A brief post on the 'lack of insurance kills people' theme by mattsteinglass

A few days ago apparently Megan McArdle posted (which seems to be supplanting the verb “wrote” in modern usage) an argument along the lines of “we don’t really know how big an effect universal health insurance has on saving people’s lives.” This occasioned furious blogospheric responses from Matthew Yglesias, Austin Frakt and others. That in turn prompted Megan to explain that she wasn’t saying that lack of insurance doesn’t kill people, but that she doesn’t think we really know how big the effect is, and that the size of the effect makes a difference to arguments that ground the need for universal insurance in that effect. She sums up:

The mortality question is really important, but it doesn’t touch non-mortality outcomes, which are even harder to measure comprehensively.  It doesn’t touch on the financial questions raised by medical bankruptcies–I think they’re overstated by the Himmelstein/Woolhandler crowd, but that doesn’t mean I think they don’t exist.  It doesn’t address the social justice questions.  It just says, this is probably not the best grounds upon which to make the case for national health care, because we don’t have a good handle on the number.

As I understand it, the estimate is that lack of health insurance leads to up to 45,000 premature deaths per year.* [Addendum: Megan points out that the studies she cites find no increase in mortality at all. True; see below for more.] I have no reason to believe this figure is wrong and no time to investigate it, but putting that aside for the moment, the reason why people who argue for universal health insurance have often come to use the increased-deaths argument is that opponents of universal health insurance so often refuse to accept any other arguments. All of the things Megan notes above — the medical bankruptcies issue, the social justice issues, as well as others like the economic inefficiencies issues due to reduced labor mobility, the quality-of-life issues, the population health issues, the question of whether cost reduction is possible without universal coverage, etc. — these are all routinely dismissed by many conservative commentators. When I post on the impossibility of continuing as we are with our ridiculously broken health insurance system, I routinely get responses like: “Will people be dying in the streets? I think not.” For such people, one must demonstrate that people will in fact be dying in the streets, and are in fact dying in the streets, before any reforms will be countenanced.

It is, to me, obvious that the US’s health insurance system is a travesty. Health care in the US costs 150% or more what it costs abroad, and is no better; insurance costs three times as much in premiums (abroad, the rest of the cost is covered by taxes, which spreads the burden equably so that the poor get care when they need it); there is a serious risk in the US that you will lose your insurance because you get sick, which ought to be demonstration enough that the object you are buying does not work to do that thing it is supposed to do. But conservatives have spent the past 18 months working out ever-more-sophisticated arguments to convince themselves that the sun don’t rise in the morning, and by now they’ve just about got the job done. In the face of this, people who support universal health insurance have found themselves resorting to the quickest shorthand justification of its necessity: lack of universal health insurance kills poor people. It’s a solid argument because 1. you would expect it to be true, all else being equal, and 2. studies find that it is in fact true. But if conservatives want liberals to stop talking about it for whatever reason, they should do what Megan begins to do in that paragraph: they should start taking a serious look at all the other reasons to have universal health care (medical bankruptcy, social justice, labor mobility, increased ability to cut medical spending when benefits are distributed more equally, etc.) and evincing some willingness to achieve those goals and some serious approach for doing so. As I recall, Megan’s plan for doing this was universal government-paid catastrophic health insurance, which seems like an OK idea to me; I’d like to hear more about it.

I was wrong to write that I have “no reason to believe” the 45,000 figure is wrong: I have the reason that Megan cited studies saying it’s wrong. But the next part, about not having time to investigate it, is true. I have just enough time to point you to the posts by Ezra Klein and Austin Frakt supporting findings that lack of insurance leads to many premature deaths every year and has powerful negative effects on the health of the uninsured.

Deep truths you can discover in Andy Samberg videos by mattsteinglass

I have officially lost my mind: I am starting to perceive deep thematic arguments on political and emotional themes in Andy Samberg “Saturday Night Live” videos. First it was the relevance of “I Threw It On the Ground” to the health-care debate and the Tea Party movement — people so infuriated by the attempts of others to give them something nice that they could really use that they hurl it to the ground, taking the offer as an insult to their status as responsible adults and proclaiming “I ain’t a part of your system, man!”

