Introduction
Can you write something about guns in the US of A without pissing off a large portion of your audience? Not likely. But let me try to propose a policy that has elements that both sides might endorse (excluding the most extreme ends of the spectrum).
A little auto-biography
As a Canadian born to pacifist parents, the American fascination with guns has always been mysterious to me. Most of the world probably shares this sentiment regarding Americans and their gun fetish. Why would you want to own something that can--with the simple tug of your finger-- kill another human being? Clearly there is something psychologically wrong with such a person.
Anyhow, after living in the US of A since 2007, I've come to see that it's not just crazy True Patriots that like guns, it's a lot of "normal" Americans too. In fact, many of the people I've become friends with (and with whom I share political values in every other domain) loved them some guns. This softened my "judgy-ness". Some people just like to shoot things for fun or go hunting. "Piew! Piew!" It's not for me but I no longer see much harm in it. The demographic my friends represent certainly don't own guns with the delusion that they'll someday get to be a vigilante super-hero.
Let's get to my policy suggestions...
Deez Nuts
The Liberal Media (controlled by Jews who, according to esteemed historian Ben Carson, didn't fight back) loves nothing more than to run stories involving True Patriots accidentally shooting themselves or their friends. While the specific numbers vary between studies, the trend is the same: for every time a gun is legitimately (and successfully) used in self-defense, proportionately more people are killed accidentally (between 100-400% more, depending on the study you look at and the inclusion criteria). If you include accidental non-fatal shootings, the numbers are much higher.
A significant portion of the anti gun-control lobby sincerely believes that if they were in a public-shooter-type situation they would be able to save the day or at least have a positive impact. This is pure fantasy. While I don't doubt that a combat marine or special forces operative could "take down" a shooter with minimal "collateral damage", it is only because they have years of combat training.
I don't care how good a shot you are in a shooting range (or on your Xbox). There is a massive difference between trying to shoot a stationary target vs a moving (suicidal) target that is trying to kill you. Without training you have no idea how you're going to respond. You may simply freeze up. You may panic and shoot everywhere. You will likely be trembling from either fear or adrenaline undermining your capacity to aim. In a crowded area, failure to have perfect aim may result in further deaths--the exact thing you're trying to prevent.
Trained professionals (military, police, various security agencies) go through thousands of hours of training to condition themselves to deal with high stress situations. I don't care how badass you are in your fantasies: if you aren't trained for using your weapon when someone is trying to kill you, you will not perform the way you think you will. You are either going to have no effect on the situation or you will end up shooting innocent people in your panic. Merely owning a gun does not a brave or competent person make.
Solution
The typical argument you hear from True Patriots is that if everyone is armed in a public place, suicidal shooters won't be able to do the damage they do. This is only possibly true if the people carrying weapons are trained to use them in high stakes situations. It is not true if they have never been in any situation remotely resembling a live fire fight.
So here's the proposal: Anyone who wants to carry a gun in a school or similar public place can do so provided they have the relevant training. This would include at minimum (a) a one time course that provides training equivalent to what a SWAT team, marine, or comparable operative receives for live fire-fight situations; (b) mandatory annual training refresher course.
Regarding (a) the big political issue will be who decides how much training is enough? Easy. Ask the marines or some other respected military/police institution to outline what they consider to be the minimal training required to send someone into a live fire fight. After all, these institutions know better than anyone else what's required. That is to say, we let the experts rather than politics decide. (Crazy. I know.)
Regarding (b) the answer is the same. Knowing how to react effectively in a live fire situation is a perishable skill and so there must be retraining if we want gun-carriers to be more likely to help then harm a situation. After all, that's the goal, right?
Bb..bbut...it's my right. First of all, rights are not unrestricted. They are commensurate with capacities to exercise them. Second, no one is saying you can't go to shooting ranges, keep a gun in your house, or go hunting. This is about carrying a gun in a crowded public place.
Although there may exist other arguments, the primary argument given for why fire arms should be permitted (or even encouraged) in public spaces is that True Patriots with guns will be able to diminish the casualty and fatality rates. This argument rests on a false assumption that mere possession of a gun is sufficient to, on average, accomplish this outcome. For the argument to have any chance at soundness a premise needs to be qualified. It isn't merely armed True Patriots that can reduce casualty and mortality rates in mass shootings but True Patriots with sufficient training. Otherwise, True Patriots will, on average, probably be a net liability or have no effect at all.
