Relevant and even prescient commentary on news, politics and the economy.

Federal District Judge Roger Vinson’s opinion

by Beverly Mann

Roger Vinson, Sophism King

Federal District Judge Roger Vinson’s opinion issued the other day ruling the Healthcare Act an unconstitutional overreach by Congress is so replete with sophisms that it’s hard pick the most ridiculous of them. But my candidates are:

“[W]hat if two of the purported “unique” factors — inevitable participation coupled with cost-shifting — are present? For example, virtually no one can opt out of the housing market (broadly defined) and a majority of people will at some point buy a home. The vast majority of those homes will be financed with a mortgage, a large number of which (particularly in difficult economic times, as we have seen most recently) will go into default, thereby cost-shifting billions of dollars to third parties and the federal government. Should Congress thus have power under the Commerce Clause to preemptively regulate and require individuals above a certain income level to purchase a home financed with a mortgage (and secured with mortgage guaranty insurance) in order to add stability to the housing and financial markets (and to guard against the possibility of future cost-shifting because of a defaulted mortgage), on the theory that most everyone is currently, or inevitably one day will be, active in the housing market?”

And:

“It is difficult to imagine that a nation which began, at least in part, as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force people to buy tea in the first place. If Congress can penalize a passive individual for failing to engage in commerce, the enumeration of powers in the Constitution would have been in vain for it would be /difficult to perceive any limitation on federal power’ [quoting from United States v. Lopez, a1995 Supreme Court opinion] and we would have a Constitution in name only.”

Presumably the federal government’s attorneys will point out on appeal that a law requiring individuals above a certain income level to purchase a home financed with a mortgage (and secured with mortgage guaranty insurance) in order to add stability to the housing and financial markets (and to guard against the possibility of future cost-shifting because of a defaulted mortgage) would place the mandate on those who are unlikely to default, and that, by contrast, the Healthcare Act places the mandate on those who are likely to eventually use the healthcare system and shift the cost to the public.

The purpose of the mandate in the Healthcare Act is, in other words, the opposite of the purpose of the judge’s hypothetical wealthy-individuals-must-take-out-a-mortgage-to-buy-a-home statute.

And, whether or not it is difficult to imagine that a nation which began, at least in part, as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force people to buy tea in the first place, it is unlikely that the Framers would object to a law that required people to pay for their tea rather than shifting the purchase price to the public. It also is unlikely that the Framers would think people who do are passive individuals who are failing to engage in commerce. The use of the word “mandate” to describe Britain’s conferring of a monopoly and its imposition of a tea tax is cute, but all tax laws are mandates, as are many other laws.

I haven’t read § 1501(a)(1) of the Act, but based on this judge’s stream-of-consciousness analogies, his interpretive skills seem lacking enough for me to doubt the accuracy of his claim that that section grounds its appropriateness under the Commerce Clause on the law’s inclusion of the mandate. I suspect that that section of the statute actually claims for its authority under the Commerce Clause that individuals who do not have health insurance are not passive at all, because they are likely to eventually use the healthcare system and shift the cost to the public.

Why Healthcare is So Expensive Part MMDCLVI

by Tom Bozzo, cross-posted from Marginal Utility

Competition in (increasing) service quality doesn’t reduce costs:

Dane County’s two hospitals that deliver babies are each spending close to $40 million to spruce up maternity units and related facilities for a simple reason: Young women are key health care consumers, often deciding where their families will seek medical services for decades.

“If you don’t cater to women, you lose your market share,” said Kathy Kostrivas, Meriter’s assistant vice president of women’s health.

Many pregnant women tour both hospitals before choosing where to give birth, some bringing birth plans for each step of labor and delivery, said Holly Halberslaben, director of St. Mary’s family care suites.

“They really do their homework,” Halberslaben said. “It can be their first time in a hospital. You want to retain them.”

The somewhat buried exculpatory case for these investments is that the facilities have been operating near capacity, and the Madison area is the fastest-growing part of Wisconsin apart from some areas in the Twin Cities’ exurban fringe. Nevertheless, the hospitals fairly evenly split a market of just over 7,000 annual births, so $80 million is not an insubstantial cost to recover.

I wonder how many expecting moms really are cross-shopping the facilities for compatibility with birth “plans.”[*] Many if not most of the births sort into the two hospitals on the basis of affiliations that send participants in several of the major local health insurance plans to one hospital or the other. So even a modest amount of gold-plating can represent a large cost per birth on the contestable margin. Granted, in addition to some Cadillac plan participants, the uninsured population has (Hobson’s?) choice as to where to give birth. Though it’s messed up in a whole different way if the hospitals’ business plans would seek to recover a significant share of costs incurred to attract well-to-do moms to these facilities from the uninsured.

