Opinion

Felix Salmon

Learning from breast cancer

Felix Salmon
Apr 30, 2013 15:12 UTC

Over the weekend one of my friends took to Facebook to ask a very good question. Her four-year-old daughter was going to run a lemonade stand, and my friend wanted suggestions “to incorporate an element of giving into the project”. Which charity should the daughter start supporting with her lemonade-stand profits? There were some very good answers, but there was also one woman who suggested, of all things, breast cancer research.

The Facebook post appeared at roughly the same time as Peggy Orenstein’s excellent 6,600-word NYT Magazine cover story on the problems with the breast cancer industry. Orenstein concludes:

It has been four decades since the former first lady Betty Ford went public with her breast-cancer diagnosis, shattering the stigma of the disease. It has been three decades since the founding of Komen. Two decades since the introduction of the pink ribbon. Yet all that well-meaning awareness has ultimately made women less conscious of the facts: obscuring the limits of screening, conflating risk with disease, compromising our decisions about health care, celebrating “cancer survivors” who may have never required treating. And ultimately, it has come at the expense of those whose lives are most at risk.

There are broader lessons to be learned from what we’re seeing in the world of breast cancer.

Firstly, Americans are bad at statistics. When it comes to breast cancer, they massively overestimate the probability that early diagnosis and treatment will lead to a cure, while they also massively underestimate the probability that an undetected cancer will turn out to be harmless. They’re bad at pathology: they’re easily convinced that something called ductal carcinoma in situ (DCIS) is a form of cancer, for instance, partly because the cancer industry insists on referring to it as “Stage Zero” cancer. They’re bad at biology: they think that it’s physics, basically, and that cancers are discrete, localized growths which start small and get bigger, and that the earlier you find and treat them, in large part by physically cutting them out of the body, the more likely you are to be cured.

But bigger than all of these is the fact that Americans are loving, compassionate people who really want to think that they can help, or make a difference. So they wear pink t-shirts, and ribbons, and football cleats; they spread the word in the name of “awareness”; they file up in their millions for mammograms and encourage everybody else to do so as well. (“If you haven’t had a mammogram, you need more than your breasts examined.”)

Orenstein does a good job of glossing the unpleasant consequences of such actions. Money which could be put to research into treating metastatic cancer — the kind of cancer which kills you — is instead put overwhelmingly into “awareness” campaigns and mammograms. There’s an epidemic of overtreatment, which carries massive physical, psychological, and economic costs. (And even attempting to measure such costs is considered almost treasonous in the cancer community.) More recently, the pink wave has spread to teenage girls, who are being educated, as Orenstein says, “to be aware of their breasts as precancerous organs”.

When a loved one dies of breast cancer, we all want to feel that there’s something we can do, some way we can help, some possibility that might prevent other people going through the same thing. The urge which causes people to donate to the Red Cross when there’s a big natural disaster? Is very similar to the urge which causes people to donate to the Susan G Komen Foundation when they have a nasty run-in with breast cancer.

But there are much better places to send your money than Komen. In a follow-up blog post, Orenstein points to Breast Cancer Action as one of them. It doesn’t have the feel-good aura that Komen does, and it’s unabashedly political. But it’s passionate, it’s reality-based, it doesn’t hide the people who are dying of breast cancer, and it doesn’t pretend that we have a way of stopping that from happening.

There are lots of reasons why people give to charity, and there are lots of reasons why some charities grow into Komen-sized behemoths while others stay small. But scientists and policymakers shouldn’t give especial weight to big charities just because they’re big, and physicians shouldn’t fall into line behind the cancer industry’s talking points unless those talking points have a solid scientific basis.

More generally, it behooves all of us to be a bit more critical of our intuitions. The Komen Foundation has become a spectacular success by playing to Americans’ fallacious intuitions, rather than trying to gently correct them. That’s depressing. Especially when so many lives are at stake.

COMMENT

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Posted by caiencer89 | Report as abusive

Don’t let doctors’ incomes derail healthcare-cost reform

Felix Salmon
Feb 24, 2013 00:56 UTC

Sarah Kliff and Matt Yglesias both have good summaries of Steve Brill’s monster Time article on healthcare costs. Both of them correctly point out that the heart of the piece is about negotiating power: who has it (Medicare); who doesn’t have it (the uninsured); and how the lack of negotiating power on the healthcare-consumer side inevitably leads to sky-high costs.

Yglesias says that the natural conclusion from this is that either Medicare should cover everybody — which would massively increase Medicare costs while massively decreasing overall healthcare costs — or else that rates should be set by the government, even if the bills are paid privately. He also says that Brill “rejects both of these ideas”.

Weirdly, Brill’s rejection of these ideas comes not in his conclusion, but higher up in the piece — a mere 22,000 words in — when he explains that if we reduced the age that people were eligible for Medicare, then that would save a lot of money. He then continues:

If that logic applies to 64-year-olds, then it would seem to apply even more readily to healthier 40-year-olds or 18-year-olds. This is the single-payer approach favored by liberals and used by most developed countries.

