Ricci DiStefano

I have some healthcare posts coming up, but I just wanted to post this.

I've mentioned before how dangerous I think the Ricci-DiStefano case was and why it makes me afraid of Sotomayor.

The Supreme Court came down 5-4 in favor of the firefighters today.

msnbc's take

my earlier take

A call for good books

I am always looking for good new books, but especially this summer. Suggestions?

In the last couple weeks I read:
Outliers
The Brief Wondrous Life of Oscar Wao
Where Eagles Dare
Freakonomics
Good To Great
You Can Be a Stock Market Genius
The Guns of Navarone



I highly recommend Where Eagles Dare and Good to Great for people interested. Oscar Wao was also quite good.

Homeless at Harvard

Homeless girl accepted to Harvard

I thought at first about making a political point in reference to this girl's story, but it's inspiring enough that I'll leave it at the story, for once.

Help!

If anyone is on Twitter, set your location to Tehran and your time zone to GMT +3.30. Security forces are hunting for bloggers using location/timezone searches. The more people at this location, the more of a logjam it creates for forces trying to shut Iranians' access to the internet down. Cut & paste & please pass it on.

One fast way to get around healthcare costs

I've been posting on healthcare a lot, because it's interesting, I think.

A lot of people have talked about removing the tax exemption for healthcare (which I can't decide if I support - I suppose I should, but I tend to think healthcare is worth having a lot of) or selling insurance across state lines. There are other methods, however, which seem to be more unequivocally good

I have two ideas for healthcare costs.

Firstly, tax the hell out of trans-fats. They absolutely carry massive negative externalities (in terms of price of insurance). Cigarettes could use higher taxes as well. Alcohol is another prime candidate. This a) reduces preventable disease rates and b) helps fund the healthcare required for treating everyone else. Pigouvian taxes for the win.

Secondly, there are a ton of procedures which doctors are not required for and nurses are perfectly capable of. Paying a nurse is much cheaper than paying a doctor. It seems reasonable to allow some more procedures to be done by nurses. This would be cheaper for everyone.

Iranian Elections

The probability that the vote counts declared in the Iranian elections were real is around 0.5%. In other words, before we listen to any stories about vote manipulation or use any logic about which provinces should have voted for whom, we can already be 99.5% certain that the Iranian election was fradulent. Just using province logic basically makes this a 100% certainty.

I see two big points out of this:

1) Does anyone think that this rioting would be happening if the next door rival country (Iraq) were not a democracy? The Iranian government would have had a much easier time promoting pro-Ahmadinejad nationalism if Iraq were under Hussein - also a sworn enemy, but one who oppressed his people.

Even if you don't believe that Iraq was seeking WMDs, you can't deny Iran was... and if this does successfully shake up the government (unlikely but at least there's a shot), then the war in Iraq really did protect us all from WMDs... just not in the way Bush thought.

I think Bush was a terrible president because of his awful social and environmental policy and the abominable way in which he appointed people to positions. People confuse his foreign policy, however, with his logistical ineptitude. Yes, the Iraq war should have cost less, and yes it should have been over sooner. However, in a sense, it does seem to be acting in the exact way he wanted it to - Iraq became a beacon of democracy in the Middle East, and a reasonably dependable ally.

In other words, just because the Iraq war wasn't handled well doesn't mean it was a failure.

I tend to think of war as a waste of lives and well-being, and if given the decision again, I think we'd all say the US should not invade. However, Saddam really was a nightmare, and it's hard to argue that Iraq is not better off now than under Saddam. It's just us who are worse off (our national security probably is better, despite most claims to the contrary, but the war cost thousands of lives and trillions of dollars)

2) I hope this serves as somewhat of a wake-up call to Obama, whose foreign policy is beginning to scare me. His comparison of Israeli settlement to the Holocaust was absolutely smear work (a much better comparison to the Holocaust would be the treatment of Jews in every Muslim country in the Middle East - the reason you don't hear about it is because they're all dead or exiled).

Israel is a functioning democracy, and trying to force it to bend to US will while extending negotiating power to governments not significantly different from Iran's rebalances power into highly corrupt hands. Additionally, shooting for a two-state solution ignores the problem that the Palestinian state or states (Gaza and West Bank) will either be run by Hamas or a joint effort of Jordan and Egypt; without Israeli or US intervention, it's hard to see any other outcome. We've seen what will happen if it's run by Hamas - Incessant rockets into Israel, followed by Israeli invasion.

