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Archive for 2007
Warren Buffet has it all wrong on the estate tax.
Consumption by worthless heirs creates positive externalities for the rest of us. Remove the idle rich and most of Manhattan's finest restaurants would have to close. There would be half as many Broadway shows. Granted, the cost of a pied-a-terre in New York City would probably be a third of its current price. But what's the point of having a Manhattan condo if there's nothing to do once you get there?
By contrast, the estate tax encourages people like Buffet to leave their fortunes to foundations, which can create negative externalities as well as positive ones. Conceivably, such gifts can do more harm than good.
There is only one thing you need to know about telemedicine: location doesn't matter.
The pathologist who examines your blood tests, the radiologist who reads your MRI scan, the internist who orders your prescription or the nurse who reminds you to refill a prescription - none of these providers needs to be in the same room with you. Or in the same city. Or in the same state. Or even in the same country.
Telemedicine could revolutionize the practice of medicine, especially for the chronically ill.
I am probably one of the few people you interact with who has a real interest in understanding nonprice rationing of health care. In fact, I may be the only such person.
By "real interest" I mean a desire to understand nonmarket processes the same way economists understand markets - which means, to be able to explain the past and predict the future.
Most of what has been written about nonprice rationing of health care is descriptive, not analytical. In fact, I don't believe anyone has developed a real theory about it.
David Himmelstein and his wife Steffie Woolhandler are associate professors at Harvard Medical School. Together they are a one-couple team, promoting Canadian national health insurance in the Unites States. They provide the intellectual leadership for the Physicians for a National Health Program. They are about the only academics around whose scholarship routinely gives aid and comfort to the advocates of socialized medicine, unless you count the Commonwealth Fund. They are pleasant (at least to me); they are dedicated; and they are wrong.
I first debated David on a college campus about 15 years ago. My most recent debate with them is reprinted in Annals of Thoracic Surgery. In between the two debates I had an epiphany. I discovered that the worst features of the Canadian system are not the differences with our own system, but the similarities.
Many, many years ago, the Nobel Prize-winning economist Kenneth Arrow wrote an article about asymmetry of information in medical care (your doctor knows more than you do). Since then, countless textbook authors, op-ed writers and policywonk briefers have seized on Arrow's observation to argue that a free market will not work in health care. Ergo, we need a regulated, institutionalized, bureaucratized market - like what we have in the US and almost everywhere else.
The problem with this line of reasoning is that it commits what logicians call the fallacy of the excluded middle. The unstated, and therefore unexamined, minor premise is: regulated markets can solve the problem, or at least do better than free markets. As it turns out, this minor premise is difficult, if not impossible, to defend.
What do diabetics and bagels have in common? Almost nothing. However, the market for bagels might be useful for testing ideas about health care reform.
I imagine that the market for diabetic care is about a thousand times more complicated than the market for bagels. So why not use the bagel market to experiment with hair-brained payment schemes think tanks propose to inflict on unsuspecting patients?
Here's the argument: a) if a payment scheme doesn't work for bagels, it probably has no chance of working for diabetics either; b) the social cost from being wrong is far less if we are experimenting with bagels; and c) just as the FDA requires drug companies to experiment first with rats, we should require policy wonks to try their ideas out on some relatively simple, inanimate product - and a bagel is just as good as any.
I served as one of the judges for the National Journal's recently published report card on the health plans of the leading Democrat (Clinton, Edwards and Obama) and Republican (Giuliani, McCain, and Romney) presidential candidates.
In some cases, my scores differed substantially from those of the other judges. Apparently, some of them have not been carefully reading these Health Alerts. Anyway, here is my take:
Which country produces the highest quality health care? In a sidewalk survey, the USA would probably come in first place. Among health policy wonks, however, the results would be very different. The Commonwealth Fund regularly produces studies showing that the US lags behind other countries by one measure or another. The World Health Organization (WHO) ranks the US system 37th in the world, even trailing Costa Rica. (Costa Rica? Yes, Costa Rica.)
On his way to get health care at the Cleveland clinic last year, Italian Prime Minister Silvio Burlusconi probably flew over a half dozen higher ranking countries, not to mention his own (rated number two!) or neighboring France (rated number 1!). What could he possibly have been thinking? Doesn't he read WHO reports?
It's not easy reviewing your own book. Should it get three stars or four? Two thumbs up? Or should that be three? These decisions are so wrenching I'm going to put them aside and talk about something completely different.
