The Voltaire of health economics

MAYNARD MATTERS
Critical Thinking on Health Policy

For any health economist, Alan Maynard is a reference. We've been reading his contributions for decades and now we can read a book (free to download) that has two parts. The first shows different views of his role on health economics and policy,  while the second is a selected collection of articles and book chapters.
I would like today to highlight what Rudolf Klein says about what he calls "The Voltaire of Health Economics":

I am sceptical about some of the claims to special policy wisdom of economists operating in
the health field. Too many, I find, seem to have a naive faith in QALYs, reflecting methodological innocence and an unreflective utilitarianism. Too many, in my view, appear to think that evidence should guide policy action in situations where only policy action can produce the evidence. Too
often I find myself bemused by statistical wizardry, wondering whether the inevitable simplifications required by modelling don’t exclude crucial dimensions of a complex world

The reasons for my admiration stem from Alan’s specialcombination of energy, moral drive and irreverence.  

Alan is a moralist. For him a failure to act on – or, if need be, generate – the evidence for a policy intervention is an ethical failure. So identifying what interventions give the “biggest bang for the buck” is the moral obligation of all policy makers. He sees a reform of the NHS, or indeed of any health care system, “as an experiment on fellow citizens”, which has to be justified and undertaken responsibly, and not on some ideological whim.

I agree absolutely on Rudolf Klein views.
In chapter 13 you'll find a book chapter "Health Economics: Has it fulfilled its
potential?" that is abstracted by the editor's with this words:

Whilst Maynard argued strongly for the importance of generating and using cost-effectiveness data in decision making, he was concerned that this had encouraged an industry of health economists rolling out economic evaluations. The victory of the health economics perspective in how to ration health care resources led to health economics becoming the slave of the cost-effectiveness industry, feeding regulators such as NICE and also the pharmaceutical and device manufacturers seeking to get their products approved and funded. This distorted the role of health economics and only used a small part of the full repertoire of perspectives and techniques that economics could apply to health and healthcare problems. He argued here that health economists need to keep a strong link with economics as a discipline and apply themselves to a wider range of problems such as supply and demand, the workforce, incentives and behaviour change, pricing and equity.

 As the front page says:

Brilliant, irreverent and almost always right – essays by a sceptical health economist who changed the way we think about policy

A must read.

PS. The best books of 2016 by FT

The two friends story

THE TWO FRIENDS WHO CHANGED HOW WE THINK ABOUT HOW WE THINK

Sunstein and Thaler provide an excellent review of a unique book by MichaelLewis in New Yorker. This is my suggestion for reading today.

Healthy lifespans are improving, do we know why?

Understanding the Improvement in Disability Free Life Expectancy In the U.S. Elderly Population

If you want to know the reason behind the improvement of healthy life expectancy in US, then you have to read this chapter.  Three fundamental conclusions:

First, we show that healthy life increased measurably in the US between 1992 and 2008. Years of healthy life expectancy at age 65 increased by 1.8 years over that time period, while disabled life expectancy fell by 0.5 years. Second, we identify the medical conditions that contribute the most to changes in healthy life expectancy. The largest improvements in healthy life expectancy come from reduced incidence and improved functioning for those with cardiovascular disease and vision problems. Together, these conditions account for 63 percent of the improvement in disability-free life expectancy. Third and more speculatively, we explore the role of medical treatments in the improvements for these two conditions. We estimate that improved medical care is likely responsible for a significant part of the cardiovascular and vision-related extension of healthy life.

And this is what I said two years ago in this post with Catalonia data:

Fortunately, new data about recent trends has been published and we can confirm that has increased over a period of 7 years, between 2005 and 2012 from 63 to 65.7 years for men and from 60.6 years  to 66.1 for women . In women the proportion of years lived in good health has gone up by 5 percentage points, from 72 to 77 % in men and has increased only one point from 81 to 82 %. In any case, in marginal and in absolute terms there is a substantial improvement . Nobody would have been able to foresee changes of this magnitude.

Unfortunately we don't know why.

PS. This is the post number 1.000 of this blog. Up to now, the visits reached 166.899. Thank you for your loyalty.

 Ramon Casas exhibition in Sitges

Simplistic arguments on healthcare cost growth

Technology Growth and Expenditure Growth in Health Care

After all these years of great recession, there is an argument that should be reviewed. There was a consensus that technology and ageing were forces that would increase costs. Today, we know that costs have stagnated and we are spending less resources over GDP than 7 years ago. Therefore, something has happened that requires an assessment. Maybe a delay on the introduction of innovation, maybe an increase in productivity, maybe a reduction in its costs/prices, we don't know it. Therefore health costs are not predestined to grow forever.
This is exactly what this article said about it:

Attributing cost growth and improvements in outcomes to “technology growth” is too simplistic and tells us little about where the cost growth is occurring, whether such growth should be tamed, and if so, how it should be done

 The key point is that U.S. growth in health care costs is neither inevitable nor necessarily beneficial for overall productivity gains. Instead, cost growth is the  aggregated outcome of a large number of fragmented decisions regarding the use and  spread of both old and new health technologies.

There is wide heterogeneity in the productivity of medical treatments, ranging from very high (aspirin for heart attacks and surfactants for premature births) to low (stents for stable angina), or simply zero (arthroscopy for osteoarthritis of the knee).

Why organizations are such a mess?

Many years ago I attended to a PhD course on Organizational Economics by Robbert Gibbons, from MIT. I still remember the title of one of his papers "Why organizations are such a mess". I found it really suggestive, because in a world of transaction costs the choice between organizations and markets is a difficult one, and Gibbons was trying to disentangle it. Later he coordinated the Handbook of Organizational Economics and contributed decisively to the development of the discipline. Last September he came back again at Universitat Pompeu Fabra and gave the annual lecture. It is an introduction to the key issues of organizational economics, highly recommended (starts at minute 12):

The farce of confidential drug prices

We are approaching the end of cost-effectiveness as we have known. If you can't use the price of the drug because it is confidential, then there is no possibility of cost-effectiveness analysis. As far as Pfizer has sued a public agency because its officials have leaked the prices, then everybody that uses such information is at risk of being sued. I had already said that some time ago, when in our country we moved to confidential prices. This trend is ridiculous, getting better discounts comes at the price of opacity. And opacity is an extraordinary arm to prevent competition and constrain prioritisation. Qui prodes? It's up to you to get the answer, for me it's clear. If money comes from taxes, the citizens have to know the final price paid. The time to finish such farce has come.

