Ear Rational Thoughts

How really, really awful science is in medicine

First, the Atlantic has a really terrific post on how really, really awful science is in medicine.

80 percent of non-randomized studies (by far the most common type) turn out to be wrong, as do 25 percent of supposedly gold-standard randomized trials, and as much as 10 percent of the platinum-standard large randomized trials.

... He zoomed in on 49 of the most highly regarded research findings in medicine over the previous 13 years... Of the 49 articles, 45 claimed to have uncovered effective interventions. Thirty-four of these claims had been retested, and 14 of these, or 41 percent, had been convincingly shown to be wrong or significantly exaggerated.

... How should we choose among these dueling, high-profile nutritional findings? Ioannidis suggests a simple approach: ignore them all. ...

It goes on and on. Medicine is just not in the least bit scientific. At all. It's really, really sad.

The cost of health care isn't a factor

Capre diem on the cost of care: "But almost 21 million of those uninsured are between the ages of 18 and 34, which is 41% of all uninsured.... At least in Michigan for young adults between the ages of 18 and 30, insurance is available for as little as $49.30 per month through ..., which is about the same monthly cost as a cell phone."

A long vacation

From the Economist, quoting Megan McArdle quoting the Economist, referring to retirement:

I don’t know if it’s ever going to be realistic that everyone saves enough to spend the last third of their life on vacation.

Well said. They conclude:

As we live progressively longer we must also rethink our retirement expectations. Retiring at the same age that your parents did, or earlier, can no longer be the expectation...

The problem is a double-whammy. First, the cost of keeping people alive goes up exponentially the older they get. Second, the longer people live, the longer they spend "on vacation", reducing the fraction of their life that they spent producing things. The problem is exacerbated for the infirm, who cost even more to keep alive and must (rather than choose, as is the case for the healthy) retire earlier. The result is a larger fraction of our resources going to keep people alive who are not ever going to produce additional resources in return.

If people were paying for those resources out of their pockets it wouldn't be a problem at all. But unfortunately, we have made an open-ended commitment to entirely insulate people from both costs. When thought about in this way, it seems clear that this path can NOT be sustainable.

Addendum: See this post from Arnold Kling:

As McArdle puts it,

Whether you collect a dividend check, get a corporate pension, or live off your social security, your retirement is funded by real claims on the output of people in the workforce.

For any given level of output, more consumption by one group (say, people over 65) is going to reduce what can be consumed by everyone else.

Massachusetts Health Care (again)

Arnold Kling reports some unfortunate news from MA:

The number of people who appear to be gaming the state's health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance.

He offers some thoughts:

Health insurance reform means that the government destroys the freedom of insurance companies to design their own contracts. Instead, health insurance companies simply administer programs designed by the government.

Awesome.

Uncorrelated Excellence

John Goodman, in a post that is good throughout:

In general, a bureaucratic system is one in which normal market forces have been systematically suppressed. In such an environment, there tends to be a sea of (relative) mediocrity, sometimes punctuated by little islands of excellence. Further, the islands of excellence tend to be randomly distributed. They do not correlate with much of anything.

This picture not only describes most public school systems around the world, it also describes most health care systems. (In fact, I can’t think of a single exception.)

He points out that in health care as in education, no matter how you slice it, results don't seem to be correlated well with anything you can transplant. Higher spending as often leads to worse results as better. Interventions into schools by well-meaning judges, city governments, etc. seem to have no statistically significant impact. Adding IT or changing the way hospitals are paid likewise has no consistent impact on health care.

Needless to say, I am sympathetic to the point that bureaucracy tends to lead to random results. I think it may be one of the reasons there is a wide discrepancy between the left and right on the use of government. I suspect most people can't mentally handle the notion that things are random. So what they do to resolve such situations is ignore one half of the results. If you ignore the part where the government is doing well, you are a conservative; if you ignore the part where the government fails, you are a progressive. It's the only way that two intelligent people can look at the same series of events and see the policy implications as 180° off from each other.

H/T Arnold Kling

Coffee and healthcare

When I started at my current company, they had free Starbucks coffee ("free" in the sense that you didn't have to pay to drink it; presumably they were recouping their costs elsewhere, most likely in employees' salaries). The bought it ground up in bags and they had coffee makers. Someone had to make it, but it was free to drink.

Then about 2-3 years ago, as part of a cost-savings, they switched from Starbucks to "Green Dragon" coffee, which frankly, sucked. My boss is something of a coffee "connoisseur" so rather than drink the free coffee, he decided he wanted to start buying his own (high-quality) coffee to make instead. Because he was making it by the pitcher, he decided to start a coffee club so that other people who wanted to drink "good" coffee could do so.

Now one way to handle this would be to, say, charge everyone $0.25/cup. Anyone who wants a cup can get one as long as they put a quarter (or whatever amount) in a jar.

But my boss is very, very "progressive". He doesn't like big corporations "nickel and diming" people. So rather than charge per cup, he decided to charge everyone a fixed price per calendar quarter so that he was recouping his costs, but your payment was not in any way proportional to how much coffee you drank. If you drink one cup a quarter, you pay the same as someone who drinks 5 cups a day.