The biggest problem with health policy folks (other than lacking a sense of humor) is that they almost never tell us about their vision for health care. They can chatter endlessly about minor policy matters, but fall completely silent when it comes to the big picture.
If you're always on defense, eventually you lose. No matter how inept the other side, if they always have the ball, eventually they will cross your goal line.
This is common knowledge among sports fans everywhere. Yet the insight still has not sunk in with Republicans in Washington.
Michael Moore thinks the profit motive should be removed from health care. Many others agree. They are not talking about profit in the narrow sense. What they really want is to remove self-interest from health care. But if people do not act on the basis of self-interest, what else is there? Altruism.
If it is good to deliver health care altruistically, doesn't the same argument apply to food, clothing, and shelter? What if the whole economy were structured so that all our needs were met by altruists rather than egoists? What would such a world look like? I'll start there and then wend back to health care at the denouement.
I just attended the most amazing conference. Like most health conferences, this one ritualistically began with a recitation of the failures and inadequacies of the providers of care. But that only took an hour. Over the next three days there followed a series of speeches by the buyers of care - employers, insurance companies, government agencies, etc.- each explaining how his or her organization, sector, etc., was causing the very problems addressed in the first hour. "Speeches" is the wrong word. These were more like confessions, full of sorrow and remorse - even approaching Jimmy Swaggart-like tearfulness in some cases. The presentations by Blue Cross and the private charities were particularly moving.
In the open discussions, there was none of the usual finger pointing or blame shifting. Instead, the speakers vied with one another to accept responsibility, each claiming he was more guilty than the rest. At the close, everyone joined hands and sang Kum Ba Ya and vowed to sin no more.
I am establishing the Mondrian Award for Ineffectiveness in Health Policy. The award will go to the program, agency or proposal that promises the least health outcome for the most dollars spent.
Once this idea catches on, I think it could take on a life of its own. The GAO, for example, could award an annual Mondrian to some deserving federal agency. The CMS could give a Hospital of the Year Mondrian. Each hospital, in turn, could give an annual award to a deserving department or staff doctor.
Advice for Hillary
Her plan was released today. There are lofty goals, but not many specifics.
Twenty years ago Michael Dukakis campaigned for president with the boast, "I have insured everybody in Massachusetts." Of course he hadn't, and two decades later, everybody in Massachusetts is still not insured. Along the way there have been many other plans to create "universal coverage." They haven't worked either.
Not everyone is enamored of Health Savings Accounts (HSAs) or patient power. There are even people who dislike HSAs almost as much as they dislike the syllogism. Alas, they are legion. We are surrounded by them. Were righteousness and virtue not on our side, we would have been vanquished long ago.
Many of the complaints of HSA critics are forcefully argued in a new book entitled Health Care at Risk - which I take to be the Freudian counterpart to our own book titled, Lives at Risk.
Harvard Business School Professor Regina Herzlinger has written a must-read book, "Who Killed Health Care?". It is written in the style of a murder mystery. The puzzle to be solved: Who killed Jack Morgan, (a patient who dies while awaiting a kidney transplant)? Like Murder on the Orient Express, there is not one killer here but many: health insurance companies, hospitals, employers, the federal government and even academics.
Jack Morgan is a composite figure, based on the experience of 112 people who needlessly died while waiting for a kidney transplant. They were all insured by California-based Kaiser Permante. Of those who died while waiting, 25 had a perfect match.
I know I promised no more August commentaries, but Gov. Romney just released his health plan and everyone wants to talk about it. So here is my take.
Mitt Romney is the only U.S. politician who can credibly claim to have created universal health care coverage. His Massachusetts Health Plan may yet falter; but so far he has walked the walk, while his Democrat opponents have only chattered. He alone owns the health care issue.
We are adding two new sections to our State Handbook on Health Reform:
- Workers' Comp Reform
- Malpractice Reform
The proposals go way beyond what other academics and think tanks have proposed (with the exception of Richard Epstein's long forgotten monograph for Cato) and are fairly radical.
It's the August recess for members of Congress. So everyone's life, liberty and property is temporarily safe.
Well, almost everybody. Before they left town, this largely do-nothing Congress did one very bad thing. They hiked the minimum wage from $5.15 an hour to $7.25 an hour as of July, 2009. The 7 million or so workers who are affected by this change potentially face a double whammy: loss of a job, loss of health insurance or both!
