How to improve health care for the poor

I really want to make sure that this post from Megan McArdle isn't overlooked in the discussion of the debt ceiling. There are not a lot of bloggers who have been in my situation in my 20's -- desperately poor and with a difficult medical condition (that was not my fault). But she has.

As a result, she has the correct instincts for services that would really assist the poor:

This is actually not inconsistent with other findings. For example, every time we get a health care expansion, people predict large falls in emergency room usage. Supposedly, we'll save huge sums by shifting people from expensive ER visits to cheap primary care sessions. Unfortunately, the savings have been elusive; in Massachusetts, the largest such experiment we have to date, ER visits actually rose.

Why? ER's are much more convenient. The working poor usually have much less flexibility in their schedules than the middle class. They work shifts, they may need a doctor's note to miss work, and if they don't work, they often don't get paid.

Note that this implies a totally different solution to the problem of "non-emergent ER visits": urgent care or "Minute Clinics" that work odd hours. Otherwise, you just cram even more people into the same ER space*. It is easy to come up with "Just So" stories in health care. The reforms always sound wonderful, and the benefits always unfold in a beautifully logical way. Unfortunately, people, and reality, are rarely as predictable as the models.

When you are short of money for food, leaving work to sit in an MDs office is a major sacrifice. If you are here in the Southeast and do not drive then the cost in time to make it via public transit can be huge. I have seen sick days used as a part of evaluations. I have worked in a small business where I was the only person in the store and leaving it would cause a crisis.

If you are dying of a myocardial infarct then leaving your job is clearly the right decision. But I would leg infections that started small . . . and sometimes did not progress. If I was able to get an antibiotics prescription then I'd avoid the ER.

I have tried going to "minute clinics" but they all refuse to treat because it was not on the symptom list. A last minute appointment at an MDs office was a huge issue.

I saw some good signs of improvement in Seattle where they put an urgent care clinic (open until something like 1 am) right next to the ER. I joined that HMO and it made a huge difference in my quality of life when a medical event happened.

These days I am a professor and these issues are lessened. But I think it is worth keeping in mind just how crucial these services can be for the poor, even if they are unpopular with people who work a 9 to 5 schedule.

"Looks like I picked the wrong week to quit sniffing glue"

A busy, busy end of July here on the West Coast, professionally, personally and socially. The movers come tomorrow. Perhaps I can get the OE posting queue moving shortly after that.

Words of Wisdom -- Weekend Edition

Felix Salmon is unimpressed with Alan Greenspan and suggests a different perspective:

In fact, the opposite is true — ask anybody who has experienced both wealth and poverty. When you’re wealthy — when you have a nice capital buffer to absorb mistakes — you don’t worry so much about running risks, and you’re significantly happier than when you’re poor and you have to be much more worried about where your money might end up. Insurance improves living standards, it doesn’t detract from them. Let’s have more of it.

Too busy to give this the write-up it deserves

But NPR's morning edition has been doing a great series on failing schools. Having taught in the Mississippi Delta, this piece on rural schools struck particularly close to home.

Restoring my faith in public radio

Just when I was losing faith in the medium on this story, American Public Media's Marketplace had segments today digging into the impact of the (manufactured) debt crisis, both in terms of immediate unemployment and long term effects.

Definitely worth your time.

A surprisingly blunt view of finance

I really need to blog on a health policy post by Megan McArdle. But in the meantime, here is a surprisingly sane point of view on the debt ceiling crisis:

My reading of what the ratings agencies have said is that if the GOP somehow manages to force the Democrats to do everything their way, this will not secure our AAA; it will guarantee that we lose it, because it will show that we are currently unable to make the ugly bipartisan compromises that long-term budget balance requires, and raises the risk that sometime in the not-very-distant future, the other party will retaliate by threatening default. That's what Wall Street cares about. Not saving social security. Not lower spending. They just care about getting enough consensus to keep the checks flowing.