Then again, however much hospitals might survive or struggle under that scenario, no doctor could hope for anything approaching the income he or she deserves (and that will make future doctors want to practice) if 100% of their patients yielded anything close to the low rates Medicare pays.

Weirdly, in 24,000 words which include a lot of railing against the large salaries enjoyed by hospital executives, Brill never supports or clarifies this assertion: he never says how much money doctors deserve, how much they actually make, or how high physician salaries would need to be in order to make future doctors want to practice. That last one, in particular, seems very unconvincing to me: the world is full of highly-qualified doctors who would love to be able to practice in the U.S. for much less than the current going rate.

In his conclusion, Brill says — again, without adducing any evidence whatsoever — that “we’ve squeezed the doctors who don’t own their own clinics, don’t work as drug or device consultants or don’t otherwise game a system that is so game able”. It’s a bit weird, the degree to which Brill cares so greatly about keeping doctors’ salaries high: he certainly doesn’t think the same way about teachers.

If the only thing preventing Brill from embracing sensible reform is a worry about doctors’ salaries, then surely the obvious solution is to address doctors’ salaries as part of a broader healthcare-cost reform. Given the path-dependency of such things, my idea — and I’m coming at this from a very naive position, I’m no healthcare wonk — is that we should simply allow insurers to outsource their cost negotiations to Medicare.

For any given medical procedure, Medicare pays the least amount of money, and rich foreigners pay the most, with insurers being somewhere in the middle. Here’s my idea: any healthcare insurer should be allowed to get rid of its cost negotiators, and instead be able to get Medicare to pay for all procedures on its behalf. Medicare would then bill the insurer, which would pay the Medicare-negotiated rate plus a small premium for Medicare’s time and effort, maybe 2% or 3%. (If insurers start defaulting on the amount they owe Medicare, then the premium would have to rise, to cover credit risk.)

The basic idea here is that all Americans should have access to Medicare’s discounted rates — either by being eligible for Medicare, or else by signing up for health insurance with an insurer who allows Medicare to negotiate on its behalf. All of this would be voluntary, of course. If you want your insurance to cover the kind of things that Medicare won’t pay for, then you can do that. But if you think that Medicare-quality coverage is good enough, then you should be able to get it, at only a modest premium to what Medicare itself pays.

Would doctors be paid less, under such as system? Possibly. But that shouldn’t prevent the change from happening, and maybe the government should simply step in to top up doctors’ salaries where necessary. At the very least, I think it’s incumbent upon people like Steve Brill to say exactly how much they think doctors should be paid, and how much is too little. Because of all the problems with U.S. healthcare costs, the problem of underpaid doctors is never likely to be anywhere near the top of the list.

COMMENT

You miss the point entirely. Penny wise and pound foolish, as usual.

1. Doctors SALARIES will not derail healthcare because they make up about 8% of the total annual health bill, and for many procedures, less than that. For a typical pacemaker surgery in the US, the doctor will get paid about 300.00 for the planning, operation, and follow up over the following 30 days. The total cost, depending on the hospital, could be 7-10,000 dollars. Cutting the doctor’s fee by 50% will save you 150 bucks on a 10000 bill. Cutting the cost of pacemaker itself-a device which hasn’t changed in years and costs maybe 1000.00 to make-would save thousands per case. The same medical hardware used in the US is billed at greater 50% less in the EU and abroad. Same goes for durable medical goods and technology.
2. Other doctors in developed countries make less on an absolute basis than US docs but still make in the top 1-2 percentile in their country-with better lifestyle, benefits, less (or no) educational costs, and in many cases, less hassle. The idea that these doctors would fall over themselves to work in the increasingly hostile environment (in many cases driven by an entrenched media) is laughable, for one. And the FMGs which come to the US to practice-far from being untalented-are some of the most successful businessmen and women that I know. It’s astounding to see neocolonialist, Kiplingesque speak from self appointed progressive “reformers.”
3. The US can drop current health costs by 30%-now-simply by not going along with unneeded testing-something which every reasonable doc in the US agrees with. To achieve the same savings using reductions in physician salary one would have to make every physician in the US work for free for 3 years, during which time you other costs would continue to rise unchecked.

Posted by Heartdoc5000 | Report as abusive

How to improve vaccination

Felix Salmon
Jan 10, 2013 15:27 UTC

The NYT is leading its home page right now with a big story about the current raging flu epidemic. The cost of this disease is going to be enormous, both in dollars and in lives, and there’s a limited number of things that anybody can do to slow it down. As Kent Sepkowitz says:

This season’s hyperactivity demonstrates emphatically how critical vaccination is to control of influenza… There can be no greater advertisement for vaccination or a louder call for better vaccines than the great influenza outbreak of 2012–13.

Vaccination isn’t perfect — as we’re discovering right now. Especially with respect to influenza, which comes in a dizzying variety of flavors, a vaccine can’t prevent an outbreak every year. But vaccination has proved itself time and time again as being the most ambitious and effective solution to public-health problems that the world has ever seen. Vaccinate enough people, especially children, and you can eradicate entirely some of the world’s most lethal and devastating diseases.