Then it was the sequence at the end of “Like A Boss” where Samberg straight-up denies that he said he sucked his own dick — something he just said, with graphic representation, ninety seconds earlier. It occurred to me that the appropriate ending for this skit would be for the interviewer to ask: “Are you seriously going to sit there and deny that you said something to me which I heard with my own ears just ninety seconds ago? Because if you are, then you’re hired!”

And now it occurs to me that the sequence in “I Threw It On the Ground” in which Samberg protests “This ain’t my dad! This is a cell phone!” is actually a pretty authentic representation of society-wide angst over relationships that are increasingly mediated by technological go-betweens.

Like I said: I’m out of my mind. Time to go to sleep.

Amnesty International demands five impossible health care reforms before breakfast by mattsteinglass

Amnesty International is a great organization. But I sometimes wonder whether its senior officers believe that politics is the art of taking ludicrously unrealistic moral stands, failing to accomplish anything, and preening. This evening I received an email from the director of Amnesty’s Demand Dignity Campaign, Sameer Dossani:

Our policy experts have been watching this legislation develop and the proposed outcome does not look good. Right now, the Senate is hotly debating its version of the bill, but they’re way off track. The Congressional Budget Office projects that around 24 million people will still be uninsured in 2019!1 That is unacceptable.

Because this month is a crucial window for media attention on the health care system, we’ve got to push the debate further to include human rights as a key focus. It’s up to human rights advocates to point out how the proposed reform falls short of true universality, equity and accountability.

I beg to differ: it’s up to human rights advocates to point out that if the Senate bill does not pass, the number of uninsured in America will likely rise past 50 million in the next few years, and tens of thousands of Americans per year will continue to die because they lack adequate insurance. The only thing this sort of holier-than-thou nonsense accomplishes is to help the for-profit insurance industry defeat health insurance reform. If it doesn’t get done now, it’s certainly not going to get done next year after Democrats have lost their 60-vote supermajority in the Senate, nor will it get done after Barack Obama is defeated in 2012 due to his failure to deliver on major legislative goals.

It’s crucial to have some relatively absolutist human-rights advocacy organizations that continue to push for first-best solutions on moral grounds and to oppose compromises. But it’s not crucial for them to intervene after it’s too late to make changes, when they can only contribute to cynical efforts to defeat reformist legislation. In fact, it’s crucial, at such moments, for them to keep quiet and store their powder for the next moment when they can actually make a positive difference. I mean, seriously. How pure is the ivory in Amnesty International’s tower?

The US does not have a free market in pharmaceuticals* by mattsteinglass
Bowl of Hygeia

Image via Wikipedia

Essay question: The US’s drug market is at least as artificial and overregulated as the European one. But in the US, the regulations create higher drug prices, while in Europe they create lower ones. Discuss.

Here’s the deal. In European countries, national drug price regulating bodies set the maximum price at which pharmaceuticals can be sold. They do so based on the average price at which the drug sells in other European countries. (For new drugs, the regulations are looser and based on cost-benefit analyses, to promote innovation.) Is this some kind of Soviet-style non-capitalist system? Of course not. There are still lots of different buyers of drugs; it’s just that these buyers have all banded together into cooperatives at the country level to leverage their purchasing power. And they all insist that they get the same price the other cooperatives (countries) get. That’s the same thing you do at the supermarket when you assume that you’ll pay the same price for a tube of toothpaste as the next guy in line, rather than have the cashier look you over and say “You look richer than him — for you, the price is ten bucks.” There are lots of markets in which the only buyers are a few large cooperative organizations. Iron ore, say. And the steel companies that buy iron ore presumably negotiate pretty hard to ensure they pay the same price as the other steel companies, without anybody accusing them of restricting the actions of the free market. The European market for pharmaceuticals is basically the same thing, but at the level of countries. It’s not an unfree market; it’s a free market with 25 large, powerful buyers (the EU countries) who each insist they get roughly the same price as the others.

