• New Here? How to Catch Up?

    A few recent interactions have left me with the impression that there are quite a few newer readers of this blog who are extrapolating from recent posts my position on many things. Judging the whole from a few small parts is a normal human survival skill. We make snap judgments all the time, usually without even recognizing that we’re doing it. But that reflexive intuition can be wrong.

    Curiously, one of my own limitations is that I resist generalizations too strongly. It isn’t so much that I don’t generalize, it is that I am hesitant to act upon generalizations. How do I know they’re true? If my assumptions are based on scant data they are likely to be wrong. It’s OK to hold incorrect ideas in one’s head. I prefer to treat them as working hypotheses to be tested, not as truth. But this does leave me in the position of examining trees while most others have already found their way out of the forest.

    Question is: if you are new here and really do want an evidence-based way to measure the content of this blog what should you do? Very few of us have time to read 400+ posts (that’s about 200,000 words). Well, since I’ve claimed to be an evidence-based thinker, what would I do? How would I find a subset of posts that better represent the whole than the most recent?

    Short of my developing an index of links back to key ideas and opinions (which I could do but won’t for lack of time), the next best thing might be to take a look at the Selected Citations page. That page lists and links to, in reverse chronological order, media reports and blog posts of significance that cite this blog or quote one of its authors. Since it links to the work of others who then link back to something here, each entry is a double-hop away from something somebody (who others think important) thought significant on this site. Doing that double-hopping one would land on some of the, arguably, more important posts at The Incidental Economist.

    For example, Andrew Sullivan cited the following posts:

    That’s just Sullivan. One can play the same game with others. Or, if you really want to know what I think about something, just ask. Put it in a comment to a post, and if I, a co-, or guest-blogger has written about it I’ll point you to it. If nobody’s written on it and it interests me, I’ll put it in my queue.

    But please don’t just assume that because I cited Ezra Klein a bunch last week (did I?) or said something favorable about health care reform that I agree with Klein on all things or believe everything will be perfect after reform passes (if it does). My thinking is far more nuanced than that.

    • Some say that allowing non-US doctors to practice here (e.g., ease licensing and immigration restrictions, if not actively encourage immigration) would lower costs by introducing competition and through the magic of supply and demand. Any thoughts on this?

      • @fusion – I’m skeptical, both on theoretical and empirical grounds. First, more doctors might reduce unit costs but it will increase utilization. Too much of health care is supplier induced demand. In fact, I recall hearing that a similar idea was tried in the early days of Medicare. There was an increase in medical students and doctors. The thinking was as you indicated: greater supply leads to lower cost. But utilization swamped prices and costs went up.

        The key to costs is the incentives built into the payment system. We pay too much for volume and not enough for quality. Until that is remedied costs will not come down.

    • @Austin, if the reason someone is not seeing a doctor is that none are available or the only available one is very busy (e.g., obscure rural area), then I could see how increased supply might lead to more utilization. In that case, however, it would seem worthwhile.

      Otherwise, why wouldn’t normal supply and demand rules work?

      FWIW, Dean Baker is a big fan of this, as well as relaxing patent and import protections for drugs.

      We are clearly paying too much for something. How have other countries managed to hold down prices? We are so far above levels seen in the civilized world.

      • @fusion – I’m not familiar with precisely what Dean Baker has proposed (URL please), but I would hope it takes into consideration that normal supply and demand rules don’t work in health care due to market failures. These have been evident and studied since at least the time of Kenneth Arrow’s seminal 1963 paper Uncertainty and the Welfare Economics of Medical Care. With respect to supplier induced demand, think information asymmetry. I need only point to my most recent encounter with the health care system to illustrate. My physician said I should have a CT scan. Am I in any position to evaluate whether I really needed that scan? Similar things occur with auto mechanics. This is far far far far from a perfect market.

        As I said, it is theoretically possible that prices will come down with increased provider supply. But volume may increase, for reasons just illustrated (and which are well known and generally accepted). Since cost is the product of the two, the ultimate effect on cost is not clear. Prior experience with Medicare (I don’t have a citation and am going on memory of reading or hearing something) suggests that greater physician supply leads to higher costs.

        Why are U.S. prices higher than those of other countries? The literature does not point to one clear answer, but many. The Congressional Research Service has a nice review paper on this issue, one I’ve cited in a prior post you may want to read.

