Monthly Archives: January 2013

Myths, Presumptions, and Facts about Obesity

There is a very interesting article about obesity in this week’s New England Journal of Medicine. I recommend it highly to anyone interested in the topic.

K. Casazza and Others | N Engl J Med 2013;368:446-454

To tempt you to look at the full article, here is the list of what the team considers myths.

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Myths

Small sustained changes in energy intake or expenditure will produce large, long-term weight changes

Setting realistic goals in obesity treatment is important because otherwise patients will become frustrated and lose less weight

Large, rapid weight loss is associated with poorer long-term weight outcomes than is slow, gradual weight loss

Assessing the stage of change or diet readiness is important in helping patients who seek weight-loss treatment

Physical-education classes in their current format play an important role in preventing or reducing childhood obesity

Breast-feeding is protective against obesity

A bout of sexual activity burns 100 to 300 kcal for each person involved

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Read the article to learn about “presumptions” and “facts”.

#5 “Let the Children and Grandchildren Pay?”

Time to Change the Tax Discussion #5

This is the  fifth and final posting in a five part series about taxes.

Every time congress passes legislation to increase public spending, they should have to specify which taxes they favor increasing to balance the budget. If not, then congress should have to openly discuss why they believe it is appropriate to LET THE CHILDREN AND GRANDCHILDREN PAY. If every unfunded benefit increase included this selfish labeling of the congressmen who voted for it, perhaps it would make it more stigmatizing to fight unfunded wars, increase discretionary spending (e.g., disaster relief) or resist Medicare payment increases without other spending cuts or tax increases.

Case in point: as I write this blog the House is debating how large the Hurricane Sandy relief fund should be, in the neighborhood of $50 billion ($160 per American). While I favor this expenditure, but I also favor committing to how we will pay for it (even if we only start next year…) This is a large enough expense that Congress should also be committing to the tax increase that will pay for it. For example 1% more income tax on the wealthy, or eliminating one subsidy or tax subsidy would do it. Note that ObamaCare legislation was forced to do this. It is possible.

Almost every Republican in Congress has signed Grover Norquist’s No Tax Pledge not to increase any taxes, ever. This pledge is highly destructive of rational discussion of taxes and deficit reduction. I would be much happier if fiscally conservatives  instead signed a pledge not to increase our budget deficit ( and hence national debt) unless it is specifically part of an economic stimulus to deal with a potential or actual recession. Too often we have cut taxes even in times of a growing economy, effectively pushing onto our children and grandchildren (who do not even vote yet) the burden of paying for our overspending.

Increasing taxes will never be attractive, but why should we LET THE CHILDREN AND GRANDCHILDREN PAY?

Here are links to my four previous blogs on Taxes

#1 All Taxes and Budgets Should be Expressed as Dollars per Person

#2. Include Social Security and Medicare taxes when discussing tax burdens

#3 Tax Bads (or at least don’t subsidize them!)

#4 State Tax Rates are Not Related to State Income or Growth

#5 “Let the Children and Grandchildren Pay?”

#4 State Tax Rates are Not Related to State Income or Growth

Time to Change the Tax Discussion #4

This is the fourth in a five part series about taxes.

It has  become common in the media to argue that state income or sales taxes cannot be increased or it will dampen incentives and hurt the state or local economy. While this might be true at sufficiently high tax rates, there is no evidence that tax rates currently imposed on income or sales by states has any effect on the level or growth rates of the state economy. The following nine plots will let you decide for yourself whether there is any relation between

{Sales tax revenue, income tax revenue, or total state and local government revenue}

and

{Levels of Gross State Product per Capita, One year changes in Gross State Product (the “recovery”) and Ten year changes in Gross State Product per Capita)

If there is, it is a very weak relationship, not worth worrying about. Instead we should be debating whether we want more or fewer government services relative to private goods.

