Topic: Health Care

Mandatory 3-Day Rehab Just Another Feel-Good Proposal With Unintended Consequences

The Wall Street Journal reported December 14 on a proposal by Massachusetts Governor Charlie Baker to mandate the involuntary 72-hour detention of opioid overdose survivors rescued by first responders. This is another example of feel-good public policy that strains resources and personnel, arguably infringes the civil liberties and due process rights of those detained, and won’t work as intended.

While mandatory rehab has been employed in the criminal justice system for years, the rationale for this has not been evidence-based. A systematic review of over 400 studies on the subject published in the International Journal of Drug Policy in 2016 concluded, “Evidence does not, on the whole, suggest improved outcomes related to compulsory treatment approaches, with some studies suggesting potential harms.”

Furthermore, while the precise length of time needed for successful rehab is uncertain, 3 days is barely enough time to go through acute withdrawal.  Even if the 3 days are used to plug the patient into Medication-Assisted Treatment, significant numbers of MAT patients eventually drop out of these programs. Self-motivation and self-regulation play significant roles in successful rehab.

The alarm and frustration of policymakers addressing the overdose crisis is understandable and justifiable. But lashing out with new approaches that are not empirical or data-driven will not fix the problem and may make matters worse.

 

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ACA Subsidies and Labor Market Participation

Since the passage of the Affordable Care Act (ACA) in 2010, many economists have predicted that the Act will cause a reduction in labor market participation and a recent New York Times article seemingly vindicates these expectations. The article recounts how the rapid increase in insurance premiums have led Anne Cornwell to cut her working hours, and thus her yearly income, by 30 percent in order to be eligible for health insurance subsidies. The $24,000 reduction in income allowed Ms. Cornwell and her husband to qualify for $27,000 in subsidies.

Ms. Cornwell’s reduced labor market participation supports economists’ predictions based on how the ACA determines eligibility for subsidies. Subsidies are available for people who purchase coverage from health insurance exchanges created by the ACA and whose household income is between 100 and 400 percent of the Federal Poverty Level. Economists predicted that because the subsidies are based on household income instead of individual income, second earners in many households would reduce their hours in order to qualify.

In 2014, for example, the Congressional Budget Office projected that the ACA would reduce the total number of hours worked by 1.5 to 2 percent between 2017 and 2024. In terms of full-time-equivalent workers, this represents a decline of 2.5 million workers in 2024.

It is not yet clear whether Ms. Cornwell’s decision is representative of a larger population of American workers, but her situation does coincide with economists’ findings. A recent working paper by Stanford economists Mark Duggan, Gopi Shah Goda, and Emilie Jackson—which I review in the upcoming issue of Regulation—looks at how the ACA has affected labor market participation in different regions of the United States since its implementation in 2014.

While they found no change in participation in the aggregate, this result stemmed from two offsetting trends. They found an increase in labor market participation in regions where the share of uninsured and under the poverty line was larger and a reduction in participation in areas where there was a larger number of people who were uninsured and between 139 percent and 399 percent of the poverty line. “These changes suggest that middle-income individuals reduced their labor supply due to the additional tax on earnings while lower income individuals worked more in order to qualify for private insurance.”

Ms. Cornwell’s individual reduction in labor market participation is in line with these results. While the aggregate level of labor market participation may remain the same, the reduction of participation by middle-class individuals could indicate significant losses in tax revenues and employer surplus.

Written with research assistance from David Kemp.

14 Questions for Trump HHS Nominee Alex Azar

President Trump has nominated Alex Azar to be the next Secretary of Health and Human Services. Azar will appear tomorrow for questioning before (and sermonizing by) members of the Senate’s Health, Education, Labor, and Pensions Committee.

Here are 14 questions I would ask Azar at his confirmation hearings.