A state run by Egypt is not necessarily a good thing, given that Mubarak probably won't live much longer and when he dies, Egypt will have its own set of massively difficult problems and may not be able to keep control of a Palestinian state. Jordan can't run Gaza because Israel separates them.

A two state solution can only work once Hamas and Hezbollah have been crippled, so pushing the Israelis into it before they're ready can only lead to problems. The real thing Obama should be working with the Israelis on (read "working with", not "forcing upon") is how to harm Hamas and Hezbollah without hurting the civilians whose propensity for peace is desperately needed for any solution. As Golda Meir noted, "Peace will come when the Arabs will love their children more than they hate us."

In any case, hopefully viewing the situation in Iran makes Obama realize that Israel does what it does because it has, again in the words of Golda Meir, "no alternative," given the governments that run its neighbors.

EDIT: One more brief side point:
Imagine, for a moment, that instead of Iran doctoring its election, Israel did it. Do you think for a moment that Obama would have remained as silent as he has?
REEDIT: A decent point. A strong rebuke by Obama would enable Iran to point the finger at the US, instead of losing nationalism as a force against the current rebellion. Decent reason not to respond.

That said I'm not sure I buy the notion that Iran "doesn't know how to respond" to US efforts towards greater diplomacy. It wouldn't be that hard for them to spin, so I suspect that's one journalist talking loosely.

wage gap and healthcare growth

A short observation I thought of in the car today...

Many of my very liberal friends (who constitute most of my friends from school) claim that the middle class has made no progress with their real wages in a long time. The same people complain that health care costs have risen hugely. Health benefits are not counted in the real wage data.

Doesn't this mean that middle class wages have increased, they're just forcibly allocated towards healthcare? This may not even be suboptimal, given that as we get richer, we want to see more spent on healthcare because an additional car is less important to us than a longer or higher quality life.

In other words, can't have it both ways.

The point of a public healthcare option

I generally agree with the point behind Mankiw's assertion that a public option destroys competition if it's publicly funded, and is no better than a nonprofit if it's not publicly funded. There is one point, however, that's being missed with that point.

A plan that covers pre-existing conditions, but otherwise is not subsidized in the slightest, will be competitive for people without pre-existing conditions who otherwise receive no coverage for it, but also serves as a safety net for people with these conditions.

I'm not taking a strong stance here, I tend to think that this type of option is good because it helps people deal with medical conditions that they aren't in a position to fix (presumably) but I could be convinced either way.

The much bigger problem with the public plan proposed is that it looks like it will be subsidized in other ways as well, and, even worse, it doesn't charge different premiums for people based on behavior and lifestyle. It also will not cover promising upcoming technologies because they aren't yet cost-effective, stunting their development (see my post immediately prior). Basically... there are major problems with public healthcare. It's just theoretically possible to have a competitive but still publicly-funded plan.

Universal Healthcare in the US

There is a major factor that people aren't factoring in when they talk about universal healthcare. In short, healthcare development almost certainly involves a "learning by doing" model of technological progress.

Many drugs and treatments start off as very, very expensive when they go out into the field. Because they're expensive, they typically see use only in areas where they potentially offer the greatest improvement to patient outcomes (note that this is not "cost-adjusted" improvement - it's actual improvement).

A few things happen.

1) Average cost of care goes up.

2) Average quality of care goes up if the developed treatment is effective.

3) Any problems with the current technology are documented as a result of thousands of uses across the country. Some percentage of these doctors work on improvements, and many more of them report feedback to the manufacturer and insurance companies.

4) Manufacturers work on improving the technology, both by making it cheaper and by fixing problems with current technology.

Through further development, the technology becomes more effective and cheaper.


Yes, I understand that some technologies and drugs hang on even when they show they can never be better than a cheaper status quo, even without adjusting for cost, and eliminating these from the lineup can reduce the cost of care without killing quality of care.

However, the problem with a "cost-containment" public health insurance plan (which isn't a factor in private insurance because of competition and the lack of any insurance plan with a dominant market share) is that if you don't cover expensive but medically effective treatments because they aren't cost-effective, you a) significantly reduce the number of potential improvements to technology identified through use, b) reduce the number of doctors working on improvements, and c) reduce manufacturer incentives to improve the technology because getting a public insurance plan to change what it covers is very time consuming, costly, difficult, and highly uncertain because of lobbying by the current standard technology.

