Saturday, July 12, 2014

ACA and the Uninsured Rate

There's a lot of to do about the evidence that ACA has reduced the uninsured rate. They're right. I'm not fan of the law, but, from the beginning, I have believed that the ACA would be able to do one specific thing: reduce the share of people in the category "uninsured".

I also think there will be more uninsured than most ACA supporters claimed would be, but there should still be a significant reduction. Indeed, there already has been according to a number of measures.

Is this not a vindication of the ACA?

In my view, the answer is no. For one, being "insured" is not the same as having access to quality health care. I wrote a post a while back noting how public health coverage often doesn't offer the same quality as private health coverage.

Given that the Medicaid expansion is a big part of the fall in the uninsured and given that Medicaid patients receive worse access and lower quality than patients with private care, the fall in the uninsured may not mean as large an increase in health care access as one might believe. Given the changing nature of private insurance, it's possible that even the private coverage purchased on the exchange may offer worse access than pre ACA private insurance.

As I've said before, the major problems in the health care system are overregulation on the supply side and third party (and employer) dominance in the way we pay for it. ACA doesn't do anything to deregulate the supply side and actually worsens the third party dominance in payment.

The high uninsured rate was merely a symptom of these problems. Covering up the symptom by changing people's insurance status may make our system look statistically better, but it may not offer any real improvements in our health care system.

Saturday, June 28, 2014

College Majors, IQ, and Income

New post by Randy Olson on college majors, IQ, and gender. I encourage all readers to read the whole post, which is quite informative. I did leave a comment on his post to note what seems to be a mistake in the SAT to IQ conversions on the part of one of his sources. This mistake led to a systematic overestimation of average IQs in the various majors. Here is my comment:

"SAT to IQ conversion seems to be off. Here is a good site for SAT to IQ conversions:
The smartest major, physics and astronomy, have an average SAT score of 1270. This seems plausible. However, your source converts that 1270 to an IQ of 133.
As the source I provided above shows, the actual conversion of a 1270 SAT score to IQ should be 128-130 depending on the IQ test you use.
Because this post is about the relative IQs of majors, this doesn’t actually have any impact on your argument. But, it is important to note that it seems there was an error on the part of the source when converting SAT to IQ.
My suspicion is that it has something to do with how they handled selection bias. Of course, I could be wrong.
Overall, though, good post."

I'm interested in how this all relates to the expected income of the various majors. Luckily, Bryan Caplan has already provided some numbers on the wage premium of the various majors. I like Caplan's data because it controls for an important factor: pre existing ability bias. After this control, Caplan finds the wage premium by major to be:

Earnings Compared to H.S. Grads
Electrical engineering
Computer Science
Mechanical engineering
General business
Political science/gov't
Liberal arts
English language/lit.
Fine Arts
General Education

Note that this is not a comparison of the average expected income by major. Instead, this is a comparison of how much benefit (in terms of income) is derived from a given major.
Not surprisingly, engineering and computer science have the largest wage premiums. This is followed by economics, finance, and accounting. At the bottom of the list, we see english, fine arts, and general education. 
For once, the data seems to confirm conventional wisdom. STEM and business type degrees really do payoff a lot more than traditional liberal arts degrees.
Another piece of conventional wisdom is that the traditional liberals arts majors are just as smart or smarter than the STEM and business type majors despite the income differences. Here is the link to the SAT scores by major data. As noted above, the SAT to IQ conversion seems to be off, but that applies for all majors, so the relative order and differences between majors in terms of IQ should be correct. Of course, the SAT data should be correct too.
My reading of the chart is that, once again, conventional wisdom is confirmed. Liberal arts students are just as smart as STEM and business type majors. They just would rather study philosophy or english in college and make less money later on in life. At least, that is my theory.
This post was pretty off the cuff and written at 5 AM, so it is by no means organized or well written. But, if anything, I hope I at least exposed some readers to good data on majors, income, and IQ.