Can you guess what happened? Every single quarter when he's asked for payment, it's been more $$ than the quarter before. And every quarter – as the price rises – fewer and fewer people opt-in for that quarter, and they are presumably switching back to the crappy Green Dragon that the company still offers for free. These are probably the people who weren't drinking that much coffee and so didn't see it as a good deal to stay in the club as the price rises. Which leaves people who do drink a lot, which means that the per-capita cost rises, etc.

What's really interesting about the whole thing is that there is another approach that is used by coffee clubs throughout the world – that is the pay-per-cup approach. And this approach – at least as far as I know – doesn't seem to have the same price-spiral effect that my boss's pay-one-price approach is exhibiting.

Conclusions are left as an exercise for the reader...

Who buys our healthcare?

Bryan Caplan has a couple posts linking to Clive Crook who makes the point that the difference between the US and Europe in regards to free market vs socialism is a matter of degrees:

Progressives and conservatives alike call the United States a "free-market economy": both sides have an interest in perpetuating this delusion. The idea is ridiculous - as ridiculous as calling Europe's economies "socialist". True, the blend of government and private enterprise is a bit different between the US and the European average, but the models (insofar as it makes sense to talk of a European model) are neighbors not polar opposites.

Bryan's most interesting point is in regards to healthcare:

According to 2007 OECD data, U.S. government spending [on health care] as a percentage of GDP is actually slightly above the average of (Austria, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Norway, Spain, Sweden, Switzerland, and the UK). As a percentage of GDP, the U.S. government outspends Canada, too! And since U.S. GDP per capita is higher, the U.S. government actually spends a lot more dollars per person than the average country in Europe. Lack of U.S. government spending on health care is not the reason why our government's share of the economy is smaller than Europe's.

From that table, combining Health Care as a %GDP and Public Expenditures as a percent of total spending, we get this table:

Country	Gov't HC Spending %GDP
Australia	5.9
Austria	7.5
Belgium	8.0
Canada	7.2
Czech Republic	6.2
Denmark	8.1
Finland	5.9
France	8.8
Germany	8.5
Greece	5.0
Hungary	6.2
Iceland	7.8
Ireland	5.5
Italy	6.2
Korea	2.3
Mexico	2.5
Netherlands	7.0
New Zealand	6.9
Norway	7.5
Poland	4.7
Spain	6.1
Sweden	7.9
Switzerland	5.8
United Kingdom	7.0
United States	7.2

Contrary to what we've been told, the US is not an outlier here.

The Mass Health Care Harbinger

Megan McArdle points out just how well Massachusetts health care "fixes" - which were the model for the federal plan - are working out:

Watching the Massachusetts health care reform unfold is like watching a tragic game of whack-a-mole. As I noted before, the expected cost-savings have largely not materialized, pushing the thing way over budget, and despite the fact that it already had the highest rates in the country, the cost of insurance is rising at a brisk rate of roughly 10% a year. The best you can say about this cost problem is the wan defense that I've now heard several times: that by provoking a crisis, the system may now finally do real delivery service reform that will control costs.

Side note - how come "starve the beast", when used by conservatives as a way to prevent the growth of government, is laughed at by the left (and rightly so, in my experience), but is then a perfectly legitimate defense for government failure on health care?

She continues:

The quality of legislation coming out of Massachusetts on this stuff right now is really frighteningly bad. There's none of the technocratic fine tuning that we were assured was the greatest reward of this sort of program, just crude, blanket rules that do[n't] much reflect the realities of the market. Rather, they're a cathartic outlet for legislators frustration that any reality exists outside of the power of their pens.

The war against health care spending is shaping up to be a lot like the war on drugs, the war on obesity or the war on terror. No matter how much it fails, the claim will be that the moral imperative is too great to do nothing, so more and more money and more and more erosion of our freedom will be required to really fix the problem.

The curse of longevity

From Megan McArdle:

From the Boston University Center for Retirement Research: "Our main finding is that although the current health care costs of healthy retirees are lower than those of the unhealthy, the healthy actually face higher total health care costs over their remaining lifetime." So if the reform proponents are right, and people do get healthier, we will face a (ceteris paribus) increase in health care costs. I mean, I'll be glad that people are healthier. But I hope there's a money tree somewhere to pay for all of this.

Every time we save someone's life, we necessarily sign ourselves up for another expense to save their life again, later. When "we" are deciding how much to spend on health care for "us", the incentives become perverse.

Perhaps we just need government-sponsored bungie jumping for the elderly...

Thinking you're great keeps you healthy

Robin Hanson points to a new study on the effects of subjective status (i.e. how you perceive your own status):

193 healthy men and women ages 21-55 years were assessed for subjective (perceived rank) and objective SES [Socio-Economic Status], cognitive, affective and social dispositions, and health practices. Subsequently, they were exposed by nasal drops to a rhinovirus or influenza virus and monitored in quarantine for objective signs of illness and self-reported symptoms.

Kind of sucks to be in that study. But the results are a bit surprising:

Increased subjective [status] is associated with less susceptibility to upper respiratory infection, and this association is independent of objective [status], suggesting the importance of perceived relative rank to health.

So if you think you're rich and powerful, you're less likely to get sick from someone stuffing virus laced liquid in your nose.