All data used state-level rates as stored on the  web site http://www.usgovernmentrevenue.com maintained by Christopher Chantrill, self-described “writer and conservative”.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I intentionally chose a strong title for this blog. My academic colleagues will reasonably argue that sales and income taxes DO have some dampening effect on a state economy. I do not disagree that there is some effect. But these graphs reveal that it is not detectable when it is realized that tax increases are used to pay for public services. For political decision-making, which of the following two statements is more nearly true? I would go with the latter.

Raising sales or income taxes by one percent in order to invest in bridges, public transit and education will have a meaningful negative effect on the state economy.

Raising sales or income taxes by one percent in order to invest in bridges, public transit and education will have a meaningful positive effect on the state economy.

Here are links to the previous three blogs on Taxes

#1 All Taxes and Budgets Should be Expressed as Dollars per Person

#2. Include Social Security and Medicare taxes when discussing tax burdens

#3 Tax Bads (or at least don’t subsidize them!)

#3 Tax Bads (or at least don’t subsidize them!)

Time to Change the Tax Discussion #3

This is the third in a five part series about taxes.

Introductory economics tells us that when the government taxes something, unless it is perfectly inelastically supplied or demanded, the tax will cause a distortion in a market and reduce the taxed activity. For most things (labor, profits, food, etc.) this reduction is considered a bad thing, and causes welfare losses. Yet taxes on BADS (i.e., goods with strong negative externalities) are welfare improving, since they reduce something that you want to reduce anyway.  Almost all economists will agree with this conceptually. Yet politicians and consumers are not forced to confront this reality. Perhaps economists could do a better job holding politicians accountable to this, by speaking out more. Here are six examples from recent policy debates. Why are economists not lining up behind these?

1. Tax the Sale of Guns.

The constitution asserts the right of people to own “arms” but says nothing about them being free or cheap. Econmists should favor taxing the sale of all guns, and even taxing the annual ownership of guns (similar to what we do for cars and housing) because of their large negative externalities. Higher taxes on more dangerous weapons (e.g. assault weapons), would also be appropriate. We could raise several billion dollars a year this way, and even earmark it for the extra medical care and law enforcement made necessary by the widespread ownership of guns. (In theory, I prefer not to earmark revenues, but history shows it is much easier to pass legislation if this is done, such as taxes on cigarettes. Hence in practice I support it.)

2. Tax Carbon

We will never have unanimous agreement that our excess carbon is a major cause of global warning, but we don’t need to believe this unanimously to be willing to act on it. British Columbia (Canada) implemented a carbon tax in 2008 which is raising billions of dollars while nudging people to use less fuel. Look at two recent postings here

Climate Action Through a Tax Swap Describes a currrent initiative in Washington State to implement a state carbon tax. See numerous links within it.

More on BCs carbon tax shift. Posted in 2009 this discusses the reasons for the British Columbia’s tax

3. Remove US Subsidies on Corn and Sugar

It is totally bizarre that at the same that we are thinking of taxing soft drinks for their sugar content, we are still spending billions on subsidizing corn (and hence high fructose corn syrup). US Department of Agriculture numbers show that in 2011 alone we spent 4.9 billion dollars subsidizing corn, which is  $16 per American. Visit the excellent website of  Environmental Working Group, which tracks agricultural subsidies and focus on Corn if you wish.

Remarkably, even farmers in Massachusetts benefit from the corn subsidy:

Corn Subsidies** in Massachusetts totaled $16.8 million from 1995-2011.

That works out to $4 per Massachusetts resident over 17 years. But the Massachusetts subsidy is nothing compared to Iowa which received

14.9 billion dollars ($4,866 per resident, or $286 per Iowa resident per year) over the same period. 2011 is not a particularly large outlier.

For further discussion of the serious problems with our crop insurance program consider this quote about US crop insurance.

“The most stunning evidence of the need to overhaul the current system is Dr. Babcock’s estimate that taxpayers
send $1 dollar to insurance companies and agents for every $1 dollar that goes to farmers.”

Bruce Babcock “Giving It Away free: Free Crop Insurance Can Save Money and Strengthen the Farm Safety Net”
April 2012, (Professor of Economics at Iowa State University)

http://static.ewg.org/reports/2012/farm_bill/babcock_free_crop_insurance.pdf

4. Remove subsidies on US fossil fuel production, consumption, and depletion.

This follows from point #2 above. I know it is hard to do, but so is a Carbon Tax.

