather in Stockholm March 27 to discuss a new proposal that would enable patients to gain faster access to life-saving drugs not yet approved by regulators.

One track of this new proposal, known as "Dual Tracking," provides that patients and their doctors try to minimize risk by using only approved drugs as they do now. On the other track, patients and doctors can choose not-yet-approved drugs that have passed safety trials. Patients would be able to balance their own preferences for risk with substantial new opportunities for health improvement. (Quoted here.)

See Bart Madden's More Choices, Better Health (pdf) for a very good explanation and defense of the dual tracking proposal.

The Other Ex-Ante Moral Hazard in Health: You are too Healthy

If you catch a disease or condition, and therefore you make the number of sufferers from that condition more numerous, the chance they will find a cure or partial solution is much greater.  That benefits many other people, not just yourself.  In other words, you will overinvest in being healthy.  There is much more here.

Sherry Glied's new health care paper

It is one of the best health care papers in recent times, it is here, I cannot find an ungated version.  Glied reminds us that only about 1/3 of American health care spending comes from private insurance.  Moving to international comparisons, the more general point is that:

...there is no persistent and regular relationship between the structure of system financing and the rate of growth in per capita health expenditures in a health system...the efficiency of operation of the health care system itself appears to depend much more on how providers are paid and how the delivery of care is organized than on the method used to raise the funds.

In other words, as I've stressed before, the health care cost problem comes from immediate suppliers, namely doctors and hospitals, and not from health insurance companies.

The best parts of the paper concern equity.  It is GPs which help the poor, not additional spending on technology or surgery; see p.18 for other comparisons along these lines.  Furthermore, and this you should scream from the rooftops, consider this:

...patterns of health service utilization in developed countries suggest that the marginal dollar of health care spending -- money used to purchase high tech equipment or specialist services -- is less progressively spent than the average dollar.

In other words, egalitarians should not allocate marginal government spending to health care.  And there is evidence that the more a government spends on health care, the less it spends helping people in money ways.  That is, there is crowding out. 

Finally, Glied offers a summary comparison:

Putting $1 of tax funds into the public health insurance system effectively channels between $0.23 and $0.26 toward the lowest income quintile people, and about $0.50 to the bottom two income quintiles. Finally, a review of the literature across the OECD suggests that the progressivity of financing of the health insurance system has limited implications for overall income inequality, particularly over time.

Highly recommended.

Should we waive legal liability for FDA-approved drugs?

So asks Megan McArdle.  The argument runs as follows:

I don't understand quite why FDA approval of drugs and medical devices hasn't long provided legal safe harbor for their manufacturers. The defects that show up, such as the Vioxx and Fen-Phen problems, are discovered long after approval precisely because they're so rare that they don't show up in ordinary clinical trials. If the government experts, who are presumably highly motivated to avoid catastrophes, can't spot the danger, why do we expect the drug companies to?

I can think of three possible rebuttals:

1. We simply can't trust the bureaucrats to find the flaws with drugs.  But note this is inconsistent with both the rhetoric of FDA defenders ("the FDA can work") and FDA critics, who argue we are overinvesting in drug safety as it is.

2. Lawsuits encourage the companies to look for problems once a drug is already approved.  Regulation does not.

3. People need lawsuits as a way of emotionally striking back.  If they are denied that privilege, they will demand ridiculously oversafe levels of regulation in the first place.  In this view regulation is as much about building consumer confidence in a health care system as it is about protecting people.

I do not currently have a view on this matter.  Do you?  Kevin Drum is opposed.

Why not increase this penalty?

The headline reads: "Health Insurer Must Pay $9 Million for Canceling Sick Woman's Policy." 

The article has gory details about company employees being given cancelation quotas and bonuses, apparently regardless of whether the cancelations were merited under the terms of the initial policy.

If you think that health insurance policies are unjustly canceled fairly frequently (and yes I can believe this), surely this penalty should be much higher.  The cancelers are rarely caught, so a simple application of law and economics suggests severity not leniency.  For a large health insurance company a $9 million fine is peanuts.

As far as I can tell, credibly stiffer fines have not been tried.  In other words, the government does a poor job at enforcing the health insurance contract.

You might hold a theory that the government judiciary will malfunction in such a way but a health care government bureaucracy would not make mistakes of comparable importance.

I do not hold such a theory.  When it comes to health care reform, I would like to start with the enforcement of contracts based on rational and just penalties.

Cherrypicking health care anecdotes

Yikes.  I know there is much more to the policy question than this story, but it is worth keeping in mind:

One such case was Debbie Hirst’s. Her breast cancer had metastasized, and the health service would not provide her with Avastin, a drug that is widely used in the United States and Europe to keep such cancers at bay. So, with her oncologist’s support, she decided last year to try to pay the $120,000 cost herself, while continuing with the rest of her publicly financed treatment.

By December, she had raised $20,000 and was preparing to sell her house to raise more. But then the government, which had tacitly allowed such arrangements before, put its foot down. Mrs. Hirst heard the news from her doctor. “He looked at me and said: ‘I’m so sorry, Debbie. I’ve had my wrists slapped from the people upstairs, and I can no longer offer you that service,’ ” Mrs. Hirst said in an interview...

Officials said that allowing Mrs. Hirst and others like her to pay for extra drugs to supplement government care would violate the philosophy of the health service by giving richer patients an unfair advantage over poorer ones.

Patients “cannot, in one episode of treatment, be treated on the N.H.S. and then allowed, as part of the same episode and the same treatment, to pay money for more drugs,” the health secretary, Alan Johnson, told Parliament.

And that is The New York Times.  Is Atlas Shrugging?

Addendum: More discussion here.

Why is competition between health insurance companies useful?

Kevin Drum (and Matt Yglesias) asks an excellent and important question:

Tyler is arguing for keeping the insurance industry competitive. But I simply don't see what that buys us. Even if the health insurance industry were dramatically improved, this wouldn't especially make healthcare any more efficient. It would only make the insurance industry more efficient. That would be nice, but hardly earthshaking...