As a result, it’s hard to imagine a more egregious violation of the Hippocratic oath than doing anything to violate the effectiveness of a vaccination program. Seth Mnookin has a wonderful book explaining how skepticism about vaccines is itself a kind of virus — he calls it the Panic Virus. And athough a panic virus does not need a kernel of truth at its core, such kernels are always incredibly dangerous.

Which brings me to the unconscionable behavior of Pakistani doctor Shakil Afridi, as orchestrated by the CIA:

Agents approached Afridi, the health official in charge of Khyber, part of the tribal area that runs along the Afghan border.

The doctor went to Abbottabad in March, saying he had procured funds to give free vaccinations for hepatitis B. Bypassing the management of the Abbottabad health services, he paid generous sums to low-ranking local government health workers, who took part in the operation without knowing about the connection to Bin Laden. Health visitors in the area were among the few people who had gained access to the Bin Laden compound in the past, administering polio drops to some of the children.

Afridi had posters for the vaccination programme put up around Abbottabad, featuring a vaccine made by Amson, a medicine manufacturer based on the outskirts of Islamabad.

In March health workers administered the vaccine in a poor neighbourhood on the edge of Abbottabad called Nawa Sher. The hepatitis B vaccine is usually given in three doses, the second a month after the first. But in April, instead of administering the second dose in Nawa Sher, the doctor returned to Abbottabad and moved the nurses on to Bilal Town, the suburb where Bin Laden lived.

This is horrible on three levels. First, doctors should treat disease, they shouldn’t allow themselves to be used as pawns in some counter-terrorism game, and they should never be deceptive about what they’re doing. Secondly, and much more importantly, no doctor should ever administer the first dose of a hepatitis B vaccine without then going on to administer the other two doses. That’s the worst thing you can do: it means that the vaccine is utterly ineffective, even as many families think that they’ve now been vaccinated. Thirdly, it’s very easy to draw a direct connection from Afridi’s behavior to the news that eight polio vaccinators have been murdered by militants in Pakistan.

Pakistani preachers have been saying that vaccination campaigns are a western attempt to sterilize Muslims; that’s ridiculous, of course, but the fact that the CIA has indeed used vaccination campaigns in the past, as a way to prosecute its own counter-terrorism campaigns, hardly makes it any easier for organizations like the World Health Organization and Unicef to counter the rumors.

What can the US government do about this? Not a lot, sadly. But there is one small thing, which is quite easy, and could conceivably make a real difference at the margin. Here’s Charles Kenny:

A declaration by the US that public health interventions will not be used to gather intelligence could play a vital role in tipping the balance towards successful polio eradication – and enhance US national security. Such a declaration has been proposed in a letter sent to President Obama this Monday signed by the deans of America’s top public health schools. I suggest this could be modeled on – and inserted into – Executive Order 12333 which mandates that “No element of the Intelligence Community shall sponsor, contract for, or conduct research on human subjects except in accordance with guidelines issued by the Department of Health and Human Services,” and bans engagement in or conspiracy towards assassination and actions intended to influence United States political processes, public opinion, policies, or media.

Kenny would like one extra line added to EO12333:

No person acting on behalf of elements of the Intelligence Community may join or otherwise participate in any activity directly related to the provision of child public health services on behalf of any element of the Intelligence Community.

Adding that line could do no harm, and might, conceivably, do quite a lot of good — saving the lives of children and health workers alike. Given the millions of parents who decide whether or not to vaccinate their children every year, even small things can have large potential knock-on effects. Here’s hoping the White House is listening.

COMMENT

Somewhere in my mind swims the line, “Americans want to know what is going on in the whore-house, but they won’t find out by acting like Mother Theresa.”

In an objective sense what Dr. Afridi did was wrong, but the greater good of fingering the world’s most notorious terrorist must be considered. When I was in college, I was a pacifist, convinced that we should always uphold the highest principles. In the real world, grown-ups need to make decisions in morally grey areas. Sometimes that may mean co-opting a doctor to locate a bad guy.

Societies have the morality that they can afford. The “prisoner’s dilemma” evaluated across cultures makes that clear.

Posted by Publius | Report as abusive

Let’s not worry about fake online drugs

Felix Salmon
Apr 23, 2012 14:09 UTC

Roger Bate has a curious op-ed in the NYT today. He’s the lead author on a study which bought 370 drug samples from 41 online pharmacies around the world, and then tested their authenticity. The results? With the exception of Viagra bought from non-verified websites, every single drug was 100% authentic. But you’d never guess that from his op-ed:

In 2007-8, when counterfeit versions of heparin, a blood-thinning drug, were shipped from China to the United States market, 149 people died. In the last few months, bogus versions of the cancer drug Avastin, apparently shipped from the Middle East, have surfaced in clinics in California, Illinois and Texas. Thankfully, so far as we know, they haven’t killed anyone, but more and more cases of dangerous fake drugs are being reported by the Food and Drug Administration. Numerous incidents surely go unreported, the evidence swallowed, the deaths incorrectly attributed to natural causes.