        Bottom line: I don’ t think increased physician supply is the silver bullet. It might be necessary and helpful, but only in combination with other reforms. Changing the payment system to align incentives with quality and efficiency is key to any solution.

        • @fusion – I don’t know if you subscribe to my News & Links feed. If you did you’d have seen (or will soon see) that I shared the following, which is of relevance to your query about price control:

    • @Austin,

      Most of Dean Baker’s comments are blog posts suggesting reducing barriers to foreign doctors and reducing patent protections, rather than detailed analysis. His blog focuses on bad economic reporting by the media: http://www.prospect.org/csnc/blogs/beat_the_press

      Here’s and interesting paper he wrote on encouraging trade in healthcare: http://www.cepr.net/documents/publications/free-trade-hc-2009-09.pdf

      I wasn’t suggesting the increased physician supply was a silver bullet, but I believe it to be more politically possible than direct price controls. I certainly agree with you that aligning incentives would be a big help. Actually designing such a system is obviously not easy. You can easily end up with the early HMO experience, in which doctors’ incentives were to do as little as possible.

      I don’t believe individual have the ability to evaluate or negotiate healthcare in a meaningful way. Larger buyers, such as insurance companies and the government, are another story

      I like Yglesias and have been reading him for years.

      I’ll read the CRS paper and your discussion.


    • For the record, you may only cite Klein 10 percent of the time, but it was three times in one week that created the appearance of more frequent citation.

      • @Ted Craig – I like this game.

        Did you know there were two spans each no longer than a week when Ezra cited me three times? … Let’s see 12/15/09-12/22/09 is one and 10/14/09-10/15/09 (thrice in two days!) is another. Maybe we’re not even two people. Ever seen us in the same place at the same time? 🙂

        Your move.

      • @fusion – Thanks. He seems to have a point. Perhaps there are reasons I do not understand yet why increased international trade in medical services and products is not being promoted by reform advocates. I do not think it is because none of them are serious about cost control, as Baker seems to suggest. More likely it has to do with political reality. (I’m speculating.)

        The broader point I’ve made before is that there are many ideas that are technically sound but political nonstarters. There is little point in pursuing such ideas. Those who do are at best ignored and at worst politically damaged. Either way the path to obsolescence is through proposals of politically infeasible ideas. Perhaps this is why Baker’s notions aren’t gaining traction.

        See also: David Cutler’s recent WSJ column on cost control in health reform. It is behind a pay-wall but not if you get it via Google (as of this writing).

    • @Austin, I don’t regard Baker’s ideas as political nonstarters. For example, the ability to import drugs from Canada, etc. is very popular. There are periodic reports on “medical tourism” which are often favorable.

      I may be making the mistake of equating that which is popular and that which politicians support.

      Reasons for lack of attention to these issues may include that journalists sympathize with higher wage workers (e.g., doctors), both for class reasons and because they fear competition for their own jobs (see the general attacks on bloggers), and that journalists don’t understand the issues.

      Great column by Cutler.

      • @fusion – Political feasibility goes beyond popularity with the public. There are other stakeholders who, unfortunately, have disproportionate sway (think AMA, PhRMA, etc.). I don’t think lack of attention is due largely to the biases you suggest, but that’s my opinion. I think it has more to do with the fact that those ideas are just not in play, perhaps for political reasons as I suggested.

        It is true that most journalists don’t understand the issues. But some do! I think you should put your question about Baker’s idea to Ezra Klein in his next noon-time chat (they seem to occur once every week or two). Ask him directly why those ideas aren’t in play and aren’t getting attention. Heck, you can even send him an e-mail through his blog.

    • @Austin, the media have tremendous influence over what’s in play. “Lack of attention” usually equates to lack of airtime.

      Is your second paragraph an attempt to egg on Ted Craig? 🙂

      • @fusion – I’m in agreement with you in general. I prefer to first seek explanations that are good faith, rational responses to the incentives and realities of the system, e.g. that a policy is not pursued due to its political infeasibility rather than due to ignorance.

        Seriously, ask Klein. It is a good question. Throw him an e-mail and cite this discussion if you like. Then bring it up in a chat. Please let me know what you learn.

    • @Austin, I’m much more cynical then you are about motivations. Isn’t much of economics based on the theory that people act in rational self-interest? What of public choice theory?

      I emailed Klein earlier today. I’ll keep you posted on any response.

      • @fusion – Actually, what you wrote was more or less what I meant. My use of the term “self-interest” was misplaced in my last comment. I’ve edited it for clarity.