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Celebrity Product Endorsement in the 1800s

February 3, 2012 in Books, Quotation | No comments

“The first customers bough pairs of telephones for communication point to point: between a factory and its business office, for example.  Queen Victory installed one at Windsor Castle and one at Buckingham Palace (fabricated in ivory; a gift from the savvy [Alexander Graham] Bell.”

Bring Market Prices to Medicare

December 16, 2011 in Books, Health Insurance, Managed Care, Medicare, Medicare Advantage | 3 comments

Medicare is a government-run insurance program.  Can policy changes be made to add competition to Medicare, maintain quality and reduce cost?  A book titled Bring Market Prices to Medicare argues that it can through a competitive bidding process. This book makes a number of sensible arguments which I review today.

The main proposal of the book is a competitive bidding process for all Medicare plans. Currently, there is a form of competitive bidding only for Medicare Advantage (MA) managed care plans. The authors also argues for competitive bidding for fee-for-service (FFS) Medicare (i.e., Parts A and B).  There is already a competitive bidding process for Medicare’s prescription drug program (Part D) which has worked well.

One of the main advantages of Medicare FFS is that beneficiaries do not need a referral for any services and are not limited to certain provider networks. However, Medicare beneficiaries do not pay for these added benefits. In addition, even if HMOs are more efficient than Medicare FFS, Medicare FFS beneficiaries still pay the same Part B premiums.

The authors want beneficiaries to face the true price differentials between the lowest cost plans and less efficient plans., regardless if the plan is Medicare FFS or an MA plan. Thus, beneficiaries would be responsible for any premium differences due to choosing a more expensive plan.

Currently, MA plans receive a variant of the average bid in their service area. The authors propose that Medicare would only pay for the lowest cost plan. This proposal would in essence be a transfer from plans and beneficiaries (who would have to pay the cost differential between the plan they choose and the lowest cost plan) to the government. Given the fiscal hole the federal government is facing, this is a good idea.

Authors also propose to eliminate the 25% tax on premiums. According to MedPAC, “Plans that bid below the benchmark also receive payment from Medicare in the form of a “rebate.” The law defines the rebate as 75 percent of the difference between the plan’s actual bid (not standardized) and its case mix-adjusted benchmark. The plan must then return the rebate to its enrollees in the form of supplemental benefits or lower premiums” The rebate structure gives plans a disincentive from lowering their bids since they only recover a share of the cost decreases.

Another issue focuses on regional adjustments. Living in New York is expensive and health care is more expensive in New York than in rural Mississippi. However, should Medicare subsidize New Yorkers because their health care is more expensive. The authors argue no, but poor individuals in high cost areas will be adversely affected by this policy choice.

A major issue is controlling quality. Plans could create low cost plans by providing low-quality care or failing to provide mandated services. Thus, CMS will need to regulate the plans. Plans with quality levels below a specific level would be barred from enrolling individuals or the government could force beneficiaries to pay additional premiums to enroll in these low quality plans. Public reporting of plan quality is also needed.

Strategic bidding is also a problem. Plans could collude to raise the bid price. However, by having Medicare FFS as an option will cap the amount colluding firms could increase prices. Further, a small firm could bid a very low amount and set the market. Medicare could set the benchmark at the lowest cost plan which meets a minimum size requirement.

Source:

Another Review of the Book:

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The History of Medicine: A Very Short Introduction

September 30, 2011 in Books, Contagious Disease, Medical Studies | 1 comment

I recently finished reading a great book by William Bynum called The History of Medicine: A Very Short Introduction. The book does just what it says: provides a great introduction to the history of medicine.  It is concise and interesting throughout.  The contents are divided into six chapters:

  • Medicine at the bedside
  • Medicine in the library
  • Medicine in the hospital
  • Medicine in the community
  • Medicine in the laboratory
  • Medicine in the modern world.

This chart explains the differences between the first five kinds of medicine.

There are many interesting nuggets of information from this book and picking out a few is difficult.  I’ll settle for two which discuss the unintended consequences of the invention of anesthesia and antibiotics:

“Giving surgeons more time to operate made conserving tissues easier, but the longer exposure of the open wounds to the air also increased the possibility of post-operative infection.  Consequently, anaesthesia enlarged the range of operations surgeons could perform, but not necessarily the changes of a patient’s surviving the ordeal.”

“The causative agents of malaria, tuberculosis, and HIV have all developed resistance to many of their conventional treatments, complicating these major world diseases.  The hospital has not ’caused’ this phenomenon; human agency has.  But drug-resistant pathogens are now so common that modern hospitals sometimes lose their desired epithet, as ‘houses of healing,’ and revert to that old one, ‘gateways to death.’”