[*] When John was born, the plan was to have a healthy baby, which turned out to be the plan that was robust to complications that would have mooted any other plans.

Health Care thoughts: Hysterical Reporting

by Tom aka Rusty

Health Care: Hysterical Reporting

Fox News ran a screaming intro and a scary bottom summary line on a story on some survey of physicians, claiming a majority of physician will quit, retire or work part-time.

Link via Yahoo: http://news.yahoo.com/video/health-15749655/23362511

This is further proof that Fox News does not do journalism. The conversation eventually winds around and the expert really contradicts the story headline.

I have been spending a lot of time talking to people at the national level, and the one trend that is certain is the merger/sale of physician groups to hospitals and integrated networks, effectively making the physicians employees of a larger entity. The ownership of a private practice will fade like Marcus Welby MD (some of you may be too young to understand this popular culture reference).

PS: if you leave the link open you will see a story about Miley Cyrus puffing on a bong. Oh the horror.

Tom aka Rusty Rustbelt

Thinking about Research

Chris Blattman highlights the latest version of Janet Currie and Reed Walker’s research on a positive externality of the shift to E-Z Pass (PDF link). From the Abstract:

We find that reductions in traffic congestion generated by E-ZPass reduced the incidence of prematurity and low birth weight among mothers within 2km of a toll plaza by 6.7-9.1% and 8.5-11.3% respectively, with larger effects for African-Americans, smokers, and those very close to toll plazas. There were no immediate changes in the characteristics of mothers or in housing prices in the vicinity of toll plazas that could explain these changes, and the results are robust to many changes in specification. The results suggest that traffic congestion is a significant contributor to poor health in affected infants. Estimates of the costs of traffic congestion should account for these important health externalities.

The interesting thing is that I read this paper a while ago—earlier this year, or even late last.  Well, maybe not this version of  the paper, but an earlier version of it which also showed significant positive results.  And it gets me thinking about how we deal with research.

Because the past six months or so—since the previous version—are six months in which this information apparently didn’t get disseminated to the Chris Blattmans and Kevin Drums of this world, six months during which uninformed people have bought houses near non-EZ-Pass toll plazas, six months during which every Republican candidate for the House or Senate not named Mark Kirk has spoken as if since climate change is not real, and therefore there are no possible reasons to reduce emissions. (As an aside, that the glorious liberal days of IN-9 are when Lee Hamilton seat for as long as he wanted it is an indicator of discourse shift, as this blog’s pretense to being “left of center” makes clear.)

In a limited sense, that’s probably as it should be.  People who knew about the paper read it, sent comments to the authors, asked questions, suggested changes and the refinements.  I’m certain the current version is a better paper than the one I read, with better details.

But there is likely someone who, in the past six months, bought a house near a toll plaza that doesn’t have E-Z Pass exits, thinking she was going to raise her soon-to-be-born child in a better environment than an apartment who would have liked to have known about this study, instead of ending up with “Buyer’s Remorse” in a real—not just an economic or psychological—sense.

As long as research is delayed by details and false narratives remain information-free, markets will remain inefficient. And people will have what economists gracefully call “suboptimal outcomes.”  Such as “prematurity and low birth weight,” neither of which is a positive indicator for future success and earnings.

HEALTH CARE: Can Mom Live Forever?

by Tom aka Rusty Rustbelt

HEALTH CARE: Can Mom Live Forever?

Many of us have had the experience of losing a parent. It is a life passage that is impossible to completely prepare for.

Problem is, mom is not going to live forever, and at some point aggressive care makes no sense – except to some of the children.

This puts the hospital, nursing home, doctors and nurses in tough predicaments. And it puts Medicare in a position to finance the care.

Physicians often take the path of least resistance – do what the family wants. Too often the patient is ping-ponged between the hospital and nursing home. Medicare may eventually slow down the revolving transfers by cutting payments, which leaves the doctors and nurses to face the family.

Withholding care can result in unnecessary suffering. Providing too much care may result in unnecessary suffering.

Talk to your parents if they are older. Try to get some agreement among siblings about possible scenarios. Face reality yourself if you are older. Consider a living will.

And even then you cannot anticipate the exact course of anyone’s life.

Tom aka Rusty Rustbelt

In Honor of the Super Bowl

Favorite papers from the 2008 AEA in New Orleans (all PDF, ungated):

Emily Haisley on lottery tickets and perception. I heard about this paper before reading it. Such a simple idea, such a direct experiment.

Michele Tertilt: Women’s Liberation: What’s in it for Men (with M. Doepke). The next step is to figure out why so many rulers started having a significant number of female children. But that’s for sociologists, whose work is harder than that of economists.

