Monday, September 14, 2009

Free Markets and Healthcare

After a bunch of Facebook comments back and forth an old friend of mine pointed me to this article...which presents a more market-oriented discussion of possible reforms.

It's interesting, and raises a number of good points. Goldhill's comments on the inefficiency of insurance are, of course, also the selling point for single-payer:

for every two doctors in the U.S., there is now one health-insurance employee—more than 470,000 in total. In 2006, it cost almost $500 per person just to administer health insurance. Much of this enormous cost would simply disappear if we paid routine and predictable health-care expenditures the way we pay for everything else—by ourselves.
Since these costs also go away if the insurance system is simplified. And many of the issues he discusses - IT inefficiencies, study of treatment effectiveness, etc - are in some of all of the current healthcare proposals.

But there some places where Goldhill seems off base - viewing things through a very middle-class eye. The essence of his proposal is savings accounts for health expenses, plus catastrophic insurance with a high cutoff - the current typical $2000 cutoff moved up to $50k or so. But those numbers probably soundsquite different for you and I than for most people - in the US the median household income in the US is about $50k. In fact there have been pre-tax savings accounts for a long time and I don't see they've been much of a help in limited costs.

More fundamentally, I have two misgivings about the approach. Goldhill starts off with philosophy:

based on my own work experience, I also believe that unless we fix the problems at the foundation of our health system—largely problems of incentives—our reforms won’t do much good, and may do harm. To achieve maximum coverage at acceptable cost with acceptable quality, health care will need to become subject to the same forces that have boosted efficiency and value throughout the economy. We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do ... and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy

Well and good, I suppose, but it's pretty dangerous to start with philosophy rather than actual data about what works and what doesn't. There are indeed some things governments do well, and some things they don't. But a hundred years ago, private fire companies were popular - but the US has long since gone to a government-funded model for that. If you look at the rest of the first world, every single other country has more government involvement than we do--and our current model is hardly free-market, being based heavily on tax incentives with corresponding regulations for employers. And the vast majority spend less and get results that are better than the US on most measurable dimensions.

I believe the flaw in Goldhill's free market argument is illustrated well be his examples. For Lasik surgery, an elective surgery that is seldom covered by insurance, prices have come down over the past few years, in response to market pressures. For his poor Dad's fatal infection, the final bill has an astronomical $600k+ (at least on paper). But people are just not that likely too shop around for the best price in that kind of a medical emergency - due to some combination of pain, panic or unconciousness - so here the hospital is more like a fire company than a Lasik-surgery beautification clinic.

My guess is that expenditures for these sorts of major-illness emergencies swamp the expenses that would be more sensibly allocated with better incentives. (Data, anyone?)

Goldhill admits "Some of the ideas now on the table may well be sensible in the context of our current system" and "These ideas [i.e. in Goldhill's essay] stand well outside the emerging political consensus about reform" other words, he knows he's proposing a fairly radical solution - one that hasn't been tried elsewhere. Honestly, unless you're a philosopher, who would want to take a chance like that? A more rational way of introducing more marketplace into the system would be to try some incremental ways to get more competition, say in a single US state...maybe Massachusetts?...and see how they work before trying them out at scale.

In fact I suspect that a workable government-funded portable the health care plan would be a huge boon to the free market. When a former startup I worked for went bust, I had the delightful experience of needing to find insurance for my family in a hurry (nine days, I still remember) - with no COBRA or any other backup plan to lean on. That experience was been a significant factor in subsequent job decisions I've made. It's a huge distortion of the job market when smaller companies have this sort of handicap to deal with in competing for hires. Pushing for a "free market" approach where it's not appropriate in health - at the expense of biasing the job market against startups and small companies - does not seem like a sensible tack to take.

Sunday, June 07, 2009

CMU ahead of the curve again

I just listened to Obama's speech in Cairo from last week: with all the noise about it, I haven't heard anything posted about what I thought was the most interesting bit:

And this is important because no development strategy can be based only upon what comes out of the ground, nor can it be sustained while young people are out of work. Many Gulf states have enjoyed great wealth as a consequence of oil, and some are beginning to focus it on broader development. But all of us must recognize that education and innovation will be the currency of the 21st century -- (applause) -- and in too many Muslim communities, there remains underinvestment in these areas. I'm emphasizing such investment within my own country. And while America in the past has focused on oil and gas when it comes to this part of the world, we now seek a broader engagement.