Let me be clear: the incentives today are screwy.  Let me also tell you my ideal world.  Insurance companies are judged by honest third party intermediaries.  Insurance companies compete like heck to make customers satisfied.  Insurance companies monitor doctors, read Robin Hanson, and require evidence-based medicine.  Insurance companies which fail at these pursuits either go bankrupt or they must abide by an ex ante contract to permit the exile of their CEOs to Greenland.  Every year prices would fall in real terms, quality would improve, and coverage would be expanded.  Imagine the whole health care sector working like laser eye surgery or cosmetic surgery.

This is not the world we live in, but it is the world we should aim for and I am more than willing to consider how government might get us there.  (Mandating greater price transparency is but one step.)  But if we institute a single-payer system, or highly regulated mandates, we will never have much chance of arriving in that world.  Ever.  We will have a fairly static sector with high coverage levels but rising costs long term and less innovation. 

I believe we know why insurance companies don't work this way, namely monitoring problems; they screw you over instead of serving you and they can get away with it.  Go ahead, call me a pollyanna, but modern information technology and measurement can indeed resolve many monitoring problems.  We can now monitor central bank performance quite well or show up in Sicily with a credit card and rent a car.  Neither was the case forty years ago.

Here is one summary of how health insurance companies are improving information technology for claims processing, medicine itself, and promoting evidence-based medicine.  I don't mean this industry-supplied link to be a good summary of the current truth; take it as one vision of what might be possible.  To put the point another way, insurance companies are not just risk assessors or dollar transfer mechanisms; they also can be monitors and buyer agents and that is why competition is potentially so useful.

The policy point is not: "you must die today so that the reign of Milton Friedman can arrive in forty years' time."  It is more like: "whatever transfers we wish to do today, let us proceed so that such a future remains someday possible."

Medical care is just starting to cure human beings, so don't think the future will look like the past.  I know that preaching the virtues of insurance company competition is not a popular position in the blogosphere but like Arnold Kling, I see the single-payer advocates and mandate advocates as the conservatives, not the visionaries.

Addendum: A month or two ago, one MR reader left a long and very good comment about all the innovations provided by private health insurance companies.  I can't find it, can any of you?  Please let us know in the comments or email me.

Addendum: Kevin Drum responds.

David Cutler on mandates

Cutler is very smart, tenured at Harvard, arguably the leading health care economist, and yes he is an advisor to Barack Obama.  He says mandates are not the way to go, and no I do not think he is just "falling in line" here.  Read the whole thing.  Yes, the key is to make insurance cheaper, not more expensive.  Yes, mandates are a political loser.  Yes, ex post fiddling can make up for a lot of the problems in the "no mandate" approach and there is going to be lots of ex post fiddling anyway.

Of course Ezra is right that the non-mandate plans, such as Obama's, don't do much to lower the cost of insurance.  But I would like to make a more general point about the correct direction to move in.

The way most goods and services become excellent -- I mean really excellent -- is through competition.  Yes, right now health insurance has lots of screwy incentives, most of all cost shedding.  But if you stifle competition and write off hope of getting a better-functioning private insurance market...well...I believe you have not thought long and hard enough about just how much of the social value on Planet Earth has come, ultimately, from competition in the provision of goods and services.  How do you think we got from subsistence agriculture to super-cheap food?  By mandates?

Mandates, of course, tend to require minimum coverage and thus they limit competition in the content of policies and also the expense of policies.  It's unclear if they are truly cheaper, all things considered.

I might that mandates make social cost less transparent and they encourage government to commit societal real resources outside of the usual budgetary process.  Those were two good general criticisms of the last eight years of the Bush administration; let's not carry those principles of governance over into our health care policy.

If someone needs covering, for whatever reason, give them some stuff.  If need be give them some government stuff.  Some kind of plan.  Give them whatever.  But don't overregulate private insurance companies and take them off the table as a source of future productivity improvements and super cheap coverage, however partial it may be. 

The pointer is from Brad DeLong.

By the way, if you're looking for a ray of competitive good news on the health care front, start here.  We need something similar on the insurance front and yes I know that means not every illness will be covered.  Given the Grim Reaper, it's all about marginal choices anyway.

Sentences of provocation

Or to look at it another way, if Hillary Clinton's entire agenda were enacted, her climate change proposals would wind up doing more to improve public health than would her health care proposals.

That is Matt Yglesias; here is more.  Here is the latest report on diabetes and low blood sugar.

Don't assume that mandates are cheaper

Remember Milton Friedman's arguments that a volunteer army is more cost effective than a draft?  That is true even though a volunteer army has a higher budgetary cost.  Paul Krugman today does not deny those arguments, but he elides them.  When it comes to mandates he clearly refers to budgetary costs rather than social costs but of course it is the job of the economist to stress that social costs are what matters, not to offer up to the public a comparison of budgetary costs alone.  There are lots of things we could do "more cheaply" with mandates but most of them (not all) are bad ideas.  Today Arnold Kling makes the same point.  Of course Friedman was persuasive on the draft so the argument can be made successfully in a public setting.  Elsewhere Megan McArdle writes:

Now that you are braced for the shock, here it is: comprehensive health care program costs much, much more than the government anticipated.

If you wish to compare notes, here is Krugman's response.  The piece he links to tells us: "So the “$400 million” isn’t all unanticipated and isn’t all coming from state taxpayers."

What would it cost to cover the uninsured?

Jonathan Gruber has just written a very useful and comprehensive paper on health insurance (I don't yet see ungated versions).  He estimates that without a universal mandate, but using subsidies, a typical plan for covering the uninsured would cost $4500-$5000 a year per person, and that is cost in the narrow budgetary sense.  With a mandate the fiscal cost of the government (again, not social cost, which includes the cost of paternalistically forcing people to buy health insurance) is estimated at $2732 per person per year.  Of course it is cheaper to tell people what to do, comparing to paying them to do it.  That cost estimate is assuming that the mandate is effectively enforced, which I do not expect.

I would have preferred the primary estimates to be in terms of social cost.  And I would have liked a discussion of how mandates and minimum benefit requirements distort the price of health insurance and limit competition.  Read Shikha Dalmia.  Nonetheless this remains is one of the best papers on health care economics to be had.