PS. On why external reference pricing is meaningless (p.36):

The practice of lowering list prices through discounts, rebates and similar financial arrangements15 between public payers and the MAH is wide-spread. 22 countries reported that discounts, rebates or similar financial arrangements (e.g. managed-entry agreements such as risk sharing schemes) – either statutory (i.e. based on a law) or confidential (based on agreements) – are in place. As will be discussed later in more detail (cf. Chapter 4.1.2), the widespread use of the discounts and similar provides financial benefits to the country using it, but the other countries referencing to that country do not benefit from the lower prices since they refer to undiscounted higher prices.

Rembrandt. Self portrait

Current exhibition in Caixaforum - Barcelona



In Memoriam of Thomas Schelling

Thomas Schelling: Game Theory, Cold War, Coordination, Leadership, Tipping, Focal point...

Eleven years ago, Thomas Schelling was awarded with the Nobel Prize, 4 days ago he died. It is not often that one man has such a profound impact on the world and the field of public policy. In this blog I have devoted some posts to him: Statistical life vs. identifiable life, Els pirates dels medicaments s'escapoleixen, Validesa i utilitat de les proves genòmiques.  Basically, all of them were related to his main contribution: The Strategy of conflict, a must read book for all people interested in negotiation. Today, the best thing you can do is to read Josep M. Colomer and his post on Schelling, it fits perfectly with his contribution and message, excellent post.

 Cubism and war. Picasso Museum exhibition in Barcelona

In search for the right approach to risk adjustment

Comparison of the Properties of Regression and Categorical Risk-Adjustment Models

Measuring risk-adjustment is crucial for avoiding risk selection incentives. Up to now, regression models have prevailed over categorical ones. However, such difference is often misunderstood or forgotten. A new article explains with all the details the comparison between both approaches.
The summary:

Regression and clinical categorical models represent very distinct approaches to risk  adjustment. Users must carefully choose the model that best suites the intended application. Although clinical categorical models have many advantages in terms of communication, transparency, and stability, their initial development requires a  significant effort and clinical input. Regression models usually require less initial development effort but are unstable in a changing environment and fail to provide the same degree of communication value and transparency

Great work by Fuller et al. Though I fully support the categorical approach, my impression is that beyond such options, there are also alternatives that may fit better with morbidity data: mixed models  (grade of membership). The following book explains the details (chap 17).

 

PS. R package

PS. Nowadays, unfortunately our government has lost its way regarding the design of the appropriate incentives in healthcare payment systems. The impact in the efficiency is huge, but nobody cares about it. There is a current effort to lie systematically in our post-truth era.

Hiding money in a neo-feudal world of concentrated wealth

The Panama Papers: Breaking the Story of How the Rich and Powerful Hide Their Money

There is a fight between State and wealthy people, and the outcome depends on the threshold of the cost-benefit of tax evasion. The Panama papers show that by now this threshold is quite low, benefits are higher than costs. My impression is that lobbys are successful in their effort to suggest rules that allow hiding money with a relatively low cost. After reading the book you'll be convinced about that. Therefore, it's a success of wealthy and a failure of the State. Is there are any alternative?

The more than 2.6 terabytes of data from the servers of the Panamanian law firm Mossack Fonseca provide an insight into the offshore world that is more detailed, immediate and up to date than anyone could have previously imagined. Over the course of many months we have seen with our own eyes how Mossack Fonseca has a tailor-made solution for virtually anyone with something to hide. The right loophole can always be found in one or other of the tax havens: if the company in the Seychelles can’t do it, then the Panamanian trust or the foundation in Bermuda probably can – or alternatively a combination of two, three or four of these elements. In our globalized world it seems there is hardly a single law that cannot be circumvented or have its impact lessened with the help of a few shell companies.

My impression is that Panama papers have increased the tax evading cost, but I'm not sure that this will be enough in our neo-feudal world of concentrated wealth.

Motivated bayesians or classical bayesians

Classical Bayesians will both seek out the most informative evidenceand process it in an unbiased way. However, motivated bayesians gather and process information before and during the decision-making process and they tend to do so in a way that is predictably biased toward helping them to feel
that their behavior is moral, honest, or fair, while still pursuing their self-interest. This is the definition in an interesting article in JEP, and this is the summary:

First, we argue that people often form self-serving judgments of what, exactly, constitutes fair or moral behavior or outcomes. When there is some flexibility in interpreting what is “right” and “wrong” or “moral” or “immoral,” people’s judgments of the morality of an act are often biased in the direction of what best suits their interests. Second, we argue that a similar but distinct phenomenon occurs when people actually alter their judgments of objective qualities—such as their own abilities or the quality of competing options—as a way of making egoistic behavior appear more moral. Finally, we argue that motivated Bayesian reasoning in moral decision making has important implications for many behaviors relevant for economics and policy. In domains including
charitable giving, corruption and bribery, and discrimination in labor markets, the ability of people to pursue egoistic objectives while maintaining a belief in their own morality has important consequences for their behavior.

We argue that an underexplored element in much of this research is the frequent tendency of decision makers to engage in motivated information processing—acting as motivated Bayesians—thereby resolving the apparent tension between acting egoistically and acting morally. Individuals’ flexibility and creativity in how they acquire, attend to, and process information may allow them to reach the desirable conclusion that they can be both moral and egoistic at the same time.

The article is full of examples and you can add more evidence with this case nowadays in the press. At the end of the article, ask yourself if you are a motivated or classical bayesian, or maybe both according to context...

PS. Must read post on private and public health in India.

Duchamp exhibition in Barcelona, until January.