Now, an iron ore miner could look at one steel company and say, wait, we’re not going to sell you ore at that price. You had much higher profits than the other guys last year, so we’re going to charge you more because we know you can afford it. But this obviously wouldn’t work. The steel company could just turn around and buy the iron ore from a middleman, another steel company perhaps, at a tiny markup from their low price. Similarly, if the cashier at the supermarket told you they were going to charge you $10 for a tube of toothpaste, you’d just ask somebody else in line to buy one for you for $1.50. And so you’d figure it would be impossible for pharmaceutical companies to charge Country A more than Country B — Country A would just start buying its drugs from Country B.

So how is it possible that pharmaceutical companies can charge more for their drugs in the US than they can in Canada, or France, or Germany? We all know the answer: because the US bars retailers or health care providers by law from reimporting drugs from other countries. That is a completely artificial market restriction that wildly distorts the prices of drugs in the US. No other commodity or manufactured good is restricted in this fashion in the US — it would be illegal under WTO rules. And the effect is to artificially jack up drug prices in the US, at the expense of US consumers and taxpayers, by allowing pharmaceuticals companies to price-discriminate against Americans.

Many people (not just Megan McArdle) argue that only the US still has a free market for pharmaceuticals, which is why pharmaceuticals companies can make such high profits here, and that the US market is thus underwriting all the R+D in new medicines. Whether the US actually is underwriting all the R+D is still something of a debatable question, but it’s absolutely false that the US has a free market in pharmaceuticals. The US prohibits anyone from buying drugs at low world prices. Meanwhile it pumps government money into buying drugs in the US, through Medicare (which is not allowed to negotiate for lower drug prices with manufacturers) and through the employer health insurance tax exclusion. The natural effect is to drive up drug prices in the US at consumer and taxpayer expense. It may be true that Americans are subsidizing R+D in the pharmaceuticals industry. But that’s because the government forces Americans to pay artificially high drug prices. If you believe free markets are the answer to high health care costs, you have to, at a minimum, allow US retailers to reimport equivalent drugs and medical equipment from Canada and Europe, where prices are lower. Then we can talk.

*Add: Megan points out in comments that this is the way it works for all IP. And she’s right. Good point. I should probably not think up posts on a Sunday while swimming laps. The market in pharmaceuticals isn’t as free as the market in, oh, apples, but it’s as free as the market in DVDs. This is in fact an unavoidable feature of an IP market and if the US went for David Vitter’s proposal to allow reimportation of drugs from Canada, you’d probably just end up with a lot of companies putting clauses in their distribution contracts with Canadian distributors that they’re not allowed to resell back into the US.

I remain somewhat baffled as to why large American drug purchasers are unable to negotiate prices at levels close to those in Europe. Kaiser Permanente says it has over 8 million members. That’s larger than the populations of Belgium or Denmark. Maybe drug manufacturers figure a decision by Kaiser not to buy their drugs would result in Kaiser clients switching to other insurers, which means Kaiser has less bargaining power than Denmark, whose citizens are unlikely to move to Germany just because a few drugs are unavailable. Also, while Kaiser actually might get good prices because it’s an integrated HMO, I would imagine that more traditional insurers would have the problem of separation between the docs who are prescribing the medication and the insurance company deciding whether or not to reimburse it; the insurer, who would be most interested in negotiating the low price, would not actually be the one purchasing the medicine, and that mean there’s no one bargaining agent who has both the client numbers and the strong interest in bargaining down the price.

OMG NFW — Levi J on Sarah P by mattsteinglass

Levi Johnston: “Me and Mrs. Palin”: Vanity Fair | Vanity Fair.

This is good.

Sarah told me she had a great idea: we would keep it a secret—nobody would know that Bristol was pregnant. She told me that once Bristol had the baby she and Todd would adopt him.

But this is better.

Sarah was sad for a while. She walked around the house pouting. I had assumed she was going to go back to her job as governor, but a week or two after she got back she started talking about how nice it would be to quit and write a book or do a show and make “triple the money.” It was, to her, “not as hard.”