Fighting the fake drug menace is like playing whack-a-mole. It is technically illegal for individuals to order drugs online from other countries. And yet no sooner does the F.D.A. shut down one dubious online pharmacy than another pops up. According to the National Association of Boards of Pharmacy, only 3 percent of the 9,600 online pharmacies it has reviewed complied with industry standards. Many were based overseas, so their sales to Americans were illegal; others did not require doctors’ prescriptions. And some were very likely peddling dangerous counterfeit drugs.

This is all highly alarming — but also highly misleading. The “more and more cases” of fake drugs being found by the FDA? The FDA’s counterfeit medicine page lists exactly six cases in the past 24 months, of which just two — Tamflu in June 2010, and Vicodin ES in March 2012 — were linked to online pharmacies. The bogus Avastin, by contrast, was being distributed through legitimate channels by two distributors: Quality Specialty Products (QSP), a/k/a Montana Health Care Solutions, and Volunteer Distribution in Gainesboro, Tennessee. It had nothing to do with online pharmacies at all.

Realistically, the US simply doesn’t have a “fake drug menace”. Yes, fake drugs exist, and they’re not all that hard to find if you’re based in, say, Ethiopia. An earlier study by Roger Bate found that 7 of 36 drugs bought by secret shoppers in Ethiopia failed a stringent authenticity test. (On the other hand, 100% of the drugs bought in Turkey were legitimate, and Brazil, Russia, and China all performed very well in the test.)

What’s more, even if the US did have a fake drug menace, which it doesn’t, the menace would not be coming from internet pharmacies. As Bate himself has found, internet pharmacies sell authentic drugs at low prices; the only exception to this rule is unlicensed sites hawking Viagra.

But Bate doesn’t seem to believe the evidence of his own eyes. Instead, he relies on urban myths: his July 2011 paper, for instance, said in its second sentence that “according to the World Health Organization, substandard and counterfeit drugs have been found in both developed and developing countries, accounting for more than 10% of the global medicines market and over US$32 billion in annual earnings.” This is a classic bogus counterfeiting statistic: if you go to the WHO page he links to, the WHO in fact makes no such assertion at all. Instead, it attributes the factoid to the FDA, with no footnote.

I’ve been trying to track down these statistics to their source for years, and I’ve never yet found one with a solid empirical grounding. Certainly Bate’s own studies would seem to disprove this assertion, but that doesn’t stop him, in his op-ed, talking authoritatively about “criminal networks” which “launder billions in profit”. As far as I can tell, no such network has ever been identified, and while there might be billions of dollars of profit in illegal drugs, that money is much more likely to come from marijuana and cocaine than it is from fake pharmaceuticals.

And in any case, concentrating on fake drugs is itself dangerous, because it diverts resources from the real problems with US drugs — legitimate drugs where there has been either a flaw in the manufacturing process or which have degraded because they’ve been stored badly or for too much time. Fake drugs are dangerous; real drugs can actually be more dangerous, just because people aren’t nearly as worried about them.

Still, Bate does at least appreciate that if you’re buying drugs from a licensed online pharmacy, those drugs are going to be authentic. As such, he says, that behavior should not be criminal. But he’s still a very long way from the logical conclusion, which is that there should be a free market in authentic drugs:

Buying drugs online from overseas isn’t for everyone. It should remain a limited option for desperate cash buyers — sick people with limited resources and insurance coverage — not a way for well-insured patients to reduce their co-pay. American health insurance companies should not be required to reimburse consumers for these drugs, because that would effectively import foreign governments’ price controls into the United States and undermine American companies’ research and development budgets.

This really doesn’t make sense. If authentic drugs are perfectly good for “desperate cash buyers”, why can’t they be used by the rest of us with health-insurance plans? There’s no reason why I would want to reduce my co-pay when buying drugs online; I’m perfectly happy to make exactly the same co-payment when buying at a Canadian online pharmacy as I would when buying at the drugstore down the street. But my insurer would save money, and maybe, ultimately, that would reduce the total cost of healthcare and health insurance in this country.

Yes, if the cost of healthcare and health insurance comes down, that might mean — that should mean — lower profits for Big Pharma. But would lower profits mean lower R&D budgets? And would lower R&D budgets mean fewer great new drugs coming to market? No one knows; all we know for sure is that Big Pharma’s R&D expenditure is enormous, and is increasingly bad at creating great new drugs. In general, if you want to look for billions in profits, you should be looking to the big pharmaceutical companies, not mythical organized-crime syndicates. And it’s definitely worth asking why and whether we have a societal interest in protecting those profits instead of opening up the market in US pharmaceuticals to a modicum of competition.