Bing! It's Round 6 for Goodman and Ali. Goodman pounces out of his corner. He's bobbing and weaving. Ali is looking a little groggy after the pounding he's taken for first five rounds.
Oops. Sorry. I was having a Walter Mitty moment.
Today's topic is entrepreneurship and everyone needs to get into a creative state of mind.
In a recent Wall Street Journal editorial, Harvard Business School professor Regina Herzlinger asks, "Why are there no entrepreneurs in health care?" Alert readers of this column already know some of the answers.
In our fee-for-service payment system, doctors are slaves to the way they are paid. It doesn't matter whether the payor is public or private. It also doesn't matter whether we are in the United States or in Canada. Doctors have no freedom to repackage and reprice their services. More precisely, regardless of how they repackage, they cannot reprice. So almost any innovation that raises quality or lowers the patient's costs means less - not more - net income for the physician.
Close your eyes and try to think of every health reform plan you've ever heard of - beginning with Hillary Clinton's plan about 15 years ago right up through Arnold Schwarzenegger's plan today. Think left and right. Think big and small. Don't overlook the self-serving plans devised by hospital, insurance and drug company trade groups. And don't overlook Len Nichol's plan, which is supposed to be rooted in the Old and New Testaments and the Koran.
Yes, I know. No one should have to do this on a full stomach. So you may want to put this exercise aside for a few hours and then come back to it. But if you really concentrate, at least three or four dozen plans should easily spring to mind.
The State Children's Health Insurance Program (SCHIP) was originally a Republican program, designed to provide health insurance to children in near-poor families who do not qualify for Medicaid. Democrats in Congress are now pushing for a huge expansion - one rightly resisted by the White House. Senate Finance Committee Republicans have already caved on an unwise compromise. House Democrats will now see if they can get the GOP to cave some more.
On the surface, the Democratic Party appears to be the party of Santa Claus, rescuing children from the scourge of uninsurance. The reality is quite different. If congressional Democrats get their way, millions of children will have less access to health care than they do today. Surprisingly, the same will be true for many low-income seniors. And the cost will mainly be paid for with highly regressive taxes. It's a scheme only Ebenezer Scrooge could love.
Is there rationing by waiting under government-provided health care? Of course there is.
- In Britain, where the government has been measuring these things for years, up to one million people are waiting to enter British hospitals; and the waiting lists are an issue in every election.
- In Canada, where the Fraser Institute keeps the best records, people are waiting for 771,000 procedures; and the Canadian Supreme Court, after declaring such waits a violation of basic human rights, ruled that residents of Quebec can buy private care when they are denied prompt service from the government.
However, in the documentary "SiCKO," Michael (if-you-disagree-with-me-you-must-be-on-the-drug-industry-payroll) Moore claimed there was no serious waiting problem in Canada. On CNN and his Web site, he claims there is more waiting in the United States. Source of that claim? The Commonwealth Fund. Paul (if-you-disagree-with-me-you-must-be-evil) Krugman has now joined the fray, making the same claim in the New York Times. He too cites the Commonwealth Fund.
We have a new Michael Moore site: http://sicko.ncpa.org/. At his own site, Michael invites visitors to send him health horror stories — but only about the U.S. system! To add balance, our site has health horror stories about Canada, France and Britain (easily obtained from a Google search).
I believe the National Center for Policy Analysis is the only think tank, right or left, that has consistently addressed two problems:
1. The need to choose between health care and other uses of money.
2. The impossibility of paying for health care for the elderly with Ponzi scheme financing.
We have focused on these issues for more than two decades.
Eventually others will come around. As with the AIDS crisis in Africa, even politicians and rock stars will get clued in - but in all probability after it is 25 years too late.
On Christmas Day 2002, Jack Whittaker won the lottery. He won big. At $315 million, he held the largest single winning ticket in the history of American lotteries.
Where did all that money come from? It came disproportionately from people on the bottom end of the income ladder - people who might otherwise have paid the rent, clothed their children or put food on the table for their families. (Whittaker, by the way, is an exception to the general rule; he was already worth $1 million before he bought his lucky ticket.)
As a result, that fateful Christmas Day will be remembered for achieving yet another milestone: An act of government that created more inequality per dollar spent in the shortest amount of time in all of human history.