Gruber also poses an interesting philosophical question for the paternalists: would you rather be uninsured in today's America or obese?  And if you, like I, answer "uninsured," why not first direct paternalistic interventions toward obesity?  And I'm not talking about subsidies to olive oil, I mean real mandates.  After all, they will lower health care costs, no?
 

Second sad thought for the day

Arnold Kling has sad news about his father and also a very important point:

...[in the hospital] what you deal with are people who are doing their job. For example, the cardiologist's job is to make sure his heart does not give out, even if it means he lies on his back for so long that the prospects for restoring diginity recede. Everyone wants to shunt him around, giving him more Hansonian medicine, which detracts from his ability to remain lucid. For the larger goal of trying to do the best with his remaining life, nobody is in charge and nobody is empowered.

Code Red

The book is by David Dranove and the subtitle is An Economist Explains How to Revive the Healthcare System Without Destroying It.  Here is the Amazon listing.  Here is the book's home page.

Code Red is one of the two or three best books on the economics of health care.  It is especially strong on how the current mess evolved historically and what has been tried (or not tried) along the way.  This is the place to go to understands PSROs or what happened to the HMO revolution.  Dranove is very pro-Medicare but he (reluctantly) rejects single-payer systems for limiting innovation.  Instead he finesses the market-government divide by calling for federalistic competition:

Congress should mandate that all states reach targets for the number of uninsured, say, below 5 percent within 5 years.  Congress could tie compliance to a set of financial carrots and sticks, and it does with Medicaid.  To prevent a race to the bottom, Congress should also specify a minimum benefit package.  It would then be up to each state to devise the most effective way of meeting these coverage goals.

I fear that minimum benefit packages will prevent insurance from ever being cheap plus I wonder if Medicaid shouldn't be done on the national level.  This book won't make anyone fully happy, but it is a must for fans of health care policy.

If I were Ezra Klein

Just to define our terms, I take Ezra Klein to be a guy who believes that a single-payer system is clearly a good idea and that in the meantime government-provided universal health care coverage is far better than the status quo, albeit highly imperfect compared to single-payer systems. 

If I were Ezra Klein, I would love Barack Obama and his willingness to drop the forced mandate idea.  But Ezra doesn't seem to love Barack Obama for that.

I would think that Americans are a fairly libertarian people in some (selective) regards, and that we need to frame progress as "new and concession-laden, choice-friendly version of national health care."  I would know full well that lack of a mandate has efficiency problems, because otherwise people don't sign up until they get sick and adverse selection makes it unprofitable to sell insurance.

But then, if I were Ezra Klein, I would think: "Ah, at that point there is no turning back.  Private health insurance companies will have to look to government for further financial aid.  This might even evolve into single payer someday, and that is probably the only way we would ever get there, given American Exceptionalism."  I also would think: "I [President Obama] can change my mind on the mandate later, if need be.  Only policy wonks follow the flip flops on such details.  And perhaps the mandate could be implemented indirectly -- maybe at the state level, or framed in some other way -- so that my hands are clean of apparent contradiction."  I also would think: "The mandate can't force everyone to buy health insurance anyway -- forced auto insurance mandates don't always work -- so the mandate by no means eliminates the adverse selection problem anyway."

Most of all, I would think that Democrats should not waste their energy fighting -- prematurely I might add -- intra-party battles over issues of mostly symbolic importance.

If I were Ezra Klein, I would think that only Barack Obama has the calm, reassuring manner required to lead America down a difficult and controversial path.  Only Barack Obama (and not Hillary Clinton) would enjoy a true honeymoon period as President, and maybe that is what is required to push through major health care reform.  Only Barack Obama would be seen as approaching this issue from a fresh start and without biases.

If I were Ezra Klein, I would worship at the shrine of Barack Obama.  I would send Barack Obama random postcards of love, affection, and yes money.

But I am not Ezra Klein, and I am not sending postcards to anybody.  Instead, I am sending you this blog post on "If I were Ezra Klein."

Addendum: If Ezra Klein were Ezra Klein.

The health care graph

Here is Ezra Klein, here is Paul Krugman on the same.  If we put the partisanship aside, and view this as raw statistics, what lessons can be drawn?  The biggest surprise is Japan -- a country whose health care institutions are not generally popular -- at number two.  Spain and Italy and #4 and #5 are less extreme examples of the same point.  Do the Germans and Danes really kill so many extra people through their health care systems?  Would you really rather get sick in Greece?

Nothing in this post is intended as apology for the United States health care system, but if we are going to look at the numbers let's consider all of them.  If there is any lesson about the French  -- who are a clear first -- it is that they do something right for health care apart from having so much government involvement.  What might that be?  What do we learn about what makes for a good health care system?  Is there a correlation between health care performance and policy?  I don't see it, maybe there is one, but I'm wondering if people are willing to draw lessons from this diagram consistently or not.

I might add I find it easy to believe that American health care institutions make a disproportionate share of stupid errors, or are responsible for lots of patient mistreatments, so I am not trying to undo our presence on the right hand side of this graph.  I do, however, walk away suspicious of the concept of "amenable" mortality.

Addendum: It's much worse than I thought, read this, which includes a free link to the supposedly gated study.

Second addendum: Out there on the mea culpa watch, or not, here is DSquared.

Department of hmm....

People who suffer a life-threatening alteration in heart rhythms are more likely to survive if they are in a casino or airport than if they are in a hospital, researchers have reported.

Doctors already knew that more than half of those who suffer such attacks in airports and casinos survive. But a new study in hospitals shows that only a third of victims there survive, primarily because patients do not receive life-saving defibrillation within the recommended two minutes.

Here is one summary, here are others. Note of course the results do not adjust for the lower quality of patient in the hospitals.

Racial mortality gaps

I show that quality of the clinics or doctors is not the underlying reason for racial differences in black and white mortality....Differences in patient self-management trigger a racial mortality gap even when access and treatment are equalized.

But does that paper arrive at a sensible conclusion?

