Arnold Kling  

Measuring Health Care Effectiveness

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Health Care Administrative Cos... Healthy Debate...

Co-blogger Bryan and I have been arguing over two issues, one substantive and one methodological

Substantive issue: I say that health care probably is effective. He says that there is no evidence that it is effective on average. Incidentally, Paul Krugman says that there is no evidence that U.S. health care is effective at the margin, meaning that the additional money that we spend on health care relative to other countries does not lead to measurably better health outcomes.

Methodological issue: I say that looking at aggregate data on health care outcomes is lazy econometrics. There is no substitute, I argue, for careful disaggregated studies.

Now, in response to my post on Murphy and Topel's article about the huge benefits of health care, Bryan is sticking to his substantive position, but reversing himself on methodology. That is, he remains skeptical that health care provides benefits. Now, he argues that Murphy and Topel are failing to control for other factors that affect health.

Murphy and Topel find that longevity after age 60 has increased since 1970, with much of the improvement coming in the form of fewer deaths among males from heart disease. But can we conclude that this reflects better health care? Might this reflect other factors, such as reduced pollution, less physically-demanding jobs, and earlier retirement? Murphy and Topel glide past this question.

I am more than willing to concede the substantive point that Murphy and Topel have failed to provide conclusive evidence of the benefits of health care. However, I claim progress on the methodological point that the question needs to be settled by careful, disaggregated analysis rather than lazy macro statistics.


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TRACKBACKS (1 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/288
The author at Catallarchy in a related article titled The Money Pit writes:
    There's been an intersting debate over at EconLog between Kling and Caplan over the general efficacy of medical care. An it goes as little something like this... [Tracked on June 20, 2005 8:08 PM]
COMMENTS (10 to date)
spencer writes:

How can any intelligent person think that healthcare is not effective or does not provide benefits.

I guess I can assume that when Bryan's wife gets pregant she will not go to a doctor and have him deliver the baby at home.

Are you reading Krugman right? I seriously doubt he said anything like that -- but I don't pay that much attention to what he says.
He has his views and I have mine-- sometimes they agree and sometimes they don't, so what.

Ted writes:

It would seem that "health care" can be credited with the improvement in longevity, although it would be a stretch to say that "health care at the margin" could be.

Since 1970, high blood pressure and high cholesterol have been targeted by public health officials, the pharmaceutical industry, and by physicians. The public has bought into this. Some of the effective medications are relatively low-tech and inexpensive.

policydoc writes:

Aggregated and disaggregated data both have their useful points, and should be viewed as complementary. Disaggregated data helps identify root causes of improvements in health, and in theory should help us focus our efforts on areas where there is actually benefit to medical therapy. However, aggregating these studies into some type of cohesive whole is a methodological challenge that hasn't been solved, as far as I know.

There have been many disaggregated analyses of the impact of health care on the conditions that affect life expectancy. The vast majority of decline in cardiovascular outcomes can indeed be attributed to medical care: a mix of improved treatment of disease (for example, management of heart attacks has improved dramatically over the past few decades), and improved management of risk factors (smoking, cholesterol, blood pressure). While various studies differ somewhat on the relative attributions of benefit, most conclude that, outside of smoking cessation, the benefits are largely from improvements in medical care. Lifestyle is not likely to play a major role - witness the rising rates of obesity.

The other major cause of life expectancy gains is in infant mortality. Studies have shown that almost all of the gains in recent times (say, 1970 onward) is due to improved medical care - specifically the development of technologies such as neonatal ICUs and surfactant. Smoking cessation is likely to have contributed as well, although abuse of other drugs - especially crack cocaine - has probably had an adverse effect.

Bernard Yomtov writes:

Paul Krugman says that there is no evidence that U.S. health care is effective at the margin, meaning that the additional money that we spend on health care relative to other countries does not lead to measurably better health outcomes.

These are two different statements:

1. US health care is not effective at the margin.
2. The per capita health care spending the US does in excess of that done in other modern countries is not effective.

I think Krugman is saying the second, not the first. Regardless, the failure to distinguish between the two is a serious error.

Brandon Berg writes:

In all the discussion of the relative merits of US and European health care, I have yet to see any mention of an eminently obvious confounding factor: lifestyle differences.

Americans are significantly fatter and have significantly worse diets than Europeans, factors which have nothing to do with health care, but which negatively affect the health indicators which critics of US health care claim are incontrovertible evidence of its inferiority. Why is no one calling them on this?

James writes:

Bernard writes:

"These are two different statements:

1. US health care is not effective at the margin.
2. The per capita health care spending the US does in excess of that done in other modern countries is not effective.

I think Krugman is saying the second, not the first. Regardless, the failure to distinguish between the two is a serious error. "

The first is logically entailed by the second. If the U.S. spends A dollars per capita on healthcare and Europe spends B dollars per capita on healthcare, then the marginal unit of healthcare (the referent of the first statement) is the one financed by the Ath dollar, which is contained in A - B, (the referent of the second statement). For someone to mean the second and simultaneously not mean the first is internally inconsistent.

If Bernard is right about Krugman's meaning, it would seem either that Krugman doesn't know enough economics to understand the "econ 101" concept of marginal benefit or that Krugman is willing to be internally inconsistent when he argues for more socialism. I'm torn...

spencer writes:

Maybe the reason the Europeans live longer is they work shorter hours.

If Krugman is saying a certain share of healthcare spending is on unnecessary administrative costs it would work at both the margin and on average. If 25% is wasted, it is 25% on average and 25% at the margin. It still means 75% on average and 75% at the margin is effective and generates positive returns.

There is nothing in his statement that leads to the conclusion that a smaller share is wasted on average and a larger share is wasted at the margin. While this is possible, in theory, he does not say that.

Jon writes:

Krugman says nothing about "marginal" effectiveness--this is a nonsense usage of the concept as the "marginal effectiveness" of healthcare depends on where that marginal dollar is allocated within the healthcare system. There are many avenues for adding marginal dollars to the system. A dental care subsidy for children under the poverty line would have different results than a law mandating feeding tube usage in all cases where it would preserve life (along with government reimbursement when the patient ran out of money).

Krugman merely says that that we spend more per capita on health care and seem to achieve a lesser result and this implies our system is less effective.

The latter statement is what I (and I suspect most people on this board) think is not necessarily true.

Ben England writes:

One shouldn't gloss over the fact that a good portion of health care spending may lead to substantial quality of life improvements that frequently don't have an impact on longevity. Availabilty of such treatments is something the US market does considerably well in.

Not getting a hip replacement for severe osteoarthritis won't kill you. You'll just wish it would.

Bernard Yomtov writes:

James,

There is no inconsistency. My point is that "spending on healthcare" is not "healthcare." Suppose systems A and B deliver the same services, but system A is poorly managed, with the result that users of A spend more than users of B. Then it is not reasonable to say that users of A get more healthcare.

If we each buy a dozen eggs, but you pay more for some reason, no one in their right mind would say you had bought more eggs than I had. Spending on eggs is not eggs.

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