On education, we will expand exchange programs, and increase scholarships, like the one that brought my father to America. (Applause.) At the same time, we will encourage more Americans to study in Muslim communities. And we will match promising Muslim students with internships in America; invest in online learning for teachers and children around the world; and create a new online network, so a young person in Kansas can communicate instantly with a young person in Cairo.

On economic development, we will create a new corps of business volunteers to partner with counterparts in Muslim-majority countries. And I will host a Summit on Entrepreneurship this year to identify how we can deepen ties between business leaders, foundations and social entrepreneurs in the United States and Muslim communities around the world.

On science and technology, we will launch a new fund to support technological development in Muslim-majority countries, and to help transfer ideas to the marketplace so they can create more jobs. We'll open centers of scientific excellence in Africa, the Middle East and Southeast Asia, and appoint new science envoys to collaborate on programs that develop new sources of energy, create green jobs, digitize records, clean water, grow new crops. Today I'm announcing a new global effort with the Organization of the Islamic Conference to eradicate polio. And we will also expand partnerships with Muslim communities to promote child and maternal health.

This was the closing portion of the speech, so maybe everyone else flamed out with indignation at something or other before it...but it was also by far the most concrete proposal. Sounds like CMU in Qatar is way ahead of the curve here.....

Friday, June 05, 2009

Google squared

Matt Hurst published some results today of some of his own experiments with Google^2.  It's kind of interesting to compare Google^2 to SEAL, which has more limited goals (it doesn't try and find attributes).   I don't think either one is clearly superior, from my trials, but it seems like SEAL does quite well comparatively.

Matt's first query, "small boats" gives mediocre results for Google^2, but SEAL gives

which is quite decent (modulo kayak and kayaks being the same).  "Sailing boats" gives spottier results in SEAL:

SEAL's result for "netbooks" is great, except "linux" creeps in somewhere in the top 30 results...

"Scottish regions" gives mostly cities in SEAL (like in Google^2), to the extent that I can recognize what it gives.  Matt's next queries are:

Test 5: ‘british overseas territories’ – SEAL gives a very reasonable list, as does Google^2, according to Matt.

Test 6: ‘plants native to the pacific northwest’ – Matt rates Google^2 as "very poor {gardening, botany, Hardcover, Your account, Add your first tag, Share your own customer images, paperback)".  SEAL starts with "Trees, Plant nursery, Washington" and then goes downhill....but it at least knows that it didn't find much and tells you that the list has low confidence.

Test 7: ‘novels of o’brian’ – excellent results from Google^2, and mediocre low-confidence results from SEAL.

Test 8: ‘jedi masters’ – Matt's comments for Google^2 is "oops {Obi-Wan kenobi, Star Wars: The Clone Wars, Mace Windu, Star Wars Episode VI:return of the jedi, Jedi Temple, Kit Fisto, Younglings}".  SEAL gives

#Found Items
1Mace Windu
2Obi-Wan Kenobi
3Luke Skywalker
5Qui-Gon Jinn
7Shaak Ti
8Jedi Council
9Plo Koon
10Saesee Tiin

Nice, except for #8, but why is Mace-Windu first? still, this is pretty good.

Test 9: ‘movies of brad pitt’ – Google^2 gets "not bad, a reasonable list of movies with Director and Language fields. Note that it doesn’t attempt to normalize ‘USA’ and ‘United States’ suggesting that the system uses very superficial representations internally."  SEAL gets poor results, with a low-confidence warning.

Test 10: ‘progressive rock bands’ – Google^2 gets a "fail" from Matt.  SEAL gets

#Found Items
2Pink Floyd
3King Crimson
6Jethro Tull
7Gentle Giant
8Dream Theater
10Van Der Graaf Generator
13The Beatles
14Porcupine Tree
15Procol Harum
17Frank Zappa
18Led Zeppelin
20Art rock
21The Moody Blues
22Deep Purple
24Tangerine Dream
25The Mars Volta
26Punk rock
27Progressive metal
28Classical music
29The Wall
30Symphonic rock