The surprising reason that Oil Subsidies Persist: Even Liberals Love them. Forbes, April 25, 2012.

We should not be subsidizing oil, coal and natural gas: 15.1 billion dollars in 2010 ($48 per American in 2010), according to OECD estimates.

5. Tax (more) people who do not purchase health insurance

As a health economist, I had to add at least one health related “bad”.

The Affordable Care Act of 2010 includes provisions for taxing people who choose not to purchase health insurance, as it should, since they impose costs on the rest of us who do by: relying on charity care when they have emergency medical needs, relying on bankruptcy when they have high uninsured costs, and raising average premiums for insurance buyers since the people not buying insurance are on average healthier (and lower cost) than average. Hence this tax will be welfare improving, overall.

I thought about discussing/supporting taxes on obesity, smoking, or alcohol abuse, but see lots of problems with that, even those these are bads, often under the control of consumers.

6. Don’t subsidize war

War is bad, and has a lot of negative externalities. (Yes, there are also some benefits.) In 2013 the US will spend $902 billion  on national defense (excluding police, fire, law and prisons). That is $2863 per American in 2013 alone on “defense”. (Health and Education have mostly positive externalities.)

Brown University researchers maintain a web site on the cost of wars since 9/11

Here is one sobering sentence from a recent press release.

“The war bills already paid and obligated to be paid by the U.S. federal government as of fiscal year 2012 are $3.7 trillion in constant dollars.”

That is $11,746 per US citizen…

There are many more bads that should be taxed and not subsidized, but I will end here.

For related discussion see the earlier blogs

#1 All Taxes and Budgets Should be Expressed as Dollars per Person

#2. Include Social Security and Medicare taxes when discussing tax burdens

Letter calls for gun injury research

Colleague Austin Frakt forwarded to me the link to an open letter to VP Joseph Biden and members of the Gun Violence Commission.

http://crimelab.uchicago.edu/sites/crimelab.uchicago.edu/files/uploads/Biden%20Commission%20letter_20130110_final.pdf

The letter is signed by over 100 well-known health professionals, policymakers and economists.

The letter addresses the fact that both teh CDC and the NIH agencies are currently prohibited from funding research on the health effects of guns.

Anyone serious about wanting to understand how to control gun violence should support the letter’s two recommendations:

RECOMMENDATION ONE: We call for the removal of the current barriers to firearm-related
research, policy formation, evaluation and enforcement efforts.

RECOMMENDATION TWO: We call on the federal government to make direct investments in
unbiased scientific research and data infrastructure.

The following table in the letter tells the story clearly.

9 Branas, C., Wiebe, D., Schwab, C. & Richmond, T. (2005) Getting past the “f” word in federally funded public health research, Injury Prevention 11(3): 191.
10 http://projectreporter.nih.gov/reporter.cfm
11 Calculated updated numbers for 2002 -2012 for cholera and rabies using average case occurrences per year

Commonwealth Fund Report on Health Care Cost Control

The Commonwealth Fund has just come out with a new report outlining a strategy for containing health care costs in the US. It seems rather optimistic to me. Here is the opening two paragraphs and link.

Confronting Costs: Stabilizing U.S. Health Spending While Moving Toward a High Performance Health Care System, Authored by The Commonwealth Fund Commission on a High Performance Health System
January 10, 2013

Michael Chernew (Harvard) is the only economist on the Commission, which is mostly MDs and MBAs.

“Overview

The Commonwealth Fund Commission on a High Performance Health System, to hold increases in national health expenditures to no more than long-term economic growth, recommends a set of synergistic provider payment reforms, consumer incentives, and systemwide reforms to confront costs while improving health system performance. This approach could slow spending by a cumulative $2 trillion by 2023—if begun now with public and private payers acting in concert. Payment reforms would: provide incentives to innovate and participate in accountable care systems; strengthen primary care and patient-centered teams; and spread reforms across Medicare, Medicaid, and private insurers. With better consumer information and incentives to choose wisely and lower provider administrative costs, incentives would be further aligned to improve population health at more affordable cost. Savings could be substantial for families, businesses, and government at all levels and would more than offset the costs of repealing scheduled Medicare cuts in physician fees.” from The Commonwealth Fund Report

The heart of their analysis is in the technical report by Actuarial Research Corp.