Loose Ends
1. Gun control is not the same thing as the government coming to take your guns. Why do we always hear this straw man?
2. As far back as the mid 90s, the NRA sponsored a law in congress (which was passed and repassed) that prevents the CDC from collecting and using any data on gun violence. The law reads that "[any data collected by the CDC] may not be used to advocate or promote gun control.” WTF? If unrestricted gun ownership and lax gun control laws (and enforcement) really weren't related to higher gun death rates, as the NRA claims, then why does the NRA lobby against collecting the data? What are they so afraid of? If they're right, why not use the data to show it? And more importantly how can we have good policy without good data? To me the reasons are fairly obvious but I'll let you draw your own conclusions.
3. Gun control vs gun rights arguments usually go like this:
(a) War of empirical evidence. Continued disagreement for a variety of reasons having to do with biased interpretations and different quality of evidence being given equal credence, methodological disputes.
(b) Normative: "Fine, I don't accept your studies and you don't accept mine. It doesn't matter anyway. Gun ownership is a right." So, here's the thing I've always wondered...and if you are anti gun control proponent maybe you can let me know in the comments what you think. Suppose the empirical data indicated fairly strongly that lax gun control laws (and enforcement) actually do lead to significantly higher rates of homicides and accidental deaths, ceterus parabus. Would you be willing to oppose gun control legislation despite the fact that more people will die and get injured? At how many preventable deaths per year might you change your mind? 100? 200? 1 000? Is there any number? Or is an unrestricted right to own a gun more important than any number of preventable deaths?
Showing posts with label policy. Show all posts
Showing posts with label policy. Show all posts
Saturday, October 10, 2015
Wednesday, May 20, 2015
Solving US Health Care Cost Problems: Free Market vs Government Policy. Part 1
I apologize in advance for the somewhat scattered nature of this post. I'm trying to work through some ideas.
What I'm trying to figure out is whether certain cost problems in the US health care system can be solved using free market approaches or whether solutions require government intervention. The nature of the problems I'm looking at arise as a consequence of conflicting interests between insurance companies, hospitals, doctors, and patients. Any solution has to find a way to harmonize the respective interests of each. Recent evidence suggests government action works, although the case is far from certain. Also, supposing there are equally effective free-market solutions we still must ask why we'd chose one type of solution of the other. Let's get some statistics on the table first to get a general overview of the US health care situation.
Give or take a few, total US expenditures on health care in 2013 was 2.9 trillion. When we average that cost over the population the average per person's cost is $9, 225.00 (2013). To give those figures some context, OEDC average per person health care spending is $3, 448. The next highest spender is Switzerland at $6, 080.00 per person. Despite the familiar mantra of "but we have the best healthcare in the world", the US performs comparatively poorly in terms of many health outcomes. (To be fair, there are also a few areas where it doesn't, such as wait times for specialists and surgeries, and for cancer treatment outcomes.) Currently, health care costs represent about 17% of US GDP and is expected to rise to 22%, whereas the OECD average is 9.5% of GDP, the next highest being the Netherlands at 12%.
If you're like me, your thinking, "wait a minute, I didn't consume even close to $9 000.00 in health care this year. Where is this number coming from?" In other words, we can't just look at averages, we need to know how those costs are distributed across the population. That information will allow us to target cost saving policy at the costliest populations and/or health issues. Are you ready for your head to 'asplode'?
In a single year, what percentage of total health care dollars spent do you think went to the top 5% of health care users? (I.e., the sickest people). Ready? About 49%. That's right. Just 5% of the population consumed almost half of all health care dollars spent in a year. Now, what percent of the total health care dollars spent do you think went to the top 1% of health care consumers? Ready? The top 1% of health care consumers consumed about 30% of the total health care dollars spent in a single year.
Ok, let's look at the other end of the spectrum. What percentage of total health care spending did the bottom 50% consume? (I.e., the healthiest people or those with the cheapest conditions to treat). Ready? It's 3%. Yup, 50% of the population only consumes about 3% of the total health care dollars spent in a year.
(For more fun facts about the distribution of health care spending, here's a--wicka wicka--breakdown)
So, why--beyond shock value--should we care about these statistics? Because if we're going to set policy to decrease health care costs we're going to get way more bang for our buck if policy is directed at the top 5% of users rather than everyone all at once. There's very little to be gain by reducing the health care costs of the healthiest 50% whereas there are very likely cost savings available from the top 5%.
We might ask why treating this population is so expensive. To figure this out we need to know if their treatment is expensive because of the nature of the conditions for which they need treatment or the way the conditions are treated/billed/managed or they're always in and out of hospitals or it's some combination of all of the above.
It turns out that the 5 most expensive conditions to treat are heart disease, cancer, trauma, mental disorders, pulmonary conditions. But if only a small percentage of the population has these conditions, they won't account for the high costs. What we need to know is both what conditions are the most prevalent in the population and of those, which are the most expensive to treat.
