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July 13, 2009

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We should not forget that we only have one chance to take care of our one life and if we fail to do so, we cannot reverse everything.

Assuming that "public health care system squashes medical innovation", how does that fit with the outstanding Swedish record on the medtech field?

For that matter, Finnish exports on health technology have remained quite solid as well, and about a fifth of the exports is sold to the United States. If you're getting a digital mammography in America, chances are that the system was designed in the country that I live in.

I don't get the comments of Reynolds and McArdle. What, it would be impossible to pay research incentives under a public health care system? Private health care would inevitably disappear under a public health care system?

And their evidence consists of family stories and graphs that show increased American concern for their pets?

Or is it just that, you know, they actually believe that Americans are such morons that they won't be able to make any public health care system work? Fine by me; if you think it's too much of a challenge for you, don't try it. Perhaps it's not unreasonable to assume that the same corruption and lethargy that characterizes the American federal system of governance will inevitably spread also to the public health care sector.

Still, it's very difficult for me to understand their argument that the current arrangement, already tainted by such qualities, is not only better, but is actually keeping the Americans more wealthy and competitive. It reminds me of those early 19th century Russian pamphlets which declared that serfdom truly was a social institution par excellence.

N. B., I tend to use private services myself, but then again, I'm relatively healthy.


Cheers,

J. J.

Good points, Jussi, especially about the speciousness of the pets argument. Anyway, if you read the comment thread, it turns out that McArdle's numbers (which she didn't produce, to be fair) are probably wrong.

That said, there are several ways to test the argument being made. Simply showing that other countries have competitive medical-export industries isn't enough, since they would argue that companies from those countries are free-riding on the profits from the American market.

The first question, then, is: How much of the medical market is subject to intellectual property rights? I'm not clear, for example, that the developers of radioactive seed therapy enjoyed any financial returns from the development.

The second question is: what is the price differential for medical devices and tradable techniques across countries?

The third question is: How much of the profits of other countries' industries come from the American market?

For their argument to hold, the answers would have to be: Lots, high, and lots. Of course, even then their argument could be wrong, but if those three conditions don't hold, then AFAICT their argument is wrong. (I think.)

As it stands, it seems that they are making an argument solely about pharmaceuticals.

In addition, I'd like to reiterate that it has next to nothing to do with the current reform proposals. There is the possibility that a public plan will include some cost controls, but they will be the same ones as Medicare, and Medicare's (weak) controls have not discouraged innovation.

You can (and Bernard might, although I've found that health-care reform cuts oddly across ideological lines in the U.S.) argue that the mooted reforms shift expenditures from private to public sources, which might be unattractive to some. You can also argue that the mooted reforms do too little to control costs. But I just don't see how you can make the Reynolds-McArdle arguments in good faith about the proposals that are on the table.

P.S. The reason why I wouldn't want to predict Bernard's response is simply that the taxpayer currently winds up paying quite a bit for the uninsured. Since the "let 'em die" option isn't on the table, many independent conservatives support universal coverage, even via a public option. In fact, one very prominent member of my department has said that if it weren't for health care, he would be a Republican ... and I would venture that if you added climate change and gay marriage to that mix it would be true for almost every U.S. citizen in my department except perhaps three people. Of whom I am one.

That last should read Bernard Guerrero and David Allen and probably Doug Muir (and possibly Scott Blair) as among our regular commentators who either have conservative leanings or may have conservative leanings, but to whom I would not to impute a position on health care reform.

"A third, fourth, and fifth might be: Does Ms. McArdle really believe this argument? If so, why? And what does it have to do with any of the actual health care reforms that are on the table?"

Oh, it's pretty obvious, no? A national health care system would in effect have to ration health care. Unlike ours current system, where everybody has as much health care as they can pay for.

Reynold's post interests me, though, because... there's no real evidence to back up his argument. There's no research on innovation in other countries. There's nothing other than "My family would be dead." I'm half surprised he didn't trot out "Canada has fewer MRI machines than the city of New York."

Myself, I'm a bit leery of how the Democrats are going to pay for the plan; I know it's a small increase proportionately, but I don't see a tax hike passing at the moment. And if the GOP doesn't make sweeping gains in 2010, it will only be because the party has gone completely crazy, to judge the Sotomayor hearings.

"I will be very annoyed at my party and President should we get a bill that does not include a public option and that is not financed by a surtax on high earners like, uh ... really? ... my wife and me."

