September, 2007

How To Pay For Quality

by Robin Hanson

September 26th, 2007

David, Alan, and Dana’s first comments focused on how to better promote helpful over harmful medicine, and I tried to steer them back to the effect of simple crude cuts.  But on this our last discussion day, let me address this quality issue, by describing a completely supply-based approach to Medicare quality.
Imagine each person has [...]

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Beware Double-Standards

by Robin Hanson

September 26th, 2007

Consider a health policy issue like child car seats in the U.S., mosquito netting in the third world, preschool education for poor children, or the immunization of immigrants. Imagine that for this issue there were many good studies over several decades, including some recent studies. Imagine that after controlling for many factors, these [...]

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Understanding Differences in Aggregate Outcomes

by Dana Goldman

September 23rd, 2007

I suggested supply-side differences might explain aggregate differences in how we ‘produce’ health. Robin Hanson replied that he would like to see the system become more efficient. But what if the regional differences are due to demand-side factors? Maybe people in Miami prefer surgery, and people in Minnesota prefer medical management. [...]

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Yes, There Are Costs Of Change

by Robin Hanson

September 23rd, 2007

Dana Goldman suggests “a catastrophic health plan, with first dollar coverage exceptions for those therapies that can be shown to be clinically efficacious and reduce total health care spending” and asks if I’d “be in favor of subsidizing this coverage for the low-income uninsured, with the subsidies paid for by eliminating the tax exclusion for [...]

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An Example and a Question

by Dana Goldman

September 22nd, 2007

Robin Hanson asks David Cutler what is missing from aggregate studies. I can’t help but provide just one example. Suppose some physicians in Region A are better at surgery, while those in Region B do a better job with medical management of heart attacks. And further assume that surgery is more expensive — hardly a [...]

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Still Seeking Specific Critiques

by Robin Hanson

September 22nd, 2007

I said I’m “all for finding better ways to favor helpful over harmful medicine” but I asked “why must this distant possibility stop us from publicizing and acting now on our consensus that we expect little net health harm from crude cuts?” and I suggested six possible reasons one might offer.
Dana Goldman pointed to one [...]

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Don’t Pretend It’s Easy

by David M. Cutler

September 22nd, 2007

Per capita income in the United States is 30 percent higher than in Sweden, and yet Americans are no happier than Swedes; indeed, Swedes report greater levels of happiness. Based on these data, can one conclude that cutting income in the United States by 30 percent across the board would leave Americans unaffected? Of course, [...]

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What Is the Effect of a Price Increase?

by Alan Garber

September 21st, 2007

What is the effect of a price increase?  The conventional answer that quantities consumed will decrease along a demand curve doesn’t always apply in health care.  The question isn’t even answerable without describing which price is being increased and specifying the mechanism for the price increase.  The price of a medical product or service usually [...]

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Are the Aggregate Studies Misleading? Why?

by Robin Hanson

September 21st, 2007

I asked:
Do you claim the existence of identifiable treatments with positive benefits, which are cut when spending is cut, shows that aggregate spending variations do give substantial aggregate health gains?
Dana Goldman replied:
My response is yes. The research on the use of ACE inhibitors by diabetics is a good place to start, but there are many [...]

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No Grand Conspiracy

by Dana Goldman

September 19th, 2007

My head is dizzy from all the metaphors! What was the monkey doing working in a software company anyway?
There is a very simple identification problem. We know that on average our medical care is worth it — as David Cutler and others have shown. If we cut half — without knowing what [...]

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Let Go of the Medical Monkey Trap

by Robin Hanson

September 18th, 2007

It is said you can trap a monkey by putting a nut through a small hole in a gourd. The monkey reaches in and grabs the nut, but then his fist won’t fit back through the hole. Greedy monkeys will literally let themselves be caught rather than let go of the nut. [...]

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Watch Where You Cut

by Alan Garber

September 18th, 2007

According to Alan Garber, the Henry J. Kaiser, Jr. Professor at Stanford, “Hanson’s diagnosis … is not particularly controversial. His solution is.” Efforts to trim excess medical spending must confront the highly variable benefits of certain medical treatments. Garber argues that Hanson’s eagerness to implement cuts, largely regardless of the details, risks cutting high-value treatments along with lower-value ones. According to Garber, what we need, first, is more and better information about the value of particular interventions. Second, we need incentives not to guide people away from overconsumption generally, but to guide them away from low-value care. Third, we need to increase the sensitivity of consumers to the costs of their health care by exposing them more to prices. Improved information and education, Garber says, will help consumers choose wisely.

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Half Right

by Dana Goldman

September 14th, 2007

Robin Hanson is half right, says Dana Goldman, the RAND Chair of Health Economics and Founding Director of RAND’s Bing Center for Health Economics. Medicine can only do so much, and most recent increases in longevity are the effect of healthier habits and living conditions, Goldman says. However, Goldman notes, the RAND Health Insurance Experiment, which Hanson leans on, is more than thirty years old, and many new therapies have emerged since then. In particular, new drugs have been shown to have a large impact on health. Patients required to pay for more of their care often cut out what they neeed, not what they don’t. Improved living conditions may do more for future health than more medicine, Goldman suspects. “But it may also turn out society should be spending more, not less, on medical care — just doing so in a more prudent manner.”

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Use a Scalpel, Not a Meat Cleaver

by David M. Cutler

September 12th, 2007

Harvard’s David M. Cutler agrees with Robin Hanson’s claim that “a lot of medical spending doesn’t add much value.” However, he is “surprised by Hanson’s argument that this hasn’t been much noted,” pointing to major media coverage of this point and to his own work. According to Cutler, Hanson’s argument is “too simplistic,” suggesting that people in 1975 were better off with half today’s average medical spending. New technologies are both very successful and very expensive, and Cutler argues this extra cost is worth it. Citing research that demand-side approaches to cutting wasteful spending, such as raising consumer prices, are ineffective, Cutler plumps for a supply-side approach: “invest in information technology, monitor what physicians do, and pay providers more for better care than for less good care.”

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Cut Medicine in Half

by Robin Hanson

September 10th, 2007

In this month’s lead essay, the iconoclastic George Mason economist Robin Hanson argues that “our main problem in health policy is a huge overemphasis on medicine.” Hanson points to a spate of studies — especially the huge RAND health insurance experiment — to show that “in the aggregate, variations in medical spending usually show no statistically significant medical effect on health.” Hanson lays down the gauntlet and “dares” other health policy experts to publicly agree or disagree with this seemingly well-confirmed claim and its implications for policy. For Hanson, those implications are clear: “Cutting half of medical spending would seem to cost little in health, and yet would free up vast resources for other health and utility gains.”

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