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james buchanan and the stealth plan for insurance copays

I’ve been thinking about James Buchanan again in light of Jennifer Burns’ new critical review of Nancy MacLean’s Democracy in Chains. (Steve Teles and Henry Farrell both defend their own positions — and their independence from Charles Koch — one last time as well.)

I’m done talking about Democracy in Chains, but Buchanan was on my mind today. I don’t know how much direct influence he had on public policy. He hasn’t come up that much in my work, although obviously public choice arguments bolstered the case for deregulation.

Recently, though, I’ve been trying to wrap my head around health policy a little bit, in part to test whether arguments I’ve worked out looking at other social policy domains apply there as well. And here Buchanan plays an interesting — though quite indirect — role.

Health economics as a field only emerged in the 1960s. After federal health spending shot up with the 1965 passage of Medicare and Medicaid, government became increasingly interested in supporting such research.

One of the early papers that shaped that field — and indeed, the whole policy debate over universal health insurance — was Mark Pauly’s 1968 American Economic Review paper, “The Economics of Moral Hazard.”

The paper points out that individuals who are insured against all health costs are likely to seek out more care, at least of some types, than those who are not insured. Thus insurance that includes no deductible or cost-sharing is likely to result in overuse of care. The argument seems obvious now, but at the time — while familiar to insurers — it was novel in economics.

(Interestingly, in Kenneth Arrow’s comment on the paper, his counterargument to Pauly is basically, “this is why we have norms” — to prevent people from consuming more than they need: “Nonmarket controls, whether internalized as moral principles or externally imposed, are to some extent essential for efficiency.”)

Anyway, Pauly was a student of James Buchanan, and credits Buchanan with turning his attention to health policy. Pauly thought he’d do a thesis on “designing the economic framework for a government-funded voucher system for public education” (ahh, now we’re getting into MacLean territory).

But the passage of Medicare had created new pools of money for health research, and Buchanan suggested Pauly might look at health care instead.

Focused on his studies as well as his new wife, 25-year-old student Pauly was only vaguely aware and not much interested in these outside happenings until his mentor, James M. Buchanan, PhD, explained that the law creating Medicare also provided funds for academic health economics studies. He suggested that Pauly switch his thesis focus from education to health care economics and apply for a federal grant.

“Broadly speaking, I was interested in government and public policy,” Pauly remembers. “But the thing that drew me to health care economics was the money. I wish I could be more noble, but that was the reason. I got the grant and the rest is history.”

Three years later, the moral hazard paper was published. It significantly eroded the economic case for universal health insurance without meaningful cost-sharing—just the sort of plan that Ted Kennedy was then advocating—although economists like Rashi Fein would spend the next decade trying to build support for just such a plan.

Capture

The moral hazard argument also led the Office of Economic Opportunity to initiate the RAND Health Insurance Experiment, which was intended to estimate the effects of different pricing structures on healthcare consumption and outcomes.

After a decade of study and nearly $100 million in expenditures, the Health Insurance Experiment found that cost-sharing reduced the use of care without harming outcomes. (There was, of course, much debate over the results.) Employers took note: “The fraction of major companies with cost-sharing insurance plans rose from 30% to 63% in the years immediately following the publication of the experimental results.”

The next couple of decades would see repeated attempts to reform healthcare, but the principle of social insurance — of some kind of broad-based, universal coverage like Medicare — stayed on the margins of health policy conversations, replaced by a focus on cost-sharing, means-testing, and the promotion of competition.

So James Buchanan never got the education vouchers he would have liked, and that MacLean focuses on the context of Virginia’s multiyear desegregation battle. And he hardly would have been a fan of Obamacare, which gave government a sizable new role to play in healthcare. And really, whatever credit — or blame — there is should go to Pauly, not Buchanan. Buchanan was just there with advice at a critical moment.

But maybe, just a little, we can point to James Buchanan for helping to give us the healthcare system—with plenty of copays and high deductibles, and still no universal coverage—that we have today.

[With credit to Zach Griffen, who knows much more than I do about both health economics and health policy, for pointing me in the right direction.]

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Written by epopp

September 18, 2018 at 8:47 pm

Posted in economics, health, policy

don’t drink alcohol, like at all

I have consumed very little alcohol in my life. It is not a religious issue. When I was a child, my father gave me a sip of beer and I was revolted. As I got older, the bitter taste of some alcoholic drinks no longer bothered me, but I had relatives who abused alcohol, so I stayed away. I am still a near teetotaler, but I try the occasional drink at social events.

So I always thought that, like many people and even health professionals, moderate alcohol consumption was safe. Then, recently, I read an article in Mother Jones that argues that there is serious evidence that alcohol is carcinogen. Some of it is political reporting in that it is about the alcohol industry’s response to the research, but it does raise a red flag.

