Salon: Dudebros and millennials shouldn’t determine who gets healthcare!

I wrote this at Salon. I didn’t title it. So if you are going to complain about that, direct it elsewhere.

Excerpt:

But instead of getting into the nuts and bolts of whether the young can be swayed to enroll, I think it behooves us to take a step back and consider how utterly surreal this spectacle is. The whims of a small set of 20-somethings and 30-somethings will determine whether our attempt at a universal healthcare regime stays afloat or self-implodes. Did you manage to see that shirtless bro with a crooked Miami Dolphins hat who became a mini-celebrity yesterday because he witnessed the Capitol shooting? The success of Obamacare depends on the neurons in his dudebro brain firing in a specific way that causes him and his dudebro friends to sign up for insurance on the exchange. We are all at his mercy.

Do you think the NHS in the U.K. had a phase like this? Do you imagine there was a moment in 1948 when all of Britain had their fingers crossed, hoping that the whims of the country’s youth would afford them the luxury of healthcare? Do you think Canada’s Medicare system was constructed in such a way that it could be unraveled by a small part of its population opting not to participate? No, of course not. These are competent countries and when they wanted universal healthcare, they made it happen. When we wanted it, however, we produced a Frankenstein joke so compromised by navigating between the relevant special interests that the whole thing may very well collapse in on itself in a spectacular display of our nation’s accelerating impotence.

Read the rest at Salon.

Socialize Big Pharma Research

I ran across this post at Jacobin called “Socialize Big Pharma.” The basic argument is simple. We need more antibiotic drugs, and pharmaceutical companies aren’t trying to produce them. Therefore we need to eliminate the private pharmaceutical sector altogether, putting a socialized system in its place.

I found the post odd for a number of reasons, but mainly because it seems to totally miss the drug patent system at the center of the dysfunction the author is so concerned about. Drug patents are state-granted monopolies over manufacturing specific drugs. This time-limited monopoly system allows drug companies to generate massive rents for as long as the patents last. The possibility of capturing those massive rents is what is supposed to motivate private companies to undertake drug research.

But, as Dean Baker has famously argued, the drug patent system is a ridiculous way for the state to go about making drug research happen. For $30 to $80 billion per year, the federal government could totally replace the research private drug companies undertake. If it combined this replacement spending with an abolition of the drug patent system, consumers would save $270 billion a year due to the elimination of patent-generated rents. Additionally, the publicly-funded drug research could be directed towards more socially valuable drugs, e.g. the antibiotics that the author of the Jacobin piece is so frantic about.

I was stunned by how badly the author missed the point. The piece is a great testament to the way in which incumbent institutions (in this case drug patents) get so ingrained into our understanding of reality that we barely take notice of them. So here, the author ends up totally overlooking drug patents on the way to reaching the unnecessary conclusion that the entire pharmaceutical industry needs to be socialized. In reality, the author’s complaint should lead him to indict the patent system as a failed way to generate good drug research. This then supports the idea that we should publicly fund drug research, a point many authors have already made. It does not, by itself, say anything about the need to socialize the firms that run the pill-making machines, this being the conclusion the author oddly comes to.

Policy Shop: The Oregon Medicaid Success

New post at Policy Shop. Excerpt:

The second theory is that Medicaid is uniquely inferior among health insurance plans, and that is what causes it to be ineffectual. The right-wing has been pursuing this theory for a while, claiming that the low reimbursement rates in Medicaid basically make it inoperative as insurance because providers do not want to take it. The Oregon study shows that is not true because Medicaid recipients did substantially increase their utilization of health care services. But even if we assume it is true, the policy conclusion that springs from it is to change Medicaid so it is not inferior to other health insurance plans. If the argument is that Medicaid, and not other health insurance, is useless because it is X, then make Medicaid be not-X.

Much, much more over at Policy Shop.

The Impact of Fallin’s Medicaid Decision

So Mary Fallin has this thing she does where she forgets that she is governing a state, and pretends instead that she is a national political actor whose job should primarily consist of taking symbolic potshots at federal government programs that the Republican party dislikes. It is not totally clear why she does this: sometimes I speculate that no one has adequately explained to her that she is not a member of Congress anymore.

On most days, Fallin’s grandstanding is just a waste of everyone’s time. As a state governor, she has no real power over federal matters. She does the political equivalent of waving a few Don’t Tread On Me flags, the national media reports on the circus, and everyone goes on with their lives. However, Fallin’s recent decision to reject federal dollars to expand Medicaid in Oklahoma goes beyond symbolic gestures, and delivers a huge blow to uninsured poor people in the state.