Healthcare and financial markets

The next act in healthcare private equity

Mckinsey has released a short article that allows to understand recent profitability of healthcare in US financial markets. These exhibits speak by themselves: (Exhibit 1)

Exhibit (2)

and (Exhibit 3). 
Take a breath and think twice about what's going on.

Are we reaching the flat-of-the-curve medicine?

Health at a Glance: Europe 2016

Fifty years ago, Victor Fuchs wrote:

“Although many health services definitely improve health, in other cases even the best known techniques may have no effect.”

 Now this statement may seem obvious, though it requires close attention. In the late 1970's Alain Enthoven coined the expression: the-flat-of-the-curve medicine to describe the point where there is no marginal returns on health outcomes while additional resources are being spent. Some years ago, you may find a post on this in the blog.
Now OECD has released the Health at a Glance report and I would like to highlight a short comment:

Between 2010 and 2014, there have been virtually no gains in healthy life years for men and women in many EU countries. This suggests that greater efforts may be needed to prevent illness and disability and to improve the management of these conditions to reduce their disabling effects.

If this is so, then we are extending unhealthy life years, and  somebody should check precisely what's going on (p.57).

Populist health politics, the ultimate nightmare in the post-truth society

What is populism?

Nowadays populism is on the rise, unfortunately. Politicians embrace such option because we are in the post-truth society. As far as truth or facts are not relevant, populists may create false frames without any scruples. A worrying trend, and this is the reason why some people disconnect from public affairs, since it is so difficult to accept such exposure to ficticious reality. In my country, the health minister created a false frame (and he succeded on that, at least up to now). He said that he would "deprivatise" hospitals while hospital privatisation had not occurred formerly, only exceptional contracting out was necessary in certain situations with unattended demand. You can't undo what you have not done before.
Anyway, if you want to know the basis of populist strategists you should read this book :

Populism's core is a rejection of pluralism. Populists will always claim that they and they alone represent the people and their true interests. Müller also shows that, contrary to conventional wisdom, populists can govern on the basis of their claim to exclusive moral representation of the people: if populists have enough power, they will end up creating an authoritarian state that excludes all those not considered part of the proper "people." The book proposes a number of concrete strategies for how liberal democrats should best deal with populists and, in particular, how to counter their claims to speak exclusively for "the silent majority" or "the real people."

Two comments:

"Populism is not just antiliberal, it is antidemocratic—the permanent shadow of representative politics. That's Jan-Werner Müller's argument in this brilliant book. There is no better guide to the populist passions of the present."—Ivan Krastev, International New York Times
"No one has written more insightfully and knowledgeably about Europe's recent democratic decay than Jan-Werner Müller. Here Müller confronts head on the key questions raised by the resurgence of populism globally. How is it different from other kinds of politics, why is it so dangerous, and how can it be overcome? Müller's depiction of populism as democracy's antipluralist, moralistic shadow is masterful."—Dani Rodrik, Harvard University

Sadly, populism is on the right and on the left, they adopt the same strategies and they finally will undermine democracy. Now is the moment to keep away from populism, to fight against populism.

PS. In the last chapter you'll find the right strategy to fight populism, 10 actions:

6. Populists should be criticized for what they are—a real danger to democracy (and not just to “liberalism”). But that does not mean that one should not engage them in political debate. Talking with populists is not the same as talking like populists. One can take the problems they raise seriously without accepting the ways in which they frame these problems.

PS. In London Review of Books, Jan-Werner Müller says:

Populists aren’t just fantasy politicians; what they say and do can be in response to real grievances, and can have very real consequences. But it is important to appreciate that they aren’t just like other politicians, with a bit more rabble-rousing rhetoric thrown in. They define an alternative political reality in which their monopoly on the representation of the ‘real people’ is all that matters: in Trump’s case, an alt-reality under the auspices of the alt-right. At best, populists will waste years for their countries, as Berlusconi did in Italy. In the US, this will probably mean a free hand for K Street lobbyists and all-out crony capitalism (or, in the case of Trump, maybe capitalism in one family); continual attempts to undermine checks and balances (including assaults on judges as enemies of the people when they rule against what real citizens want; and life being made extremely difficult for the media); and government as a kind of reality TV show with plenty of bread and circuses. And the worst case? Regime change in the United States of America.

Genome editing: a major breakthrough in life sciences

Redesigning Life: How genome editing will transform the world

While in a previous post I claimed that genome editing could be a "weapon of mass destruction", today I would like to suggest a close look at this new book. Specifically, chapter 4, The Gene Scissors is a must read to understand the scientific revolution that's going on in life sciences.

In contrast to such limitations of traditional genetic engineering approaches the power of genome editing lies inf four key features. First, the technique can be applied to practically any cell type from any plant or animal species, ranging from bacteria to humans. Second, it can precisely target any región of genome. (...) . Third, the efficiency of gene targeting is extremely high, so no complicated drug selection to identify a one in a million event is required. Fourth, this type of genetic engineering leaves no trace of foreign DNA in the genome that is being targeted.

The tools for the newest type of genome editing are simple to prepare, being well within the power of any scientist with basic molecular biology skills, reagents and equipment.

The complexity of this new approach is explained in clear and understandable language. John Parrington has made a good job, as he did in his previous book: "The deeper genome".

PS. If you want to know the latest on the topic, check Nature: The dark side of human genome
PS. If you want to know a snake-oil seller on genome, check this. The regulator is still on vacation.

Taxing the rich to feed the leviathan (2)

Once upon a time there was a country that 2% of the population  (143.092 citizens) earned 25% of total income of the country and paid 36%% of total income tax collected by the government. More than one third of government funding coming from income tax depends on 2% of population.
Do you think is this fair?. Right now some populist and comunist parties consider that the amount collected from this 2% of population (those that earn more than 60.000€) is not enough and should be increased. Well, this is only an option. I mean, the option to increase is only one, the consequence according to Hirschman may be voting with their feed, the exit, to leave the country.
If you are really concerned about inequality, now is the time to forget any income tax increase and read Branko Milanovic or this previous post.You'll reach exactly the right conclusion, far from nowadays populism and comunism.

