Tuesday , November 12 2019
Home / Tag Archives: Economics of Health Care

Tag Archives: Economics of Health Care

Sometimes Drug Prices Are Too Low

When Americans talk about drug prices, the conversation is dominated by the eye-popping sticker prices of certain new drugs. We’re all aware of how sky-high prices can make it hard for some patients to afford the drugs they need. Yet few appreciate how patients also lose access to treatments when prices are too low. The federal government’s attempts to keep prices low have created a chain of unintended consequences. Start with the “best price” law of 1990, which...

Read More »

The Latest Nobel Prize in Economics

The Royal Swedish Academy of Sciences will award the 2019 Nobel Prize in Economic Sciences to Abhijit Banerjee and Esther Duflo of the Massachusetts Institute of Technology and Michael Kremer of Harvard “for their experimental approach to alleviating global poverty.” The award reveals a deepening fault line among economists about how best to fight poverty. What’s striking about the award is that the Nobel committee gave it to the three economists specifically for...

Read More »

Do the “ends justify the means”?

This question actually has two distinct meanings: 1. Should we do things if benefits of the ends exceed the cost of the means?2. In various individual cases, does the benefit of the ends actually exceed the cost of the means? The first question is normative while the second is empirical.  To illustrate this distinction, let’s start by considering three cases: The US government sent young men to their death in Iraq, because the ends were supposed to justify the means....

Read More »

Reinhardt’s Misleading Data on Drug Price Differences

Timothy Taylor, the Conversable Economist, posted today on some highlights from the late Uwe Reinhardt’s last book, Priced Out: The Economic and Ethical Costs of American Health Care. He, following the lead of the Milken Institute Review in its excerpt of the book, shows charts comparing the cost of various health care goods and services in the United States to the cost in other countries. The bottom line, which will surprise no one who has followed the issue, is...

Read More »

Should we discourage medical malpractice lawsuits?

I’ve always been skeptical of the utility of medical malpractice lawsuits. A new study by Michael Frakes and Jonathan Gruber finds evidence that they are counterproductive: We estimate the extent of defensive medicine by physicians, embracing the no-liability counterfactual made possible by the structure of liability rules in the Military Health System. Active-duty patients seeking treatment from military facilities cannot sue for harms resulting from negligent care,...

Read More »

Health care subsidies are almost impossible to reform

Imagine if the government gave people a subsidy of $5000 each time they bought a new car. That would be inefficient, encouraging the excessive purchase of new cars. Now imagine that the subsidy was 40% of the price of the car, up to a price of $25000. That would be even more inefficient, encouraging the excessive purchase of cars, and also encouraging the purchase of cars of excessively high quality. Now imagine a 40% car subsidy that had no upper limit. That would be...

Read More »

Why both liberals and conservatives will lose on health care (in the short run)

Our current health care system fails at almost every level. Because the health care for most people is paid for by third parties (mostly the government), costs have exploded to levels far high than optimal. This has reduced real wages for millions of Americans. And yet tens of millions of lower and moderate-income people have no health insurance at all. Liberals want to remedy this situation with some form of universal health care, while conservatives would like to...

Read More »

Prescription Drug Prices: Retaliatory Socialism

Yesterday’s Wall Street Journal (“Trump Plans Order to Tie Drug Prices to other Nations’ Costs,” July 5, 2019) reported: President Trump said Friday he was preparing an executive order that would lower drug prices so that the federal government would pay no more than the costs paid by other countries. Mr. Trump is quoted as saying: As you know for years and years, other nations paid less for drugs than we do, sometimes by 60, 70%. We’re going to be, and we’re working...

Read More »

Henderson on Uwe Reinhardt’s Last Book

Uwe Reinhardt was a well-known health economist at Princeton University who died in 2017. An outspoken advocate of government regulation of health insurance, he helped design the single-payer system adopted by Taiwan’s government. Reinhardt’s last book is Priced Out: The Economic and Ethical Costs of American Health Care. In it, he argues that U.S. health care is too expensive, its administrative costs are too high, the U.S. tax system subsidizes health care for...

Read More »

AOC and Ted Cruz Come Around to My Way of Thinking

Recently, Democratic Representative Alexandria Ocasio Cortez and Senator Ted Cruz have advocated what I have long advocated: allowing women to have the freedom to buy contraceptives over the counter. Here’s AOC: Psst! Birth control should be over-the-counter, pass it on. 1:53 PM – 7 Jun 2019 and Ted Cruz: Ted Cruz Retweeted Alexandria Ocasio-Cortez I agree. Perhaps, in addition to the legislation we are already working on together to ban Members of Congress...

Read More »