  1. Is Congress a small business as that term is defined in the Affordable Care Act?
  2. Colette Briggs is a four-year-old girl with aggressive leukemia who is about to lose coverage for the one hospital within a hundred miles that can deliver her chemotherapy. She’s losing that coverage because insurance companies are fleeing the Exchanges. What do you plan to do, what can HHS do, about this problem?
  3. What will you do to prevent drug manufacturers from using the regulatory process to corner the market on certain drugs so they can gouge consumers and taxpayers?
  4. HHS already publishes data on Exchange premiums and insurer choice. Will you commit to publishing a review of the growing body of research showing Exchange coverage is getting worse for many expensive illnesses?
  5. Does HHS have an obligation to encourage young, healthy Americans to pay the hidden taxes contained in the ACA’s rising health insurance premiums?
  6. How will HHS increase its efforts to educate Americans about all their options for avoiding the mandate penalty?
  7. Short-term health insurance plans are an affordable alternative to increasingly costly Exchange coverage. Will you reinstate the 12-month policy term that existed before this year, and allow short-term plans to be guaranteed-renewable?
  8. The previous administration issued rules making it generally unlawful to purchase or switch Exchange plans for nine months out of the year. The Trump administration has restricted this freedom even more, making it generally unlawful for ten and a half months out of the year. Should consumers be free to purchase and switch health plans when they choose, just like any other product?
  9. Will you require insurance companies to repay the “reinsurance” subsidies the Government Accountability Office found the Obama administration illegally diverted to them?
  10. Will you press the Food and Drug Administration to allow the sale of birth-control pills over the counter, without a prescription?
  11. Medicare, Medicaid, and ObamaCare attempt to pay insurance companies according to the cost of each individual enrollee. If those complicated formulas really work, should government just give the money to the enrollees and let them control their health insurance and health care decisions?
  12. Is Obamacare’s Independent Payment Advisory Board constitutional? 

  13. Should seniors be able to opt out of Medicare without losing Social Security benefits?
  14. Will you end government encouragement of “abuse-deterrent” opioids, which have not reduced overdose deaths and are borderline unethical because some are literally formulated to hurt people?

Should Doctors Try to Alleviate Pain?

The rising level of deaths from opioid overdoses is getting a lot of attention, including from a Nobel laureate economist and the White House. In the rush to find a solution to the problem of opioids, I hope we don’t forget the problem that opioids were intended to cure: chronic severe pain. Living with that kind of pain is awful, and it’s wonderful that science has found ways to help people in pain.

But that’s not the way President Trump’s surgeon general sees it. In an NPR interview this week, Dr. Jerome Adams had this to say:

NPR’s Elise Hu: Much of this crisis started in doctors’ offices. We’ve heard statistics like doctors in the United States prescribe four times the number of pills per person that doctors in the United Kingdom do, for example. What do you think is encouraging doctors to prescribe at those levels?

Dr. Adams: Well, I can tell you, as one of those doctors, that many of my colleagues tell me they feel pressured to prescribe. You have patients who expect an opioid is the only or main way to treat their pain. But I would take issue with one thing you said—I don’t think it started in the doctors’ offices. I think it starts before that. I think that it starts with this expectation that everyone’s going to have no pain, with the idea that a pill can solve everything. And we need to help folks understand there’s a real danger to feeling like we can medicate our way out of any and all problems. 

(Note: that statement appears at about 4:25 in the audio, but not in the related transcript.)

Of course no one should feel that we can “medicate our way out of any and all problems.” But we can relieve some pain. And I am disappointed to hear the surgeon general say that we should get over our attitude that doctors can help to alleviate our pain.

In a 2005 Cato study, Ronald T. Libby argued that opioid therapies for pain had proved successful, but because of criticism and law enforcement efforts “many physicians and pain specialists have shied away from opioid treatment, causing millions of Americans to suffer from chronic pain even as therapies were available to treat it.”

In a recent article, surgeon and Cato senior fellow Jeffrey Singer argues that crackdowns on opioid prescription and the resulting decline in prescriptions are driving more patients to the black market, while “opioid abuse and overdose rates have declined by 25 percent in states where marijuana has been made legally available.”

There are going to be plenty of arguments about the best policy to deal with opioid abuse. But let’s start with the premise that the alleviation of pain is a great thing.

Why Does Land-Use Regulation (Still) Matter in Oregon?

Last month it was reported that land-use regulations were crushing a new entrepreneurial venture in Oregon: goat yoga. If you aren’t already a yoga devotee and familiar with the pastime, goat yoga involves rolling out your yoga mat at a family farm and then letting baby goats jump on your back while in “downward dog” or “plank” position. And before you start to worry, the practice is allegedly good for both baby goats and humans.

Unfortunately, Oregon’s land-use regulations wouldn’t allow the country’s goat yoga pioneer, Ms. Lainey Morse, to practice activities on agricultural land that didn’t promote the “sale of a [farm] commodity.” In other words, since you don’t buy the baby goats when you’re done with class, local zoning means Ms. Morse and her clients are out of luck.

