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07/26/2009

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Anonymous

We (government) ought to assign a dollar figure for incremental increases in human life. We'll then recall that just as price discrimination permits higher profit, costing life on a per person basis will be more efficient for society. So we'll set up boards to declare the worth of extending individual lives. Is the individual a learned man? Will he write books with society? Is he a doctor or a lawyer or a professor? Clearly we must allocate more resources to this valued member of society than the prisoner or the vagabond.

And what sum is worth spending? We can build a sophisticated model to weigh the benefits of extending life versus paying for it on an individual by individual basis. All decisions will be made by the model -- it was coded by Harvard economists.

In so doing, a graduate student will realize that the model can be modified to answer another question. By adding layers of logic and complexity he'll determine that human life, on aggregate, is worth only living to the age of 62. Of course, there are Chicago PhDs beyond this age that are productive but on aggregate he will determine that those beyond 62 are a drain on society.

The bureaucrats, struggling to find an answer for the now "bread line"-eske medical waiting lists will welcome this study as a convenient answer for all of the same reasons that bureaucrats love Kenyesianism.

Thousands of old people (and the sick people deemed negative NPV for society) will shortly thereafter die. Society will be left humming along. It will operate at a utilitarian maximum. GDP will be perfected tuned by the model.

The detail that some men who died had means is irrelevant. Their private ability to pay could not be forced to interfere with society as a whole's need to progress. Some will say, "Your model is flawed! Some who died had positive NPV 'projects'. By living another year, they could have contributed to society." But they are wrong. Every good economist knows the foundation of the practice is a world of limited means. In this world of limited financing, profitability indexes trump NPV. Of course, "the model" understood this. There are no bugs in the model. The model is flawless are those dead are rightfully dead.

Society can be optimally tuned.

Anonymous

Bravo for bringing in a truly intelligent cost benefit analysis to the debate, that doesn't disrespect personal liberties.

Anonymous

I'm not sure from this post whether the aggressive treatment of certain kinds cancer commended by Professor Becker is financed by private insurance or by Medicare. If it's financed by Medicare, it undermines the thrust of his argument.

With regard to personal liberties, does it really make a difference whether decisions on medical treatment are made by government officials or the claims department of your insurance company?

Anonymous

Cherrypicking one or two diseases does not seem the best way to judge a healthcare system. The cited study does not disprove the data which show that overall results are still better in Europe than the US, at much lower cost.

Anonymous

The most common cause of deaths for black males between 5 and 55 years old is homicide so when American and European mortality is compared you're not comparing the same things. When American whites are compared with European whites the American life expectancy is 4–5 years greater.

Ross
Chicago, IL

Anonymous

Shouldn't the $120,000 value of one year of life be discounted for the expected year in you would be predicted to receive it?

Anonymous

"Cherrypicking one or two diseases does not seem the best way to judge a healthcare system. The cited study does not disprove the data which show that overall results are still better in Europe than the US, at much lower cost."
Actually, it is a good way to judge. Examining a single detail is more likely to give real understanding than fuzzy overall statistics where you can't tell what's causing what. That is after all the point this article made.
Of course, you need to gather more and more details, till you can build an accurate overall picture.

Anonymous

But here is the problem with this analysis: what we care about is not survival rates of a particular disease but the overall life expectancy. The fact that Europeans do less tests for prostate cancer and fewer mammograms can reflect simply the value choices they make - they are not worried about those, since they are happy with the overall life expectancy

That is an easier argument to make than that Americans are concsiously choosing a lifestyle that makes them live on average less than people in 34 other countries

Anonymous

A European and American study indicate little effectiveness for the PSA test. The results were discussed in the New York Times:

http://www.nytimes.com/2009/03/19/health/19cancer.html?_r=1&scp=3&sq=psa&st=cse

European doctors have apparently listend to the study and see no need to push the PSA test. US doctors continue to push the test despite the evidence.

Anonymous

"Cost Containment" is the the number one issue in regards to Health Care reform. If it were not for the hyper-inflation (I still cant't figure out why this doesn't show up in the consumer price index or any of the other inflation indexes) that has occured within the medical industry in the last thirty or so years, we wouldn't be having this discussion now. As it now stands, no one can afford medical/health care. Not individuals, not business/industry, not insurance, not government. There is a major problem.

Throughout all this I find it rather surprising, that no one wants to look at the rather bizarre and byzantine Tort Law structure that has developed in this country around medical and health care. Whenever one tries to bring the subject up as a contributing cause of the hyperinflation in medical costs, they are pooh-poohed and driven from the debate/discussion. If cost containment is to occur, the "Sacred Cow" of Tort Law must also be slaughtered for reform to take place in order to reduce cost.

Also, as for containing costs, we will also need to take a hard look at "Price and Wage" Controls throughout the Business and Industry to create "affordable" health care.