A quarter of the population has at least one of these five chronic conditions: diabetes, heart disease, asthma, mood disorders, or hypertension. Unfortunately, each of thes conditions is associated with other conditions and illnesses. Treating the primary conditions in conjunction with the associated illnesses accounts for 50% of all health care spending.
How do we put all this information together? If we want to figure out a way to reduce costs, clearly we want to go after the most costly people and conditions to treat. And if those two variables overlap, that's probably a good target. So, how should we do it? Does government need to implement some sort of policy or are there free market solutions? To answer this question I want to use as a case study of one hospital's method of reducing treatment costs. There are other successful models for cost reduction as well which I'll also look at briefly. The point I want to establish is that it is possible. Not only is it possible, but these successful models reduced costs, increased quality of care and health outcomes.
What I really want to know is whether these models were a consequence of government policy (i.e., the ACA) or whether they could have come about without a government mandate. If the reply is the latter, we must ask the obvious question: Then why didn't it happen pre-ACA? The pro-market person can correctly point out that it did in a very small handful of cases. Just look at the Mayo clinic and an HMO in Colorado. But there's a further question lurking. If these models were so successful, why weren't they copied? Presumably, when someone finds a superior business model, other businesses must copy it or lose out.
The pro-market person might reply that the regulatory environment pre-ACA interfered with market forces such that efficiencies weren't realizable. But their own example--the Mayo clinic seems to undermine this argument. I'll have to investigate this claim. On the other hand, the ACA (government action) brought in (Medical) Accountable Care Organizations (ACOs). ACOs are voluntary programs that reward Medicare and Medicaid providers (e.g., hospitals, clinics, doctors, etc...) for cost savings through innovation. Health care economists and pretty much anyone else that works in health care policy have known for decades that preventative medicine and coordinated/managed care (this is when groups of specialists are paid as a team to manage patient outcomes) is the best way to bring costs down and improve patient outcomes. So, why wasn't anyone doing these things pre ACA? Why didn't market forces converge on this more efficient model?
My answer is that there were two prisoner's dilemma-like situations. The first is between health insurance companies, the second is between doctors and hospitals. Let's take a look at the first. The health insurance business is an odd one. You're trying to sell a product that you hope your customer will never use. And so, the best customers from the insurance companies' point of view are the healthiest ones. Every one wants the healthy customers. No one wants the sick ones. Here's the deal with preventative care and managed care programs: Setting up these programs requires up-front investment that won't see returns for up to 5 years.
Here's the problem. If you're the only insurance company that invests in a preventative and managed health system you're going to have lots of healthy customers. This might seem good until you realize that you're the only one that invested in the program. What are the other companies going to do? They're going to try to poach your customers! You invested all that money and created healthy customers and now all the other insurance companies are going to swoop in and steal all the healthy customers you created. Seeing how this might happen, no insurance company wants to be the sucker--even though they want to have healthy customers! And so no insurance company makes the up front investment and we end up with no cost saving measures.
It looks like the only way you can get the health insurance companies to make the up front investment in these cost saving measures is if somehow "someone" gives each company assurances that all the others will do the same. This way, no one will end up a sucker by being the only one to make up front investments only to have the new healthy customers poached. It looks like the government is that "someone" who can offer the assurance by mandating preventative care be part of health care insurance policies. Doing so allows the insurance companies to exit the prisoner's dilemma.
The second prisoners' dilemma occurs between doctors/care providers and insurance companies (I'm less sure if this is technically a prisoner's dilemma, it might just be a more general case of conflicting interests). Doctors and care providers (e.g., hospitals) want to get paid more money rather than less. Insurance companies want to pay less rather than more. This leads to high costs. For example, if a doctor is charging for every test he orders and every minor consultation, he's likely to order more tests than is necessary. In fact, there's good evidence that this happens. Consider this data from 2012. For some types of tests, US doctors order significantly more than their OEDC counterparts. So, how do we get doctors and hospitals to move to a managed care model? I.e., where they aren't necessarily under a fee-for-service model or at least where they're under a model that doesn't incentive ordering unnecessary tests and procedures?
Again, it looks like at least one answer is through government mandate. ACO programs under the ACA are voluntary for hospitals to enter. Hospitals get to share whatever cost savings the hospitals generate through managed care initiatives. Interestingly, the hospitals are free to experiment with whatever managed care models they want. So, if the hospitals save medicare and medicaid 2 million compared the previous year, the hospital gets to keep just over half of the savings. The program has been a huge success. Here are a couple highlights:
In the first year of the program 58 Shared Savings Program ACOs held spending $705 million below their targets and earned performance payments of more than $315 million as their share of program savings. Total net savings to Medicare is about $383 million in shared savings, including repayment of losses for one Track 2 ACO.