Sometimes I think if the health care bill doesn’t pass, we should just elect the lady president, then roll up the country, turn out the lights and call it a day.

Why Big Pharma wants health insurance reform by mattsteinglass

To recap: Initially, Megan McArdle wrote that she doesn’t want health insurance reform because it will entail the elimination of a robust private health care/insurance sector, and that will curtail innovation in pharmaceuticals and technology. I responded that the reforms proposed in Congress don’t eliminate private health insurance or care; they rely on it, like most of the world’s universal health care systems in Europe and elsewhere. Megan then responded that the current reforms in Congress are just the “camel’s nose”, and they will ultimately lead to the crushing of private health insurance and/or care. I responded that they won’t, because evidence shows that all those European health insurance systems that have for 60+ years relied on a robust, regulated private insurance sector (France, Germany, the Netherlands, etc.) still have robust, regulated private insurance sectors. In the Netherlands, I noted, they recently eliminated the public plan and moved to an all-private system. To this, Megan responds that underneath that surface of private health insurance in Europe, the government is actually controlling things, and she takes the example of pharmaceutical prices. In the Netherlands, as in most European countries, drug prices are tightly regulated by the government. This, Megan says, has crippled Europe’s ability to stimulate drug innovation and research, and if we adopt European-style health insurance systems, we will cripple the US’s ability to stimulate drug innovation, and since the US is the last free market for drugs left in the world, that will cripple drug innovation throughout the world.

I feel that we are really getting somewhere in this discussion. I have two basic questions here. The first is this: if Megan thinks the Dutch system is fine apart from the price controls on drugs, why don’t we adopt the Dutch system but not the price controls on drugs? If Megan’s problem with the House insurance reform bill is not the actual House insurance reform bill, but the prospect that it will ultimately lead to price controls on drugs, why doesn’t she back the House insurance reform bill and insist that it not adopt price controls on drugs?

The second question I have is this: if the House health insurance reform bill is so bad for drug innovation and research by pharmaceuticals companies, why are the pharmaceuticals companies buying $12 million in ads promoting the House health insurance reform bill?

I think I have a pretty good idea why they are, actually. Take a look at the current “CEO Voices” essay on the website of PhRMA, the pharmaceuticals industry business coalition, by Astrazeneca President Rich Fante.

As the debate on the future of health care reform unfolds, our leaders must strike a delicate balance between changing the system to address its weaknesses and protecting America’s lead in the search for new medical cures and treatments.

One of the first changes Congress should make is to increase resources for the Food and Drug Administration, so it can remain the world’s gold standard for consumer protection. A strong FDA will help bring safe and effective medicines from the laboratory to patients in a consistent, systematic way.

Second, reform efforts should expand coverage for the uninsured, so every American has affordable health and prescription insurance. Lack of insurance compromises people’s health because they receive less preventive care, are diagnosed at more advanced disease stages. Once diagnosed, they tend to have higher mortality rates.

To provide coverage for those without health insurance, we encourage efforts to increase access to market-based, private coverage and availability of public-sector programs.

So the president of Astrazeneca thinks the top two priorities are increasing the resources of the FDA (so it can approve more new drugs), and increasing the number of Americans who have health insurance, both public and private. The reason for that is obvious: if you don’t have health insurance, you can’t afford to buy drugs.

But there’s something else going on here as well. American health insurers are becoming increasingly reluctant to reimburse treatment with expensive new drugs that can’t be shown to work better than older, cheaper drugs. (This, by the way, is exactly the same process that goes on in all those European health care systems when they review how much to pay for new drugs.) This industry research report (which you and I can only read the abstract of, because the full report costs $11,000) argues that as insurers are getting more aggressive, drug companies must take into account the likelihood of insurers’ paying for new drugs, and drop research on drugs that are unlikely to be reimbursable.