Anonymous

To support the superiority of the current US system over European-style systems to which it is frequently invidiously compared, you cite Preston and Ho's working paper, which convincingly argues that the US has achieved much greater improvements for prostate cancer outcomes than Europe in the last twenty years and that this superior performance can be plausibly attributed to better health system performance here in the USA. But as your post implies, Preston & Ho's paper never discusses the cost to American taxpayers for achieving this specific improved health outcome. Furthermore, they point out that, more than many other causes of US's poor health status, prostate cancer is a disease of older men who have Medicare, an arguably "European-style" health care financing system. So it seems to me that for most Americans the Preston & Ho results are entirely consistent with envy of European health care systems. The exceptions would be men like yourself, Sam Preston, Greg Mankiw and me, who are old enough to be at risk from prostate cancer - and to benefit (now or soon) from Medicare. But surely we will all adopt positions on health reform which would improve the welfare of women and younger men as well as ourselves.

Anonymous

I really don't care what someone else thinks a year of my life is worth. What I think a year of life is worth is what counts to me and is dependent (to me) on what on the quality of that year is likely to be in comparison to the other things I value. Some one else will likely come to a different value. Our system is breaking down because we allow me to value a year of my life at infinity but someone else is to pay for it. There is no such thing as unsustainable growth in medical cost unless we continue to claim someone else is to pay for it.

Anonymous

Here is a link to the Preston/Ho paper:

http://repository.upenn.edu/psc_working_papers/13/

Anonymous

"The US has relatively high incidences of obesity, partly because Americans consume lots of high fat and high cholesterol foods..."

I beg to differ.

Fat does not make you fat. Calories make you fat, whether you ingest them in the form of fat, sugar, complex carbohydrates, or protein.

The drive for a low fat diet in the USA has increases Americans' sugar intake, and thus the calories we consume. This is because fats taste good, and if we have to give them up we want something else that tastes good.

Anonymous

One year of additional longevity at $120,000 needs to be compared to alternative uses, e.g., a college education in sciences. The analysis is too introspective and for the benefit of the aging which is already overdone.

Anonymous

A very thoughtful and interesting article, but sorry Becker, Posner's got you schooled on this issue. His answer is much more complete and balanced. Cherry picking from a working paper? Seems like you should know better! You picked a pretty hard position in defending the US health care system, but I'm not sure why you are defending it. I wish you would use your skill and creativity to figure out ways to improve our current system rather than arguing the extra cost is worth it... (and with this one number from a working paper cancer study? Sheesh.) You know that US doctors use the cancer tests more because they overprescribe? Perhaps the lack of inexpensive preventive measures e.g. diet coaching, creates the discrepancy between costs and mortality in the US. Expensive surgeries and cancer treatments may help tack on a few years at the end of a persons life, but you get much less bang for your buck. Listen to the behavioral economists, and they will tell you that personal behavior will change when the 'default' choice is the healthy one. Right now the default choices for Americans seem to be the unhealthy ones. (smoke more, eat more unhealthy food, fast food, stress more, etc...)
It would be nice to see a little bit of your work focus on those choices.

Anonymous

quite an insightful post. without being disrespectful. but i do agree. americans are chosing to be unhealthy it isnt forced upon them

Anonymous

I agree. Posner definitley illustrated a much more complete answer. great posting

Anonymous

If a reporter were to come to his editor with a proposed article titled, “President Obama is gay,” the editor would demand supporting evidence, before that article ever saw print.
However, if the same reporter submitted an article titled, “Federal deficit is too high,” history says the editor would ask for no supporting evidence, nor would the article contain any. The media merely assume, as a matter of faith, that revenue neutrality is more prudent than deficits.
Economics is rare, perhaps unique, among sciences, most of which demand evidence for their hypotheses. Only in economics can intuition, faith and popular wisdom obviate facts or even the desire for facts. Thus, I have had editors, columnists and reporters tell me it is obvious that large deficits are unsustainable, lead to recessions, depressions, inflations and hyper-inflations. When I ask for evidence to support these views, I seldom hear from them again, probably because they feel scientific evidence is unnecessary in a science, but more importantly, they don’t have any.
Even the Concord Coalition, an organization that for seventeen years, has collected vast amounts of money to preach for federal deficit reduction, unashamedly offers no evidence to support its views. Check its website, www.concordcoalition.org, or write to them and you will see.
Because our leaders parrot the economic beliefs promoted by the media, lack of evidence has contributed heavily to government actions that yield repeated recessions. Until the media learn to ask, “What is your evidence?” we will continue to suffer periodic, economic traumas. These traumas may seem inevitable and unavoidable, but in reality they are caused by beliefs lacking evidence.