What we’re faced with here is a tradeoff. On the one hand, there are clear financial benefits to letting Americans and American insurers buy their authentic drugs wherever those drugs are cheapest. On the other hand, there are extremely vague worries that were that to happen, some hypothetical new future drug might fail to make its way to market. Given the massive economic and fiscal costs of healthcare price inflation, it’s surely a no-brainer to go for the option which unambiguously saves money. Especially since, as Bate himself has demonstrated, the drug-safety risks of going down that road are essentially nonexistent.

COMMENT

“No one knows; all we know for sure is that Big Pharma’s R&D expenditure is enormous, and is increasingly bad at creating great new drugs.”

It is enormous taken on its own, but it’s less than half the amount Big Pharma spends on administration and marketing. And Pharma really has no desire to create new drugs, just endlessly refining what we already have, hence the amount spent on marketing. Plenty more information here.

http://mdcarroll.com/2009/10/25/explaini ng-research-drug-company-expenditures-pa rt-1/ and http://www.rxgs.com

Posted by Frank99 | Report as abusive

The most dangerous school in Los Altos

Felix Salmon
Nov 1, 2011 16:15 UTC

A week or so ago, Matt Richtel wrote a long and glowing profile of the Waldorf School of the Peninsula, looking into the apparent irony that a Silicon Valley school is decidedly low-tech; he quoted one parent, Alan Eagle, a senior Google employee, as saying that “I fundamentally reject the notion you need technology aids in grammar school”.

But there’s more to technological progress than iPads. And I wonder what Alan Eagle would say if he knew that fear of life-saving technology at the Waldorf School is exposing his children to a much-heightened risk of painful, untimely, and easily-preventable death.

Screen shot 2011-10-31 at 5.44.15 PM.png

The first thing to say about this tragic chart is that both Los Altos city and Santa Clara county have extremely low immunization rates. The right level of immunization is 100%, and rates of 90% or 94% are very dangerous indeed.

But 23% is positively evil.

This is a very dangerous level of immunization–the level where herd immunity gets lost, disease reservoirs are established, and children emerge from their school to infect infants, immunocompromised adults, and people whose vaccinations didn’t take or have waned, with potentially fatal diseases.

No responsible parent would ever let their child attend a school with a 23% immunization rate. And indeed there’s a strong case to be made that public-health officials should simply refuse to allow any such school to open its doors unless and until that rate improves. I’ll be charitable here and assume that Richtel didn’t know this number when he wrote his piece — but still, the NYT owes its readers something of an apology here for leading them to believe that there might be something admirable about this sinkhole of highly-dangerous fear and ignorance.

By far the best book on this phenomenon is The Panic Virus, by Seth Mnookin; I can highly recommend it. He tells of how when public-health officials try to work out which areas are at highest risk of fatal outbreaks, one thing they do is look at a map of Whole Food stores — it’s the crunchy-granola college-educated liberals who are by far the worst offenders when it comes to putting their own children and everybody else’s at risk. And they love to eat up pseudoscientific claptrap about “immature thymus glands” when it’s published by outlets like the Huffington Post.

It’s a statistical certainty that children die, unnecessarily, when immunization rates fall. The Los Altos parents sending their kids to the Waldorf School of the Peninsula are at best misguided and at worst downright malign. No matter how skeptical they are of technology, school administrators have an overriding moral duty to do something about this. Now.

Update: I should have put this in the original post, sorry, but the chart comes from the Bay Citizen’s immunization pages, which show that “at Waldorf School Of The Peninsula, 72.73 % of kindergartners weren’t fully immunized in the 2010-11 school year due to their parents’ personal beliefs”. The data comes from the California Department of Health.

Update 2: A fascinating comments thread, which is worth reading, or at least skimming through. Thanks in particular to LaraR, who notes that kids can’t enroll in public schools in Santa Clara unless they’re immunized. Which seems to have had the unintended consequence that parents who don’t want to immunize their kids all end up sending their kids to the Waldorf School, with potentially disastrous consequences. There’s already a pertussis epidemic in the county.

COMMENT

This article makes me really sad. Any parent can sign a waiver in the public school which allows them to enroll without immunizations. Maybe educated people are questioning the status quo. My daughter had a seizure IN MY ARMS when she was 8 weeks old…”a vaccine induced encephalopathy due to the Pertussis vaccination” they called it. Sound fun to you? I don’t vaccinate anymore. Subsequently, my kid went to a public school and then left that shame of an education system for a Waldorf School. You should concentrate your efforts on “How Public Schools are Failing to Educate our Kids and Our Country.”

Posted by OntheTrail | Report as abusive

How to lose your debt without losing your health

Felix Salmon
Oct 3, 2011 15:51 UTC

Deleveraging is painful. It’s so painful, indeed, that it can actually be lethal:

Foreclosure is not just a metaphorical epidemic, but a bona fide public health crisis…

The N.B.E.R. study found significantly more suicide attempts in high-foreclosure neighborhoods. For every 100 foreclosures, it found a 12 percent increase in anxiety-related emergency-room visits and hospitalizations by adults under 50. Losing a home disrupts social ties to neighbors, schools, jobs and health care providers — ties that under better circumstances promote good health. Neighborhoods suffer, not just homeowners.