Considerable reductions in medical costs could be achieved by instructing patients about the importance of strictly following the therapy regimen.  A special emphasis on educating minorities will have the added benefit of reducing the black-white mortality gap by at least two-thirds.

I am more likely to think that peer effects from the early years of life are difficult to reverse by education and persuasion alone.  Here is the paper.  That's from Emilia Simeonova, who is on the job market this year from Columbia.

The year in books, economics

Here is David Leonhardt's list.  Here is David Leonhardt's very good column on why fee-for-service is such a fundamental problem behind American health care institutions.

Pakistan update

So we have as close to a confirmed familial cluster of H5N1 that we have witnessed since May, 2006 in Indonesia.

Here is much more detail.  There seems to be evidence of at least limited human-to-human transmission for bird flu in Pakistan.  Here are other reports.  If you think that the risk of a bird flu pandemic has been declining over the last year or two, it's a sign you are taking too many cues from mainstream American media.  The pools of the virus have been festering and if anything the risk of a broader pandemic probably has been going up.  It's a shame that none of the presidential candidates have said much about what we should be doing.

Prescription for Reform

[In Italy] small proposals bring protesters to the streets, one hurdle to making changes as protected interests seek to preserve themselves. Pharmacists shut their doors this year when the government threatened to allow supermarkets to sell aspirin. The cost for just 20 aspirin tablets at a pharmacy is $5.75.

That is from an excellent article in the NYTimes on Italy's malaise.  We may snicker when we think that Italians couldn't buy aspirin at the supermarket but our prescription-only system isn't much better.  Kerry Howley, writing in Reason, says Basta!

On a Fast Track to Nowhere?

Periodically when the FDA is criticized for slowing the approval of new drugs they announce a new policy like Fast Track.  I'm skeptical of these announcements since they are inconsistent with the FDA's incentives.  A recent investigative report in the Cleveland Plain Dealer seems to suggest that I am right to be skeptical but in the end makes me wonder whether Fast Track may be useful after all.  Here's the part that supports my skepticism.

A decade ago, the Food and Drug Administration introduced a Fast Track designation for drugs in development that was intended to speed the availability of medical treatments for serious diseases.

However, a seven-month investigation by The Plain Dealer shows that this government blessing has not increased the number of drugs approved or moved them to market faster.

...Dr. John Jenkins, director of the FDA's Office of New Drugs, acknowledged that the Fast Track designation only gives companies the same access to FDA programs that was already in place when they lobbied Congress for the provision in 1997.

       "There's really not much other, if any, benefit for Fast Track," he said.

The report, however, makes a big deal of the fact that stock prices do respond positively to Fast Track designation.  The report spins this as pump and dump with the FDA in effect doing the pumping and insiders and hedge funds doing the dumping. 

...frenzied trading occurs regularly when companies announce Fast Track status. The number of shares bought and sold more than doubled on 49 percent of days that companies announced Fast Track designations. Trading was 10 times higher than the day before in 22 percent of instances....hedge funds and others who [short the stock] bet that the price of a stock will fall - and it often does after the initial jump a company receives from Fast Track designation.

But I'm also skeptical of stories that suggest markets are systematically fooled by non-events and the numbers presented do not seem wildly inconsistent with a modest but real positive signal from being listed as Fast Track.

Stock prices of companies that trade on the New York Stock Exchange rose just 1 percent after Fast Track announcements... Excluding these companies, most of which are major pharmaceutical firms, Fast Track announcements boosted stock prices 11.5 percent.

I'll call this one a draw until further information arrives.  What wisdom does the crowd offer?

Hat tip to Mike Giberson at Knowledge Problem.

Dr. Joel Selanikio also advances economics

EpiSurveyor is free, open-source software used to collect data—primarily medical survey data right now, although there's no reason other types of data couldn't be gathered—in areas where medical data is often out-of-date or incomplete, when it's even collected at all.

Because EpiSurveyor is aimed primarily at developing economies, it's designed to run on PDAs and mobile phones...and to transmit collected data back to a central repository via SMS.

In other words, you can put people out into the field and get (almost) real time data on the evolution of a village economy.  The data are converted into useful forms right away, and gathering the data is easier in the first place, so the assistants are less likely to shirk.  Here is more, here is the associated non-profit, here is a YouTube video.  Data gathering is one of the most backward features of the social sciences, so development economists, take note.  But should businessmen care as well?

I asked Selanikio what EpiSurveyor could use most right now—besides money, which is always welcome.

"We really need people who could help us develop a sustainable business model for EpiSurveyor. Ad-supported? Subscription fees? Two tiers of features? That sort of advice, from people who are truly qualified to give it, would be very helpful."

Get well

Here are the updates on Bob Frank's heart attack.  He seems to be doing fine.  Bob Frank is not only a great economist and writer, but he is also an extremely friendly and generous man; we wish him well.  Hat tip to Mark Thoma.

Elsewhere on the health front, the very smart and very adorable Virginia Postrel is continuing to recover from cancer treatment.

A Gut Feeling

The title, Campylobacter jejuni infection increases anxiety-like behavior in the holeboard: Possible anatomical substrates for viscerosensory modulation of exploratory behavior, is unpromising but the paper is fascinating.  The authors show that infection with certain bacteria can cause more anxious or cautious like behavior in mice, perhaps causing the infected agent to avoid predators.

The presence of certain bacteria in the gastrointestinal tract influences behavior and brain function. For example, challenge with live Campylobacter jejuni (C. jejuni), a common food-born pathogen, reduces exploration of open arms of the plus maze, consistent with anxiety-like behavior, and activates brain regions associated with autonomic function, likely via a vagal pathway.

Could bacteria also influence our emotional state?  If verified in humans this could offer insights into conditions like Crohn's disease, irritable bowel syndrome and perhaps into fears such as agoraphobia.  Long time readers will know that this study is not alone in suggesting that parasites can influence our emotions.  Ever wonder why you like cats?

Hat tip to Monique van Hoek and Faculty of 1000.