Rodger Malcolm Mitchell
rmmadvertising@yahoo.com
www.rodgermitchell.com

Anonymous

What you have said, Professor Becker, is true. Please allow me to distinguish between health care and medical care. It is not the physician's role to keep people healthy. Rather it is to evaluate symptoms, diagnose them and suggest a remedy if necessary. Health care on the other hand is a public health issue like sanitation, FDA protection and the education of the public relative to healthy life style. As you point out, eradicate obesity, smoking and abuse of alcohol and the costs of "health care" go way down.
Medicare spends 80 billion in the last year of life and the practice of defensive medicine is probably around 100 billion annually. Comparitive effectiveness regulations will not help as medical care is an individual art and the very research about what works and what doesn't is paid for either be the federal government or drug companies. And in many instances is politically or financially driven.

The "reform" is not about health care, not even about money. It is about control of 17% of the GDP. After all, remember in the 60's when the Medicare argument was raging. The pro forces said that it was "undignified" for seniors to have to grovel for free health care or go to a public hospital. Now those same people say we have to ration senor's health care. I might add that the cons in the 60's argued that the cost would break the bank. Their argument is the same today and they were correct then and correct now.

My advice---don't get sick.

Anonymous

Rodger,
I read a little bit at your site. You're ignoring the influence that expectations play in an economy. Long-term contracts, spelled out in nominal sums of money have a depressing influence. Capital is misallocated to arbitrary winners who come out ahead due to the whims of a bureaucrat calling in bonds. Similarly, trade of any sort breaks down whether the unit of account is inflating or deflating.

What you propose -- reckless inflation -- only "works" as a very wicked means. Firstly, it is only effective to the extent that prior expectations are exceeded. That is, a person who would do a job yesterday for $20 does not recognize that your new $20 is hot off of the presses. He is therefore manipulated into working harder than he would given full information on the supply of money. Secondly, it steals from creditors. Thirdly, it breaks down future trade as buyer and seller (they're interchangable) become distrustful of the unit of account: money. They resort to not trading at all (depressing). They resort to non-specialization (depressing). They resort to holding their money as commodities (depressing).

Inflation without end entirely misses the role that capital formation, specialization, trade, expectations, capital reallocation play in a healthy economy. Least of all sound money is moral and ethical money that doesn't prey on those not sophisticated to understand how they are otherwise being robbed. And rightly so. Honest trade and honest work shouldn't require a math PhD.

Even if we ignore the glaring oversimplification fallacies in your analyses, your logic suffers the confusion of taking inductive to be deductive. You pick 5,6,7,8 or 9 cases and conclude that a phenomenon is true for all cases. If you look hard enough you can find any pattern you like. Your entire argument is susceptible to a Lucas critique.

Anonymous

Why are we trying to explain whether we are better or worse off than the Europeans who have many different health care systems, when we can't even explain why we are worse off than ourselves.

In other words, as Uwe Reinhardt has asked: so why does the "best medical care in the world" cost twice as much as "the best medical care in the world?"

Dartmouth Atlas data from 2001-2005 show that the costs for a Medicare enrollee in Manhattan ($81,142), Los Angeles ($77,411), or Chicago ($62,564) are considerably higher IN THE LAST TWO YEARS OF LIFE than for a Medicare enrollee in Seattle ($43,217), Milwaukee ($42,189), Salt Lake City ($38,773), or Des Moines ($33,863). Why is that, and what are you gonna do it about it?

Anonymous

Inflation aside, health care costs have ballooned incredibly since the 1950s. What was once small privately held companies, have now grown to massive corporations that would rather have a higher profit margin than ensure their customers receive quality care. Obama has already taken some steps in the right direction, I think a health care system closer to Europe's would be another one.

Anonymous

If there is one certainty about America's health care it is that adults with autism lose at every turn.

It takes over 7 1/2 years in Florida for people with autism to get Social Security disability benefots because no one will help us with facilicated communication -- we are supposed to just starve and die when we have not achieved our full independence, apparently.

We cannot get medical services even when we have over $100 K insurance to cover it and medical providers abandon us as patients because they do not understand autism or find it too inconvenient to handle us and our facilitated communication needs -- why ? 200 years of discrimination against people with autism !!! We must stop it and change this.

THIS is why Obama's health care plan MUST pass and MUST cover adults with autism -- we are letting CRUELTY happen to people with autism in America -- is there any truly justifiable excuse for this ?

http://www.youtube.com/watch?v=MT5HgBiZjZc

Look at the video well -- when Republicans and some holdout Democrats want to vote adults with autism out of fully 100% subsidized health care for all their autism medical needs, THIS is the result.

Would anyone like it if it were them ? Or their child ? Their mother or father ? Sister or brother ? Friend or colleague ?

How can we be the most wealthy Country on this Planet and not provide health care for every adult with autism in the U.S. ? And not years from now, but right now ? Immediately.

Anonymous

Nice post. While there may have been a mortality decline in prostate cancer in America, this may not be the whole story. First, is this benefit cost effective? Secondly, fairness requires that this clinical benefit be juxtaposed againt the men who were unnecessarily treated and who developed chronic complications from surgery or radiation. In addition, many men who truly need treatment endure these complications which dilutes the benefit of the treatment and diminishes their quality of life. I suspect that when the issue is viewed in its totality, that the scenario is much more murky.

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