Being loyal to your health system

Entitats d’assegurança sanitària lliure de Catalunya 2014

Your country may have decided that publicly funded health coverage is mandatory for all citizens. Therefore, there is no opt-out posible. Your taxes or contributions will fund the system. What happens if you are not satisfied with the access or quality of services? You may complain, but unfortunately its impact will be negligible most of the times. This is the voice option in Hirschman terms. Voice is really a political and confrontational perspective, while  Exit is the alternative option.

While both exit and voice can be used to measure a decline in an organization, voice is by nature more informative in that it also provides reasons for the decline. Exit, taken alone, only provides the warning sign of decline. Exit and voice also interact in unique and sometimes unexpected ways; by providing greater opportunity for feedback and criticism, exit can be reduced; conversely, stifling of dissent leads to increased pressure for members of the organization to use the only other means available to express discontent, departure. The general principle, therefore, is that the greater the availability of exit, the less likely voice will be used.

Hirschman provides light to what is going on in our health system. Right now one fourth (24,9%, p.29) of the population has decided to "exit" the publicly funded health system. Well, really they can't exit, they pay twice, and this is the reason why it is said they have duplicate health insurance, the same services covered twice.
Hirschman  says that loyalty could reduce exit, however current health policy trends are exactly producing the opposite, reducing loyalty to the public system. And this could be the reason why every year there is an increase of departures. Well, really there are communication vessels and people switch between the systems according the services needed.
This is exactly what's going on, and somebody should ask: is this efficient in social terms?. My answer is absolutely not, you'll never pay twice if you want to buy a loaf of bread, why should be this the case for health insurance for 66% of Sarria district citizens, one third (37,5%) of Barcelona citizens or one fourth of catalan citizens?.
Beware of the warning sign of decline while health policy is encouraging hospital nationalization.

PS. Just to be clear, I'm not arguing for a formal opt-out system. It is unacceptable and outdated. I'm just asking for an efficient system that members engage in long-term loyalty relationships.

When voters do not control the course of public policy

DEMOCRACY FOR REALISTS Why Elections Do Not Produce Responsive Government

These are tough days for voters. Specially for those that believe in the folk theory of democracy -people vote according to their preferences, and governments act according to their ideological foundations. It's a good moment to retrieve the rationale for voting and I pick three statements from a book:

In the conventional view, democracy begins with the voters. Ordinary people have preferences about what their government should do. They choose leaders who will do those things, or they enact their preferences directly in referendums. In either case, what the majority wants becomes government policy— a highly attractive prospect in light of most human experience with governments. Democracy makes the people the rulers, and legitimacy derives from their consent.

Unfortunately, while the folk theory of democracy has flourished as an ideal, its credibility has been severely undercut by a growing body of scientific evidence presenting a different and considerably darker view of democratic politics. That evidence demonstrates that the great majority of citizens pay little attention to politics. At election time, they are swayed by how they feel about “the nature of the times,” especially the current state of the economy, and by political loyalties typically acquired in childhood.

We will argue that voters, even the most informed voters, typically make choices not on the basis of policy preferences or ideology, but on the basis of who they are— their social identities. In turn, those social identities shape how they think, what they think, and where they belong in the party system. But if voting behavior primarily reflects and reinforces voters’ social loyalties, it is a mistake to suppose that elections result in popular control of public policy. Thus, our approach makes a sharp break with conventional thinking. The result may not be very comfortable or comforting. Nonetheless, we believe that a democratic theory worthy of serious social influence must engage with the findings of modern social science. 

I agree absolutely with this view. A highly-recommendable book.

The times are changing back: hospital nationalization returns

Let's imagine you are the owner of a hospital. Basically you provide private care (85%) and you have a specific contract with the public sector that represents the remaining 15% of the income. One day, you wake up in the morning, turn on the radio and you hear the health minister that wants to buy the whole hospital for a price that is half the annual income. At a first glance you may think it is a joke, but what happens if it is not? Let's wait for what's going on the next days.
This signaling strategy is the most inappropriate to send if you really want a goal. The first message is: nationalization is a possible idea that a politician may set in the agenda again. The second is: a low price could induce the hospital owners to say no -the natural answer- and the minister would be happy because the responsibility of failure -ironically- wouldn't be his. The distraction manoeuvre would have ended. In such situations, strategically the best reply by the owner is just to say the hospital is not on sale.
In summary, a complete strategic mess in its goals and its means. An outdated nationalization trend could be back at least in the discourse. I hope will not succeed. Meanwhile nobody has explained the efficiency according to ownership -another signal that ideology is what counts, not efficiency. This is a greatest deception to citizens and at the same time undermines the system and its institutions. Unfortunately, the times are changing back. Something radically different should be done to improve citizen's health.

Chris Cornell "The Times They Are A-Changin' BACK"

Come gather 'round people from far & wide
Keep for yourselves while the river's run dry
And you find that your tears are getting harder to cry
There's a thirst in your soul that's invading
Start digging your wells, & fall dead in your tracks
'Cause the times, they are a changin' back

Here come bards and the bloggers, who are losing your heads
Only write by repeating what others have said
Now the ones and the zeros, they don't know how to lie
If it's written then it must be a fact
Now winners & losers are equally lost,
And the times they are a changin' back

Come presidents blue, and congressmen red
We do what's been undone and undo it again
As we carry the load for the 1%, who bought you your seat at the table
Well the wine pours red and the hearts turn black, And the times they are a changin' back

Come all you media, women and men
24 hours a day scare the shit out of them
If fear is your business then business is grand
There's always someone somewhere dying
And I know if it gets slow you'll take up the slack
Cause the times they are a changin' back

Come pass the baton in the relay of time
Where death is the only true finish line
And we look to the past or the future is blind
Are we sure that we're equal to the task
Cause I can't help but see the writing on the wall
It reads: the times they are a changin' back

PS. Bob Dylan's message to Nobel Committee after being found by Quim Monzó and Pere Gimferrer in this video:

What explains economic growth? (2)

Deirdre McCloskey presenting "How the World Grew Rich: The Liberal Idea, Not Accumulation or Exploitation" at Nobel Conference, Sept 29, 2016

PS. Quote of the day:_

What is crucial is our ability to engage in continuous conversation, testing one another, discovering our hidden presuppositions, changing our minds because we have listened to the voices of our fellows. Lunatics also change their minds, but their minds change with the tides of the moon and not because they have listened, really listened, to their friends' questions and objections.