For me, the most interesting passage from Stephanie Mencemer’s article was about the “J-curve” – the finding that moderate amounts of alcohol intake improve cardiovascular health. She reports that when people re-examined the data and excluded former drinkers from the data, the J-curve disappeared:

But this J-curve is deceptive. Not all the nondrinkers in these studies were teetotalers like the ones I grew up with in Utah. The British epidemiologist A. Gerald Shaper began a wide-ranging men’s heart health study in the late 1970s, and when he examined the data, he found that 71 percent of nondrinkers in the study were actually former drinkers who had quit. Some of these ex-drinking men were as likely to smoke as heavy drinkers. They had the highest rate of heart disease of any group and elevated rates of high blood pressure, peptic ulcers, diabetes, gallbladder disease, and even bronchitis. Shaper concluded that ex-drinkers were often sicker than heavy drinkers who hadn’t quit, making them a poor control group.

Yet for decades, researchers continued to include them and consequently found an implausible number of health benefits to moderate drinking, including lower rates of deafness and liver cirrhosis. The industry has helped promote these studies to doctors.

That’s one reason why, until recently, alcohol’s heart health benefits have been treated as incontrovertible science. But in the mid-2000s, Kaye Middleton Fillmore, a researcher at the University of California-San Francisco, decided to study Shaper’s ex-drinkers. When no one in the United States would fund her work, she persuaded Tim Stockwell, then the director of Australia’s National Drug Research Institute, to help her secure Australian government funding.

Stockwell and Fillmore analyzed decades’ worth of studies on alcohol and heart disease. Once they excluded studies with ex-drinkers—which was most of them—the heart benefits of alcohol largely disappeared. Since then, a host of other studies have found that drinking does not provide any heart benefits. (Some studies have found that drinking small amounts of alcohol—sometimes less than one drink per day—can be beneficial for certain people at risk of heart disease.) Robert Brewer, who runs an alcohol program at the Centers for Disease Control and Prevention, says, “Studies do not support that there are benefits of moderate drinking.” The Agriculture Department removed language suggesting that alcohol may lower the risk of heart disease in the most recent US Dietary Guidelines.

I think I’ll have the ginger ale.

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Written by fabiorojas

May 4, 2018 at 4:08 am

Posted in fabio, health, uncategorized

Teaching/research/learning opportunity available in Lebanon

Paul Galatowitsch has an announcement for organizational researchers who are looking to integrate their summer/winter break with teaching, research, and/or learning in Lebanon.

This might be of particular interest those with experience or seeking experience with NGOs, health systems, and refugees:

www.socioanalytics.org and the Short Course in Lebanon is up and ready.  I would really like to get some Organizational Sociologists on board…. It’s a great research and service opportunity.

 

Written by katherinechen

October 10, 2017 at 7:38 pm

mental health and graduate school: personal reflections

A few weeks ago, The Chronicle of Higher Education ran an article about the effects of graduate school on mental health. On my Facebook feed, I saw some of the normal contrarian response: “If you think graduate school is bad, wait till you are a professor.” I wrote back, “For me, the tenure track was a cake walk compared to the tenure track. I went to a very toxic graduate program.” I meant that in all honesty.

In this post, I want to elaborate on the effects of graduate programs on individual well being from my own perspective. I do so for two reasons. First, I am an advocate of graduate school reform. I think that graduate programs are poorly designed and I also think that my program at Chicago had some serious challenges. Second, mental health and well being are extremely important. If we can be a little more open about it, we can work to make it better.

Let’s start with self-assessment. I consider myself to be well physically and emotionally. I have never been diagnosed with depression or another disorder. Nor do I have the emotional states that suggest that I am not well. I have had personal success and failure, but I seem to respond constructively.  People who know me tend to say that I seem mellow and balanced most of the time. I think that is accurate.

However, that changed during the last year of graduate school. For the first time in my life, I spent a long period of time in a highly anxious state. I could barely sleep. I experienced such bad nausea that I lost about 30 lbs. It was bad. To me, it was clear I needed help. I turned to the student counseling center at the University of Chicago.

There were obvious and non-obvious aspects of my experience. The obvious: As I was nearing completion of my graduate program, I was experiencing stress. Getting a job in academia is hard. The non-obvious: I had experienced much worse stress in my life, but had not experienced this decline in well being. Previously, I had all sorts of positive coping mechanisms. This time, I couldn’t eat and was on the path to poor health. What was the difference?

What my counselor claimed was that anxiety is often associated with a lack control. Bad events don’t always trigger anxiety, but people feel anxiety when they think the world is happening “at them” and they have no way to assert agency in the situation. This made sense to me and the counselor suggested a series of actions to help me regain agency. Some were simple. For example, my counselor suggested that I drink water everyday at regular intervals. I continue that ritual to this very day.