I think it is easy to over-estimate ideology among members of wall street because a few of them have decided to spend their wealth on political activism. But, for most businesses (especially in banking), the goal seems to be getting paid and it is worth remembering that. Narrowly averting a disaster is only of limited value if structural incentives (and poor journalism) ensure that it happens again and again.

Why we're where we are

When journalists are determined to find a way to assign equal blame to both sides in every crisis and foul-up, there can be no real accountability and without accountability, a democracy cannot function. If reporters were willing to go where the story led them instead of slavishly following a perverted view of 'fairness,' then politicians would face some consequence for gross irresponsibility.

Paul Krugman recently said

And look at what this does to incentives: no matter how badly Republicans behave, they don’t draw condemnation from the Very Serious People. All you get is tut-tutting about how politics is awful, and if only we had a third party to install Mike Bloomberg as dictator president all would be well.

Pundits who won’t call out extremism without pretending that it’s symmetric aren’t a big part of our problem, but they are a part of our problem.

He's wrong. They and journalists like the Washington Post's Felicia Sonmez are a big part of our problem and more; they are a necessary condition for the mess we're in.

Josh Marshall takes an in depth look at this idea here.

Virtuous Circles

The ever interesting Felix Salmon has reasons for optimism about the future of Paywalls. In particular, he notes how the porous paywall of the NYT beats the FT paywall (which is consumer unfriendly and annoying).

But even better is the marketing opportunity that this sort of paywall creates:

Those paying digital subscribers, however, are much more valuable than their subscription streams alone would suggest. They’re hugely loyal, they read loads of stories, they’re well-heeled, and advertisers will pay a premium to reach them. Judging by the second-quarter results, which is admittedly early days, it seems as though total digital ad revenues are going up, not down, as subscriptions get introduced: the holy grail of paywalls.

This is a principle worth keeping in mind -- there are virtuous circles as well as vicious ones. Not only does the NYT get to collect predictable revenue from a steady stream of subscribers (and predictable revenue is worth a lot), it also gets an advertising boost from being able to identify these readers. It's an amazing outcome and I remain delighted that it worked out for them.

Now I wonder if we could try and apply these principles to public health. How can we create incentives where patients identify themselves in ways that save money and are happy to do so? Because when you manage to get these sorts of two for one punches, efficiency is massively improved.

When all of your studies are ecological

Consider this example:

By contrast, in England during the same period, the nobility and gentry didn’t conspire with the crown to exempt themselves from taxation. Instead, thanks to a number of factors—greater social solidarity, a keener sense of foreign threats, reforms that made the government itself less corrupt, and the principle of taxation only with the consent of Parliament—the wealthy of England willingly accepted higher taxes on themselves. As a result, government spending in England rose from 11 percent of GDP in the late seventeenth century to 30 percent during some years in the eighteenth century. That’s higher than U.S. federal spending today. These higher taxes on the wealthy in England, Fukuyama notes, “did not, needless to say, stifle the capitalist revolution.”

This is a persistent problem in the evaluation of programs: how do you determine the direction of causality in an ecological study? Did England become wealthy and thus feel free to raise taxes or did raising taxes allow England to prosper and become wealthy? The same issue arises with debating points made closer in time:

The idea that the economy will suffer if we modestly raise taxes on upper-income Americans is belied by recent history: we increased tax rates on the rich in 1993 and the economy created more than twenty-two million jobs; we cut them in 2001 and the economy created fewer than seven million jobs.

But it is clear that there were a lot of confounding variables between the two time periods. Still, it is interesting that most people seem to immediately see a link between raising taxes and lower economic growth. Why are we so sure about this link, given the weak relation seen historically?

It's a really challenging problem and, worst of all, one that data can't really help us with.

Mr. Glass vs. the Patent Troll

This American Life takes on Nathan Myhrvold's Intellectual Ventures. What more do you need?