The Allocation of Talent

Talent flows to where it is highly rewarded so if price and wage control limit rewards in one sector of the economy, talent will flow to the uncontrolled sector.  Mark Ramseyer looks at one implication:

The Japanese national health insurance provides universal coverage. Necessarily, this entails a subsidy that dramatically raises the demand for medical services. In the face of the increased demand, the government suppresses costs by suppressing prices. By combining extensive biographical (including income) data on all 449 Tokyo cosmetic surgeons and a random sample of 499 other Tokyo physicians, I explore the effect of this price suppression on the allocation of talent and the development of expertise. Crucially, the national health insurance does not cover services - like elective cosmetic surgery - deemed medically superfluous. Facing price caps in the covered sector but competitive prices in these superfluous sectors, the most talented doctors should tend to shift into the superfluous sectors and there to invest heavily in their expertise. I find evidence consistent with this: cosmetic surgeons earn higher incomes than other doctors; are more likely to have attended a national (generally more selective) medical school; are more likely to have served on the faculty of a medical school; and are more likely to be board-certified. I speculate on the broader implications this phenomenon poses for the allocation of talent in medicine.

Hat tip to Larry Ribstein at Ideoblog.

Medicare for everyone?

Medicare spends billions of dollars each year on products and services that are available at far lower prices from retail pharmacies and online stores, according to an analysis of federal data by The New York Times. A comparison of Medicare figures with retail catalogs reveals dozens of instances of the program’s paying above-market costs.

For example, last year Medicare spent more than $21 million on pumps to help older and disabled men attain erections, paying about $450 for the same device that is available online for as little as $108. Even for something as simple as a walking cane, which can be purchased online for about $11, the government pays $20, according to government data.

These widespread price discrepancies, including those for oxygen services, have been noted in dozens of regulatory reports.

But when officials and politicians have tried to cut these costs, they have often encountered a powerful foe: the companies that sell these devices, who ask their elderly customers to serve, in effect, as unpaid lobbyists, calling and writing to their representatives in Congress, protesting at rallies, and even participating in political attacks against individual lawmakers who take on the issue.

Here is the full story.  You are correct to think that not all versions of a single-payer system need discourage innovation.  You are also correct to think this is what they look like.

Illegal immigrant fact of the day

Illegal immigrants from Mexico and other Latin American countries are 50% less likely than U.S.-born Latinos to use hospital emergency rooms in California, according to a study published Monday in the journal Archives of Internal Medicine.

Here is the link.

Data revision of the day -- good news this time

The United Nations' top AIDS scientists plan to acknowledge this week that they have long overestimated both the size and the course of the epidemic, which they now believe has been slowing for nearly a decade, according to U.N. documents prepared for the announcement...the latest estimates, due to be released publicly Tuesday, put the number of annual new HIV infections at 2.5 million, a cut of more than 40 percent from last year's estimate, documents show. The worldwide total of people infected with HIV -- estimated a year ago at nearly 40 million and rising -- now will be reported as 33 million.

Here is the full story, which also explains the sampling errors behind the earlier estimates.

Dutch Treat

THE Dutch health minister, Ab Klink, is considering a recommendation to offer free health insurance for life to anyone who donates a kidney for transplant.

The award would be quite valuable, worth about $1500 a year or $24,000 in present discounted value (30 yrs, 5% discount rate, no increase in health care costs).  Becker and Elias predict a large increase in organ supply at $15,000 so the Dutch are in the ballpark for a good test.  More here.

Thanks to Dave Undis of LifeSharers for the pointer.

Surgery vs. Drugs

Levitt and Dubner discuss bariatric surgery in their most recent NYTimes column.  Writing on their blog (they or their publicist) say this:

Bariatric surgery is often the most effective treatment for the morbidly obese, and with a mortality rate of around one percent, it isn’t terribly risky...

Not terribly risky!!!  I consider a 1% chance of death to be very risky, perhaps worthwhile for some morbidly obese people but when 1 in every 100 patients doesn't make it off the table that is not good odds.

What I find most interesting, however, is that I don't think that any drug, even one with net benefits, could pass FDA trials with a mortality risk of 1%.  Recall that Rezulin was pulled from the market when 63 out of 750,000 people developed liver problems (the actual number may have been higher of course but the numbers aren't even close.)   

It doesn't make sense to regulate one source of risk at much higher rates than another source, given equal benefits.  It's quite possible, for example, that patients denied risky weight loss drugs turn to even riskier bariatric surgery.   (I am not arguing this point here, I am explaining why efficiency requires that equal risks be regulated equally).

So if it doesn't make sense to regulate one source of risk at much higher rates than another source, should surgery be regulated more or drugs less? 

Practice makes perfect?

Technological innovations, especially the use of laparoscopic procedures [for stomach surgery], have made for considerable gains in safety and efficacy. While the operation is still dangerous in some circumstances — one study found that for a surgeon’s first 19 bariatric operations, patients were nearly five times as likely to die than patients that the surgeon later operated on — the overall mortality rate is now in the neighborhood of 1 percent.

That is from Dubner and Levitt, the full story offers much more, mostly about weight loss, and here is further discussion.

Repugnance is Repugnant

Many people find the idea of selling human organs for transplant to be repugnant which is why Roth argues that we should focus more on improving efficiency through kidney swaps.  I'm all in favor of swaps and have also suggested that one argument in favor of no-give, no-take rules is that they are ethically acceptable to more people than organ sales.

Nevertheless, I think Roth assumes too quickly that repugnance is a constraint to be respected rather than an outrage to be denounced and quashed.  People's repugnance at inter-racial dating or homosexual sex is no reason to prevent free exchange - the same is true for organ donations.  Repugnance itself can be repugnant.

Is it not repugnant that some people are willing to let others die so that their stomachs won't become queasy at the thought that someone, somewhere is selling a kidney?

What people think repugnant can change rather quickly with changes in the status-quo.  Adam Smith said that in his time there were "some very agreeable and beautiful talents of which the possession commands a certain sort of admiration; but of which the exercise for the sake of gain is considered, whether from reason or prejudice, as a sort of public prostitution."  What were these talents that people in Smith's time thought akin to prostitution?  Acting, opera singing and dancing.  How primitive, how peculiar.