Friday, June 20, 2014

On the New Commonwealth Fund Report

The new Commonwealth Fund analysis of international health care systems is out and, not surprisingly, the USA ranks dead last out of 11 nations. Despite my contrarian nature, I'm not a defender of the USA health care system, but I do think that, relatively speaking, the USA gets a worse rap than it deserves. "Relatively speaking" is an important word. In an absolute sense, the system really is as bad as commonly believed. But, in a relative sense, other systems are vastly overestimated due to bad reasoning and, yes, zombies. It is also true that, as bad as the USA system is, even our system deserves a bit more credit than it gets at times. A few thoughts on the actual report:

1.) The study ranks the UK as being the best health care system of the 11 countries. This should be an immediate red flag that this analysis is more driven by an ideological preconceptions than a quest for an objective comparison. I could be wrong. But, the emphasis on "health care equity" certainly isn't helping their case. Neither is the fact that data on how long people in the UK have to wait for elective surgery (a measure that they probably wouldn't do all that well on) is missing from the study.

2.) Progressives are claiming this study as a slam dunk for their health care policy views. After all, the socialized UK system is on top and the USA system is at the bottom. But, a look at the in between rankings muddies up the picture. Switzerland, with a heavy reliance on private medicine and cost sharing (neither of which progressives are very big on), comes in at second place. Canada, with a single payer system, comes in at second to last, right above the USA.

3.) One of the biggest problems with these international health care system comparisons that supposedly "show" how bad the USA system is that they don't measure the best thing about the USA system: innovation. Yes, we spend a lot more money (more than we need to), and we don't get a ton of value. But, our decentralized system also offers more room for experimentation than the tighter models of Europe. The problem here is that the benefits from this innovation benefit the whole globe, so it doesn't show up in international comparisons of health care systems. Indeed, in some ways, these other health care systems that are supposedly so much better than ours "free ride" off of our innovation, and then brag about how they do so well with less money. Excellent (old) article on this by Tyler Cowen here.

I also plan on responding to TIE and Krugman about the idea of zombie arguments in the very near future. Stay tuned.

Tuesday, May 27, 2014

Some Quick Things

1.) Thomas Picketty seems to have made some data errors in his popular book (not too different from Rogoff and Reinhart). Also, the long term trends in wealth inequality seem to be much more complicated than is often suggested.

2.) The VHA, as it turns out, has had a "secret list" to make it's long waiting times not seem so long. Interestingly, many advocates of single payer saw the VHA as a good model for the entire national health care system. Although, it is important to note that the VHA's problems are hardly new. Yet another reason not to support nationalized health care.

3.) A recent meta analysis of studies on the link between saturated fat and heart disease found: 

"Current evidence does not clearly support cardiovascular guidelines that encourage high consumption of polyunsaturated fatty acids and low consumption of total saturated fats."

I've long suspected that saturated fat is not as bad as most people believe. This seems to support that view. This is also a good reason to be skeptical of bans and taxes on food deemed to be "unhealthy", as it is often unclear.

4.) I often speak favorably on the concept of cost sharing in health care on this blog. Aaron Carroll provides a different point of view. I'll be the first to admit that cost sharing has its downsides, and that there are times when more cost sharing is not desirable. Still, overall, I think there is too little cost sharing in our system instead of too much.

5.) Textbook example of regulatory capture with Pepsico lobbying for a crackdown on "counterfeit hummus". (HT to Mark Perry)

Friday, May 16, 2014

Paul Krugman on Free Market Health Care (Again)

I understand that Paul Krugman is a great economist. He has won a Nobel Prize. But, when he talks about issues like health care, he is surprisingly inept. Recently, he made a post about market based health care.

As usual, Krugman makes out Kenneth Arrow's work as having ended the discussion on the ability for markets to work in health care. I don't know why. There are a lot of markets with asymmetric information where markets still work just fine. There are lots of markets where people "need" the product (like food) where markets work fine too.

Still, my biggest problem with Krugman's post is his assertion that markets have a record of failure in health care. Reader's may recall this post from a while back where I explained this wasn't so:

"I can think of a few real world examples of more or less free market (or consumer based) health care:

1.) In the USA, cosmetic type surgeries like Lasik Eye Surgery (look here). Results seem to be fairly positive.