A busy morning

But I'm going to try to find time soon to say something about:

This could be a mistake, argues Paul D. Spudis in “The Case for Renewed Human Exploration of the Moon.” In his study, Spudis argues that Moon exploration could reinvigorate the space program and provide a starting point for future research missions. Spudis suggests using the Moon as a testing ground for new technologies and strategies. He says the Moon’s geological make-up can teach us more about other planets and Earth’s own history. And since it has no atmosphere and a dark sky, the Moon could serve as a better home base for astronomical observation. Furthermore, Spudis specifically makes the case for human exploration, rather than just unmanned missions. As an example, he argues that trained scientists can give context to the evidence they collect, whereas robots just pick rock samples at random. He writes, “[Robots] cannot undertake scientific study, make new observations and let these observations guide subsequent work and iteratively apply the lessons learned to an evolving conceptual paradigm […] Although significant gathering of data can be done with robots, conducting science in space requires scientists.” While Spudis is realistic about the political and financial hurdles, he maintains there’s only one way to prevent NASA’s demise: “We must return people to the Moon.”

from TNR

and

There are trigger issues in which the GOP no longer reflects the thinking of mainstream Americans of either party. In Tuesday's charade as the House put the Tea Party debt legislation to a vote, what we saw was an example of the kind of coalition voting common in Europe, where separate parties arrive at an agreement to govern. There are now essentially three parties in Congress: Democrats, Republicans, and the Tea Party. Reasonable Republicans with a sense of the possible do not subscribe to the Tea Party's implacable ideology, but they feel they must deal with it to placate its zealots. They are essentially in a coalition with a third party.

from Roger Ebert

And of course, this.

Different visions of Health Care

One question that has been pretty persistently part of US public health efforts has been a fundamental disagreement about the role of government in health care. This shows up in all sorts of interesting places but has new entered the debt ceiling negotiations. From Paul Krugman:

It turns out that in the final stages of the debt negotiations, Republicans suddenly added a new demand — a trigger that would end up eliminating the individual mandate in health care reform.

This is telling, in a couple of ways.

First, the health care mandate has nothing to do with debt and deficits. So this is naked blackmail: the GOP is trying to use the threat of financial catastrophe to impose its policy vision, even in areas that have nothing to do with the issue at hand, a vision that it lacks the votes to enact through normal legislation.

Second, this is a demand Obama can’t accept, unless he plans on changing his party registration. Health reform doesn’t work without a mandate (remember the primary? Maybe better not to). And if health reform is undermined, Obama will have achieved nothing. So by adding this demand, Republicans were in effect saying no deal . . .

The alternative interpretation is that there is a large segment of the US population that would rather freedom to choose health care than efficient health care. The focus on individual decisions over public well being has implications on a whole host of medical decisions affecting issues like: disease management, fraudulent medications, antibiotic resistance and so forth.

It is hard to see a clear road forward when there is a legitimate difference in such basic questions of health care organization.

Implications of not raising the debt ceiling

Even Megan McArdle is asking hard questions about the debt ceiling and the consequences of paying just interest on the debt, medicare, social security and military salaries:

•You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.
•The nation's nuclear arsenal is no longer being watched or maintained
•The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity,etc.
•The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country. All the illegal immigrants currently in detention are released, since we don't have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
•All of our troops stationed abroad quickly run out of electricity or fuel. Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
•Our embassies are no longer operating, which will make things difficult for foreign travellers
•No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people! Sorry, wildfire victims! Try to live in the northeast next time!
•Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
•The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who's going to be teaching your kids without a special property tax assessment.
•The market for guaranteed student loans plunges into chaos. Hope your kid wasn't going to college this year!
•The mortgage market evaporates. Hope you didn't need to buy or sell a house!
•The FDIC and the PBGC suddenly don't have a government backstop for their funds, which has all sorts of interesting implications for your bank account.
•The TSA shuts down. Yay! But don't worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too. Hope you don't have a vacation planned in August, much less any work travel.
•Unemployment money is no longer going to the states, which means that pretty soon, it won't be going to the unemployed people.