Now, the fact that Europe has socialized health care doesn't really matter for this process - the US sets the standard for healthcare treatments and healthcare development, it has far fewer basic improvements to make to hospitals that European systems still need to make, and, most importantly, the US, as the largest healthcare market in the world, provides a big enough market to incentivize development anyway. European countries can piggyback off of what we do, because they can observe our development and then jump on technology when it hits cost-efficacy. We can't do that, because we're the market that still incentivizes development.

In other words, Obama's public healthcare plan takes an exceedingly static view of helathcare costs, instead of the dynamic one that actually occurs. Healthcare costs have gone way up because we've developed more new treatments in the last 20 years than at any point in history. Rising healthcare costs are happening in Europe, as well - it's not some artifact of an inefficient or badly incentivized system.

In short, rising healthcare costs are not a bad thing - they're an indicator of accelerating medical progress. A point I won't cover, but still an important one, is that they may also the result of a societal willingness to spend a greater proportion of income on extending and improving life vs buying more material goods (not covered in this blog post because it is explained well by Mankiw and other writers)

I'm not saying that the US is as efficient as it could be - there are plenty of structural changes that could be made (and I like computerizing health records as one piece of that puzzle). But I'm not sure that universal healthcare is the right one.

To illustrate the potential effects, I've linked to a paper published in European Radiology called Cost containment and diffusion of MRI: oil and water? The situation in Europe. Turns out MRI is significantly underpenetrated in Europe relative to what it should be for optimal healthcare.
(link to whole article here.)
We can look at the development of the CT scan, the MRI, AIDS medicines, chemotherapy, and biotherapeutic (injectable) medications for similar examples.


To those who say that US medical care doesn't benefit from all the extra technology (and I know a lot of you who argue this), you are making a terrible argument. Gary Becker explains why. (Link, you'll notice, from Mankiw)



And as a final aside, to those of you who challenge the notion that a learning-by-doing model could make sense, I'd direct you to the competition between Boeing, Airbus and Mcdonnell Douglas that eventually drove MD out of business cuz they couldn't make planes fast enough. I think this is the link, science direct is being maintained so if it's wrong, I'll fix it.

Jews in the Middle East

The exodus Obama forgot to mention.

You can't criticize Israeli settlement without criticizing this, as well.


EDIT: I'll point out I didn't dislike the speech Obama gave, although I'm very, very wary of the pressure it's putting on an already hyper-strained Israeli government. I wish he'd been less understated about the threat Iran poses, but I'm guessing he's aware of that. and I do wish he'd talked about Jews and Christians under Muslim theocracies more, because they're treated much worse than Palestinians in Israel.

It also freaks me out that 80% of the applause came every time Obama cited the Koran, when the whole understated point of the speech was that secular values have a place in the Middle East.

The text of the speech is here.

Justice Dept... bad move

The antitrust report released by the justice department today is dumb, argues George Priest.

Couldn't agree more. His point is introductory Corporate Finance... a field European firms have always lagged behind US ones in, and where Euro gvts DEFINITELY lag behind.

Obama undermining Israeli government?

Obama trying to undermine the Israeli Government?

Obama gunning for a right wing government of an ally in an attempt to make them more conciliatory/left wing (which has never worked for Israel and has only energized Hamas, Hezbollah, PLO, etc. terrorists) seems to be deeply misguided policy...

I know they're enemies so it's harder... but what about Iran? North Korea? Sudan?

If you want to make a principled stand... why isn't the Chinese government a target, especially in light of the fact that they're cutting back on treasury purchases, which actually gives us a self-interested reason as well as a principled one?

We have to see how this plays out and what political game Obama's trying to play, exactly... it's hard to see it as gunning for peace, because these kind of moves have never, ever worked before and conditions haven't changed. Temporary peace? who knows.

Rich Poor Gap

The middle class aren't losing, the rich are gaining, writes Thomas Cooley.

If true, stopping that progress in the name of "preventing the widening of the rich-poor gap" is, bluntly, stupid.

Better cancer detection?

R+D strikes again:

breakthrough in testing for GI cancers

Needless to say, this could quite potentially be much cheaper, simpler and more effective than a colonoscopy or the equivalent of the esophagus (whose name I forget), which would reduce health insurance costs quite a bit.