Thursday, December 31, 2009

Pricing Transparency in Health Care

Matt Yglesias, normally super intelligent blogger, has made a breathtakingly stupid argument against the potential efficacy of pricing transparency in health care:

"I went to the Maine version of this idea and decided to pretend that I was living at my dad’s summer house in North Brooklin, ME and was considering my hospital options. It turns out that the closest place to get a knee MRI costs $1,550 and is a 40 minute drive to Ellsworth. There are two slightly cheaper options in Bangor—$1,159 or $1,160—but that’s more like a 75-80 minute drive. So the competition in this market is not very fierce. Bangor is the second-largest city in the state; it’s not convenient to get there from Brooklin, and even there you only have two options. Possibly not the best test case for these ideas."

An additional hour of driving would save the hypothetical patient $350. How many jobs pay you $350 per hour? Unless you work for Goldman Sachs, work for KPMG fudging Goldman Sachs books, or are a lawyer helping Goldman Sachs fudge their financial statements, very few. The problem is twofold: 1) Most people lack the information to comparison shop (health care reform should remedy this), and 2) people largely lack the incentive to use that information to economize (health care reform will not remedy this, rather it will exacerbate this trend). Presently people do not have the incentive to economize as they are not directly paying for the procedure. Rather, the insurer is paying for the procedure and then passing on the additional cost in the form of higher premiums. If people were exposed to the additional cost then they would have an incentive to economize it would drive prices down and also premiums.

Friday, December 25, 2009

How to Chase Off Foreign Investment and Destroy the Welfare of Your Nation

Hugo Chavez is threatening to instantly deport all automakers with production capacity in Venezuela if they do not immediately share their proprietary technology with local businesses. Things like this do not make for a inviting investment climate for potential new entrants and for existing companies may nullify threats of deportation as companies may decide to up and leave of their own volition. The only impetus for such idiocy in my mind would be a concerted effort on Chavez part to meet and overtake Zimbabwe's Mugabe as worst world leader.

Wednesday, December 23, 2009

Christmas Links

This is crazy, check it out. A high rise fell over intact in Shanghai.

A really interesting blog post about the future of cell phones, cell companies, and Google.

Johnathon Chait says Republicans screwed up by trying to defeat health care reform instead of influence health care reform. I agree!

Matt Yglesias agrees with Chait and makes the obvious but interesting observation that by not participating in the reform process "they gave all their leverage away to Joe Lieberman and Ben Nelson, so we wound up with some weird freebies for Nebraska." This should have been obvious to any casual observer but somehow was still lost on Mitch McConnell.

Ezra Klein channels Tom Harkin who thinks the Nelson deal (getting full federal reimbursement for Medicaid expansion) might lead to full federalization of Medicaid.

Tuesday, December 15, 2009

Auction Broadcast Spectrum

Presently broadcast television is allocated a certain/significant amount of spectrum, spectrum that could be used for other applications such as broadband. What is galling about this arrangement is that the government is conferring a scarce and hence extremely valuable resource for free. Mark Cuban suggests reclaiming the spectrum and auctioning it off. I wholeheartedly agree. In general, outside of reserving spectrum for first responders and for national security reasons I don't understand why the default presumption isn't to auction spectrum.

update: Whoops! I was hasty. Cuban also makes a good counter argument, along the lines of national security/emergency response, for why you wouldn't want to sell off spectrum. Anyhow, it's in interesting post, read it (all the way through I should say).

Friday, December 04, 2009

Tyler Cowen has a good post on the problems with mandates, namely, mandate creep:

"Breaking a three-day stalemate, the Senate approved an amendment to its health care legislation that would require insurance companies to offer free mammograms and other preventive services to women.

The vote was 61 to 39, with three Republicans joining 56 Democrats and the two independents in favor."

Tyler leaves unexplored what this means for the proposed IMAC/IMAB (the medicare board that is supposed to propose cuts which congress can vote up or down). Ezra Klein and other progressive bloggers consistently tout the IMAC as a central mechanism for cost control. That said, congress voted to include this benefit just as study was released indicating that the US's mammogram protocol is probably too extensive, and thus too expensive for the benefit conferred. Or in other words, that it doesn't pass muster with respect to comparative effectiveness. This was a controversial finding, and I don't have the capacity to know whether it is dispositive. But, it does highlight a tradeoff, the type of tradeoff that the IMAC board will be proposing, ostensibly in order to "bend the curve". To me this says, unfortunately, that the IMAC proposal has little potential of "bending the curve" as Congress will always be loathe to cut benefits (especially seniors' benefits).