March 2009

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Why is ‘health status insurance’ better than ‘health insurance’?

March 31, 2009 in Economics - General, Health Insurance | 2 comments

If you get sick and have a non-group health insurance plan, your premiums will increase.  When you think about it, this really doesn’t make much sense.  The concept of ‘health insurance’ is that it is supposed to protect your assets in the case where your health deteriorates.

John Cochrane proposes one solution: the creation of health status insurance.  ”If a health shock causes your medical-insurance premiums to rise, it pays a lump-sum payment sufficient to pay the higher medical-insurance premiums. (To deter fraud, the payment goes into a special account that can only be used for medical insurance premiums.)”

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Should a Government Health Plan compete with Private Health Plans? A Rebuttal

March 31, 2009 in Health Insurance, Public Policy | 5 comments

Last month, I blogged about allowing a government-sponsored health plan to compete with private insurers.  Joe Paduda gives one argument in favor of a public health insurer that any economist would love: increased competition.  

“The reality today is that almost every market is already dominated by a very few health plans, so much so that in most markets, there really is very little market competition amongst health plans…In 96% of markets, at least one insurer has share higher than 30%; in almost two-thirds of the markets, at one insurer has share greater than 50%.”

Could a public health plan actually increase competition?

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Front-Line Staff Perspectives

March 31, 2009 in Operations Research, Quality | No comments

As an economist, I conduct most of my analysis based on the quantitative data.  However, qualitative data should not be overlooked.  A paper by Tucker et al. (2008) looks at how the front-line hospital staff evaluates quality issues.  Some examples of their findings are:

  • The largest number of operational failures occurred in the equipment/supply category.  The reason for these operational failures were that supplies were often missing and equipment was also broken.
  • Poor facility layout often made it difficult for providers to observe patients.
  • Coordination among providers was also a problem. “hysicians reported inconsistent notification from nurses about changes in patient conditions, such as abnormal test results and drops in blood pressure. Nurses commented that physicians were often difficult to reach for consultation. In addition, OR staff reported that they were frequently uninformed about scheduling changes, which resulted in confusion and delay. Staff from all departments lamented a lack of advance notice about patient conditions—such as a need for supplemental oxygen or isolation—which created safety risks because they were unprepared when the patient arrived.”
  • Delays in getting lab tests results created significant bottlenecks in patient care.  
  • Poor hand washing practices increased infection rates.

Further, adopting a policy and implementing are two different things.  ”..while most hospitals had policies to satisfy publicized national goals, such as the use of two patient identifiers when providing care, front-line staff reported low compliance with such policies. This highlights that safety improvement is hindered by implementation rather than policy creation.”

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“All the fuss about global warming is grossly exaggerated”

March 30, 2009 in Economics - General | 1 comment

The N.Y. Times has an interesting profile of Freeman Dyson, a man who claims that global warning may not pose a grave risk to civilization.  Dyson agrees with the scientific consensus that:

  • Rapidly rising carbon-dioxide levels in the atmosphere are caused by human activity,
  • The world is getting warmer, also due to human activity
  • Using coal to generate energy creates “real pollutants” like soot, sulphur and nitrogen oxides, “really nasty stuff that makes people sick and looks ugly.”

So why does Dyson believe that global warming is not a big deal?  First, there has been no overwhelming evidence that warming trends will adversely affect humans or the environment.  Al Gore’s film “An Inconvenient Truth” claims that polar bears will drown if the ice caps melt, but it is more likely that polar bears will be able to adapt to changing conditions over time.  A change in temperature will affect some species adversely, but it may be favorable to other species (such as humans).  Dyson claims that many Greenlanders enjoy a warming of the globe since they can grow cabbage in their own yards.   

Dyson also support energy produced by coal.  Although coal energy is dirty, is it cheap.  Cheap energy can help bring India, China and other countries in the developing world from poor nations to ones securely in the middle-class.  Dyson says, “By restricting CO2 you make life more expensive and hurt the poor. I’m concerned about the Chinese.  [The Chinese are] changing their standard of living the most, going from poor to middle class. To me that’s very precious.”

As an economist, I know that models that predict large scale effects using non-linear modeling can be highly unreliable. Dyson claims that standard climate models take into account atmospheric motion and water levels but have no feeling for the chemistry and biology of sky, soil and trees. This likely exaggerates the danger of global warming.  Thus, large scale anti-global warming interventions involve very large, up front costs in exchange for extremely uncertain benefits far into the future.  

This is not to say that we should ignore the environment.  Clean air and water very important and clearly affect a population’s health.  Further, as a resident of the smog-filled Southern California, I would certainly appreciate efforts to clean up the air.  I believe a carbon tax would be the best way to reduce pollution, but setting a goal of zero carbon emissions is not only unfeasible, it is counterproductive.  

Climate-change specialists often speak of global warming as a matter of moral conscience.  Don’t hurt “the environment.”   We need more science and less ideology when evaluating the effects (good and bad) of global warming.  

  • “The key to change…is to let go of fear” – Roseanne Cash

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Think Aloud: A tool for experimental economists

March 30, 2009 in Experimental | 1 comment

Are people irrational?  Many economic experiments have shown that people often make seemingly irrational or paradoxical choices. 

An article by Ryan, Watson, and Entwistle (Health Econ 2009) probes whether or not people really are irrational using discrete choice experiments (i.e., pick option A or option B).  What they found is that some of the “irrational” behavior is often due to additional assumptions by the participants.  To understand which idiosyncratic assumptions individual carry with them, the authors ask people to think aloud while they are answering the questions.  This way, the authors are able to evaluate if the participants are having the same assumptions the designer of the economic experiment.  