This is a problem that’s going to get worse before it gets better. No matter how many refinancings and principal writedowns we get, the number of foreclosures is bound to rise sooner or later. There are 11 million homeowners underwater; those people have to deleverage somehow, and foreclosure is, sadly, top of the list of ways for them to do so. The only other way of getting a principal writedown, these days, is a short sale — but given how long it’s taking banks to foreclose, it makes sense to just sit in your house and wait for the bank to kick you out, rather than going to all the effort of trying to find a buyer just so that you can be forced to live elsewhere that much sooner.

I worry too about Ireland, in particular, where foreclosures haven’t even started yet, mainly because underwater homeowners there have been surprisingly diligent about making their mortgage payments. That’s partly a cultural thing, and partly a function of the fact that Irish mortgages are all recourse: if you default on your mortgage, the bank will seize essentially everything you own. But develeraging is even more necessary in Ireland than it is in the US, and again it’s hard to see how it’s going to happen without defaults and foreclosures.

The “great haircut” idea where everybody sees their debts written off simply isn’t going to happen: there’s not enough capital in the banking system, for starters. And for as long as Ireland remains in the euro, it’s hard to see how the country can deleverage through inflation. But that’s more of an option in the US — the more we inflate our way out of our excessive debt burden, the healthier we’ll all be. Literally.

COMMENT

“How does Felix feel about someone who was hardworking and carefully practiced self-denial, lived on a written budget every month for years on end and NEVER went out to restaurants or the theatre, took public transit everywhere so they could direct the money that they’d usually have to pay for auto insurance or an auto loan to savings towards their eventual down payment, and in all other respects lived frugally and saved up an amount that would normally constitute a solid 20% down payment on an affordable home during non-bubble years, but happened to be attempting to make their purchase during a bubble and was priced out of the market at the bubble housing era price levels?”

I don’t understand the point here. The frugal miser bought in the bubble years and all his hard work to save a solid 20% has been wiped out by the collapse of the bubble – so he is now 10% underwater. Without either a restructuring or inflation, he remains underwater for the next 15-20 years (the average 30 year loan doesn’t see significant principle paydowns till fairly late in the amortization curve). Keeping his zero-down neighbors out of foreclosure will prevent his property value from further eroding, leaving him deeper underwater.

Actually, inflation would be the better option for him – his home value would increase and equity would build while the over-leveraged would just break-even.

Plus I am not sure that a miserly existance, which reduces economic activity for the resteraunts, theaters and auto makers would really be that beneficial. Where does Mr Frugal Miser work? If it is in any business with actual customers, he can credit much of that 20% down to the spending of his less frugal neighbors.

Posted by Ragweed | Report as abusive

Improving America’s healthcare cost consciousness

Felix Salmon
Aug 25, 2011 17:34 UTC

If you haven’t read Sharon Begley’s wonderful Newsweek cover story on how less healthcare can mean better health, I’d urge you to do so now — it’s one of those articles where I just want to quote pretty much the entire thing. All manner of medicine, it turns out, from CT and MRI scans to antidepressants, have a habit of making people not better but worse.

The good news is that Big Medicine seems to be getting the message, and that’s having a real effect on Medicare cost inflation. Here’s Peter Orszag:

Partners HealthCare has used its health IT to be more selective about which patients should have diagnostic imaging tests, such as MRIs and CT scans. The cost to Medicare for imaging tests nationwide roughly doubled from 2001 to 2009. And such tests are not only expensive but potentially dangerous. Frequently imaged patients face an increased risk of cancer because of exposure to excessive radiation.

Doctors at Partners now order imaging scans through the computer system and are automatically queried about the patients’ characteristics. For each case, the software then provides an “appropriateness” score, reflecting evidence- based protocols for the image requested.

In a follow-up column, Orszag looks at another hospital, Mt Sinai, where he recently joined the board — a focus on reducing readmissions rates there has helped reduce its Medicare billing inflation to 2% — vastly lower than the 12% annualized inflation rate in Medicare costs that we’ve seen on average over the past 40 years or so.

The big question here, raised most promiently by Maggie Mahar, is why we’re seeing this unusual slowdown in Medicare costs right now. Mahar and Orszag say that a lot of the reason is the Affordable Care Act: a rare instance of a piece of legislation actually having its intended consequences. The act is designed to pay more for outputs and less for inputs — that is, to encourage the use of medical procedures only if they improve health outcomes, and to discourage them if they don’t.

I buy that. And if the healthcare industry broadly takes to heart the lessons of Begley’s article, then it’s easy to imagine a world where we can have our cake and eat it — lower healthcare costs (or, at least, lower healthcare-cost inflation) along with improved health outcomes.

The problem here is the incentives. From a public-policy perspective, there’s no doubt that getting doctors to order fewer harmful drugs and procedures is a really good idea. But from the point of view of the doctors and hospitals, they’re going to be leaving money on the table. Recent legislation includes some financial carrots and sticks, in a pretty well-designed manner.

