Wennberg, Staiger et al on Observational Intensity Bias

This very interesting paper by John Wennberg, Doug Staiger et al develops a new approach for calibrating risk adjustment models so as to not over adjust for the higher intensity of coding that results when there are more visits. In short, in markets where doctors do more visits, they will also tend to code more diagnoses. Their approach takes into account both visits and diagnoses to improve model fit. There are many further questions one could ask, but this is destined to be an influential paper.

http://www.bmj.com/highwire/filestream/632298/field_highwire_article_pdf/0/bmj.f549

NEJM Study Says Eat Olive Oil and Nuts

There has been a lot of news recently about a NEJM randomized trial  Spanish study of diets that shows  statistically significant benefits of two Mediterranean diets, one providing free olive oil, the other providing free nuts (mostly walnuts), along with other diet recommendations.Scientists randomly assigned 7,447 men and women in Spain over age 55 who were overweight, were smokers, or had diabetes or other risk factors for heart disease to follow the Mediterranean diet or a low-fat diet as the control group. Here is the key paragraph from the NY Times.

“One group assigned to a Mediterranean diet was given extra-virgin olive oil each week and was instructed to use at least 4 four tablespoons a day. The other group got a combination of walnuts, almonds and hazelnuts and was instructed to eat about an ounce of the mix each day. An ounce of walnuts, for example, is about a quarter cup — a generous handful.”

The articles in the Times and Post have emphasized that it was the Mediterranean diet, but the following important blog from Dr. Aaron Carroll, highlights that it very likely that the effects were solely due to increased olive oil and nuts, since the three groups do not differ meaningfully in their consumption of other foods (red meat, fish, vegetables, fruit, grains, red wine, etc.).  Hence instead of saying “Go Mediterranean”, it should have said “Eat Olive Oil and Nuts” to reduce heart and stroke risks.

See table linked in this blog.

Now we’re all going Mediterranean?

http://theincidentaleconomist.com/wordpress/now-were-all-going-mediterranean/

More work should be done in this area.

Here is the full cite and abstract from the NEJM.

Primary Prevention of Cardiovascular Disease with a Mediterranean Diet

Ramón Estruch, M.D., Ph.D., Emilio Ros, M.D., Ph.D., Jordi Salas-Salvadó, M.D., Ph.D., Maria-Isabel Covas, D.Pharm., Ph.D., Dolores Corella, D.Pharm., Ph.D., Fernando Arós, M.D., Ph.D., Enrique Gómez-Gracia, M.D., Ph.D., Valentina Ruiz-Gutiérrez, Ph.D., Miquel Fiol, M.D., Ph.D., José Lapetra, M.D., Ph.D., Rosa Maria Lamuela-Raventos, D.Pharm., Ph.D., Lluís Serra-Majem, M.D., Ph.D., Xavier Pintó, M.D., Ph.D., Josep Basora, M.D., Ph.D., Miguel Angel Muñoz, M.D., Ph.D., José V. Sorlí, M.D., Ph.D., José Alfredo Martínez, D.Pharm, M.D., Ph.D., and Miguel Angel Martínez-González, M.D., Ph.D. for the PREDIMED Study Investigators

February 25, 2013DOI: 10.1056/NEJMoa1200303

http://www.nejm.org/doi/full/10.1056/NEJMoa1200303?query=featured_home#t=article

Abstract: The traditional Mediterranean diet is characterized by a high intake of olive oil, fruit, nuts, vegetables, and cereals; a moderate intake of fish and poultry; a low intake of dairy products, red meat, processed meats, and sweets; and wine in moderation, consumed with meals. In observational cohort studies and a secondary prevention trial (the Lyon Diet Heart Study), increasing adherence to the Mediterranean diet has been consistently beneficial with respect to cardiovascular risk. A systematic review ranked the Mediterranean diet as the most likely dietary model to provide protection against coronary heart disease. Small clinical trials have uncovered plausible biologic mechanisms to explain the salutary effects of this food pattern. We designed a randomized trial to test the efficacy of two Mediterranean diets (one supplemented with extra-virgin olive oil and another with nuts), as compared with a control diet (advice on a low-fat diet), on primary cardiovascular prevention.

