Economists Running Amuck

Paul Levy

First published 6/13/11 on Not Running a Hospital

Economists are so embedded in their training with the concept of “ceteris paribus” — “all other things held equal” — that their policy prescriptions often go awry. Here are two recent examples:

First, in the March 10, 2011 issue of the New England Journal of Medicine, David Cutler and Leemore Dafney argue against transparency of pricing in the health care sector.

Continue reading “Economists Running Amuck”

Misinformation on the IPAB

Merrill Goozner

First published 6/9/11 on Gooz News

David Brooks’ op-ed in the New York Times earlier this week attacking health care reform’s Independent Payment Advisory Board has set off a mini-firestorm in the liberal blogosphere. Brooks claimed IPAB would impose centralized planning over health care decision-making, while the alternative Republican plan — vouchers — would let consumers decide how much insurance and how much health care they should buy. Brooks went on to say the fight over IPAB will be a defining battle between the two ideologies contending for power in the U.S. — decentralized free-market choice and centralized planning.

Whew. That’s an awful lot of baggage to pile onto a board that the Congressional Budget Office says will pare all of $15.5 billion from overall Medicare spending between 2015 and 2019. For those keeping score, that compares to $400 to $500 billion in other Medicare cost reductions in the reform law.

Continue reading “Misinformation on the IPAB”

VoucherCare for Cancer

Merrill Goozner

First published 6/6/11 on Gooz News

The health care cost debate takes place on two stages using two languages, one scientific, the other economic. The net result is a failure to communicate.

The scientific texts emanated over the weekend from the American Society of Clinical Oncology meeting in Chicago. Ongoing clinical trials showed that science has come up with new drugs that can reduce the incidence of breast cancer and prolong life for people with skin cancer. The former is an estrogen inhibitor that would have to be taken by tens of millions of older women to have a major impact on reducing the rate of breast cancer. The latter would only be given to a subset of the 68,000 new cases of melanoma each year, and would extend life from a few months to a few years for some of the 7,700 who die from the disease each year. Again, most of those people are older, although there are a number of younger people, especially young women, who disproportionately get advanced skin cancer.

Continue reading “VoucherCare for Cancer”