Other methods of asserting agency were were specific to my situation. For example, one of the major factors in my anxiety was the fact that one of the my dissertation committee members refused to speak to me for a year, another had simply gone “AWOL” and a third refused to write me a letter of recommendation. Any one of these issues could hobble a student. To have all three happen could be a career killer. Obviously, I had lost control of the situation and I was paranoid and bitter. How could all my years of work go down the drain because two or three people refused to do their job?

To counter these events, which I have no control over, my counselor suggested a few good rituals. For example, to deal with the guy who would not speak to me, I would politely show up at his scheduled office hours and ask if he had any comments on my dissertation. If not, I would simply say “thank you, I’ll check in a few weeks” and follow up on email. By doing this, I was doing something small to assert control and, legally, I was preparing a paper trail showing that I actively sought comments.

After a while, I was able to calm down. It took a while for me to get a response from the faculty, but it happened. But more importantly, I learned that I could take an active role in my mental well-being. I could create structures and rituals and not be victimized by circumstances.

Now, I want to return to the bigger point – how the structures of graduate school impinge on mental health. At the very least, I was going to be stressed out no matter what. There are many more graduate students than job openings. Also, academia is driven by prestige. Thus, if you went to the wrong school, you may have an uphill battle compared to people who went to the right school or who had the “right” advisers. Higher education is a tough business.

Then, on top of that, the culture in many programs and labs is simply toxic. That is what my experience taught me. People can abandon each other, harm each other and humiliate each other with little immediate consequence. That is probably why people seem to have such negative experiences in academia. It is a hard business, but it’s also a business with few options and very little accountability. In other sectors of the economy, quitting and moving is easy. If you have a bad boss, you can quit and move. In academia, quitting a job can easily be the end of a career.

Thus, we shouldn’t be surprised if higher education is a work environment that exacerbates mental health challenges. It’s an environment that poses limited options and allows people to act badly with few consequences. People (rightfully) feel as if things are out of control, and, in many cases, they are.

To counter these tendencies, and improve well being, we can do a few simple things. First, in the graduate programs, make sure that “everyone is taken care of.” Plan regular meetings with people. Have norms and concrete benchmarks. You can be critical but supportive as well. Actively make sure that all students are on track. Second, create an environment where people can constructively talk about anxiety, depression and whatever other problems they may have. Third, create rules and norms for students and faculty. Students need to hold up their end of the bargain. But so do faculty. A culture of helping all students, openness about problems, and norms for good behavior and timely work can help make graduate school more of a challenge instead of a health issue.

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Written by fabiorojas

August 21, 2017 at 7:59 pm

bmi – a conceptual mess, or, andrew perrin i take back what i said earlier

One of the basic measures of health is body mass index (BMI). It is meant to be a simple measure of a person’s obesity which is also correlated with morbidity. Recently, I spent some time researching the validity of BMI. Does it actually measure fatness? The answer is extremely confusing.

If you google “validity of BMI as a measurement of obesity,” you get this article that summarizes a few studies. The original definition of obesity is that you need to have at least 25% body fat for men and 35% for women. This is hard to measure without special equipment, so BMI is the default. Thus to measure BMI validity, you need a sample of people and then compute the BMI and the body fat percentage (BF%). The Examine.com reports that in number of studies compared BF% and BMI. In some ways, BMI survives scrutiny. In non-obese people, as defined by BF%, BMI works well, but it seems to under-report obesity in others. In a few odd cases, mainly athletes with a lot of muscle weight, obesity is over-reported. Thus, you get a lot of mis-classification: “One meta-analysis on the subject suggests that BMI fails to classify half of persons with excess body fat, reporting them as normal or overweight despite having a body fat percentage classifying them as obese.” Translation, we are much fatter than we appear to be.

Then, soon after I read some of these studies, the LA Times reported on a new study from UCLA that examines the BMI-morbitiy correlation. In that study, researchers measured BMI and then collected data on biomarkers of health. This is done using the NHANES data set. See the study here. Result? A lot of fat people are actually quite healthy in the sense that BMI is not associated with cardio-pulmonary health (i.e., your heart stopping). This reminds me of an earlier discussion on this blog, where there were conflicting estimates of the obesity-mortality link and a meta-analysis kind of, sort of, shows an aggregate positive effect.

How do I approach the BMI issue as of today?

  • BMI is a rough measure of fatness (“adiposity”), but not precise enough for doctors to be making big judgments about patients on a single number/measurement.
  • BMI is not a terribly good predictor of mortality, even if there is a mild overall correlation that can be detected through meta-analysis.
  • BMI is probably not correlated with a lot of morbidity that we care about with some important exceptions like diabetes.