Steve Brill Interview on the Daily Show

Steve Brill, who just wrote a 36 page article for Time Magazine, conducted an informative interview on the daily show on Thursday, Feb 21, 2013. Here is the link to the unedited version. It is in three parts, and lasts about 12 minutes (including some ads). Worth watching if you have time.

http://www.thedailyshow.com/watch/thu-february-21-2013/exclusive—steven-brill-extended-interview-pt–1

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.

___________________________

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

____________________________

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

2007-2011 MarketScan Data at Boston University

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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

 

 

 

 

 

1994 assault weapons ban may have saved 6000 lives per year

Although not a statistical statement, there is a noticeable association between when the 1994-2004 assault weapon ban was in place and the observed decline in gun-related deaths. That ban also contained other provisions that will have affected availability of guns.

A decline of more than 6000 gun-related deaths per year appears to be  associated  with that legislation before it expired. See linked picture.

 

Another articles on this issue also has compelling graphs. The title of the paper could be its abstract..

S Chapman, P Alpers, K Agho, M Jones. 2006. Australia’s 1996 gun law reforms: faster falls in firearm
deaths, firearm suicides, and a decade without mass shootings.
Injury Prevention 2006;12:365–372. doi: 10.1136/ip.2006.013714

 

Two Great Articles in the December JEL

Journal of Economic Literature, December 2012

Two great articles.

Racial Discrimination in the Labor Market: Theory and Empirics

Kevin Lang and Jee-Yeon K. Lehmann

We review theories of race discrimination in the labor market. Taste-based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread, but no existing model explains the unemployment rate differential. Models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment. At their current state of development, models of statistical discrimination based on rational stereotypes have little empirical content. It is plausible that models combining elements of the search models with statistical discrimination could fit the data. We suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy. (JEL J15, J31, J64, J71)
Wonderful synthesis from Kevin and Lehmann, a recent BU Ph.D. alum.

Full-Text Access | Supplementary Materials 

Psychologists at the Gate: A Review of Daniel Kahneman’s Thinking, Fast and Slow

Andrei Shleifer

The publication of Daniel Kahneman’s book, Thinking, Fast and Slow, is a major intellectual event. The book summarizes, but also integrates, the research that Kahneman has done over the past forty years, beginning with his path-breaking work with the late Amos Tversky. The broad theme of this research is that human beings are intuitive thinkers and that human intuition is imperfect, with the result that judgments and choices often deviate substantially from the predictions of normative statistical and economic models. In this review, I discuss some broad ideas and themes of the book, describe some economic applications, and suggest future directions for research that the book points to, especially in decision theory. (JEL A12, D03, D80, D87) 

Nice short summary of key themes from the extraordinary Kahneman book.

Full-Text Access | Supplementary Materials

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

Time to Change the Tax Discussion #2

This is the second in a five part series on Taxes.

Far too much of the discussion of tax burdens has focused on the federal income tax rates while the federal payroll taxes – Social Security and the Medicare tax – get minor attention. This was epitomized by Mitt Romney’s reference to 47 percent of Americans as not paying any taxes, when what he meant was not paying any Federal income taxes. This line of discussion ignores the fact that low income earners pay Social Security and Medicare taxes. Almost every economist would agree that these payroll taxes affect net pay and incentives in fundamentally the same way as income taxes and hence matter greatly. While true that these are earmarked taxes, they are nonetheless important contributions to federal revenue and affect deficits. In 2012 The federal income tax contributed 32 percent of total federal revenue, while social security and medicare payroll taxes contributed 23.9 percent.  Since these social insurance taxes are either proportional (Medicare tax) or regressive (SSI, since it stops after $110,000 in 2012), they substantially change the overall progressivity of the taxes. the following figure is from the Concord Coalition, based on US Treasury data.

https://spreadsheets.google.com/spreadsheet/oimg?key=0AqDf7XX8MI2BcGVxYmhHME92YWgtTXQ1bm84YTlpZkE&oid=2&zx=n74qil40ph5k

U.S. Treasury Department, Final Monthly Treasury Statement from Sept. 2012

http://www.concordcoalition.org/learn/budget/federal-budget-pie-charts

In an earlier blog (What are current marginal tax rates?), I calculated marginal tax rates for various levels of taxable income, which show that currently people earning $70,700 to $142,700 pay the highest marginal tax rates (38.1% including federal, SSI and Medicare taxes, higher if you add in Massachusetts income taxes).Warren Buffett basically referred to this same phenomenon when he said that his secretary paid higher taxes than he does on earned income.