I think that this post highlights just how desperately we need to increase tax revenues. Even if we might one day repeal them in the face of a lower burden of government spending, the most logical equilibrium seems to be to pay more now and reduce taxes once we work out what we don't want the government to do.

I also have no patience for the dynamic Laffer Curve -- as Noah Smith so nicely pointed out, that line of argument rather suggests Sub-Saharan Africa should have emerged as the great power after the horrible tax policy of the European, Asian, and American nations. Taxes can have bad effects but so can persistent unemployment!

The irrationality of engineers

Andrew Gelman has a new post pointing out a contradiction that keeps popping up in the pop econ world. You should read the whole piece (as well as Joseph's take on it) but this part in particular caught my eye:

The key, I believe, is that "rationality" is a good thing. We all like to associate with good things, right? Argument 1 has a populist feel (people are rational!) and argument 2 has an elitist feel (economists are special!). But both are ways of associating oneself with rationality. It's almost like the important thing is to be in the same room with rationality; it hardly matters whether you yourself are the exemplar of rationality, or whether you're celebrating the rationality of others.

This is an excellent point but I'd go further. The economist's 'rationality' is, as mentioned before, analogous to the statistician's 'significance.' Both are highly specific terms that are just close enough to their general usage to get people into trouble.

I previously gave some silly examples of 'irrational' decision making, here's a more practical one: you're an engineer designing a missile. You're concerned with accuracy, range, speed, payload and cost. The 'rational' approach would go something like this -- for each attribute, come up with a function that assigns its level a dollar value, then pick design x where a(x) + r(x) +s(x) + p(x) - cost(x) is optimized. I suspect that most engineers would find this 'rational' approach highly irrational and would usually choose, instead, to hold three or four of these attributes to an acceptable threshold and optimize the remaining one or two. (check out the cheap beer post for more on thresholds and irrationality.)

There's nothing wrong with having a specialized, field specific definition for rationality; there is something wrong with using confusion over different meanings of the term to make yourself look good.

Popular Micro-economics

Andrew Gelman writes:

Pop economists (or, at least, pop micro-economists) are often making one of two arguments:

1. People are rational and respond to incentives. Behavior that looks irrational is actually completely rational once you think like an economist.

2. People are irrational and they need economists, with their open minds, to show them how to be rational and efficient.

Argument 1 is associated with "why do they do that?" sorts of puzzles. Why do they charge so much for candy at the movie theater, why are airline ticket prices such a mess, why are people drug addicts, etc. The usual answer is that there's some rational reason for what seems like silly or self-destructive behavior.

Argument 2 is associated with "we can do better" claims such as why we should fire 80% of public-schools teachers or Moneyball-style stories about how some clever entrepreneur has made a zillion dollars by exploiting some inefficiency in the market.

[sorry for the general link, there seemed to be technical issue linking to the specific article]

I think that this insight is quite compelling and exposes a real issue with popular micro-economics. After all, these two positions mostly contradict each other!

I see this contraction arising for different reasons than Andrew does. I think that economists are often forced to make strong assumptions in order to deal with the sorts of complex problems that they look at. So they presume rationality on the part of all actors when trying to explain problems (i.e., descprive work). But when they want to improve matters they shift and reject this assumption (as it would suggest everything is already optimized). So they make different (strong and unverifiable) assumptions depending on whether they are trying to explain behavior or give guidence to improve outcomes.

What seems to be more alarming to me that is that this pool of economists often don't "sanity check" the effect size of their analysis. Perhaps it is my background in epidemiology, but if I see a hazard ratio of 5 then I am immediately suspicious that it is too good to be true. However, Ray Fisman can see an analysis that suggests firing 80% of teachers and not necessarily wonder if perhaps there is an overly strong assumption in his analysis (like the pool of new potential teachers not having finite limits or in the real sensitivity of the evaluation process).