Tuesday, July 28, 2009

Health insurance and the free market

Martin Feldstein discusses health insurance reform. He, like Greg Mankiw, who cited this link on his blog, lay out the cases for private insurance markets in health care pretty nicely.

Friday, July 17, 2009

A bioethicist on the value of life and health insurance systems

This week's Times magazine features a wide-ranging discussion by a Princeton bioethicist on the value of the life and what changes it, health care rationing, and health insurance systems. The title gives away the perspective of the author, but adding an extra flourish makes the point a little better. Like the famous quote about democracy, one can say that social justice is worst served by a system that rations health care, except for all the other systems.

Interpreting UK marriage and divorce statistics

The Economist weighs in on trends in English marriage and divorce, pointing out that divorce rates have been declining recently. Based on their graphic, I would say, "slightly declining or treading water." Although marriage rates have declined, then, their point is that maybe the unions that are formed are actually stronger on average due to a selection effect.

Fair enough. And I think it might be true that never getting married rather than getting married and then divorced could be less painful and therefore preferable. But I'm not sure that's really clear.

Brooks on Obama and community colleges

Today David Brooks clarifies what was muddy to me about the president's new $12 billion plan for community colleges.

I'm no expert on retention policies in community colleges, and the way Brooks frames it, maybe nobody is or even can be, given the dearth of good tracking data. But the idea that while low tuition is probably pretty important, the biggest bang-for-the-buck vis-a-vis graduation is in policies that are more adaptive to students' needs really resonates. The $12 billion is apparently directed primarily toward trying to develop such policies and programs.

One sees vast heterogeneity in students' abilities probably at every stage of education. I certainly see it among undergrads at Queens College and among Ph.D's at the Grad Center. Some are so sharp they seem more in command of the material than the instructors, me included! Some appear to be in dire need of assistance. A vast middle doesn't give off much of a vibe either way. Community colleges are a natural place to really try to improve outcomes; high schools might be even better. Four-year colleges probably need something too. As to which provides a more fluid environment to try new things, again, I'm no expert.

Health care for pets and humans, and what it reveals

With thanks to a heads-up post on Greg Mankiw's blog, here's a posting on the AEI blog that discusses levels and rates of growth of U.S. health care spending --- on pets and on humans.

It's a brilliant comparison. There's health insurance for pets too, but I don't think there's any government insurance. And there's definitely no tax break for employer-subsidized health insurance for pets! At first brush at least, you would expect the market for health care for pets to be fairly free functioning, with prices more reflective of marginal utilities or marginal productivities of health care than in the case of human health care.

What you see is, if anything, more rapid growth in health care spending on pets than on people, but the level is significantly lower. Andrew Biggs thinks this might be a reason to focus on the level of U.S. (human) health care and not care so much about the growth rate. A rationale might be that the latter seems to be more a product of underlying forces like the growth in incomes and health technology.

Thursday, July 16, 2009

New results on VA diagnoses of OEF/OIF mental health disorders

The Times reports on a forthcoming article in the Am J Pub Health on VA diagnoses of mental health ailments among veterans of Afghanistan and Iraq. Although the statistic is conditional on having entered the VA for treatment, the central finding, that 37 percent of that group received diagnoses of mental health conditions, is eye-opening.

Via a telephone survey of about 2,000 OEF/OIF vets, RAND has estimated the percentage across all veterans whether they seek VA care or not to be a little lower, 30.7 percent. I calculated that as one minus the share with no condition, which is 69.7 percent, in Table 4.4 of The Invisible Wounds of War.

That more troops are surviving their injuries is a good thing. But their mental health injuries from the trauma of combat exposure will likely only increase in prevalence as a result. Still, a positive light in which to potentially view at least the VA statistic is that at least this 30-40 percent has been diagnosed and is hopefully receiving care. As with mental health in the civilian sector, mental health concerns among the military carry the pernicious effects of stigma, which make them that much worse than physical injuries.

More on caloric restriction and longevity

The Science article about caloric restriction and longevity in rhesus monkeys triggered a funny column by Roger Cohen pointing out that quality of life matters in addition to quantity.

Suppose the mechanism through which caloric restriction extends life is by diminishing reproductive behavior and the energy allotments it requires. Try pitching that to the public, especially to anybody who enjoys Viagra.

What a good economist should be doing

The Times reports how CBO directory Doug Elmendorf isn't telling Congress what it wants to hear about its draft health care bills. There is nothing in the bills that will decelerate health care spending; rather, they increase it by expanding coverage. While the latter is a noble pursuit, it doesn't come free.

Doug should be proud of being such a cantankerous economist. From a scientific perspective, the best advice for policymakers is the truth, not cheerleading. I just hope he hasn't ticked off enough people on both sides of the aisle to jeopardize his reappointment. Or alternatively, I hope that he's ticked off both sets just enough to appear completely neutral.