Allowing the Bush tax cuts to expire will return those earning over $388,350 to paying the highest marginal rates (43.4% including the Medicare and ACA taxes).

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

 

All Taxes and Budgets Should be Expressed as Dollars per Person

Time to change the discussion #1

This is the first of five posts on my blog on how discussion of taxes and budgets in the US needs to change to improve decision-making.

Recent political debate and the media throws around costs of millions, billions and trillions of dollars even though there is no easy way for an ordinary citizen to evaluate the meaning of these terms. All of these are very big numbers. Consider the following numbers, sorted from largest to smallest. Which ones should we be worrying about?

Sample of recent numbers in the news (or that should be there)

$16.4 trillion US National Debt [1]

$3.7 trillion Total cost of wars in Iraq, Afghanistan and Pakistan [Reuters,2]

$1.2 trillion Size of tax increases and budget cuts in the fiscal cliff [3]

$1.1 trillion Federal deficit for 2012 [4]

$849 billion What is at stake in the Bush-era tax cuts for the wealthy, those earning more than $250,000, over ten years. [ABC news,5]

$ 807 billion The US government’s estimate of the direct cost of the war in Iraq thru FY2012. [6]

$ 571 billion The US government’s estimate of the direct cost of the war in Afghanistan and Pakistan thru FY2012 [6]

$ 100 billion Cost of the Iraq war that was used in discussions just before attacking Iraq [7]

$ 1.4 billion Financial spending for all presidential candidates, 2011-2012. [8]

$ 446 million The FY2013 annual budget for the Corporation for Public Broadcasting. [9]

$192 million The cost of the 2010 Newton North High School serving half of the Newton MA population [10]

$  83 million Campaigning expenses, all candidates including outside spending, on Elizabeth Warren vs. Scott Brown Massachusetts Senate race, 2012. [11]

$ 11 million Proposed tax override for Newton MA in 2013 to pay for schools [12]

$ 54,000 Cost of running the March special election to vote on the Newton override. [13]

The relevant populations

US population: 315 million people

MA population:  6.6 million

Newton population:  86,000 (half served by Newton North High School, the other by Newton South High School.)

Costs revisited with Ellis commentary

 

$ 52,000                US National Debt per Person -    High, but can be reduced if we try hard.

$12,000                 Total cost of wars in Iraq, Afghanistan and Pakistan per Person Not worthwhile to me, and 23% of our total US debt!

$ 3,800                  Per person size of the 2013 fiscal cliff, in taxes and reduced spending.

$ 3,500                  Extra cost per person per year to eliminate the federal deficit for 2012. Although similar to the preceding, note that this is for one year, while the above is over ten years… Even jumping over this cliff does not eliminate our deficit.

$ 2,700                  Ten-year cost per person of the Bush-era tax cut on those earning more than $250,000. A lot is at stake here, not small change.

$ 270 Average per year cost per person of Bush-era tax cut on >$250k Doesn’t look like such a big number, and this is how much it reduces our per person annual deficit.

$13,500 Average per year cost per wealthy person (top 2%) of Bush-era tax cuts. Recall that the average income of this group is way higher than $250k

$ 2,600                  The official direct cost per person of the war in IraqWhy isn’t there more discussion of this?

$ 1,800                  Cost per person of the Afghanistan war. Maybe Afghan was worthwhile, but I doubt it.

$   317                    Initial cost per person of the Iraq war used in selling it to the public. How could we have been so wrong?

$       4                    Cost per person of the US presidential campaign. Maybe higher than I wish, but it is not going to break our budgets. Plus it is all voluntary, unlike the taxes.

$       1                    Cost per person of federal funding of public TV and radio. A small portion of their total budget. Why are we talking about this at all?

$4,500                   Cost per Newton resident of the Newton North High School. High, but I bet we more than made it back in increased property values. Even ignoring that more than half was funded by the state, if there are 4 people per household, then this is only 2.6% of median property value in Newton.

$    13                     Cost per Massachussetts resident of the 2012 Senate race. Seems reasonable expense for making big decisions. Plus it only happens every six years for each senate race, so only $2 per year per person.

$  128                     Cost per Newton resident per year of proposed tax override to help pay for schools. Definitely affordable.

