Desperate discounts started

After the change of pharmaceutical pricing schemes in April 2012, the same product may have two prices, one for the National Health System and another for the citizen paying out of pocket. This scheme was put in place last January. Now it's a good moment to have a look at how it works.
For drugs sold on community pharmacies, NHS discounts range is 6-63%, and for specialty drugs 1-74% (!!!). You can check this statement in this table.
Does this make any sense?. I don't want to go further. I'm just confirming the situation after the regulator has paved the way: a desperate discounts process has started.

PS. Thinking critically, the former interpretation is wrong, discounts are not the issue. In order to be publicly funded, a discount gives higher satisfaction to the officials (anchoring). If this discount is confidential, still greater "satisfaction", because of fine tuning in the process of adjusting the cost per QALY to its expectations. A useless effort by the regulator (funded by our taxes), a successful effort for market access. As a citizen it is sad to be subject to such poor quality regulator, we can only expect to disconnect as soon as possible.

PS. Early impact of copayments, have a look at this post.

A healthier population (after all this years)

Enquesta de salut de Catalunya 2012. Informe dels principals resultats 

It is just a fact. The authors of The Lancet article were unable to have a look at the last Catalan Health Survey. In 2006, 78,6% of population considered their health as good, in 2012 (p54) this figure has moved up to 82,8%. The Lancet only emphasized negative issues without clear evidence. It seems that this is the selling argument of our times.
The most relevant thing from the health survey is that citizens view themselves healthier than before the recession, you'll find additional details inside the report.
However, a closer look may highlight some doubts about individual health behaviours, smoking by young people and specially the obesity epidemics. Therefore, a short applause and a clear public health alert for an improvement of health behaviours.

Internalities, habit formation and healthy individuals

Healthy Habits: Some Thoughts on The Role Of Public Policy in Healthful Eating and Exercise Under Limited Rationality

Selected statements from a chapter of new book presented recently: Behavioral Public Policy, a must read.

About unhealthy habits:

Neither self-control problems per se nor naivety about future self-control problems necessarily lead to special mistakes in light of habit formation. People over-indulge in un-healthful behaviors because of self-control problems. But it is primarily the unhealthfulness per se not the habit component that causes the problem. Self-control problems predict that people overconsume unhealthy goods and activities, but by themselves there is no simple prediction that overconsumption is worse for habit-forming goods than for non-habit-forming goods.

Message:

First, unless we believe that it is likely that people are making mistakes, the fact that some activities are habit forming does not (in any way that I can understand) heighten the case for policy intervention, regulation, or paternalism. Second, if we decide we'd like to deter some activity, we should never forget the power of prices. The most practical policy we may employ if we reach the conclusion that people are doing too much of bad habits or too little of good habits: tax or otherwise deter the bad habits, and subsidize or otherwise support the good habits. If we want to get people to do less unhealthy eating, we should make it more costly; if we want people to do more exercise, we ought to make it cheaper

Tool, a life cycle adjusted taxes on unhealthy behavior:

Instead of (say) 10% tax on unhealthy items for a persons entire life, consider heavy taxes for young people for these items, and no taxes when older, in a way calculated to leave the total tax burden the same overall if people do not change their behavior. What would happen, according to di§erent theories of motivation? If young people are acting according to fully rational models, fully realizing the habits they are forming and the costs they are incurring, then they will be made no worse off. Indeed, there is a behavioral prediction of the rational model: they will either keep consuming a lot in their youth and in their adulthood just like they did before, or they will stop in their youth and then start in their adulthood. But either way, economic theory based on full rationality says they will be just as well as before. How might people who have self-control problems or projection bias behave? The prediction is that they are very likely to decrease consumption dramatically both in their youth and thereafter. This is because the prediction of these alternative models is that those who were forming these habits when young (at least the ones who were close to indi§erent before) were not planning to do so. If people don't realize they will develop a lifelong habit as strong as they will, then they never thought they were going to pay taxes later in life just because of early consumption.

Wether this is possible to apply remains uncertain. I suggest looking at Acemoglu-Robinson paper to shed some light.

How much does healthcare cost during your life?

Estimating lifetime healthcare costs with morbidity data

We don't know when we can get an illness, how much it will cost to treat and how much time will last. Thats the rationale for being  insured. However, if you were born in 2007 your lifetime healthcare costs in Baix Empordà were 111.936 € for women and 81.566 € for men (on average and without any additional assumption about changes in unit costs). As far as this is the average, mandatory insurance allows for compensating those in ill health by those that are healthy. This is an unique efficient result, any departure from such option would require individual savings and potential debt when having an illness.
We have just published such estimation in BMC Health Services Research, those of you that follow this blog will remember this 2011 post. Lifetime health trajectories is a challenge for research, our contribution is just one of the first steps in such direction.