For example, take this presentation a few months ago by John Watkins, who sets reimbursement policies for Blue Cross Premera in Washington State. Watkins explains that without evidence from direct head-to-head trials of new drugs against old ones, he is not likely to approve reimbursement. And in this article from 2006, Watkins explains that he was able to approve reimbursement for a new type of diabetes medication (developed from Gila monster saliva! Wow!) after very complex comparisons showed that for certain patients, it could save 11% in costs over a 10-year period, despite costing far more per dose. But Watkins explains that Blue Cross could do this because it has less client turnover than other insurers. For insurers who expect to lose a lot of their clients within a few years due to America’s balkanized market, such long-term cost savings don’t work. So they won’t approve reimbursement for new, more expensive drugs for chronic conditions like diabetes that only save money in the long term.

Diabetes drugs are a big area of investment for pharma. PhRMA boasts that the industry has 183 new diabetes medications under development. But it makes no sense to invest in these and other drugs if you don’t know whether insurers will reimburse for them. And that’s probably why pharmaceuticals companies have finally decided to get on board with health insurance reform: they need some predictability. The current American health insurance system is simply too big of a mess. They can’t invest in new drugs with any confidence that private insurers will pay for them.

But the main point here is simple: Megan is arguing that the House health care reform plan will in the long run devastate private pharmaceutical innovation in the US, but the US pharmaceuticals industry disagrees with her. They are backing this bill. They are advertising for it. They are calling for the government to get more people insured. Maybe Megan knows their business better than they do. But that just doesn’t seem likely to me.

Health care has a sticky plane, not a slippery slope by mattsteinglass

McArdle vs. National Health Care — Crooked Timber.

John Holbo has a more charitable reaction to Megan’s “Slapping the Camel’s Nose” post than I did:

McArdle’s opposition to national healthcare is based entirely on slippery slope arguments, arguments from unintended consequences, and suspicions that those who are proposing national health care really want different things than they say they do. Now, this is reasonable. But only up to a point. Because at some point we need something more, but McArdle is quite strident in her insistence that what she has said is enough.

But I still disagree with Holbo’s contention that Megan’s all-slippery-slope approach is reasonable, even “up to a point”. It might be reasonable in some other form in some other argument, but in this one, it just isn’t. Every one of Megan’s arguments is predicated on the contention that reform will lead to the effective disappearance of private health care, and complete government dominance of both the health insurance and health care markets. That’s what she means by the “camel’s nose”. The problem is this: countries that have the Bismarck model of universal coverage through regulated private health insurance do not move to single-payer government-controlled systems. Germany started the first Bismarck-style system 126 years ago. It still has it. France, the Netherlands, Switzerland—they all started with regulated private insurance backed by a public plan for the needy, and they all still have regulated private insurance backed by a public plan for the needy. Except for the Netherlands. They used to have a public plan for the needy, but in 2006 they scrapped it and moved to an all-private health insurance system, with subsidies for those who can’t afford private coverage. What they have, roughly and leaving some bits out for simplicity’s sake, is what the US would have if it passed the current House bill, then eliminated Medicare and Medicaid, and funded the system by handing out subsidies or vouchers so everyone can afford coverage. The direction that Megan envisions things “naturally” going is precisely the opposite of the way they actually went in the Netherlands over the past 20+ years.

The evidence shows that in the real world, there ain’t no slippery slope. There is, if anything, a sticky plane. And there ain’t no camel behind the camel’s nose. Ain’t even a nose, actually—that metaphor can’t even be tweaked to make it work. I mean, we already know that the health insurance systems in every other advanced economy work better than the US’s. But within the subset of those better systems that rely on private insurance, the evidence of a century-plus of experience is that they don’t eliminate private insurance. Let alone private health care providers. In the face of such overwhelming evidence, it is not “reasonable” for Megan to abstractly theorize that a Dutch or French system is really a stalking horse for a British system. If it were, the Dutch and the French would have the British system. They don’t. End of story. Refusing to talk about the real world and preferring to stick with discussions of theories that do not fit the real world is not “reasonable”, and it seems to me that this has to be the point of first engagement with what Megan is saying.