Jim Mays, Dan Waldo, Rebecca Socarras, and Monica Brenner “Technical Report: Modeling the Impact of Health Care Payment, Financing, and System Reforms” Actuarial Research Corporation, January 10, 2013

The areas they simulate are revealed in the table of content headings. Nice recent references.

Introduction ……………………………………………………………………………………………………………………………….. 1
I. Improved Provider Payment ………………………………………………………………………………………………….. 4
II. Primary Care: Medical Homes ………………………………………………………………………………………………… 7
III. High-Cost Care Management Teams …………………………………………………………………………………….. 13
IV. Bundled Payments ……………………………………………………………………………………………………………… 16
V. Modified Payment Policy for Medicare Advantage …………………………………………………………………. 22
VI. Medicare Essential Benefits Plan ………………………………………………………………………………………….. 26
VII. Private Insurance: Tightened Medical Loss Ratio Rules ……………………………………………………………. 30
VIII. Reduced Administrative Costs and Regulatory Burden ……………………………………………………………. 32
IX. Combined Estimates …………………………………………………………………………………………………………… 35
X. Setting Spending Targets …………………………………………………………………………………………………….. 37
Appendix A. Creating the “Current Policy” Baseline ……………………………………………………………………….. 40

 

Be Ready for the Trillion Dollar Coin!

In case you have not been paying attention, there is growing sentiment in favor of the Platinum Coin Seigniorage (PCS) and the Trillion Dollar Coin.

Here are two solid posts on it, one by economist Paul Krugman, the other by Philip Diehl, former director of the US mint .

The crux of the issue is that the debt ceiling,  created by legislation of our congress, is inconsistent with the powers enumerated in the constitution, specifically the fourteenth amendment.

Be Ready To Mint That Coin

http://krugman.blogs.nytimes.com/2013/01/07/be-ready-to-mint-that-coin/?smid=tw-NytimesKrugman&seid=auto

Co-author of platinum coin law weighs in on trillion dollar coin

http://www.dailykos.com/story/2013/01/08/1177211/-Co-author-of-platinum-coin-law-weighs-in-on-trillion-dollar-coin?detail=email

Here is the relevant sentence in section 4, of the 14th amendment of the US constitution.

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

This amendment was passed in July 9, 1868 and “Section 4 confirmed the legitimacy of all United States public debt appropriated by the Congress.” Wikipedia.

Here is the Wikipedia discussion of the issue, somewhat dated.

The issue of what effect Section 4 has regarding the debt ceiling remains unsettled.[52] Legal analyst Jeffrey Rosen has argued that Section 4 gives the President unilateral authority to raise or ignore the national debt ceiling, and that if challenged the Supreme Court would likely rule in favor of expanded executive power or dismiss the case altogether for lack of standing.[53] Erwin Chemerinsky, professor and dean at University of California, Irvine School of Law, has argued that not even in a “dire financial emergency” could the President raise the debt ceiling as “there is no reasonable way to interpret the Constitution that [allows him to do so]”.[54]

 

US Cardiovascular Diseases Rates are Improving But…

I browsed to the following overview of US research on Heart, Lung, and Blood diseases in the US. This report documents the dramatic improvements in cardiovascular health in the US, which they estimate costs the US about $300 billion or about $1000 per American in 2008 (Direct of treatment and indirect costs from premature mortality).  This makes the US look good, until they compare this trend to trends in other countries, which are almost all better, and have also had large decreases in mortality from 2000 to 2008. We currently spend $3 billion per year on research on Heart, Lung and Blood diseases ($10 per American per year). Below are three figures all from this one report.

http://www.nhlbi.nih.gov/about/factbook/FactBook2011.pdf