In the not to distance future I think people will look back on the present and think us primitive and peculiar.  Letting thousands of people die while organs that could have saved their lives were buried and burned.  So much unnecessary pain; all for fear of a little exchange.  How primitive, how peculiar.  How repugnant.

The roots of medical innovation

In a much-praised piece, Jon Cohn argues that the NIH, not commercial incentives, is the key to American medical innovation.  He writes:

The great breakthroughs in the history of medicine, from the development of the polio vaccine to the identification of cancer-killing agents, did not take place because a for-profit company saw an opportunity and invested heavily in research. They happened because of scientists toiling in academic settings. "The nice thing about people like me in universities is that the great majority are not motivated by profit," says Cynthia Kenyon, a renowned cancer researcher at the University of California at San Francisco. "If we were, we wouldn't be here." And, while the United States may be the world leader in this sort of research, that's probably not--as critics of universal coverage frequently claim--because of our private insurance system. If anything, it's because of the federal government.

The single biggest source of medical research funding, not just in the United States but in the entire world, is the National Institutes of Health (NIH): Last year, it spent more than $28 billion on research, accounting for about one-third of the total dollars spent on medical research and development in this country (and half the money spent at universities).

A few points should be made:

1. The strength of American medical innovation stems from the combination between the NIH, private philanthropy, and commercial incentives.  Cohn has lots of (just) praise for the NIH, as basic research is often a public good.  But he doesn't say enough about philanthropy, and he confuses pro-NIH evidence with showing the superfluity of commercial incentives.

2. Send some flowers to Cynthia Kenyon, whom I could not personally quote in this manner with a straight face.  You would never know that universities are profiting from drugs, and patenting them, at an unprecedented rate.  Universities are also forming partnerships with drug companies at an unprecedented rate. 

3. Companies must work very hard to translate basic research into usable applied form and the U.S. is a clear world leader in this regard.  A drug idea is not the same as a drug.  Cohn at times admits this, but is he really denying that the supply curve here slopes upward with regard to expected profits?  You can cite all kind of "mixed" factors about commercial incentives but at the end of the day that is the basic question.

4. Statins, Prozac, and anti-AIDS drugs are notable examples of #1.  Or try this list of Merck products.  Merck and Pfizer are much more than simply marketing or doctor bribery machines, although admittedly they are that too. 

5. The standard arguments against commercial "me-too" drugs are considerably overrated.

6. FDA restrictions are at least partly responsible for the costly, overly concentrated, and blockbuster-oriented nature of U.S. and other pharmaceutical companies.  Tight regulations discriminate against the small company and the small idea.  Even if you think tight regulations are a good idea, don't blame these tendencies on the big bad corporations.

7. It is odd for Cohn to cite me as his libertarian foil, since the referenced piece very clearly cites the NIH as a critical factor behind American medical innovation.  This odd citation again represents the desire to replace "anti-commercial" arguments with an easier-to-make "pro-NIH" case.

9. The NIH works as well as it does because the money is mostly protected from Congress.  It is not a success which can easily be replicated.  The more money is at stake, the more Congress wants to influence allocation.  We should guard this feature of the system jealously and try to learn from it.  If we can.

The bottom line: Arguments for the NIH are not arguments against the importance of commercial incentives for medical innovation.

Addendum: Read Clive Crook too.

The Shortage of Transplant Organs

The Wall Street Journal has a front-page article and a debate between Julio Elias and Alvin Roth on alleviating the shortage of transplant organs.  This interactive graphic was good at explaining the idea of kidney swaps.  Elias and Roth should have discussed no-give, no-take rules and Lifesharers. 

I will be speaking to Congressional and agency staff about the organ shortage this Thursday at noon (this event is not open to the public.)

Addendum: Transplant surgeon Arthur Matas, mentioned in the WSJ article, is no libertarian but argues for live kidney sales in a new Cato Policy Report.

Kiss me, I'm vaccinated

I just had my flu shot.  Please send your checks to my George Mason address.

People who have the flu spread the virus so getting a flu shot not only reduces the probability that I will get the flu it reduces the probability that you will get the flu.  In the language of economics the flu shot creates an external benefit, a benefit to other people not captured by the person who paid the costs of getting the shot.  The external benefits of a flu shot can be quite large.  Under some conditions each person who is vaccinated reduces the expected number of other people who get the flu by 1.5.

Since a large fraction of the benefits of the flu shot, perhaps even a majority of the benefits, go to other people and not to the person paying the costs, the number of people who get a flu shot in the United States is well below the efficient level.  I only got the shot because, as you well know, I'm altruistic.  I care about you.  But do send your checks, that will help.

In lieu of a check I'm thinking of having some buttons made up to encourage people to get their shot.  Here are some possible slogans:

• Kiss me, I'm vaccinated.
• Take one for the herd!
• Get a flu shot.  The life you save may not be your own.

Madison Avenue here I come!

Of course, we know from the Coase Theorem that there is an alternative approach.  We could charge people who do not get their flu shots. (Thus, if you haven't had a shot you must still must send me a check.)  Or to reduce transaction costs we could fine people who get the flu.  I kind of like that last one.  (But what to do about the 36,000 a year who die from the flu - charge their estates?)

What do you think?  Leave your suggestions/slogans for how to encourage getting a flu shot in the comments.

Is uncompensated care for the uninsured driving up medical costs?

No, say Jonathan Gruber and David Rodriguez:

We measure uncompensated care as the net amount that physicians lose by lower payments from the uninsured than from the insured. Our best estimate is that physicians provide negative uncompensated care to the uninsured, earning more on uninsured patients than on insured patients with comparable treatments. Even our most conservative estimates suggest that uncompensated care amounts to only 0.8% of revenues, or at most $3.2 billion nationally.

Can any of you find an ungated copy of this paper?

The economic value of teeth

Looks and height matter for economic outcomes, so why not teeth?

