Unintended benefits

A little while ago, I was reading an AP opinion piece in the newspaper, titled Disease prevention often costs more than it saves. I was skeptical about its premise, but then I read the article, and the details bothered me more. The example used is that of relying on a personal trainer/lifestyle coach to prevent diabetes.

It's a terribly poor example, and whoever Carla Johnson is, I am sad to report that she appears to be neither a mathematician nor a health expert. True, the annual cost of diabetes is about $4100 initially (ref - note, however, that it rises over time) and we are, hypothetically, spending $5400 or $6300 a year to prevent it (note: The article says "$5400" but also says that for every person that this sort of treatment works for, it fails six others, and seven times $900 is $6300, not $5400). So on diabetes, we're saving $600-700 or so per person per year with this program, hypothetically, if each year of the program leads eventually to 1/7 of one year free from diabetes for one person.

However, the health benefits of having someone sort out your diet and exercise problems are not limited to not getting diabetes! Diabetes is the big-ticket item, sure. But is it the only thing? Obesity is linked to many other health problems. What the article author should instead be comparing is the cost of the program - which we expect would be discontinued after the first year or so if it were not making a difference - to the average increased cost of being overweight and not exercising, not just diabetes.

And then there's the other side of the question of cost effectiveness: We have not only a significant portion of the costs being repaid in saved diabetes bills, and much (quite possibly all) of the remainder being repaid in other medical bills; we have additional years of healthy productive life, fewer sick days, etc. Direct medical costs are only about half the total price tag of obesity (ref) and so, even hypothetically paying $900 a year indefinitely for personal lifestyle coaching is, on the scale of a national system, a good idea. After all, we're looking at an expected average positive payout at that point.

So the example is quite poorly considered. Is there a valid point to the op-ed piece? Well, yes. An ounce of prevention is not always worth a pound of cure, and it's worth actually checking to see if it is. But a valuable moral of the story is that you have better be very thorough in weighing the costs of everything being prevented. Narrow focus on particular kinds of costs while ignoring others is how we wound up with this system in the first place.

Sin taxes vs impact taxes

Sin taxes have bothered me for a long time. Taxing a product or behavior because it is of questionable morality or unpopular has always struck me as a heavy-handed form of social engineering and an act of political cowardice - and highly regressive. Sin taxes usually come out more heavily on the poor, who spend a greater fraction of their income on alcohol, on cigarettes, etc.

But then, there's also a compelling reason for taxing many of these things that has nothing to do with holier-than-thou punish-the-poor reasoning. The fact of the matter is that the consumption of some things has a defined impact. Take driving. There's a "social" cost several times the cost of gasoline with average automobile mileage - dimes per mile.

Same with cigarettes and alcohol. There's a measurable cost associated with the health problems that come out of cigarette smoke, there's a social cost to alcohol, and in states/countries where prostitution is legal, that, too, has a social cost. And this sort of heavy-handed social engineering not only works to cut the vices they target, these specific and targeted taxes can fund the sort of programs that would compensate for the negative social impacts.

And not only that, but many of these taxes fall far short of the actual impact. Such as gasoline taxes, which in the best of times barely cover road maintenance.

Markets want to be conservative?

The other day I said something that should strike a reader as odd: Markets want to be conservative. And in that, I did not mean "conservative" as a collection of political positions that some pundit might want to assign to the term; I mean the much older and more literal meaning of the term. The sort of market economy we have today resists some types of change.

It's not an inherent property of the market itself. It's a product of social influence. With the creation of each market, each service, each industry, a special-interest group is created. The invention of the personal automobile lead to the automotive industry - and all those involved in the manufacture, sale, and maintenance of the automobile have a vested interest in consumers using cars, and will try to influence policy to fit.

The only change that the market embraces is one that makes someone more money; privatizing prisons, for example, has backfired by creating a lobby - one with, in many cases, pre-existing ties to state legislators that landed them the contracts in the first place - with a vested interest in increasing the prison population. Insurance companies have a vested interest in preventing health care reform - because successful reforms would obliterate their bottom line.

In a land where everything is for sale - including legislative access and the publicity needed to get into office - the market provides incentives for parties to fight against change. We've seen it with the tobacco industry; we've seen it with state-run lotteries; we're seeing it now, once again, with health care. In each case, the profit motive of the private sector puts the brakes on changes in public policy.

When I look at the privatization of prisons, I am not surprised that some states may achieve short-term savings in higher efficiency operations; I am also not surprised that in the long term, it comes back to bite them in the tail, as suddenly there's a group that benefits if recidivism rises, if indeed crime rates rise, and fundamentally if prison populations rise - a motive that does not exist in a publicly run prison.

Watching health care

By now, I think the news that the US government spends more per capita on health care than some countries that do have universal coverage should be new to nobody. It's been true for quite some time.

The odd public-private loosely regulated but subsidized system we have, it almost seems designed for maximum inefficiency. There is a certain level of fixed demand that the government pays for through Medicare and Medicaid, creating a nice disconnect from competition; there is a serious informational gap between consumers and the facilitators (insurance companies), where the facilitators are considered essential. There's also the systematic denial of benefits to "risky" consumers in order to have a better margin.

Every insurer has an incentive to generate paperwork - as much as possible in order to delay payouts as long as possible or prevent them; providers want additional paperwork to help protect themselves from lawsuits - around which another insurance industry has sprung up; malpractice insurance is a major part of the cost of a practice.

And then consumers themselves are often ill-informed on actual costs and benefits of services. The cost of not getting a regular checkup gets to be quite high in the long run; saying when it exceeds the cost of getting one is a difficult calculation if you aren't trained as an actuary. So when I look at health care, I see a large collection of opaque boxes that all eat money. Even the experts can only figure out how to look at some of them.

It can be fixed many different ways - whether leaning heavily on the private sector (regulated tightly between employers and insurers with a government insurance program covering those not required to have private insurance) as in Japan, or whether working wholly through the public sector, as in Sweden, but it's going to take a dramatic change; and because markets want to be conservative, that change is going to be difficult. And it's going to kill some corporations.

But I'd rather have dead corporations and bankrupt insurers than dead people. And that's what we're getting out of it now.

Herbal remedies

I recently read a piece in the newspaper - a little AP notice saying that a decade after the government embarked on a massive effort to study herbal remedies, there has been little positive news. The "lone exception" cited in the article is the suggestion that ginger may alleviate nausea caused by chemotherapy.

But that doesn't really tell the whole scientific story of herbal remedies. Sure, the popular (and lucrative) herbal remedies have generally not lived up to their reputation in clinical studies. The placebo effect is strong with us, but seems to be the main benefit of such.

However, the herbal remedies the AP article is referring to are hardly the whole story of herbal medicine. Many herbs have potent medicinal effects affirmed by studies. Cilantro does interesting things with heavy metals; cinnamon affects blood's cholesterol and glucose balances; turmeric (the orange spice that gives curry powder and many curries their distinctive yellowness) plays a role in suppressing histamines. Garlic really does have an impact on the immune system's behavior.

Willow bark does indeed alleviate pain, and also has potentially beneficial cardiac effects - you've probably taken a concentrated form of the same chemical, marketed under the name of aspirin. Camellia sinensis and coffea arabica share a remarkable effective stimulant chemical released when parts of the plants are steeped in hot water - caffeine.

So when I read that article, I thought to myself that it overstated the case. There certainly are herbal remedies that work. There may be many, such as echinacea, which fail to live up to the hype of their fans under scientific scrutiny, but even if the government-funded studies in question picked out only one significant effect, the things you put in your food will affect the systems of your body.