 A.O. Rorty, "Experiments in Philosophical Genre: Descartes' Meditations," pp. 545-565 in Critical Inquiry 9: 562

PS.Economic History: Los orígenes de la industrialización catalana, o cómo Cataluña se convirtió en la pequeña Inglaterra

What explains economic growth?

Bourgeois Equality. How Ideas, Not Capital or Institutions, Enriched the World

This is the great question that Deirdre Nansen McCloskey tries to answer in her last book of the trilogy. If we want to continue to improve our living standards we should confirm that we are on the right track. And she says:

"an anti-bourgeois rhetoric, specially if combined with the logic of vested interests, has in many ocasions damaged societies"

She focuses specially on how specific places changed their views on those that create value. Part IV explains how a pro-bourgeois rhetoric was formed in England around 1700:

In other words, the attitude of medieval Europe and its church toward the bourgeoisie was nothing like entirely hostile, especially in northern Italy and in some of the ports of Iberia and the Baltic, even if it did not result in the business-dominated civilization of the southern Low Countries after 1400, and more widely Holland after 1568, and England after 1688. Barcelona, for example, was from medieval times an exception to the antibourgeois character of the rest of Spain—as in some ways it still is, and as Basque Bilbao came to be in the nineteenth century

 Realizing the potential depended on a bourgeois ideology adopted by whole societies, not merely by the bourgeoisie itself. The ideology had been foreshadowed in the Hanse towns such as Lübeck and Bergen and Danzig, and in some trading towns of southern Germany, and in the prosperous little cities of Flanders and Brabant, in Barcelona, in the Huguenot strongholds of France, and especially in the northern Italian cities such as Venice, Florence, Genoa, and the rest.

In summary, a change in ideas modified deeply wealth creation. I can't summarise 768 pages. My recommendation is to read it if you are interested in economic history. The key questions are answered there and in two previous books. You may agree or not, but persuasive style of Mccloskey is guaranteed. Some parts are repetitive and controversial, but the amount of quotes and knowledge is amazing. You'll enjoy the impressive erudition of Deirdre McCloskey.

PS. Today in the news has started a new anti-bourgeois campaign, the goal is to increase the taxes of the super-rich. It just sounds really as the opposite of what Deirdre says that has allowed us the betterment process of the last three centuries. Our economics minister is professor of economic history. It would be good that somebody gifts him the book and convinces him to read it.

PS. While I was studying my PhD, in rhetorics course, Deirdre came. I will always remember how she argued about the need to change economic methodology. Unfortunately after two decades, the academic profession has taken the opposite direction, a mathematical perspective.

PS. Eduard Bonet, from ESADE, is quoted several times in the book. I would like to acknowledge his guidance on this topic.

The coming wave of new health technologies

AHRQ Healthcare Horizon Scanning System
Report of a Pilot Project: Rapid Cost Analyses of Selected Potential High-Impact Intervention Reports

Unfortunately the US government has discontinued the Healthcare Horizon Scanning System. It was a framework to detect innovations before entering into the market. One of the last reports was on cost impact of these technologies:

We completed 53 rapid cost analyses on 55 topics over a period of 4 months from July through November 2014. The topics consisted of selected Potential High Impact  ntervention reports published in 2013 and 2014. These 55 topics had a designation of  oderate or high potential for high impact in those reports. To estimate potential costs of these new and emerging interventions, we sought to identify data on the following:  revalence of the disease or condition targeted by each intervention; actual or projected  doption of the new intervention; costs of the intervention; costs of a similar intervention; and costs of an alternative intervention used for the disease or condition

It seems that something similar is being proposed in Europe.  Let's wait and see. Meanwhile check the canadians.

 

Giacometti-Picasso, Paris Exhibition

How bad health regulation leads to unsafety medical devices in Europe

Comparison of rates of safety issues and reporting of trial outcomes for medical devices approved in the European Unión and United States: cohort study

The topic sould be at the top of health policy agenda (at least as it is in this blog). New evidence confirms the additional safety risks of european bad regulation.

In the European Union, medical devices are approved by private notified bodies if they meet performance criteria and are likely to be safe, but notified bodies generally do not require evidence of effectiveness for most devices. Many high risk devices are approved faster in the EU than in the United States, where the Food and Drug Administration usually requires prospective clinical trials of such devices.

And the results are in BMJ:

The unadjusted rate of safety alerts and recalls for devices approved first in the EU was 27% (62/232) compared with 14% (11/77) for devices approved first in the US. The adjusted hazard ratio for safety alerts and recalls was 2.9 (95% confidence interval 1.4 to 6.2) for devices approved first in the EU.

This means exactly 2.9-fold greater rate of safety alerts and recalls and a 4.6-fold greater rate of recalls than devices approved first in the US  (and if you look at the confidence intervals you'll get more worried).  How can we trust the european regulator?. For decades, European Union has leaved its citizens with less safety protection than is required for medical devices. A perfectly designed absurdity to disseminate risk for european citizens that the new proposed regulation is unable to correct.

PS. If you wnat to understand the differences between EU and US regulation, read this NEJM article or Milbank one..

Beyond the hype: the controversy over wearables

Effect of Wearable Technology Combined With a Lifestyle Intervention on Long-term Weight Loss

If you want to know if some device is effective, there is a standard way to demonstrate it: a clinical trial. This is precisely what has been done on the impact of wearables on weight loss. And the result is:

Among young adults with a BMI between 25 and less than 40, the addition of a wearable technology device to a standard behavioral intervention resulted in less weight loss over 24 months. Devices that monitor and provide feedback on physical activity may not offer an advantage over standard behavioral weight loss approaches.