This all stands in contrast to the maelstrom of finger-pointing regarding the estimates of Medicare Part D, the new prescription drug expansion, back in 2003 and 2004. That primarily involved the executive branch and not the CBO, which is independent. Because CBO typically takes administration estimates as at least a starting point, however, I bet some of the withheld information ultimately may have biased their estimates then too, however unintentionally.

Saturday, July 11, 2009

Obama on growth and institutions in Africa

Technically, Obama didn't address questions of growth per se, but he did talk about the role of institutions, like the protection of property rights and a government free of corruption, as covered in articles here and here.

The sticky part might be that current institutions are indeed a legacy of earlier colonial interventions. One can only imagine how difficult government and political reform is in developing countries, when for example the citizens of California can't seem to get it done either.

Thursday, July 9, 2009

The tax exemption on health insurance compensation

In the NEJM, Jon Gruber lays out the case for ending the tax exemption on employer-provided health insurance subsidies, as a method of helping pay for expanded insurance coverage. To economists, at least on the most basic level, before you start thinking about employers dropping insurance altogether, this qualifies as a no-brainer. Tax exemptions are subsidies that encourage more spending. Everybody grouses about out-of-control health care costs; this would clearly qualify as a "two-for-one" kind of policy, by reducing demand.

The problem is that nobody ever thinks quantity demanded is the culprit in rising costs. I would agree that it's not necessarily clear that it is, but neither is it clear why the free-market level ought to be insufficiently high that we should subsidize it.

(Rural) roads vs. tax cuts

Today Ed Lazear writes about how the sluggish pace of stimulus spending here compares with the very rapid diffusion of tax rebates in 2008 (and in 2001).

Separately, the New York Times gripes about stimulus money being spent on rural roads rather than on cities. I'm no expert on the bang-for-the-buck differences between dollars spent on rural highways and bridges versus urban bridges. I get that the stream of consumption from a public investment of a given size ought to be larger in a denser area, other things equal. But rural roads also facilitate transportation of goods between cities. A new rural construction job and a new urban construction job probably has similar effects on the economy.

Finally, the political economy of doling out stimulus money doesn't seem all that obvious to me. If spending bills originate in legislatures where representation is proportional, like in the U.S. House for example, why should rural areas be disproportionately favored? Maybe the story is one about voting blocs, where all urban representatives are fairly monolithic in their voting behavior.

Still, Ed Glaeser makes some good points about the goofy political economy of mass transit money.

It's hard not to agree with Lazear and others that tax cuts are just easier in that they avoid all this and leave it up to consumers where to spend or invest funds. But it's also easy to imagine that public goods would be suboptimally provided in such a private market scenario, where there can be free-riding.

Tuesday, July 7, 2009

Stimulus spending in France

Yesterday the Times reported on stimulus spending in France, said to be $37 billion in total, three quarters to be spent this year, mostly on shovel-ready construction projects. Reading the article, it sounds like they're exclusively investing in historical structures that produce income flows from tourism.

French GDP is perhaps $2 trillion per year, so two thirds of a $37 billion stimulus would be about 1.4% of GDP. This compares with $787 billion spread over several years in a U.S. economy of $14 trillion. This article and other reports have discussed the slower rate of stimulus spending in the U.S. Assuming the $787 is spread equally in thirds across 2009-2011, it would represent about 1.8% of GDP each year.

These are relatively large numbers, and they assume the multiplier is one. That's probably a reasonable number, although Robert Barro thinks it's maybe even a little too high.

Monday, July 6, 2009

David Weil on health and growth

Last month, Brown University economist David Weil posted some thoughts about health and economic growth that summarized some recent findings in the subfield. Because improved population health can also increase population size, it isn't immediately clear that policies targeting health are really such a two-for-one kind of special, hopefully improving well-being and macroeconomic performance simultaneously. An article last year in The Economist summarized some of this research.

But Weil also points out that economists have measured the economic valuation of longevity gains themselves, completely separate from the value in increased incomes, as being extremely large. Even if health improvements didn't accelerate growth, they surely would bring enormous benefits on their own.

Textbook renting

Yesterday the Times reported on a textbook rental company that operates over the Internet at www.chegg.com. As of today, they're advertising the textbook for my Queens College Econ 206 class for a little over $30, and the textbook for my Grad Center Econ 71100 class for a little under $30.

As of today, list prices on Amazon for both of those are a little over $110 new or around $40 used, and a little under $50. The publisher also offers an eBook version of the former for $59.

Comparing these prices, one immediately recognizes the value to students of a smoothly operating market for used books.

Evolutionary origins of music

An article in the WSJ a few days ago gathered some interesting perspectives about the origins of music appreciation in humans, on the occasion of archaeologists' discovering 35,000 year-old flutes. The Journal article quotes cognitive archaeologist Steven Mithen talking about the social uses of music, either to express unity or emotions, or potentially in coordinating stone-age construction or toolmaking.