Healthy teeth are a vital and visible component of general well-being, but there is little systematic evidence to demonstrate any impact on the labor market.  In this paper, we examine the effect of oral health on labor market outcomes by exploiting variation in access to fluoridated water during childhood.  The politics surrounding the adoption of water fluoridation by local water districts suggests exposure to fluoride during childhood is exogenous to other factors affecting earnings. We find that children who grew up in communities with fluoridated water earn approximately 3% more as adults than children who did not.  The effect is larger for women than men, and is almost exclusively concentrated amongst those from families of low socioeconomic status.  Of the channels explored, we find that occupational sorting explains 14-23% of the effect, suggesting consumer and employer discrimination are the likely driving factors.

That is by Sherry Glied and Matthew Neidell; here is the paper on-line, note their findings are preliminary not final.  Teeth seem to matter less for rich people because they have later chances to cover up -- using money of course -- for bad childhood teeth.  The poor apparently remain stuck with their teeth problems.  You might think that childhood exposure to fluoride is just proxying for quality of county and thus county human capital in some way, but the fluoride/earnings correlation seems to hold up even when variables are used to adjust for county quality.  Can you dissent from a paper that writes:

...the anecdotes described above suggest that people who lack teeth may have trouble finding jobs.

I thank a loyal MR reader for the pointer.

Addendum: Here is Caplan (and Blinder) on the economics of teeth.

Helping the bottom billion

Kevin, a soon-to-be loyal MR reader, asks:

What single intervention would do the most to improve the health of people living on less than $1 a day?

Experts answer here.  The first guy asked says give them cash.  One woman, whom I believe is a practitioner of living on a dollar a day, responds: "Improve the house, which is small and untidy." 

What I found noteworthy is how many plausible but quite distinct answers there were.  While I disagree with Jeff Sachs on many issues, I think he is right to stress just how many different problems have to be overcome for sustainable development to occur.

Your thoughts?

Big news on pharmaceutical prizes

Senator Bernie Sanders, the first self-described socialist ever to be elected to the Senate, has introduced a bill that I might actually sign on to, The Medical Innovation Prize Fund Act of 2007.  In essence, the prize fund would pay pharmaceutical companies to release their patent rights to the public domain. 

The level of funding for medical innovation prizes would start at $80 billion per year, and increase with the growth in GDP....

Under the Sanders proposal, the patent system would still be used, but the patent owners would no longer be given monopoly rights to control the manufacturing and sale of products.  Instead, patents would be used to establish who "owns" the right to the cash rewards given for new inventions.  Drugs developed without patents would also be eligible for the prizes.

I like that the funding amounts are serious and would be available to non-patented products (innovations without property rights are underfunded).  I worry about corruption and funding directed according to political pressure.  I would be reassured if the system were clearly voluntary - that is, pharmaceutical manufacturers should have the option of the patent or the prize.  Clearly an option will increase profits for the pharmaceutical firms but medical innovation has many beneficial returns not captured by the pharmaceutical companies  so I am not worried about bigger transfers.

Most importantly, a prize fund would make clear the tradeoff between pharmaceutical revenues and R&D and it would reduce the pressure for price controls which I think are a serious threat to future medical innovation.

Thanks to Ben Krohmal for the pointer.

Single-payer systems aren't so egalitarian, part II

...[compared to the United States] income plays a larger role in buffering children's health from the effects of chronic conditions in England.  We find no evidence that the British National Health Service, with its focus on free services and equal access, prevents the association between health and income from becoming more pronounced as children grow older.

Here is the paper.  Of course equity is not the only argument for single payer systems.  Here is part I of the series, concerning Canada and the (possible) continuation of the health-income gradient there.  Many of you were skeptical about the reported result, but here is further evidence.  Most of all, the determinants of health are not well understood; that is itself a sobering fact no matter what your policy point of view.

Was RAND wrong?

No, not Ayn Rand, the RAND experiment on health care.  The RAND experiment randomly assigned people to different health plans and one of the big findings was that cost sharing reduced use of health care but had little effect on health outcomes.  My colleague, Robin Hanson, likes to use this as a club to argue that we should cut medical spending in half. 

Even randomized experiments have problems, however, and it turns out that there was a lot of attrition in the RAND experiment.  A Healthy Blog quotes from a new paper in the October 2007 issue of the Journal of Health Politics, Policy and Law, by Dr. John Nyman of the University of Minnesota (alas not online).

Of the various responses to cost sharing that were observed in the participants of the RAND HIE, by far the strongest and most dramatic was in the relative number of RAND participants who voluntarily dropped out of the study over the course of the experiment. Of the 1,294 adult participants who were randomly assigned to the free plan, 5 participants (0.4 percent) left the experiment voluntarily during the observation period, while of the 2,664 who were assigned to any of the cost-sharing plans, 179 participants (6.7 percent) voluntarily left the experiment. This represented a greater than sixteenfold increase in the percentage of dropouts, a difference that was highly significant and a magnitude of response that was nowhere else duplicated in the experiment.

What explains this? The explanation that makes the most sense is that the dropouts were participants who had just been diagnosed with an illness that would require a costly hospital procedure. … If they dropped out, their coverage would automatically revert to their original insurance policies, which were likely to cover major medical expenses (such as hospitalizations) with no copayments … As a result of dropping out, these participants’ inpatient stays (and associated health care spending) did not register in the experiment, and it appeared as if participants in the cost-sharing group had a lower rate of inpatient use. … the cost-sharing participants who remained exhibited a lower rate of inpatient use than free FFS participants, not because they were responding to the higher coinsurance rate by forgoing frivolous hospital care but instead because they did not need as much hospital care, since many of those who became ill and needed hospital care had already dropped out of the experiment before their hospitalization occurred. …

Hat tip to The HealthCare Economist.

Medicare benefits for prescription drugs

The Medicare prescription drug benefit was, from the beginning, flawed in the details of its execution.  But in general terms it is turning out to be one of the best health care investments our government is making:

Rewarding inventors with inefficient monopoly power has long been regarded as the price of encouraging innovation.  Public prescription drug insurance escapes that trade-off and achieves an elusive goal: lowering static deadweight loss, while simultaneously encouraging dynamic investments in innovation.  As a result of this feature, the public provision of drug insurance can be welfare-improving, even for risk-neutral and purely self-interested consumers.  In spite of its relatively low benefit levels, the Medicare Part D benefit generate $3.5 billion of annual static deadweight loss reduction, and at least $2.8 billion of annual value from extra innovation.  These two components alone cover 87% of the social cost of publicly financing the benefit.  The analysis of static and dynamic efficiency also has implications for policies complementary to a drug benefit: in the context of public monopsony power, some degree of price-negotiation by the government is always strictly welfare-improving, but this should often be coupled with extensions in patent length.