In the second year Pioneer ACOs generated estimated total model savings of over $96 million and at the same time qualified for shared savings payments of $68 million. They saved the Medicare Trust Funds approximately $41 million.
Where We At?
So far it looks like there's a strong case to be made that government action can solve many of the cost problems with the US health care system. Of course just because the government can solve these problems it doesn't follow necessarily that a market-based solution couldn't solve these problems. Some might even argue that the problems arose in the first place as a consequence of government intervention in the market. I'll look at these arguments in the next post. For now, amaze your friends with your new-found knowledge of healthcare statistics.
What I'm trying to figure out is whether certain cost problems in the US health care system can be solved using free market approaches or whether solutions require government intervention. The nature of the problems I'm looking at arise as a consequence of conflicting interests between insurance companies, hospitals, doctors, and patients. Any solution has to find a way to harmonize the respective interests of each. Recent evidence suggests government action works, although the case is far from certain. Also, supposing there are equally effective free-market solutions we still must ask why we'd chose one type of solution of the other. Let's get some statistics on the table first to get a general overview of the US health care situation.
Give or take a few, total US expenditures on health care in 2013 was 2.9 trillion. When we average that cost over the population the average per person's cost is $9, 225.00 (2013). To give those figures some context, OEDC average per person health care spending is $3, 448. The next highest spender is Switzerland at $6, 080.00 per person. Despite the familiar mantra of "but we have the best healthcare in the world", the US performs comparatively poorly in terms of many health outcomes. (To be fair, there are also a few areas where it doesn't, such as wait times for specialists and surgeries, and for cancer treatment outcomes.) Currently, health care costs represent about 17% of US GDP and is expected to rise to 22%, whereas the OECD average is 9.5% of GDP, the next highest being the Netherlands at 12%.
If you're like me, your thinking, "wait a minute, I didn't consume even close to $9 000.00 in health care this year. Where is this number coming from?" In other words, we can't just look at averages, we need to know how those costs are distributed across the population. That information will allow us to target cost saving policy at the costliest populations and/or health issues. Are you ready for your head to 'asplode'?
In a single year, what percentage of total health care dollars spent do you think went to the top 5% of health care users? (I.e., the sickest people). Ready? About 49%. That's right. Just 5% of the population consumed almost half of all health care dollars spent in a year. Now, what percent of the total health care dollars spent do you think went to the top 1% of health care consumers? Ready? The top 1% of health care consumers consumed about 30% of the total health care dollars spent in a single year.
Ok, let's look at the other end of the spectrum. What percentage of total health care spending did the bottom 50% consume? (I.e., the healthiest people or those with the cheapest conditions to treat). Ready? It's 3%. Yup, 50% of the population only consumes about 3% of the total health care dollars spent in a year.
(For more fun facts about the distribution of health care spending, here's a--wicka wicka--breakdown)
So, why--beyond shock value--should we care about these statistics? Because if we're going to set policy to decrease health care costs we're going to get way more bang for our buck if policy is directed at the top 5% of users rather than everyone all at once. There's very little to be gain by reducing the health care costs of the healthiest 50% whereas there are very likely cost savings available from the top 5%.
We might ask why treating this population is so expensive. To figure this out we need to know if their treatment is expensive because of the nature of the conditions for which they need treatment or the way the conditions are treated/billed/managed or they're always in and out of hospitals or it's some combination of all of the above.
It turns out that the 5 most expensive conditions to treat are heart disease, cancer, trauma, mental disorders, pulmonary conditions. But if only a small percentage of the population has these conditions, they won't account for the high costs. What we need to know is both what conditions are the most prevalent in the population and of those, which are the most expensive to treat.
A quarter of the population has at least one of these five chronic conditions: diabetes, heart disease, asthma, mood disorders, or hypertension. Unfortunately, each of thes conditions is associated with other conditions and illnesses. Treating the primary conditions in conjunction with the associated illnesses accounts for 50% of all health care spending.
How do we put all this information together? If we want to figure out a way to reduce costs, clearly we want to go after the most costly people and conditions to treat. And if those two variables overlap, that's probably a good target. So, how should we do it? Does government need to implement some sort of policy or are there free market solutions? To answer this question I want to use as a case study of one hospital's method of reducing treatment costs. There are other successful models for cost reduction as well which I'll also look at briefly. The point I want to establish is that it is possible. Not only is it possible, but these successful models reduced costs, increased quality of care and health outcomes.