$       .62                 Per person cost of running Newton’s March special election. Should not have even made the papers. Informed decision-making costs money.

Lessons

Big cost numbers are easier to understand when expressed as a cost per person.

Some big numbers don’t look very scary. Others look worse.

The numbers that get a lot of play in the media are not necessarily the right numbers.

Thought to Ponder: Why is it that almost no one in Newton is worried about having incurred a debt for one school in the amount of $4500 per resident, while citizens, and our Congress in particular, seems paralyzed to contemplate reducing our federal debt by a similar amount?

Citations

[1]  http://www.brillig.com/debt_clock/

[2] Reuter. 2012. Cost of war at least $3.7 trillion and counting.  http://www.reuters.com/article/2011/06/29/us-usa-war-idUSTRE75S25320110629 based on estimates from “Cost of War at http://costofwar.com/ which is sponsored by the National Priorities Project.

[5] http://abcnews.go.com/Politics/fiscal-cliff-bush-tax-cuts-expire/story?id=17907791#.UMnzFXfgztE

[4] http://www.gpo.gov/fdsys/search/pagedetails.action?packageId=BUDGET-2012-BUD

[5] http://abcnews.go.com/Politics/fiscal-cliff-bush-tax-cuts-expire/story?id=17907791#.UMoiRnfgztE

[6] Congressional Research Service, 2011. The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11. http://www.fas.org/sgp/crs/natsec/RL33110.pdf updated continually at “Cost of War at http://costofwar.com/.

[7] Tom Russert Interview with Vice-President Dick Cheney, “NBC News’ Meet the Press,” Transcript for March 16, 2003.https://www.mtholyoke.edu/acad/intrel/bush/cheneymeetthepress.htm

[8] Center for Responsive Politics, 2012.Most Expensive Races 2012 Overview

http://www.opensecrets.org/overview/index.php and

[9] Corporation for Public Broadcasting. 2012 Fiscal Year 2013 Operating Budget. http://www.cpb.org/aboutcpb/financials/budget/

[10] Newton Tab. 2012. Newton North High School final cost $6M less than expected. http://www.wickedlocal.com/newton/news/x1334618956/Newton-North-High-School-final-cost-6M-less-than-expected#ixzz2EwkW8uLrhttp://www.wickedlocal.com/newton/news/x1334618956/Newton-North-High-School-final-cost-6M-less-than-expected#axzz2EwkHptlI

[11] Center for Responsive Politics, 2012.Most Expensive Races 2012 Overview http://www.opensecrets.org/overview/topraces.php?cycle=2012&display=allcandsout

[12] http://www.newtonma.gov/gov/executive/override.asp

[13] Newton Tab, December 12, 2012. Table showing breakdown of the various costs of the special election in March, 2013 on the override.

HCC risk adjustment formulas for ACA Exchanges

HHS announced the new risk adjustment formulas proposed for the ACA Health Insurance Exchanges on December 7, 2012.
Here is the citation and direct link.
Department of Health and Human Services. HHS Benefit and Payment Parameters for 2014, and Medical Loss Ratio. 2012 [Dec 7 2012]. Available from: http://www.gpo.gov/fdsys/pkg/FR-2012-12-07/pdf/2012-29184.pdf
Focus only on the first 33 pages for teh Risk adjustment system.
Summary:
This proposed regulations provides details on the risk adjustment formula that is proposed for the Federal and STate Health insurance exchanges. At its heart is an HCC model similar to the Medicare 100 condition HCC model. Innovations are that it has separate models for four metal levels (bronze, silver, gold, platinum), it uses a concurrent rather than prospective framework, it has separate models for infants, children and adults. It was estimated at RTI using Truven Health Analytics 2010 MarketScan® data, which we also have licensed at Boston University for research use. The rules are a painful 373 pages long. Focus on pages 1-33 for an overview of the RA approach.
Other NPRM (=Notice of Proposed Rule Making) for regulations of the ACA are the following.
EHB/AV (Essential Health Benefits/Actuarial Value) NPRM:
Summary: http://www.healthcare.gov/news/factsheets/2012/11/ehb11202012a.html
Citation: US National Archives and Records Administration. 2012. Code of Federal Regulations. Title 45. Patient Protection and Affordable Care Act; Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation; Proposed Rule. [Available at: http://www.regulations.gov/#!documentDetail;D=CMS-2012-0142-0001]

Discussion: The rule discusses accreditation of health plans in a federally-facilitated or state-federal partnership exchange. States that plans offered inside and outside of the exchange must offer a core package of benefits including the following: Ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative services, lab services, preventive and wellness services and chronic disease management, and pediatric services.