That's amazing! Why is there so many articles pushing wearables for weigth loss when there are very few clinical trials, and their results are clearly against their use?. This is a marketing bubble and somebody should tell clearly that they could use wearables but for other reasons.

PS. Let's imagine that somebody wants to relate wearables for weight loss reduction with insurance premiums! Nothing to add.

The Bahama Soul Club, Cuban Tapes

European Union Health: in the middle of nowhere

Joint Report on Health Care and Long-Term Care Systems and Fiscal Sustainability

If there is an example of how one part of an organization can't speak with the other is the European Union and Health Policy. If we are talking about medical devices, health issues are at the back, industry is writing the regulations. If we are talking about options for improvement, economics unit  explains what health unit has to do. A perfectly designed mess.
Take the example of this week. A Joint report, that is an economics report with elementary mistakes for any health economist. Take this statement:

"Competition between hospital providers can lead to higher quality under strict price regulation." (p.70)

Does anybody know what does really mean strict regulation? Who is writing such things and being paid with our taxes?.
If you check another report on the topic by experts of the European Union you'll find an opposite recomendation.

"The conditions for competition to be a useful instrument vary across countries, health care subsectors and time. There is no golden rule or unique set of conditions that can be met to ensure that competition will always improve the attainment of health system goals." (p.4)

Definitely, the EU is in the middle of no judicious health policy.
In summary, an avoidable report that you can skip reading and devote your time to hearing Bob Dylan music for example, the new Nobel Prize.

 

The Times They Are A-Changin'

Bob Dylan

Come gather 'round people where ever you roam
And admit that the waters around you have grown
And accept it that soon you'll be drenched to the bone
If your time to you is worth savin'
Then you better start swimmin' or you'll sink like a stone,
For the times they are a' changin'!
Come writers and critics who prophesy with your pen
And keep your eyes wide the chance won't come again
And don't speak too soon for the wheel's still in spin
And there's no tellin' who that it's namin'
For the loser now will be later to win
For the times they are a' changin'!
Come senators, congressmen please heed the call
Don't stand in the doorway don't block up the hall
For he that gets hurt will be he who has stalled
There's a battle outside and it's ragin'
It'll soon shake your windows and rattle your walls
For the times they are a' changin'!
Come mothers and fathers throughout the land
And don't criticize what you can't understand
Your sons and your daughters are beyond your command
Your old road is rapidly agin'
Please get out of the new one if you can't lend your hand
For the times they are a' changin'!
The line it is drawn the curse it is cast
The slow one now will later be fast
As the present now will later be past
The order is rapidly fadin'
And the first one now will later be last
For the times they are a' changin'!

Written by Bob Dylan • Copyright © Bob Dylan Music Co.

A new missed opportunity

After all these years, a new proposal for regulating in vitro diagnostics and medical devices in EU is available. Current regulation was enacted in 1998, and this one could be applicable in 2022, 24 years after, pas mal for the busy politicians!.
And this is a proposal, there were previous unapproved proposals, and this one has to pass the Council and the Parliament. I will not enter into the details.
It was supposed to increase safety and efficacy, but the main problem remains with who has to enforce them. Notified bodies, a subcontracting regulatory firms network, with vested interests with industry can't claim independence. And specifically, the methods for evaluate the analytical validity, clinical validity and utility is uncertain. No regulator will confirm us that the cut-off values of diagnostic tests are set according to the best evidence and greatest benefit. In US, FDA is the responsible.
In summary, a new missed opportunity for european citizens. A greater risk and uncertain effectiveness in diagnostic tests and medical devices.

PS. The latest known example of the impact of wrong regulation is this one. Those affected can't read this blog, they are blind.

Josep Moscardó

Beyond cost-effectiveness analysis

Departures from Cost-Effectiveness Recommendations: The Impact of Health System Constraints on Priority Setting

Cost-effectiveness may be considered a focal point for health economists. However the trip from theory to implementation raises many doubts.  The reductionist perspectives of some health economists consider that politicians are rational in decision making. And this is not the case. I suggest you a look at this article:

The cost-effectiveness model generally used for the evaluation of health technologies—and health care and public health interventions more widely—has become a central tool for public-sector policy makers in many health care systems. It was developed to help decision makers with fixed public resources to compare (1) different interventions for the same health problem and (2) programs in different disease areas. For a particular level of health care resources, the goal is to
choose from among all possible combination of programs the set that maximizes total health benefits produced. The traditional CEA methods presume the existence of only one salient constraint— the public finance budget constraint. Yet all of the evidence suggests that many other constraints impinge on decision makers, at least in the short run.

A fundamental reason for the failure to implement is that CEA assumes a single constraint, in the form of the budget constraint, whereas in reality decision makers may be faced with numerous other constraints. The objective of this article is to develop a typology of constraints that may act as barriers to implementation of cost-effectiveness recommendations. Six categories of constraints are considered: the design of the health system; costs of implementing change; system interactions between interventions; uncertainty in estimates of costs and benefits; weak governance; and political constraints.

There is intelligent life beyond cost-effectiveness...

Who sets the cut-off?

The clinical benefits, ethics, and economics of stratified medicine and companion diagnostics

All what you need to know about the implications of stratified medicine, you can get it in one article. That's great. And at the same time worrying or amazing for somebody. You'll see that stratified medicine reduces the size of the market with the use of biomarkers. Than, more accuracy is more costly. However, who sets the cut-off? This is the question. Trusheim and Berndt shed light on the issue:

Setting the cut-off value for the imperfectly performing companion diagnostic presents multiple challenges to the scientist, regulator, ethicist, marketer, clinician, and payer. Scientists might seek natural break points connected to a biological mechanistic rationale, or struggle to define the proper balance between diagnostic sensitivity and specificity. Regulators might seek a division that maximizes the benefit:risk ratio with the greatest certainty. Ethicists might be concerned with issues of denying care to some or knowingly causing harm to some (statistically) to benefit others. Marketers might seek to optimize revenues by balancing efficacy improvements, and the correlated pricing and market share, with the number of eligible patients in the market. Clinicians might seek to know the likelihood that their individual patient will respond to treatment or will incur an adverse event. Payers might focus on the net clinical benefit to their specifically covered population and the overall affordability of the resulting net total outlays for the actually treated population. Although clearly having overlapping perspectives, when selecting the CDx cut-off each stakeholder brings its own unique view of the issues to emphasize and the proper metrics to optimize.