PS. Must read (as usual), Uwe Reinhardt blog on Angus Deaton.

PS. Economic and financial conditions are again "bubble-like.". WSJ dixit today. I agree.

PS. Toni Catany, exhibition at Galeria Trama.

Incentives and physician specialty choice

Specialty choice in times of economic crisis: a cross-sectional survey of Spanish medical students

Two opposite trends coincide, on one hand Health Policy is strengthening primary care, and on the other hand the number of students that apply for it is decreasing. The shortage of primary care practitioners should be an issue of concern for any regulator. However, current professional incentives are set up in a different opposite direction.
You'll find the details in this article. Key messages:

Results: 978 medical students (25% of the nationwide population of students in their final year)
participated. Perceived job availability had the largest impact on specialty preference. Each 10% increment in the probability of obtaining employment increased the odds of preferring a specialty by 33.7% (95% CI 27.2% to 40.5%). Job availability was four times as important as compensation from private practice in determining specialty choice (95% CI 1.7 to 6.8). We observed considerable heterogeneity in the influence of lifestyle and work hours, with students who preferred such specialties as Cardiovascular Surgery and Obstetrics and Gynaecology valuing longer rather than shorter workdays.
Conclusions: In the midst of an ongoing economic crisis, job availability has assumed critical importance as a determinant of specialty preference among Spanish medical students. In view of the shortage of practitioners of FCM, public policies that take advantage of the enhanced perceived job availability of FCM may help steer medical school graduates into this specialty.

Meanwhile, you can check today some details about  the salaries in the public sector. An this link shows how physicians are really paid in one region. The summary is that all you thought and presumably knew about it (average salaries and complements), is completely wrong when you have detailed information about individual salaries. I strongly suggest to have a look at it, and find the first primary care physician salary.

Undermining agency theory

The Rhetoric of the Economy and the Polity

Two statements from an excellent article by D. McCloskey:
 
A criticism on agency theory:

The Great Recession gave us all some perspective on how agency theory works. The deepest problem in agency theory in any of its forms (public choice, law-and-economics, finance, whatever) is the same as the problem in prudence-only political theory, subject to the Nussbaum Lemma. The theory declares that one has an “obligation” tomake profit (and further that the economic analyst has an obligation to articulate such a theory, always, and has an obligation not to talk about the ethics of  managerial or scientific obligation, since these are matters of value about which one has an obligation not to dispute). But where does the obligation come from? It comes in fact from the ethical responsibilities of a manager to her professionalism, her stewardship, her stakeholders’ interests, or her promotion of the common good. The agent is not a pure prudence-only, Max U creature after all, just as the Hobbesian selfish individual is not. In the very theory that
denies ethics to the agent, she is imagined to be driven by an ethic, albeit a tacit and abbreviated one. Kant fell into a similar self-contradiction when he claimed to base ethics on reason alone, yet gave no account of the reasons an agent would want to act on reason.

About the crisis:

If we have a crisis, it is one of ethics. Bad People (mainly Bad Men) did it. But the baddest men are the political theorists and business-school professors who recommend an approach to the politics of life that omits the virtues. Is that you, looking at yourself in the mirror?

My understanding is that we have emphasized agency teory beyond its initial purpose. The combination of agency and utilitarism forgets professionalism. I share the view of McCloskey.

PS. 30 years after Fama-Jensen famous article on separation ownership and control.

PS. Another article against agency theory.

PS. Nussbaum Lemma:  I think it implausible to suppose that one can extract justice from a starting point that does not include it in some form, and I believe that the purely prudential starting point is likely to lead in a direction that is simply different from the direction we would take if we focused on ethical norms from the start.
McCloskey interpretation: You have to put the rabbits into the hat if you are going to pull them out.

Courts as market makers

Recent decision invalidating Myriad patents has had immediate results. The market of genetic tests on breast and ovarian cancer has new entrants. The price of the test has decreased 40% (!) in just four months after the resolution. More entrants are expected in the next future for more tests.
The question is still the same, is there any clear cost-effectiveness analysis available for such tests? Why homebrew tests (LDT) are beyond any regulation? Does any regulator care about all this issues?. The answer is: up to now, we can't see any efforts. Patents create artificial monopolies, courts may create markets when invalidate patents,  but patients are concerned about health improvement and value. In an asymetric information environment, the regulator can't take permanent holidays. Overdiagnosed population doesn't necessarily mean healthier population.

 Forbes Healthcare Summit 2013

Insurance Companies Enter A New World