Here is Amazon’s summary of the book:

Taking a thematic rather than strictly chronological approach, W.F. Bynum, explores the key turning points in the history of Western medicine-such as the first surgical procedures, the advent of hospitals, the introduction of anesthesia, X-Rays, vaccinations, and many other innovations, as well as the rise of experimental medicine. The book also explores Western medicine’s encounters with Chinese and Indian medicine, as well as nontraditional treatments such as homeopathy, chiropractic, and other alternative medicines.

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Smoking Prevention in China

August 30, 2011 in Books, Public Health | 1 comment

“All tobacco companies are state-owned, and the industry provides signifiant revenue; it also directly employs more than half a million people. From the government’s perspective, smoking is important to stability, both economic and social.  Some cigarettes are even subsidized–the cheapest brands cost as little as thirty cents a pack, because officials fear that farmers will become unhappy if they can’t afford to smoke.”

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Poor Need More Financial Services than Rich

April 6, 2011 in Books, Financial | No comments

Why would that be the case?  The answer is risk.  Poor people (especially in developing countries) have a larger share of their assets at risk due to theft, a family illness, or funeral.  Thus, cash flow management is vital for survival for the poor.  The Enlightened Economist discusses a book called Portfolios of the Poor where Daryl Collins and three co-authors examine how the poor in India, Bangladesh and South Africa manage their money. The data the authors use is unique: weekly diaries kept by researchers who tracked these individuals and families. They found the following:

“The first surprise is the extent to which poor people – living on or about the $2 a day threshold, or about 40% of the world’s population – use a wide variety of financial services, although many of them are informal. The reason is that such low incomes are typically extremely variable and so there is a more intense need than in the case of better-off people for financial management. Poor people have a greater demand for financial intermediation. Less surprising, perhaps, are the facts that poor people face much greater risks including the risk of theft or unanticipated life emergencies, and that their typical transaction is very small indeed…

The typical researchers’ focus on balance sheets will show that the kind of people who kept diaries for this research will see little change in their (tiny) level of assets from one year end to the next, but there will have been, relatively speaking, huge flows of cash in and out in between. Another insight is that a year is far too long a time horizon for financial decision making – and this includes assessing loan rates using APRs. Most of the time poor borrowers will want a loan for a very short period and may regard the (high) interest rate as a fee for a service.”

Thus usurious interest rates may not be so high in levels if paid back quickly.   In other words, the high interest rate translate into a small interest payment for short-term loans, and thus the interest may just cover lenders’ high transaction cost of making such a short term loan.

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Book Review: Macrowikinomics

December 10, 2010 in Books | 2 comments

The theory behind Wikipedia is that the wisdom of the masses is greater than that of a few ‘experts’.  Many people believe that Wikipedia has greatly enhanced the amount of knowledge available to the common man.  Others lament that the encyclopedia entries are not always screen and the quality of entries is highly variable.  Can online, mass collaboration lead to significant improvements in a variety of fields?  This is the propoistion advanced by the book Macrowikinomics by Don Tapscott and Anthony D. Williams.

Although I have not read the entire book, the section on healthcare offers innovative, although overly optimistic, ways to leverage online mass collaboration to improve healthcare quality.  Examples of healthcare websites where this type of mass collaboration takes place include:

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The Drunkard’s Walk

November 26, 2010 in Books | 1 comment

The Drunkard’s Walk is not about drinking.  Instead, as the subtitle states, the book discusses ‘How Randomness Rules our Lives.’  Although I personally didn’t enjoy this book, I highly recommend it to most people.

There are two categories of people who should not read this book: economists (me) statisticians, or mathematicians.  These people will likely already know most of the fundamental concepts which are outlined (in a very entertaining manner) in this book.  In addition, you should not read the book if you’ve read the History of Statistics (me).  The Drunkard’s Walk has a lot of neat anecdotes about the lives of statisticians and what problems they were trying to overcome wen they developed new statistical methods.  These anecdotes, however, are more thoroughly documented in the much denser, much slower, but also much more informative History of Statistics.

To see if you should read this book, check out the following excerpts below:

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Medicaid Overview

September 26, 2010 in Books, Medicaid | 2 comments

“If you’ve seen one Medicaid program, you’ve seen one Medicaid program.”

This week, I will review some of the findings from a wonderful book titled The Politics of Medicaid.  Author Laura Katz Olson writes a well-researched book that evaluates Medicaid from the points of view of its various stakeholders including beneficiaries, providers (esp., physicians and nursing home), managed care organizations (MCOs), and the state and federal governments.  This post provides a general overview of the Medicaid program.