In other words, the optimal ex post incentive scheme involves some market power for drug makers.  To some extent the subsidy counteracts the deadweight loss resulting from that monopoly by lowering real prices to consumers.

Here is my previous post on the topic, also indicating that the Medicare prescription drug benefit is not nearly as costly as has been charged.  Of course subsidizing the pharmaceutical companies does not always sit so well with the left, so I am curious whether progressives will accept this result.  And I am curious whether they envision single-payer programs as continuing this subsidy, or confiscating pharmaceutical company rents instead.

As a side remark, Martin Feldstein was the one who saw, way back when, that health care economics would become such a major field; kudos to him.

Addendum: Sorry for the omission, here is the paper itself.

The best two sentences I read today

According to a study that even the New Republic's Jon Cohn admitted he thought was probably exaggerated, being uninsured killed 18,000 people a year this decade.  Methicillin-resistant Staphylococcus aureus, on the other hand, apparently kills 19,000 a year.

That's from Megan McArdle, who continues:

Non libertarians can, of course, go along wishing that we would have national health care and a War on Infection.  But it's worth asking yourself: in a world of scarce resources, where you could only have one, which would you choose?  And by what principle?

The fact that I have read very few sentences today does not diminish the stellar quality of these thoughts.

How to debate health care policy

Health care policy should be debated through micro-facts.  Let's consider a few:

1. American health care outcomes look much better once we adjust for race and other demographic factors, including violence and car crashes.  Some groups -- such as Asian-American women -- have remarkably good health care outcomes.

2. Some of the health care savings of other systems occur through price effects (e.g., doctors are paid an average of $60,000 in France) and do not involve real resource savings.

3. American's high expenditures, however wasteful they may be, nonetheless drive much of the world's medical innovation.  Medical innovation is also a public good to some extent and no the pharmaceutical companies are not simply parasites on the NIH and universities.

4. America has a different structure of interest groups. and therefore a single payer system in the United States would not operate as does a single payer system in other countries.  It would more likely favor the interests of doctors and insurance companies, for a start.

5. If we take the international health results/expenditures data at face value (and we shouldn't), they imply that greater access to medical care does not itself improve health outcomes.  So we should be careful in how we use and cite such results.

6. Health care outcomes improve with income even under single-payer systems.  Our best estimates suggest that this gradient is no steeper in the United States than it is in Canada.

7. Having health insurance does improve your health care outcomes, but not to an amazing degree.  The largest benefits are arguably the alleviation of financial risk, and no I am not meaning to slight that factor.

8. Pharmaceuticals, unlike many forms of health care, have large and noticeably positive effects on individual health.

9. The major Democratic health care plans on the table all, one way or another, admit they will spend more money on health care.  The fact that other countries spend less therefore does not help predict the change in spending that would result from these plans.

(Sorry for the lack of links, I am on the road, google back to previous MR posts for documentations.)

Now here is how to debate health care policy.  Ask a defender of single payer systems (or other possible reforms) how many of these points he or she accepts.  Settle on that list, noting that residual disagreements may well remain.  Then debate what the list means for what America should do about health care policy today.

Here's how not to debate health care policy.  When you hear one point on that list, bring up in response that other countries spend less and produce better health care outcomes and that therefore we should copy the systems of those countries.

But libertarians, I am not letting you off the hook either: Isn't there some form of further government intervention into health care that could help somebody?  And if your basic model is that governments steal as much money as they can, and then waste it all, shouldn't we then jump at the chance to institute health care subsidies of this at least partially helpful nature?  The alternative is simply that the money gets wasted some other and worse way.

More on health insurance mandates

Megan McArdle writes:

Tyler wonders what will be done with people who are required to by health insurance, but don't. The answer, I think, is "they'll get treated". The object is not to play chicken with people; we can't make a credible committment not to treat people without insurance (and thank god for that.) The object, as I see it, is to force the people who care about things like legality to get insurance rather than rolling the dice. The people who don't care about such things will continue costing us some fraction of the small amount that caring for the uninsured currently costs us now. It may only be a slight improvement, but it's still an improvement.

"Improvement over what?" is my query.  I prefer taking the needy (some would say more than the needy, not I) and having the government directly provide health insurance for them.  I imagine a better and no-real-role-for-the-states version of Medicaid, at the expense of Medicare (lots of old people are wealthy) if it fiscally must be.  If it's worth forcing X to buy health insurance and then subsidizing X, it is worth giving X health insurance directly.

Avoiding the mandate keeps the private insurance market relatively "clean," as it were.  Mandating private insurance means that the government has to regulate the content of that coverage and that private insurance will likely become more cumbersome and more contested and more expensive for everyone.  It means we will never have true insurance deregulation; private plans should be free to compete, innovate, offer catastrophic-only plans, sniffles-only plans, and so on.

The benefits of the health insurance mandate are otherwise small.  Many people care about "being legal" (the parents of uninsured 20 somethings?) but those people are probably the least likely to need the insurance.  And I am leery of having a law that we know in advance we are not going to enforce.  (It's not as if you post a 25 mph speed limit knowing you will only pull over the young people who look like criminals; in this case we're simply deciding on no enforcement or using some dubious bureaucratic tactic of differentiation across citizens.) 

And aren't mandates more generally a dangerous and over-used practice?

So I say no, let's not do it.  It might be better than doing nothing, but doing nothing is not the only alternative before us.  Doing nothing is not even the likely alternative at this point.  The mandates limit chances for better long-run reforms, though Matt and Brad will tell you this is single-payer, I will look toward insurance market deregulation.  Only one of us has to be right.

Addendum: Here is Ezra Klein on same.