The rule also specifies options for each state’s “benchmark” plan. Plans must offer coverage greater than or equal to that offered by the benchmark plan.

The rule also specifies that HHS will provide an AV calculator to help issuers determine health plan ACs. The calculator uses a nationally representative sample. Starting in 2015, HHS will accept state-specific datasets to use with the calculator. The rule proposes a 2% AV window around the AV specified by for each metal group.

Market Reform NPRM:
Rule: http://www.regulations.gov/#!documentDetail;D=CMS-2012-0141-0001
 

Citation: US National Archives and Records Administration. 2012. Code of Federal Regulations. Title 45. Patient Protection and Affordable Care Act; Health Insurance Market Rules; Rate Review; Proposed Rule. [Available at: http://www.regulations.gov/#!documentDetail;D=CMS-2012-0141-0001]

Discussion: This rule focuses on reforms to the health insurance market. It includes guaranteed issue, premium regulation (rate bands, rate restrictions), single statewide risk pool, etc. The rule also proposes regulation changes to streamline data collection.

MPFS (Medicare Physician Fee Schedule) Rule:
Citation: US National Archives and Records Administration. 2012. Code of Federal Regulations. Title 42. Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule, DME Face-to-Face Encounters, Elimination of the Requirement for Termination of Non- Random Prepayment Complex Medical Review and Other Revisions to Part B for CY 2013. [Available at: http://www.gpo.gov/fdsys/pkg/FR-2012-11-16/pdf/2012-26900.pdf]
More rules and regulations are presented here.
I thank without implicating Tim Layton (BU RA extraordinaire) for organizing this information for me.

BU ranked 17th in world, 7th in US by “Most employable students”

Graduates from Boston University were  ranked 17th most employable in the world and 7th most employable in the US by the 2012 Global Employability Survey, published by the New York Times and International Herald Tribune. It was discussed in BU Today on November 1, 2012. Here is the results in table form from the NY Times.

This represents a huge improvement from their ranking 51st in the US by the same newspaper in 2011.  Is this big change believable, and why the big change? The biggest factor is that for the 2011 study, (http://www.nytimes.com/imagepages/2011/10/20/education/20iht-SReducEmploy20-graphic.html?ref=education) the NYT Survey polled only business executives and board chairs, and only surveyed them from the ten countries, while for the 2012 the international survey included 20 countries from all over the world, including Asia and Latin America. The new survey also explicitly included 1200 top business recruiters as well as 1500 chief executives and business managers, as in the past.

It makes a big difference whether you ask recruiters as well as than chief executives, since recruiters will care more about a very large number of potential candidates before they visit or give attention to candidates from a particular university.  Plus this new survey included Australian and Asian countries for the first time.

Boston University is not only one of the largest (28,000+) private universities but has also had a large number of international, and particularly, Asian students and alumni, for decades. It also has a rich set of graduate degrees with high proportions international.

The following table was generated from the US News and World reports using the 50 universities with the highest % international undergraduate students. It shows that Boston University had the ninth highest number of international students among all these universities. Moreover some of the other surprises also have much higher numbers than the ivies and other top schools. Hence these ratings from recruiters make sense, once one takes this into account.

Ranking of 50 Universities  with high international student percentages by number of international students.

Source: http://colleges.usnews.rankingsandreviews.com/best-colleges/rankings/national-universities/most-international/spp+50
Columns
A = ranking by largest number of international undergraduate students
B = University name
C = % internat.
D = # of Undergrads
E = Number of Internat. students
F = rank by # % Internat