Under the first stage of the HITECH Act, doctors who adopt electronic health records can receive incentive payments of as much as $44,000 from Medicare or $63,750 from Medicaid; hospitals can qualify for payments of $2 million or more. As of early August, Medicare providers had received $400 million in incentive payments for health IT, and much more is in the pipeline. Surveys suggest that while the first-stage incentives are available, at least two-thirds of American hospitals will adopt new systems.

Starting in 2015, the Medicare subsidies for adopting health IT systems are to be replaced by penalties for not doing so.

But it seems to me that the jury’s still out on whether these incentives are going to bend the famous cost curve over the medium to long run. Medical cost inflation is volatile and unpredictable, and downticks often just result in mean-reversion upticks the following year. The way to make sure these effects last is to get Begley’s message out to the population as a whole — and then to give them some amount of skin in the game when it comes to the cost of the procedures they do undergo. When people pay even a tiny amount of their direct healthcare costs, they become much more conscious of what those costs are. And the one thing this country really needs is much more cost-consciousness when it comes to healthcare.

COMMENT

@djseattle, you said what I was going to say, and more eloquently. Felix, we all have much more, ahem, money in the game than we did a decade ago. We can use the web to “educate” ourselves as consumers, but we can never be the same educated consumers as we are when buying a car. Our doctor is our personal expert, and we generally do what he/she says, and will buy all of the additional bells and whistles, even if a chunk of the cost is coming out of our pockets.

Posted by Curmudgeon | Report as abusive

The antidepressant debate

Felix Salmon
Jul 11, 2011 06:58 UTC

The NYT’s new-look Sunday Review led this weekend with a big essay by Peter Kramer, the author of Listening to Prozac. But for all its length and detail, it’s very hard to read — at many points, doing so feels like listening to one half of a telephone conversation. Which makes sense when you consider Kramer’s opening paragraphs:

In terms of perception, these are hard times for antidepressants. A number of articles have suggested that the drugs are no more effective than placebos.

Last month brought an especially high-profile debunking. In an essay in The New York Review of Books, Marcia Angell, former editor in chief of The New England Journal of Medicine, favorably entertained the premise that “psychoactive drugs are useless.” Earlier, a USA Today piece about a study done by the psychologist Robert DeRubeis had the headline, “Antidepressant lift may be all in your head,” and shortly after, a Newsweek cover piece discussed research by the psychologist Irving Kirsch arguing that the drugs were no more effective than a placebo.

I’ve included, here, all of the links that Kramer provides. Which is exactly one, to the NYT topic page on antidepressants. If you want to find Angell’s article, or the USA Today piece, or the Newsweek cover story, you’re on your own: Kramer and the NYT won’t help you. And Kramer, clinical professor of psychiatry at Brown University, takes care not to even mention part two of Angell’s two-part series, where she talks at length about how psychiatry has been captured by drug companies, who “are particularly eager to win over faculty psychiatrists at prestigious academic medical centers”. (After reading Angell’s second essay, you’ll certainly wonder why Kramer doesn’t disclose how much income he gets from pharmaceutical companies.)

In any case, if you read Kramer’s piece and wondered what on earth he was talking about, then I would highly recommend you now read Angell, both part 1 and part 2. In general, the NYRB is a bit harder to read than the NYT, but not in this case — Angell’s essays are models of clear and powerful empirically-based argument, while Kramer’s looks positively messy and incoherent in comparison.

Here, for instance, is Angell:

For obvious reasons, drug companies make very sure that their positive studies are published in medical journals and doctors know about them, while the negative ones often languish unseen within the FDA, which regards them as proprietary and therefore confidential. This practice greatly biases the medical literature, medical education, and treatment decisions.

And here’s Kramer:

Not long ago, I received disturbing news: a friend had had a stroke that paralyzed the right side of his body. Hoping to be of use, I searched the Web for a study I vaguely remembered. There it was: a group in France had worked with more than 100 people with the kind of stroke that affected my friend. Along with physiotherapy, half received Prozac, and half a placebo. Members of the Prozac group recovered more of their mobility…

Surprised that my friend had not been offered a highly effective treatment, I phoned Robert G. Robinson at the University of Iowa’s department of psychiatry, a leading researcher in this field.

Kramer knows Angell’s argument, of course — his essay is a direct response to hers. Yet he still feels comfortable cherry-picking a single obscure French study — which, again, he doesn’t link to — in order to prove that Prozac is “highly effective” in stroke victims. I would love to know what Kramer thinks of this xkcd strip; for all that Kramer complains about “the news media’s uncritical embrace of debunking studies”, the fact is that it’s the outlier studies that never get replicated which tend to get the most press.

Angell’s main argument, expounded at book length by Irving Kirsch, is that antidepressants are, amazingly, even worse than placebos; the main evidence for this is a massive database of FDA trials, which was obtained by Kirsch and his colleagues via the Freedom of Information Act. Kramer’s response to this is to say that the FDA trials are flawed, and that some large number of the subjects weren’t depressed at all.