Dean Yang and Sharon Maccini: Under the Weather: Health, Schooling, and Socioeconomic Consequences of Early-Life Rainfall. The paper that convinced me that Economics really is a good field in which to work.

Marcellus Andrews, “Risk, Inequality, and the economics of disaster.” This was much better live, where he prefaced it by taking about coming the hotel as an insurance inspector and pointed to the “sh*t line.” After the presentation, people were coming out, talking about how if they had wanted a sermon, they would have gone to church. Only person I went out of my way to thank for his talk, interrupting him conversation with Jamie Galbraith in the process.

Acemoglu and Finkelstein, Input and Technology Choices in Regulated Industries: Evidence from the Health Care Sector. Two future Nobelists collaborate. What’s not to like?

Dani Rodrik, Second Best Institutions. The best of a set of presentations.

Universal Health Care Is Good for Business

A Healthy Blog notes that Massachusetts has reversed the national trend:

Since the enactment of Chapter 58, Massachusetts has increased the percentage of employers offering coverage to their employees. With the employer offer rate up 4% over two year, to 76%, we are climbing well above the national average of 60%. This increase occurred in spite of the recession. Most employees (80%) who are eligible for employer-sponsored insurance choose to enroll. There are large (and predictable) differences between small and large employers, with the small employers less likely to offer health insurance.

Full report here (PDF).

ER: It is the law, and often a slogan "Everyone can get care"

Rdan

Not only is ER care enormously expensive for ‘more routine’ health concerns than a clinic, but perhaps are not equal for insure/uninsured even for traffic accidents, not withstanding our best wishes.

Sphere notes a report from the Archives of Surgery:

It’s federal law: All seriously injured emergency and trauma patients must be given equal lifesaving care, whether or not they can pay for it. But that’s not happening, according to a new report. The study, conducted by Children’s Hospital Boston research fellow Dr. Heather Rosen and colleagues from three other hospitals, found that uninsured trauma victims ages 18 to 30 are dying at an annual rate 89 percent higher than insured victims with identically severe injuries.

As the health reform tornado continues to swirl on Capitol Hill, the data could provide fresh ammunition for those pushing for expanded health insurance coverage.

The study, published today in the Archives of Surgery, examines the survival rates for patients brought to about 900 U.S. trauma centers between 2002 and 2006, analyzing some 690,000 patients who had suffered penetrating trauma — such as wounds inflicted by a gun or knife — or blunt trauma from vehicle crashes and falls. Earlier research found 18,000 extra deaths a year among uninsured victims of such injuries. Rosen and the other researchers chose to focus on the 18-to-30-year-old subset because they had fewer existing conditions — comorbidity — that muddy the evaluation of the cause of death.

[snip]

In a comment published with the journal article, Dr. Brent Eastman, a trauma and vascular surgeon from Scripps Memorial Hospital in San Diego who was just elected chairman of the Board of Regents of the American College of Surgeons, noted that emergency rooms and trauma centers “are the safety net for many communities.” He called for Rosen’s conclusions to be taken seriously.

Rosen cautions that the definitive cause for the higher death rate for uninsured people remains to be determined. Still, the hard number — the nearly 90 percent jump in mortality rates for uninsured accident victims — speaks loudly on its own. “Although the lack of insurance may not be the only explanation,” she says, “the accidental costs of being uninsured in the United States today may be too high to continue to overlook.”

The Best Health Care System in the World

For the record, both my daughters were vaccinated today, under government supervision at no cost to us, in a procedure that took less than 10 minutes—including getting a five-year-old to take her coat off and, post shot, put it on again.

Via Felix Salmon’s Twitter feed, without further comment.

(cross-posted from Skippy the Bush Kangaroo)

Game Changing Vote On Health Care

by Bruce Webb

Key Senate committee passes health care plan

The Senate Finance Committee passed a long-awaited $829 billion health care bill Tuesday by a 14-9 vote. Sen. Olympia Snowe, R-Maine, was the lone committee member to cross party lines, breaking with other Republicans to vote for the measure. All the committee’s Democrats supported the bill.

The MSM will lead with Snowe, but the real story to follow is that last sentence. Neither Conrad nor Lincoln left the fold. Meaning that at first glance there is no chance they would vote to keep the merged bill from at least coming to the floor for debate (which was a possibility if they had defected on the SFC bill itself) and I would think little chance they would back a filibuster on final passage.

TPM liveblogged the vote here: LIVEBLOG: Senate Finance Committee Votes On Health Care Reform Bill

I’ll be following this story all day and night but mostly not be able to comment. So consider this an open Health Care thread. I would throw one question out for discussion: Did AHIP overplay its hand by releasing the PWC Report? Because I certainly would not have predicted the Conservadems falling into line the way they did, something got them off the fence.