Source: http://colleges.usnews.rankingsandreviews.com/best-colleges/rankings/national-universities/most-international/spp+50
A B C D E F
% internat. Undergrads Internat. students Rank by  % Internat
1 Purdue University–West Lafayette 15% 30,776 4616.4 8
2 University of Illinois–Urbana-Champaign 13% 32,256 4193.28 12
3 Michigan State University 9% 36,675 3300.75 36
4 University at Buffalo–SUNY 16% 19,334 3093.44 7
5 Indiana University–Bloomington 9% 32,543 2928.87 39
6 University of Minnesota–Twin Cities 8% 34,812 2784.96 50
7 University of California–Berkeley 9% 25,885 2329.65 35
8 New York University 10% 22,280 2228 29
9 Boston University 12% 18,140 2176.8 16
10 University of Southern California 12% 17,414 2089.68 15
11 University of California–San Diego 9% 23,046 2074.14 33
12 New School 27% 7,081 1911.87 1
13 Northeastern University 14% 12,913 1807.82 9
14 University of Iowa 8% 21,564 1725.12 48
15 University of Oregon 8% 20,623 1649.84 43
16 Cornell University 9% 14,167 1275.03 38
17 Stony Brook University–SUNY 8% 15,926 1274.08 44
18 Drexel University 10% 11,899 1189.9 31
19 Binghamton University–SUNY 10% 11,861 1186.1 28
20 Syracuse University 8% 14,671 1173.68 46
21 University of Miami 11% 10,509 1155.99 21
22 University of Pennsylvania 11% 9,779 1075.69 20
23 Carnegie Mellon University 17% 6,281 1067.77 6
24 University of Colorado–Denver 8% 12,674 1013.92 45
25 Emory University 11% 7,441 818.51 22
26 University of San Francisco 13% 6,051 786.63 10
27 Harvard University 11% 6,657 732.27 23
28 Florida Institute of Technology 26% 2,724 708.24 2
29 Brown University 11% 6,380 701.8 25
30 St. Louis University 8% 8,670 693.6 42
31 Columbia University 11% 6,027 662.97 19
32 University of Rochester 11% 5,643 620.73 18
33 Georgetown University 8% 7,590 607.2 47
34 Princeton University 11% 5,249 577.39 26
35 Illinois Institute of Technology 21% 2,714 569.94 3
36 University of Tulsa 18% 3,004 540.72 5
37 Johns Hopkins University 9% 5,980 538.2 37
38 Yale University 10% 5,349 534.9 27
39 Duke University 8% 6,680 534.4 49
40 University of Chicago 9% 5,388 484.92 34
41 Massachusetts Institute of Technology 10% 4,384 438.4 30
42 University of Denver 8% 5,453 436.24 41
43 Worcester Polytechnic Institute 11% 3,849 423.39 17
44 Brandeis University 12% 3,504 420.48 14
45 Rice University 10% 3,755 375.5 32
46 Lynn University 18% 1,619 291.42 4
47 Andrews University 13% 1,929 250.77 11
48 Polytechnic Institute of New York University 11% 1,939 213.29 24
49 Clark University 9% 2,311 207.99 40
50 California Institute of Technology 12% 978 117.36 13

The big jump in the ranking of Boston University’s rating by international recruiters into the “seventh most employable students” from last years ranking of 51 by mostly US business executives is probably mostly real.

US Affordable Care Act and Risk Adjustment

Although there is no accompanying paper, I thought it might be useful to post the PowerPoint slides that I have used in several recent talks about the US since there is an enormous interest in a relatively concise summary of the features of the ACA.

Since my area of particular interest is risk adjustment, there are a number of slides on that topic.

Since Massachusetts is an important early demonstration, I included three slides on Massachusetts.

There are three versions posted: the PowerPoint slides, a pdf version, and a pdf version as a handout (four slides per page).

Powerpoint pdf Handout

 

 

 

A SURVEY OF AMERICA’S PHYSICIANS: PRACTICE PATTERNS AND PERSPECTIVES

An Examination of the Professional Morale, Practice Patterns, Career Plans, and Healthcare Perspectives of Today’s Physicians, Aggregated by Age, Gender, Primary Care/Specialists, and Practice Owners/Employees

Survey conducted on behalf of The Physicians Foundation by Merritt Hawkins | Completed September, 2012. Copyright 2012, The Physicians Foundation

I found this physician survey very useful for statistics about age, hours, patient visits per day, specialty, practice size, attitudes, health reform, ACOs, PCMH and more.

The results reflect selection bias and has an older set of respondents than all MDs, but is still interesting.

http://www.physiciansfoundation.org/uploads/default/Physicians_Foundation_2012_Biennial_Survey.pdf