Eh. It looks to me like Obama isn't deadset on the public option, but I could be wrong.

"n fact, one very prominent member of my department has said that if it weren't for health care, he would be a Republican ... and I would venture that if you added climate change and gay marriage to that mix it would be true for almost every U.S. citizen in my department except perhaps three people"

And other than that Mr. Lincoln, how did you like the play?

Though I am curious why you think I incline conservatively.

Hey, Scott. Couple different things here, let me unpack them.

National health care and rationing: that's not true, sir. Most national health care systems don't ration: France and Switzerland would be the prime example. At the same time, there is no evidence that U.S. wait times are less than elsewhere; the reason is that AFAIK the only data on U.S. wait times comes from Medicare ... the socialized part of our health care system. (If that isn't true, I'd be interested to know.)

It is possible to national health care with no more cost controls than we currently have; if the public option fails, that's what we'll get. In addition, it's perfectly possible to have a limited national health care system (like, say, Britain or Mexico) with private insurance or fee-for-service on top of that for anyone capable of paying.

Paying for the plan: depends on what you mean by "leery." If you mean that you're unsure that the surtax can pass the Senate, I sadly agree. If you mean that you yourself think such a surtax would be a bad idea, I must respectfully disagree, although I am open to counterarguments.

Obama and public option: you may be right, in which case I'll be annoyed at the President. Why the "Eh"?

My perception of your possible conservatism: I can't say, honestly, which is why I put you as "possible." No aspersions intended.

My first reaction to your Lincoln quote was to laugh and think, "Good point." Upon reflection, though, I'd have to say that the parties in Sweden (or Canada) have serious differences, even when a basic level of universal health care and gay marriage are off the political table.

Frex: the right level of top marginal taxes, direct income redistribution policy, education policy, trade policy, energy policy (even when climate change is taken seriously), drug policy, national service policy, countercyclical fiscal policy, financial regulation, health and safety, and, of course, matters of war and peace.

Admittedly we're not in that world, but there is a lot there to disagree about even once a basic universal health insurance plan is put in place.

Right?

"Most national health care systems don't ration: France and Switzerland would be the prime example"

Hrrm. Okay, then I've been served.

Still, I guess at the end of the day I'm just puzzled at how America is managing to pay more than everybody else for what everyone seems to be frankly poor service. Is America really spending significantly more on health care than the rest of the world at the moment, or are charts like this inherently skewed in ways that aren't obvious to me?

http://media.economist.com/images/20090627/CBB677.gif

That said, I'm not opposed to higher taxes to pay for a system if it works. It's pretty clear we have to do something, after all. I just get the feeling that the administration and Democrats are very unlikely to vote to raise taxes right now, though I hope that I am wrong.

I'm not offended by the belief that I'm a conservative; I recognize that my inclinations do run that way a fair amount. It's just amused that it's apparently obvious.

"Frex: the right level of top marginal taxes, direct income redistribution policy, education policy, trade policy, energy policy (even when climate change is taken seriously), drug policy, national service policy, countercyclical fiscal policy, financial regulation, health and safety, and, of course, matters of war and peace."

Hrmm. Is there? I agree there's plenty of room for discourse, and I guess it's a failure of imagination on my part, but I have a hard time seperating the GOP stance on health care, gay marriage, and global warming from the rest of your examples. Can you really seperate health care from income redistribution in American discourse? I mean, yes, theoretically. And I'd agree that there are ots of Americans who do. But in American politics, with its two party system?

I suppose that's possible once a national health care system is in place the GOP will quickly claim how they were never opposed in theory if it's successful, but I don't think that's what you mean.

(Apologies if that seems ridiculous).

Let me question what I think is a key statement, Noel:

"Most national health care systems don't ration: France and Switzerland would be the prime example."

Don't ration what, and to whom? AFAICT, nobody spends anything near what we do on "heroic" end-of-life treatments. And judging from my experience with both of my folks and my step-father, the rationers have the right of it. I'd suggest that any workable system will end up spending a great deal more on basic preventative treatment and a lot less on "heroic" care. The net effect will be increasing popularity for GP tracks and pressure on specialist incomes and high-end equipment manufacturers and those producing drugs with only marginal improvments in performance.

Re: "undertaxed"

I read that phrase in one of your earlier posts, and I think I need further clarification. Cost/benefit basis? Actual vs. theoretical tax burden? Variance depending on who is doing the taxing and what it is being spent on?