The lead author of the UCLA study said that this was the “last nail in the coffin” for BMI. She might be right.

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Written by fabiorojas

February 18, 2016 at 12:01 am

how the acid rain program killed northeasterners

Remember acid rain? For me, it’s one of those vague menaces of childhood, slightly scarier than the gypsy moths that were eating their way across western Pennsylvania but not as bad as the nuclear bombs I expected to fall from the sky at any moment. The 1980s were a great time to be a kid.

The gypsy moths are under control now, and I don’t think my own kids have ever given two thoughts to the possibility of imminent nuclear holocaust. And you don’t hear much about acid rain these days, either.

In the case of acid rain, that’s because we actually fixed it. That’s right, a complex and challenging environmental problem that we got together and came up with a way to solve. And the Acid Rain Program, passed as part of the Clean Air Act Amendments of 1990, has long been the shining example of how to use emissions trading to successfully and efficiently reduce pollution, and served as an international model for how such programs might be structured.

The idea behind emissions trading is that some regulatory body decides the total emissions level that is acceptable, finds a way to allocate polluters rights to emit some fraction of that total acceptable level, and then allows them to trade those rights with one another. Polluters for whom it is costly to reduce emissions will buy permits from those who can reduce emissions more cheaply. This meets the required emissions level more efficiently than if everyone were simply required to cut emissions to some specified level.

While there have clearly been highly successful examples of such cap-and-trade systems, they have also had their critics. Some of these focus on political viability. The European Emissions Trading System, meant to limit CO2 emissions, issued too many permits—always politically tempting—which has made the system fairly worthless for forcing reductions in emissions.

Others emphasize distributional effects. The whole point of trading is to reduce emissions in places where it is cheap to do so rather than in those where it’s more expensive. But given similar technological costs, a firm may prefer to clean up pollutants in a well-off area with significant political voice rather than a poor, disenfranchised minority neighborhood. Geography has the potential to make the efficient solution particularly inequitable.

These distributional critiques frequently come from outside economics, particularly (though not only) from the environmental justice movement. But in the case of the Acid Rain program, until now no one has shown strong distributional effects. This study found that SO2 was not being concentrated in poor or minority neighborhoods, and this one (h/t Neal Caren) actually found less emissions in Black and Hispanic neighborhoods, though more in poorly educated ones.

A recent NBER paper, however, challenges the distributional neutrality of the Acid Raid Program (h/t Dan Hirschman)—but here, it is residents of the Northeast who bear the brunt, rather than poor or minority neighborhoods. It is cheaper, it turns out, to reduce SO2 emissions in the sparsely populated western United States than the densely populated east. So, as intended, more reductions were made in the West, and less in the East.

acid_revised

The problem is that the population is a lot denser in the Northeastern U.S. So while national emissions decreased, more people were exposed to relatively high levels of ­SO2 and therefore more people died prematurely than would have been the case with the inefficient solution of just mandating an equivalent across-the-board reduction in SO2 levels.

To state it more sharply, while the trading built into the Acid Rain Program saved money, it also killed people, because improvements were mostly made in low-population areas.

This is fairly disappointing news. It also points to what I see as the biggest issue in the cap-and-trade vs. pollution tax debate—that so much depends on precisely how such markets are structured, and if you don’t get the details exactly right (and really, when are the details ever exactly right?), you may either fail to solve the problem you intended to, or create a new one worse than the one you fixed.

Of course pollution taxes are not exempt from political difficulties or unintended consequences either. And as Carl Gershenson pointed out on Twitter, a global, not local, pollutant like CO2 wouldn’t have quite the same set of issues as SO2. And the need to reduce carbon emissions is so serious that honestly I’d get behind any politically viable effort to cut them. But this does seem like one more thumb on the “carbon tax, not cap-and-trade” side of the scale.

 

Written by epopp

February 15, 2016 at 1:17 pm

current data on income inequality and mortality

imrs.php

From the Washington Post:

Wealthy and middle-class baby boomers can expect to live substantially longer than their parents’ generation. Meanwhile, life expectancy for the poor hasn’t increased and may even be declining, according to a report published Thursday by several leading economists.

Call it a growing inequality of death — and it means that the poor ultimately may collect less in money from some of the government’s safety net programs than the rich.

As of 2010, the average, upper-income 50-year-old man was expected to live to 89. But the same man, if he’s lower income, would live to just 76, according to the report.

The inequality itself isn’t surprising. What is more surprising is the stagnation in the lowest portions of the income distribution. I would like to see how cause of death varies across the income spectrum, to see exactly what might be at work here.

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Written by fabiorojas

September 24, 2015 at 12:01 am

Posted in fabio, health, inequality