Or, to put it another way, lots of people were diagnosed with depression and put onto a trial of antidepressant drugs, even when they were perfectly healthy. Which sounds very much like the kind of thing that Angell is complaining about: the way in which, for instance, the number of children so disabled by mental disorders that they qualify for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) was 35 times higher in 2007 than it was in 1987.

And it’s getting worse: the editors of DSM-V, to be published in 2013, have written that “in primary care settings, approximately 30 percent to 50 percent of patients have prominent mental health symptoms or identifiable mental disorders, which have significant adverse consequences if left untreated.”

Those who would defend psychopharmacology, then, seem to want to have their cake and eat it: on the one hand it seems that serious mental health disorders have reached pandemic proportions, but on the other hand we’re told that a lot of people diagnosed with those disorders never really had them in the first place.

To a first approximation, I know nothing at all about psychiatry, psychopharmacology or the optimal treatment of depression. But as a lay reader with a decent understanding of statistics and as someone whose sister is one of those very rare people whose PhD was a negative thesis, I can tell you that Angell’s articles are vastly more compelling than Kramer’s attempt at a rebuttal.

Does that mean I now believe that antidepressants do no good at all? No — as a good Bayesian, I’m not going to let a single article do that. But I was looking forward to a strong response to Angell. And the weakness of Kramer’s essay only serves to confirm my suspicions that Angell and the anti-antidepressant crowd really are onto something.

COMMENT

I have heard about this side effecst from Zoloft, but most of what I know is a few different articles but I have seen some commercial ads regarding a pharmaceutical lawsuit regarding any SSRI’s effecting a child if the mother was taking them during her pregnancy. If it is something that has impacted your family then I would suggest contacting an attorney by the name of Chad Pinkerton, I believe he is in the Webster area close to where I live. I have had the chance to see some of his previous cases and the power and enthusiastic attitude he presents is uplifting and comforting. The commercial I saw the other night for him said you can contact him at 1-855-Zoloft1. Hope this could be of some help to you.

Posted by Penelope373 | Report as abusive

How much for lifetime health insurance?

Felix Salmon
Jun 13, 2011 14:20 UTC

Caroline Graham’s interview with Bill Gates has lots of interesting nuggets, but this bit in particular, about the amount of money his children will inherit, got me thinking:

He won’t specify what they will get, but the reports that they’ll receive ‘only’ $10 million each can’t be far off, because he concedes, ‘It will be a minuscule portion of my wealth. It will mean they have to find their own way.

‘They will be given an unbelievable education and that will all be paid for. And certainly anything related to health issues we will take care of. But in terms of their income, they will have to pick a job they like and go to work. They are normal kids now. They do chores, they get pocket money.’

He is determined that his family life should be as unaffected as possible by his fortune.

It probably goes without saying that if you want your family to be unaffected by your fortune, you probably shouldn’t bring up your family in a $100 million house and invite your friend Bono to stay the night when he’s playing a local gig. And that if you have $10 million in the bank as you’re just entering the workforce, your investment income is almost certainly going to vastly exceed anything you can earn from picking up a job and going to work. So if Gates wants to force his children to “find their own way,” he’ll either have to give them much less than $10 million, or else encrust that money with so many restrictions on how it can be spent that the absolute amount doesn’t really matter anyway.

Still, the bit which stuck with me was where Gates said that “anything related to health issues we will take care of.” I have no idea where to even begin answering this question — so maybe one of my readers can help. Here goes:

How much would it cost for Bill Gates to buy a lifetime’s worth of gold-plated health insurance for one of his daughters, covering any conceivable medical expense, in full, not only for her life but also for any future spouse and all future children she may have? Assume this is a single-premium deal, where he simply writes a check today and his daughter and her hypothetical future family are covered for the rest of their lives.

While there’s a certain amount of moral hazard here — his daughter could turn out to be some kind of sanatorium addict — let’s assume for the sake of argument that the kid is perfectly healthy and well-adjusted today. If you were a big health insurer, how much would you need to charge before taking on that kind of liability?

It seems to me that this is a product which would be of interest not only to Bill Gates but also to many other high net worth individuals looking to ensure that their kids are medically looked after for as long as they live. Is the problem that it would be too expensive for even a billionaire to buy? Or is it just that no insurance company would ever dare write it?

COMMENT

Good question. A single premium health insurance policy for, say a child who turns 21. The real reason for such a policy would be to protect the fortune the child inherited. There is no need for low co-pay cover, so all that is required is catastrophic health care with a high annual deductible, say $50,000 minimum. It could be more.

We could probably price an annual catastrophic health policy today (it’s not my field) and consider the single premium policy to be little more than an annuity to make the premium payments. It’s not quite that simple since inflation, life expectancy and other factors that come into play over the expected life span need to also be factored in.

It’s a nifty idea but the market is probably not of sufficient size to be attractive to any insurer and the upfront premium is so large, given today’s interest rates, that financially savvy buyers would just as soon bear the risk themselves.

Posted by OregonJon | Report as abusive
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