Although goat yoga may not be high on every Oregonian’s to-do list, land-use regulations do impact citizen lives in more pernicious and less-funny ways.

One of the more ubiquitous ways land-use regulations harm non-yogis is by inflating housing costs. My studies indicate that the relationship between land-use regulations and home prices is highly statistically significant, or unlikely to occur based on random chance alone. In 44 states, new land-use regulation is correlated with increasing home prices.

Existing research supports this view. For example, Harvard Economist Edward Glaeser finds “zoning and other land-use controls play the dominant role in making housing expensive” and a study by Salim Furth found residents of high-cost coastal areas would pay 20 percent less in homeownership costs if they adopted regulation typical of the rest of the country.

But increasing home prices is just one of many unsavory impacts of regulation. Academic evidence indicates that when restrictive regulation is present, racial and economic segregation increase significantly and geographic mobility and economic growth decline. Another issue is that heavy land-use regulations infringe on basic freedom and individual liberty: land-use regulations hamper individual property owner’s ability to use their property in useful ways that don’t impact other property owner’s ability to do the same.

In spite of the relationship between land-use regulations and undesirable outcomes like segregation and housing shortages, the quantity of zoning and land-use regulations continues to grow. In fact, the quantity of annual land-use regulations more than doubled in the United States between 1980 and 2010 alone, as measured by related appellate court cases. Oregon, a state famous for its conservation-minded land-use regulation, added more land-use regulations (adjusted per capita) between the years of 2000 and 2010 than 43 other states.

This Is What “Effective” Looks Like at HUD?

Yesterday HUD Secretary Ben Carson tweeted that “The Low-Income Housing Tax Credit [LIHTC] is one of the most effective tools we have to create affordable housing.” And Secretary Carson’s presidential advisor published an op-ed yesterday which lauded LIHTC as a prime example of “the most effective and efficient use of the government’s resources.”

That is high praise for a program known for expense, complexity, lack of oversight, and abuse. LIHTC is arguably one of the most inefficient housing subsidy programs that the federal government administers.

Chris Edwards and I detail some of LIHTC’s failings in our report published earlier this week. One of LIHTC’s problems is that it doesn’t successfully accomplish its own objectives to redistribute to low-income tenants and create new housing.

First, most of the LIHTC subsidy goes to developers, lawyers, accountants, and financiers rather than low-income tenants. A 2011 study found that low-income tenants capture one-third of the subsidy. That leaves two-thirds of the benefit for corporations, banks, accountants, and lawyers involved in the process.

Second, LIHTC displaces similar market-rate housing. A recent study estimated that “nearly 100 percent of LIHTC development is offset by a reduction in the number of newly built unsubsidized rental units.” That means LIHTC requires taxpayers fund housing that would be built on the private market.

Another problem is that LIHTC is relatively expensive even compared to other housing and other government housing programs. Michael Eriksen’s work suggests LIHTC units cost 20% more per square foot than medium-quality market-rate housing, and the Government Accountability Office (GAO) found LIHTC units cost 19-44% more than housing voucher units over their lifetime.

Not to mention, LIHTC has a history of fraud and abuse. NPR ran a documentary that outlined some of the recent cases earlier this year.

This problem is likely due to the federal government’s “minimal” oversight of the program. The IRS oversees LIHTC but has only audited 13 percent of state administrators during the program’s entire existence. As a GAO auditor put it earlier this year, the “IRS and no one else in the federal government really has an idea of what’s going on.”

This is just a sampling of LIHTC’s problems; additional issues are noted in the report. If LIHTC is HUD’s version of an “effective” and “efficient” government program then that explains a lot.

See our report for more details on the Low-Income Housing Tax Credit.

Uwe Reinhardt, R.I.P.

Uwe Reinhardt, a beloved health economist at Princeton University, died Monday at the age of 80. Uwe was a giant in his profession. His combination of insightful economic analysis and wit knew no equal. I always, always looked forward to hearing what Uwe had to say. We are proud to have hosted him at the Cato Institute, to have debated him, and to have called him a friend. The Cato Institute offers its condolences to the Reinhardt family, for whom Uwe made no secret of his love, and to all those in the health policy and economics professions who will miss him dearly.

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