Meanwhile, you'll not be able to find any implication of the regulator on selecting the right cut-off in the new european draft rules for in vitro diagnostic tests. This is a new missed chance.

Man Ray, Hands, 1966, screenprint

Global health is getting better

Measuring the health-related Sustainable Development Goals in 188 countries: a baseline analysis from the Global Burden of Disease Study 2015

Who's affraid of economic evaluation?

El disseny institucional de l'avaluació econòmica
L'avaluació de polítiques públiques en l'àmbit sanitari: la millora de l'atenció a l’ictus a Catalunya com a exemple

Today I'll suggest a reading from the latest issue of Nota d'Economia. You'll find two articles of special interest for health economists. The first one, on institutional design will convince you that this is the tough part of the issue. Governments prefer to avoid difficult decisions, only a proper institucional design  will provide the best impact of economic evaluation. The second one is an excellent example of the impact of stroke prevention and care, or how organizational innovation may deliver social value of 372M€ in 7 years. Great, we need more initiatives like that, and studies that assess its impact.
This is the summary:

Aquest estudi mostra que després de les millores que han tingut lloc en l’atenció a l’ictus agut a Catalunya (Abilleira et al., 2009, 2011a, 2011b; Salvat-Plana et al., 2011) en el període 2005-2012 es van evitar 719 defuncions i es van guanyar 11.153 anys de vida, amb un valor social mínim de 353.164.622,08 euros (1.050.147.483,07 euros màxim). Un cop eliminat l’efecte de l’augment de la incidència, el nombre de defuncions per ictus va ser de 919 i 11.760 anys de vida guanyats, amb un valor social mínim de 372.404.624,76 euros (1.195.167.115,79 màxim)

PS. US is affraid of economic evaluation...have a look at JAMA

 Neus Martin

The anxiety of inaccuracy

Conflicting Interpretation of Genetic Variants and Cancer Risk by Commercial Laboratories as Assessed by the Prospective Registry of Multiplex Testing

What happens if "one quarter of the clinical genetic results from commercially available multiplex cancer panels and reported at the PROMPT registry had conflicting interpretations" and if "36% of conflicting genetic tests results appeared to be clinically relevant, because they were either reported as pathogenic/likely pathogenic"? Does anybody care about it?.
I would suggest today you have a look at this article and your level of anxiety will increase suddenly.

Clinical data and genetic testing results were gathered from1,191 individuals tested for inherited cancer susceptibility and self-enrolled in PROMPT between September 2014 and October 2015. Overall,participants (603 genetic variants) had a result interpreted by more than one laboratory, including at least one submitted to ClinVar, and these were used as the final cohort for the current analysis.

Of the 603 variants, 221 (37%) were classified as a variant of uncertain significance (VUS), 191 (32%) as pathogenic, and 34 (6%) as benign. The interpretation differed among reporting laboratories for 155 (26%). Conflicting interpretations were most frequently reported for CHEK2 and ATM, followed by RAD51C, PALB2, BARD1, NBN, and BRIP1. Among all participants, 56 of 518 (11%) had a variant with conflicting interpretations ranging from pathogenic/likely pathogenic to VUS, a discrepancy that may alter medical management.

Therefore, 

Clinical interpretation of genetic testing for increased cancer susceptibility as assessed by multiplex panels hinges on accurate curation and interpretation of variants. Discrepant interpretation of some genetic variants appears to be common.

Take care. The regulator remains on vacation, a never ending vacation.

PS. On genetic testing 

 Vivian Mayer

The costs of inaccuracy

The Lifetime Economic Burden of Inaccurate HER2 Testing: Estimating the Costs of False-Positive and False-Negative HER2 Test Results in US Patients with Early-Stage Breast Cancer

Diagnostic tests show different levels of false positive and negatives in the results. The impact of such unwanted results by physicians finally have an impact on health and quality of life of patients. You can check what does this means for HER-2 test in breast cancer in US in this article.

Patients with breast cancer whose tumors test positive for human epidermal growth factor receptor 2 (HER2) are treated with HER2-targeted therapies such as trastuzumab, but limitations with HER2 testing may lead to false-positive (FP) or false-negative (FN) results.

Among 226,870 women diagnosed with EBC in 2012, 3.12% (n = 7,070) and 2.18% (n = 4,955) were estimated to have had FP and FN test results, respectively. Approximately 8400 QALYs (discounted, lifetime) were lost among women not receiving trastuzumab because of FN results. The estimated incremental per-patient lifetime burden of FP or FN results was $58,900 and $116,000, respectively. The implied incremental losses to society were $417 million and $575 million, respectively.

That's a lot. Something should be done to improve accuracy in such tests. It was already known partially. Its cost-effectiveness is sensitive to HER-2 test properties.
However, as Kassirer said:

Absolute certainty in diagnosis is unattainable, no matter how much information we gather, how many observations we make, or how many tests we perform. A diagnosis is a hypothesis about the nature of a patient's illness, one that is derived from observations by the use of inference. Our task is not to attain certainty, but rather to reduce the level of diagnostic uncertainty enough to make optimal therapeutic decisions.

That's it.

Rafel Joan

The US political gridlock on cost-effectiveness

A Framework for Payer Assessment of the Value of New Technologies:A US Approach

USA is well known for its prominent interest in avoiding cost-effectiveness as we know in certain european countries. They talk about comparative effectiveness research, because it fits with their current priorities: What works best? and let's the cost for another day. Forget trade-offs.
If you want to know the recent stuff on the topic, have a look at this article. You'll notice three steps: clinical care value, managing affordability and health system value. It makes sense as a first step. In our country we don't have such official estimates. The next step should be to introduce cost and equity considerations.