For instance, the paper found that some individual choose high cost over a low cost options.  The reason for the was that some people believe that high cost can be a proxy for quality.  

“You see I feel if you pay more you are obviously going to get more, they are going to do more for you, because that’s just a way of life isn’t it. I don’t mean to say that you have always got to pay a big price but sometimes, the saying is ‘pay cheap, pay dear’.”

Other people could not afford to pay for either option and thus they ignored the cost of each option.

“I thought with the 10 questions there, you were looking at it and thinking ‘what’s more important’? Before the cost was important to me, at the start. I was saying to myself ‘well I can’t afford £48, I know I can’t afford £48, I’m unemployed’. But the more I am answering the questions, the cost was coming out of the equation…”

This “think aloud” technique is a great way for experimental economists to verify that their experiments are actually testing what they claim to test.

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Comparison of Pharmacists and Primary Care Providers as Immunizers

March 27, 2009 in Uncategorized | 1 comment

This week my paper on Pharmacists as vaccinators was accepted for publication by the American Journal of Pharmaceutical Benefits.  Co-authored with John Fontanesi, Jan Hirsch, Sarah Lorentz, and Debra Bowers, “Comparison of Pharmacists and Primary Care Providers as Immunizers” examines whether pharmacists are productive and efficient vaccinators.  The abstract of the paper is below.  The full text of the paper is available here.

“This study examines the potential role of “alternative community immunizers,” specifically pharmacists, in providing immunization services. A convenience sampling of almost 700 adults eligible for vaccinations was taken from 15 ambulatory care settings and 11 pharmacies in San Diego, California between 2006 and 2008. The results of the study found that patient characteristics and beliefs were similar between primary care and pharmacies, but pharmacies proved more consistent in following safety protocols; had lower unit costs; and were more efficient, with greater productivity. We conclude that pharmacies combine the best immunization practices of routine scheduled primary care visits and mass influenza vaccination clinics, but gaps still exist in pharmacies’ ability to effectively transmit immunization records securely and provider willingness to embrace these “alternative immunizers.“

Can Health Care Reform Save the Economy?

March 27, 2009 in Economics - General, Health Insurance | 5 comments

In the run-up of real estate and stock market prices, demand for labor in the construction, real estate, finance industry was high.  With the drastic drop in real estate and stock market prices, the demand for loan officers, construction workers and investment bankers has dropped.  Individuals who have been laid must find a new job.  Those who are currently in dead-end jobs need to find positions in growing industries and cities.  For instance, a construction worker who used to build McMansions in the suburbs should be looking to move to new area where jobs are available working on government infrastructure projects.

Nevertheless, many employees in dead-end jobs may decide to try to keep these jobs.  Why?  One reason workers keep jobs they do not like is that they do not want to lose health insurance coverage for their family.  Moving to a new city can mean a temporary lapse of health insurance.  Further, new employers often do provide health insurance for a few months.  

The phenomenon that workers remain at sub-optimal jobs to maintain their health insurance is known as “job lock.”  I wrote a brief literature review about job lock 3 years ago.

A recent Economist article has revisited the problem of job lock as well:  

“…most Americans still get their health insurance from their jobs.  This makes it hard for anyone with a sick child to quit and start a new firm. It also makes it harder to switch jobs, despite a law helping employees to stay in company plans for 18 months after they leave. Scott Adams of the University of Wisconsin-Milwaukee found that married men with no alternative source of insurance were 22% less likely to switch jobs than those who, for example, could get covered by their wife’s employer.

Tying health care to a job can tie people to jobs they hate. Gerry Stover, who now runs a doctors’ group in West Virginia, recalls a time when his wife was pregnant and he couldn’t get health insurance at a private firm. He became a prison guard. As a public employee, his family was covered. But the job was neither pleasant nor a good use of his talents.”

While employer-provided health insurance is a good place to pool individuals of different health risks, tying health insurance to your employer may impede labor mobility and slow economic growth.

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Cuban Exports: Sugar, Cigars…and Cancer drugs?

March 26, 2009 in Health Care in Developing Nations, International Health Care Systems, Pharmaceuticals | 3 comments

Cuba is well known for its high quality cigars and sugar production, but is less well-known for its production of high quality pharmaceuticals.  According to MSNBC, “With more than 7,000 scientists dedicated to researching new drugs, Cuba has one of the most sophisticated biotech industries in the developing world. Last year the country earned $350 million from exporting 180 different medicines.”  After Ronald Regean reinstated the Cuban trade embargo in 1982, Cuba had to rely on its own biotech industry to produce drugs, since it could not import them directly from the U.S.  Thus spawned the Cuban biotech industry.

The latest news out of Havana claims that Cuba researchers have a new discovery.  According to news reports from Havana, a Cuban Research Institute has just patented a promising lung cancer drug.  The drug is called CimaVax EGF and in clinical trials it has been shown to increase life expectancy in lung cancer patients by 4-5 months.  Researchers claim that those who use CimaVax EGF “…breathe easier, experience less fatigue, less pain and increased appetite. It is administered in conjunction with conventional treatments of chemo and radiotherapy.”

When you think of Cuba, images of  Fidel Castro and Cohiba may come to mind.  But soon, you may have to think of Cuba as the home of live-saving lung cancer drugs.

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CoR

March 25, 2009 in Carnivals | No comments

The latest edition of the Cavalcade of Risk is up at Wisdom from Wenchpoo’s Mental Wastebasket.

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Globalization and U.S. Doctoral Education

March 24, 2009 in Economics - General | No comments

Foreign born recipients of U.S. based doctoral degrees:

  • Science and Engineering: 51% in 2003, 27% in 1973.
    • Physical sciences: 50% in 2003
    • Engineering: 67% in 2003
    • Economics: 68% in 2003

Citation:

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