Enrollment

  • In 2001, it’s enrollment surpassed that of Medicare.
  • Roughly 70 of adult Medicaid participants are women, generally mothers or as frail elders in need of LTC.
  • Blacks compose 12.8% of the U.S. population, but 1/4 of the Medicaid population.
  • Latinos compose 15% of the U.S. population, but  1/5 of the  Medicaid population

Spending

  • Medicaid is the 4th largst program in the federal budget (behind Social Security, national defense, and Medicare).
  • Medicaid spending in 1966 was $1.2 billion.  In 2007, spending was $333 billion.
  • Medicaid spending is almost as high as Medicare spending ($375 billion)
  • Medicaid accounts for 15% of all American’s spending on health care.
  • Although the majority of individuals that Medicaid covers are pregnant women and children, one-third of program costs are dedicated to long-term care (LTC) services.
  • Although Medicare-Medicaid dual-eligible beneficiaries make up only 15% of Medicaid enrollment, they account for 42% of all Medicaid spending.

CHIP

  • Children’s Health Insurance Program (CHIP) provides health insurance to a large share of American children.
  • CHIP is sometimes integrated into a state’s Medicaid program and sometimes administered as a separate program.

Popularity

  • According to one study, 47% of adults would increase Medicaid funding and 46% would maintain current funding levels.
  • Medicaid had more support than most welfare programs (AFDC, TANF) but less than Social Secuirty, Medicare or SSI.
  • According to this KFF study, “Nearly three-quarters (74%) of adults say Medicaid is a “very important” government program, ranking it close to Social Security (88%) and Medicare (83%) in the public’s mind, equal to federal aid to public schools (74%), and above defense and military spending (57%). About 8 in 10 Democrats (82%) and Independents (79%) view Medicaid as an important government program, while fewer, but still 6 in 10 Republicans (61%) express that view.”

Benefits

  • Initially, the federal government required state Medicaid programs to provide five benefits: inpatient hospital care, outpatient hospital treatments, laboratory and X-ray work, skilled nursing home care for individuals age 21 and older, and physician services.

Laura Katz Olson admits at the end of the book that she believes that “a single payer is a necessary component of any restructuring of medical insurance, including Medicaid itself.”  Despite this admission, the book is thoroughly research and well-written.  For anyone interested in what really happens in the Medicaid program, I highly recommend The Politics of Medicaid.

Source:

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Book Review: This Time is Different

August 20, 2010 in Books, Economics - General | No comments

What is the history of financial crises?  Why to they occur?  Are they common?  In the book This Time is Different, authors Reinhard and Rogoff assiduously review the history of government defaults and crisis of the financial system. Their data on government default is truly astounding.  They document instance of government default in multiple ways: renegotiating the terms of a loan, failing to pay investors, and reducing the value of their debt through inflation or devaluation.  Although defaults on external debt (from foreign investors) grab the of the headlines of the international media, default on domestic debt occurs as well.

Like most bubbles, the reason for these crisis is the delusion is that “this time is different.”  Astronomical house prices relative to rent are interpreted as evidence of that past ideas of sound fundamentals are obsolete; highly leveraged investments of all types become more and more prevalent.

This is a book of economic history, but one where the last 5 chapters specifically examine how the conclusions drawn from centuries of historical data can be brought to bear to analyze the current Great Contraction.  One of the points I found most interesting is that government debt almost always booms directly after a crisis, however, not for the reasons conventional wisdom ascribes.  It is true that bailouts do add to this debt, but the main short term driver of booming U.S. debt is decreased tax revenues.  During a financial crisis, the economy slows and tax receipts drop precipitously; hence the States’ recent request for more funding from the Feds.

This book is very worthwhile for economic historians and macroeconomists.  The amount of evidence presented is overwhelming.  The key points, however, are repeated over and over; after the first 100 pages, I felt I had already digested  the main points.  This is a book that I do recommend, even if I can’t say it was a page turner.

  • Carmen M. Reinhart and  Kenneth Rogoff (2009) This Time is Different, Princeton University Press, 463 pages.

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Penile Exorcism

July 29, 2010 in Books | No comments

Here is one more excerpt from the book, The Spirit Catches You and You Fall Down. The book often discusses the intersection between Westernized medicine and more traditional healing arts.  Since mental/spiritual well-being often affects physical well-being, it should be no surprise that more traditional ritual ceremonies should offer some health improvement.  This is one of the more “interesting” cases where traditional healing arts improved both spiritual and physical outcomes.

  • Complaint/Symptomatology: The client’s penis had been swollen for about a month.  He reported that he’d been treated by licensed physicians, but that the treatment had only given intermittent relief from pain and swelling.
  • Assessment: The Neng determined that the client had offended the stream spirits.
  • Treatment Plan: The Neng called upon the Neng spirits to effect a cure and release the pain.  The Neng used a bowl of water to spray from the mouth over the infected area.  The offended spirits were offered payment of five sticks of incense to release the pain and relieve the swelling.
  • Result: The client got better after the ceremony.

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