According to OK Policy Institute estimates, the rejected Medicaid expansion would have made 130,000-190,000 poor, uninsured Oklahomans eligible for Medicaid. This would have imposed no cost on Oklahoma in the short-run, and imposed very little if any cost on Oklahoma in the long-run. Up until 2020, the expansion would be funded entirely with federal funds. After 2020, the expansion would continue to be 90% funded by the federal government, leaving the state government on the hook for the other 10%. The cost of funding that 10% would be the equivalent of 0.5 percent of state appropriations for 2013. That is a very small amount to pay to insure so many, and is probably overstated because a Medicaid expansion would also permit the state to shift some healthcare costs it already pays for on to the Medicaid program.

So, expanding Medicaid would insure a significant number of poor Oklahomans, but that leaves open the question of what impact that will have on those who receive the insurance. After all, poverty is a harsh existence, health insurance or not, and Medicaid has notably stingy reimbursement rates that many health care providers loathe. Thanks to a ground-breaking study in Oregon, we have a fairly good understanding of what kind of improvements Medicaid brings. Individuals insured by Medicaid are 20 percentage points less likely to have out-of-pocket expenses, 15 percentage points less likely to borrow or skip bills to pay medical expenses, and 4.8 percentage points less likely to have an unpaid bill sent to collection.

On the health side, Medicaid recipients are 7.8 percentage points less likely to screen positive for depression, 13 percentage points more likely to report their health condition as good, very good, or excellent, and 32 percent more likely to report feeling overall happiness. They are also much more likely to have sought out preventative care like mammograms.

How do the uninsured poor not on Medicaid fare? Well you can flip those statistics around to get a sense, or you can read some of the stories the New York Times ran about those individuals who were not lucky enough to win Medicaid access in the above study. Here is just one:

For instance, a year ago, Samantha Kious, a hair stylist, went to Planned Parenthood to seek birth control medication to manage her polycystic ovary syndrome, a common hormonal imbalance.

Ms. Kious, 24, who also has depression and Crohn’s disease, a bowel condition, makes only $1,000 to $1,200 a month and cannot afford insurance. The clinic performed some tests and prescribed Ms. Kious the pills. But they also told her that she had Stage 2 cervical cancer. As of now, the condition remains untreated. She and her boyfriend even considered getting pregnant so that she would automatically qualify for Medicaid.

“It’s scary for me, having cancer and knowing I can’t do anything about it,” said Ms. Kious, her hair in an elaborate plait. “It’s an I-don’t-know-when-my-next-meal-will-be sort of thing. It’s really difficult because health problems make you scared and emotional.”

This is the reality Fallin is creating in Oklahoma by turning down federal Medicaid money. She is doing this, not for any serious fiscal reasons, but because she delusionally believes that she is some sort of national political actor that anyone outside this state cares about. She does not strike any blow against Obamacare when she refuses this money: it will still exist and nothing she can do will ever make that change. This is just the grown-up version of an impotent temper tantrum. Unlike when a toddler does it however, Fallin’s move here will actually hurt a lot of people and the state more generally.

This was originally posted at OK4RJ.

Ridiculously high doctor compensation levels in the US

Healthcare costs in the US are really high relative to other countries. In 2008, the US spent over $7,500 per person on health care, nearly twice the amount of a group of similar OECD countries. As a result, the US spends 16% of its GDP on healthcare, more than 5 points higher than any other country. This poses a huge set of problems for people in the US. Among those, family budgets are being drained into insurance premiums and government expenditures on healthcare have risen rapidly and unsustainably. Getting these costs under control is the only non-terrible solution to fixing the coming Medicare shortfall.

There are all sorts of discussions about why similar procedures in the US cost so much more than other countries. One issue not usually raised in these discussions is doctors’ compensation. Peter Ubel gives numbers on differential doctor pay in a recent post at Forbes:

Primary care physicians in the United States make $186,000 per year on average versus $131,000 in Germany. Orthopedic surgeon pay ranges from a high of $442,000 in the United States, to $324,000 in the UK, to a relatively parsimonious $187,000 per year in Australia, that according to analysis by the United Health Group Foundation.

Ubel does not give an explanation for America’s outsized doctor salaries, but there is a strong case that they are largely driven by doctor supply constraints put in place by the cartel-like American Medical Association. The full argument about doctor cartels is best provided in Dean Baker’s freely available book The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer. Mark Perry also has a good run down of the point. Really though, all one needs to do is look at a few graphs to see the obvious supply problem.

This doctor shortfall is not caused by too few people trying to become doctors. Large numbers of students are kept out of medical schools each year by the AMA. This artificial supply constraint — which has created a medical school graduation gap of over 4,200 doctors per year — may not entirely explain the high compensation of US doctors, but it surely explains some of it. Ultimately, consumers and the government pay the price of this protectionist behavior.