These are not minor matters, as I think about it. I _may_ be undertaxed in terms of a specific basket of goods that I get in exchange. But there's a bunch of junk I don't care for that goes with it. Also, pirate that I am, I'm personally inclined to _remain_ undertaxed and let the incidence fall elsewhere, via back-shifting, forward-shifting, lateral shifting, geographical shifting (I'm very elastic in that respect), etc.

"Assuming that "public health care system squashes medical innovation", how does that fit with the outstanding Swedish record on the medtech field?

For that matter, Finnish exports on health technology have remained quite solid as well, and about a fifth of the exports is sold to the United States. If you're getting a digital mammography in America, chances are that the system was designed in the country that I live in."

Niche markets?

The theory, as I understand it, is that, say, high drug prices within the U.S. drive innovation. Foreign sales are merely drug companies taking advantage of low marginal costs. I have to run to a late meeting, but on its face this would seem a possible explanation for Finnish or Swedish innovation, with the roles of the domestic and foreign markets reversed. Got think about this, though, I'm writing off the cuff. Later.

For whatever it's worth, my own experiences with the Canadian health system and those of my family have been good. I admit that I may have lucked out thanks to _guanxi,_ but I think that kind of thing is true in most health care systems. Rationing hasn't impacted me, likewise wait times. (Then again, I live in Toronto, Canada's largest city, so it wouldn't so much. Different story in Atlantic Canada.)

In any case, Canada's exclusion of the possibility of private medicine makes our system probably too idiosyncratic for you. Journalist Lysiane Gagnon much prefers the French system.

http://www.fcpp.org/main/publication_detail_print.php?PubID=2646

The French system doesn't sound half-bad, actually.

http://www.medicalnewstoday.com/articles/9994.php

"The theory, as I understand it, is that, say, high drug prices within the U.S. drive innovation."

Like the high oil prices have stimulated the development of alternate energy sources?

Also, as Noel already mentioned, there's a lot more to medical innovation than simply pharmacuticals.

But assuming that the theory holds true, by the same reasoning, vaccinations should be made seriously expensive, in order to stimulate innovation. Perhaps the cheap flu shots really are the reason why it's taking so long for the CDC to come up with a specific vaccine for AH1N1?

Cheers,

J. J.

Actually, Jussi, I've heard that a very competitive (read: barely profitable) vaccine market is responsible for the relative lack of investment in both vaccine R&D and manufacturing. Purely anecdote, though the general weakness in vaccine R&D and manufacturing seems real enough: http://www.leopoldina-halle.de/easac-report06.pdf

The report doe have a box you'll find interesting for other reasons, though: "A survey by European Vaccine Manufacturers (EVM) Association of manufacturers accounting for 85% of worldwide vaccine sales (www.evm-vaccines.org) found that 90% of that production (in 2002) originated
with European companies, though Europe represents only 30% of the global market10. Half of exports were destined for humanitarian aid agencies."

Very interesting. Especially since according to what I've read, the vaccine market has steadily increased during the past years, and actually at a faster rate than the general pharmacutical market. Plus, the adult vaccine sales have also overtaken pediatric sales.

Investment, manufacturing, and research have received their share. Where do you think the new cancer vaccines are coming from?

I don't know what kind of an impact the recent recession has had on this sector, but based on the previous performance, the "barely profitable" seems like an anecdote of dubious value.

I noticed the comment "too few companies in the EU" in the report that you linked. As it is, the vaccine market of the planet has been dominated basically by a cartel of five companies, who hold that 90% of the market. No doubt an economist with the right political inclinations could also build some curious argument on this basis.

In any case, the report that you linked seems to discuss more the necessity of the EU countries to provide incentives for the domestic vaccine production, as well as the need of new research incentives to the private sector. I'm not sure how exactly you're interpreting those comments as an indication of "general weakness" of this sector. Myself, I'm interpreting the text simply as an encouragement for the EU to pursue a practical, responsible policy on this sector.


Cheers,

J. J.

I read this:

http://www.nytimes.com/2009/07/19/magazine/19healthcare-t.html?scp=1&sq=ration%20health%20care&st=cse

yesterday (Peter Singer's article on "Why we must ration health care".

Definition of undertaxed:

In static terms, that public services worth more than taxes paid, including indirect and altruistic benefits.

Dynamically speaking, when the tax changes under discussion insufficient to appreciably affect work effort or other decisions.

The second definition is much weaker and vaguer, of course, but usually more relevant.

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