Topic: Cato Publications

Evidence from Thee, but Not from Me

Via the Healthcare Economist and Health Care Renewal, I was led to a recent editorial in the BMJ (formerly the British Medical Journal):

[In the National Health Service,] something important is quietly dying. I don’t think it is too fanciful to call it the spirit of medical professionalism. And we, the medical profession, are watching it die….

[F]ar from being privatised, medicine in England has become ever more a creature of the state….

[A]lthough medicine has embraced the need for evidence-based medicine, policy making remains largely an evidence-free zone.

Politicians consolidating and centralizing power…government sucking the soul out of a profession…ho-hum. It was the last line that really caught my attention. 

I’ve noticed the same tendency on this side of the pond. For example, policymakers such as Sen. Chuck Grassley, Rep. Nancy Johnson, and the Institute of Medicine want Medicare to cook up “pay-for-performance” financial incentives that reward providers who deliver what the evidence suggests is “quality” care. You know, pay them to follow the evidence. As Forrest Gump might say, that’s a fine idea. The only problem is, private insurers have been trying that idea for 10 years, and there’s scant evidence to show that it actually works. 

Personally, I think “P4P” has the potential to do a lot of good. But in a recent paper on the topic, I had to note the irony:

The P4P movement proceeds from two premises: first, that clinicians tend to underuse evidence from randomized clinical trials and, second, that financial incentives can increase such use and improve the quality of care. Yet whatever enthusiasm exists for P4P is not derived from the type of evidence of effectiveness that P4P enthusiasts believe should guide clinical practice. Third-party financial incentives remain an unproven tool for improving health care quality at all, let alone in a cost-effective manner.

New at Cato Unbound: Markos “Kos” Moulitsas on Libertarian Democrats

The October edition of Cato Unbound is now underway with a new essay making “The Case for the Libertarian Democrat” by Markos Moulitsas, proprietor of the web’s most popular political blog, Daily Kos. Bruce Reed, president of the Democratic Leadership Council, Harold Meyerson, editor of the American Prospect, and Nick Gillespie, editor-in-chief of Reason will reply.

Looking to next month’s midterm elections, this month’s topic is “Should Libertarians Vote Democrat?” Here’s the lowdown about this issue:

In over a half-decade of Republican political dominance, Americans have witnessed a huge expansion in the scope and cost of government, a questionably justified and so-far unsuccessful war in Iraq, serious erosions of civil liberty, and a troubling tendency toward an imperial executive. Is it time for the traditional alliance between libertarians and conservatives to finally end? If Republicans in power have failed so utterly to promote libertarian ideals, would libertarians better advance their cause by supporting Democrats at the polls? Of course, the fact that libertarians have been so badly abused by conservatives doesn’t necessarily imply they will find a more welcoming home among liberals. Is the Democratic tent big enough to include small-government free-marketeers? Perhaps libertarians have something to gain by supporting to Democrats, but does the Democratic party have anything to gain by courting libertarians?

Costs vs. Spending

In yesterday’s New York Times, David Leonhardt writes:

Mr. Wagoner’s argument has become the accepted wisdom about the [health care] crisis: the solution lies in restraining costs. Yet it’s wrong.

In fact, the solution does lie in restraining costs.  Leonhardt is wrong because he conflates costs and spending

Spending is the amount of money we devote to medical care.  Costs are different.  The money devoted to medical care represents a cost, because we give up the next-highest value use of that money (e.g., a skiing trip).  But we also bear costs due to illness, including pain, limited mobility, and shortened lifespans.  We spend money on medical care to reduce the total costs that we bear.  Spending a lot of money on medical care is therefore desirable – so long as the benefits (reduced pain, enhanced mobility, longer lifespan) exceed the costs for each increment of spending.  The solution to every economic problem undeniably lies in restraining costs. 

Leonhardt probably meant to shoot down the idea that the solution to America’s health care crisis is in restraining spending.  Indeed the thesis of his article seems to be that even though there are many wasteful medical expenditures, a lot of what America spends on health care is very worthwhile.  But he repeatedly confuses the two concepts:

But the No. 1 cause of the cost increases is still the one you can see at the hospital and in your medicine cabinet — defibrillators, chemotherapy, cholesterol drugs, neonatal care and other treatments that are both expensive and effective.  

But if those treatments are expensive and cost-effective, then they would reduce costs. 

The confusion keeps Leonhardt from reaching the $64,000 question: How can we eliminate waste while preserving what works?  Or to put it another way, How can we reduce spending without increasing costs?

Feariness about Data Loss

In the spirit of Stephen Colbert’s “truthiness,” here’s another useful term for the pop lexicon:

fear i ness (fir’ e-nes) n. The quality of being feared, even though logic and/or evidence indicates there is little to fear.

A prime example of feariness right now is data loss — the loss of control over confidential information that could lead to violation of a person’s privacy, identity theft, and fraud. This feariness has been fanned by the recent thefts of government and corporate computer hardware containing important data files.

Though privacy violations and fraud are worrisome, an article in today’s New York Times explains that much of the alarm over data loss is just feariness:

The veterans’ laptop episode underscores the crucial distinction between data loss and malicious data theft — a distinction that has often been glossed over or ignored in the recent wave of alarming disclosures of data breaches at government agencies, universities, companies and hospitals. In most cases, the consequences — financial and otherwise — of the data losses have been slight.

But while high-profile data breaches are common, there is no evidence of a surge in identity theft or financial fraud as a result. In fact, there is scant evidence that identity theft and financial fraud have increased at all. Even when computer networks are cracked into, and troves of personal information intentionally stolen, fraudsters can typically exploit only a tiny fraction of it.

Readers of Cato’s Regulation Magazine already know this story. In last spring’s issue, Tom Lenard and Paul Rubin describe how the incidence of data theft–inducing fraud is fairly stable, how most of that fraud is the product of the theft of old-fashioned paper statements instead of electronic information, and how the response to data loss (including government-mandated response) is far more costly in aggregate than any resulting fraud.

Tell Me That’s Not Your Final Answer

The congressionally chartered “Citizens’ Health Care Working Group” today released its final recommendations on how to reform America’s health care sector. (I commented on their interim recommendations here and here.)

As with many GOP-led health care reform efforts, this one began with leftist premises about the role of government. Recommendation #1 is that the federal government should “Establish Public Policy that All Americans Have Affordable Health Care.” Recommendation #2 is that the feds should “Guarantee Financial Protection Against Very High Health Care Costs.” (The group inadvertently neglected to cite any passage from the U.S. Constitution that actually grants Congress the power to do such things.)

Given those premises, there was little doubt that the group would recommend left-wing reforms. For example, the group claims to have developed both a “market–based model” and a “social insurance model” for achieving universal coverage. Yet the former is a mirror image of the statist Massachusetts health plan. What kind of “market-based model” increases taxes and government spending while forcing individuals to purchase government-defined insurance policies? Good grief.

I would give my right eye for a health care reform panel that would make this its charter:

To make health care of ever-increasing quality available to an ever-increasing number of people.

To me, that doesn’t just seem simple and non-controversial, it seems to be what everyone involved in health policy wants.

Moreover, a mission like that would force the panel to consider not just the goodness of its intentions, its knowledge of today’s health care sector, or its ability to do math, but also the incentives that its recommendations would create, and their long-term impact.

Let’s hope some enterprising panel-creator is reading this.