2.) Abroad, Singapore and, to a lesser extent, Switzerland use significant amounts of cost sharing. These systems aren't exactly "market oriented", but consumers have a lot of "skin in the game" compared to other systems (including our own system). The results (here and here). On the whole, results here seem to be fairly positive as well."

I'll be the first to admit that, in the modern world, the experience with market based health care is limited. But, this experience has been unambiguously positive. One more thing from Krugman:

That’s us in the upper right-hand corner: our uniquely privatized system is uniquely expensive, while overall indicators of the quality of care don’t point to any US superiority. So on the face of it, the evidence strongly suggests that the proposition that health is an area where private markets work badly is borne out by experience."
This is frustrating on two counts. First, this actually illustrates a point that defenders of private medicine often make: the only evidence that private medicine leads to higher costs is the USA. Indeed, if you take out the USA (an outlier), there is no correlation between private share of health spending and overall cost.
What else is annoying?

If you included Singapore in this chart, you would see another outlier. After all, Singapore has something like 60% of health care spending private. That would be far higher than every other country on this chart, USA included. Furthermore, their health care only takes up about 3% of GDP, far lower than every other country on the chart.
Overall, we should expect more of Krugman than a post that ignores so much contrary evidence and engages in cherry picking in data. But, unfortunately, this is the kind of thing I have come to expect from Krugman.

UPDATE: For those people who argue that Singapore's system is not market oriented, I direct you here.

Thursday, April 24, 2014

Take Two Minutes to Become an Expert in Single Payer

So claims a two minute video posted on Vox. Wouldn't it be nice to learn about an issue as complex as single payer in just two minutes?

Ya. But, this video doesn't cut it. Indeed, this video is best described as a blatantly pro single payer commercial thinly disguised as an "objective", educational video. A couple of the classic fallacies and falsehoods that are common among supporters of single payer are there:

1.) Single payer is popular, therefore it is good. A very bad argument that I responded to here.

2.) Low administrative costs mean single payer is efficient. Another bad argument that I responded to here.

Also no mention of some of the major problems with single payer being implemented in the USA:

1.) How differing cultures may make single payer much harder implement and more inefficient here in the USA than, say, Sweden.

2.) How the federal government has a tough time finding top tier managerial talent despite the need for it. I talked about this here.

To be fair, there was a brief mention that some single payer systems may struggle with waiting times, but, according to the video, this was only because those governments wouldn't raise taxes enough. Of course.

Single payer is a complex issue. To me, the arguments against implementing single payer in the USA are much, much stronger than the arguments in favor. But, I would suggest that anyone do lots of research (including cases for and against) before forming an opinion. One two minute video is hardly sufficient.

Monday, January 27, 2014

The Real War on the Poor

There is a war being waged on the poor in America. Here are some key attacks:

1.) Create high implicit marginal tax rates through means tested programs that were, ironically, created to reduce poverty.

2.) Create barriers to low wage, entry level employment like high minimum wages and employer health benefit mandates.

3.) Create barriers to business creation by implementing draconian occupational licensing laws that create a huge barrier to entry for poor people.

4.) Wage a war on drugs that unfairly targets poor people. The same poor people who have an extremely difficult time navigating the court system if they are a victim of this war.

5.) Instead of using anti poverty public dollars to give direct cash transfers to the poor on the condition that they are either working or seeking employment, direct the dollars towards "feel good", paternalistic programs for things like health care and education that require nothing in terms of work and are proven to do nothing to actually improve health or educational outcomes in the long term (Head Start and Medicaid).

These policies, not modest reductions in the growth rate of anti poverty programs that actually don't do much to help the poor, are the real public policies that are hurting the poor. Remember that next time you hear a politician talking about anti poverty policy.

Update: In case my implication wasn't clear, President Obama is guilty of hurting the poor by worsening #1 (expanding Medicaid and creating means tested subsidies through Obamacare), #2 (mandating health insraunce with employment and proposing raising the minimum wage), and #5 (expanding Medicaid, SCHIP, and trying to create new education programs).

President Obama has also been similar to previous administrations in doing nothing to change #4. I'll give him a break on #3 where state and local governments deserve most of the blame.