What I really want to know is whether these models were a consequence of government policy (i.e., the ACA) or whether they could have come about without a government mandate. If the reply is the latter, we must ask the obvious question: Then why didn't it happen pre-ACA? The pro-market person can correctly point out that it did in a very small handful of cases. Just look at the Mayo clinic and an HMO in Colorado. But there's a further question lurking. If these models were so successful, why weren't they copied? Presumably, when someone finds a superior business model, other businesses must copy it or lose out.
The pro-market person might reply that the regulatory environment pre-ACA interfered with market forces such that efficiencies weren't realizable. But their own example--the Mayo clinic seems to undermine this argument. I'll have to investigate this claim. On the other hand, the ACA (government action) brought in (Medical) Accountable Care Organizations (ACOs). ACOs are voluntary programs that reward Medicare and Medicaid providers (e.g., hospitals, clinics, doctors, etc...) for cost savings through innovation. Health care economists and pretty much anyone else that works in health care policy have known for decades that preventative medicine and coordinated/managed care (this is when groups of specialists are paid as a team to manage patient outcomes) is the best way to bring costs down and improve patient outcomes. So, why wasn't anyone doing these things pre ACA? Why didn't market forces converge on this more efficient model?
My answer is that there were two prisoner's dilemma-like situations. The first is between health insurance companies, the second is between doctors and hospitals. Let's take a look at the first. The health insurance business is an odd one. You're trying to sell a product that you hope your customer will never use. And so, the best customers from the insurance companies' point of view are the healthiest ones. Every one wants the healthy customers. No one wants the sick ones. Here's the deal with preventative care and managed care programs: Setting up these programs requires up-front investment that won't see returns for up to 5 years.
Here's the problem. If you're the only insurance company that invests in a preventative and managed health system you're going to have lots of healthy customers. This might seem good until you realize that you're the only one that invested in the program. What are the other companies going to do? They're going to try to poach your customers! You invested all that money and created healthy customers and now all the other insurance companies are going to swoop in and steal all the healthy customers you created. Seeing how this might happen, no insurance company wants to be the sucker--even though they want to have healthy customers! And so no insurance company makes the up front investment and we end up with no cost saving measures.
It looks like the only way you can get the health insurance companies to make the up front investment in these cost saving measures is if somehow "someone" gives each company assurances that all the others will do the same. This way, no one will end up a sucker by being the only one to make up front investments only to have the new healthy customers poached. It looks like the government is that "someone" who can offer the assurance by mandating preventative care be part of health care insurance policies. Doing so allows the insurance companies to exit the prisoner's dilemma.
The second prisoners' dilemma occurs between doctors/care providers and insurance companies (I'm less sure if this is technically a prisoner's dilemma, it might just be a more general case of conflicting interests). Doctors and care providers (e.g., hospitals) want to get paid more money rather than less. Insurance companies want to pay less rather than more. This leads to high costs. For example, if a doctor is charging for every test he orders and every minor consultation, he's likely to order more tests than is necessary. In fact, there's good evidence that this happens. Consider this data from 2012. For some types of tests, US doctors order significantly more than their OEDC counterparts. So, how do we get doctors and hospitals to move to a managed care model? I.e., where they aren't necessarily under a fee-for-service model or at least where they're under a model that doesn't incentive ordering unnecessary tests and procedures?
Again, it looks like at least one answer is through government mandate. ACO programs under the ACA are voluntary for hospitals to enter. Hospitals get to share whatever cost savings the hospitals generate through managed care initiatives. Interestingly, the hospitals are free to experiment with whatever managed care models they want. So, if the hospitals save medicare and medicaid 2 million compared the previous year, the hospital gets to keep just over half of the savings. The program has been a huge success. Here are a couple highlights:
In the first year of the program 58 Shared Savings Program ACOs held spending $705 million below their targets and earned performance payments of more than $315 million as their share of program savings. Total net savings to Medicare is about $383 million in shared savings, including repayment of losses for one Track 2 ACO.
In the second year Pioneer ACOs generated estimated total model savings of over $96 million and at the same time qualified for shared savings payments of $68 million. They saved the Medicare Trust Funds approximately $41 million.
Where We At?
So far it looks like there's a strong case to be made that government action can solve many of the cost problems with the US health care system. Of course just because the government can solve these problems it doesn't follow necessarily that a market-based solution couldn't solve these problems. Some might even argue that the problems arose in the first place as a consequence of government intervention in the market. I'll look at these arguments in the next post. For now, amaze your friends with your new-found knowledge of healthcare statistics.
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