Xavier Rodés

A healthcare expenditure mess, and nobody cares about it

Let's imagine an alleged State. All its citizens pay taxes under the same Tax Code. Health Benefits are the same under the Health Act. And spending on health care according to geography, can reach 52% more in Basque country compared to Andalusia. This is not new. Many decades having the same figure and nobody cares about it.

This is an easy table to understand health policy making in a failed state. Catalonia spends 4,7% of GDP on health, other sources say 5,5%. Anyway, you'll not find an OECD country with similar figures. After a decade we are spending the same amount per citizen than in 2006, 1.120 €. I will not add anything to this mess. There is only an increasing need to disconnect. Is there any MP in the room?

 

PS. I'm not arguing that every country has to spend the same, I'm just saying that it is not legally possible to deliver the same benefits with such different budgets. Therefore we are unequal before law. This is the usual legal uncertainty of a failed state.



Physicians' standards of conduct

Professing the Values of MedicineThe Modernized AMA Code of Medical Ethics

JAMA has decided to start JAMA Professionalism, a new department.

The goal of the articles in this section is to help physicians fulfill required competencies on this topic. According to the American Board of Medical Specialties definition, professionalism is “…a commitment to carrying out professional responsibilities, adherence to ethical principles and sensitivity to diverse patient populations.” Taking responsibility for executing professional responsibility seems intuitive enough. But what does it mean to adhere to ethical principles? How are the ethical principles defined? 

Good questions. And the answers for US physicians are in the new AMA Code of Medical Ethics.
A multi-year effort to modernise that has provided an interesting outcome. You can check for example, regarding prioritisation of resources, what should be done? in chapter 11 you'll find the answers. A good suggestion for our physicians' associations and their outdated codes.
 

Predictive modeling in health care (2)

Analysing the Costs of Integrated Care: A Case on Model Selection for Chronic Care Purposes

How do you want to manage, with a rearview mirror or just looking forward? Big data allows to look forward with better precision. The uncertainty about the disease and about the cost of care is large when you enter in hospital from an emergency department. But, after the diagnosis (morbidity), could we estimate how much could cost an episode?. If so, then we could compare the expected cost and the observed cost on a continous process.
Right now this is possible. Check this article that we have just published and you'll understand that costs of different services according to morbidity can be reckoned and introduced in health management. This analysis goes beyong our former article, much more general. So, what are we waiting for? Big data is knocking at the door of health care management, predictive modeling is the tool.

Amazing concert by Caravan Palace in Sant Feliu de Guixols three weeks ago.

Summer readings

FT published its list some weeks ago. Have a quick look at it, you'll find worthy material. Two selected picks:

and my recommendation:

Have a good summer!

The dark side, the conflict option

The dark side of the force

While reading today FM Alvaro op-ed on current war: Questions in a war, I thought that was good to remember Jack Hirshleifer and specifically to retrieve an excellent speech he gave in 1993: The dark side of the force. When I read it for the first time I got impressed and I've remembered forever.
Therefore, my suggestion is to read the whole speech. If you are an economist, you'll be shaken by his views. Selected statements:

“Our profession has on the whole taken not too harsh but rather too benign a view of the human enterprise. Recognizing the force of self-interest, the mainline Marshallian tradition has nevertheless almost entirely overlooked what I will call the dark side of the force—to wit, crime, war, and politics."

“cooperation, with a few obvious exceptions, occurs only in the shadow of conflict.”  “when people cooperate, it is generally a conspiracy for aggression against others (or, at least, is a response to such aggression).”

"Pareto is saying, sure, you can produce goods for the purpose of mutually beneficial exchange with  other parties—OK, that's Marshall's "ordinary business." But there's another way to get rich: you can  grab goods that someone else has produced. Appropriating, grabbing, confiscating what you want— and, on the flip side, defending, protecting, sequestering what you already have—that's economic  activity too. Take television. Cops chase robbers, victims are stalked by hitmen (or should I say  hitpersons?), posses cut off rustlers at the pass, plaintiffs sue defendants, exorcists cast spells against  vampires. What is all this but muscular economics? Robbers, rustlers, hitpersons, litigants—they're all trying to make a living. Even vampires are making economic choices: sucking blood is presumably the cost-effective way of meeting their unusual nutritional needs.”

“This is Machiavelli's version of the golden rule: he who gets to rule, will get the gold. Human history is a record of the tension between the way of Niccolo Machiavelli and what might be called the way of Ronald Coase. According to Coase's Theorem, people will never pass up an opportunity to cooperate by means of mutually advantageous exchange. What might be called Machiavelli’s Theorem states that no one will ever pass up an opportunity to gain a one-sided advantage by exploiting another party.
Machiavelli's Theorem standing alone is only a partial truth, but so is Coase's Theorem standing alone. Our textbooks need to deal with both modes of economic activity. They should be saying that decision-makers will strike an optimal balance between the way of Coase and the way of Machiavelli—between the way of production combined with mutually advantageous exchange, and the dark-side way of confiscation, exploitation, and conflict.”

"Thus, in recognizing the role of conflict we must not go overboard in the other direction. All aspects of human life are responses not to conflict alone, but to the interaction of the two great life-strategy  options: on the one hand production and exchange, on the other hand appropriation and defense against  appropriation. Economics has done a great job in dealing with the way of Ronald Coase; what we need  now is an equally subtle and structured analysis of the dark side: the way of Niccolo Machiavelli.”

The balance between these modes of economic activity--the one leading to greater aggregate wealth, and the other to conflict over who gets the wealth--provides the main story line of human history.

This speech and several articles on conflict were published in a book  "The Dark Side of the Force: Economic Foundations of Conflict Theory".
Hirshleifer analytic frame may be applied to health economics as well, specifically to such cases where fraud, inappropriateness, and false advertising are part of the dark force.




PS. Long time ago I quoted in a post the Schelling book on the same topic.