Monday, August 21, 2017

Supply-side ideas for health care access

This is the 1st week of classes at NC State.  My online MBA class Essential Economics for Managers is studying supply and demand.  A good place to practice this subject is health care.  Most people pay for health services indirectly through employer- or government-provided health insurance.  Health care spending is much greater in the US relative to other countries with a comparable living standard and many blame these payment mechanisms.

Many efforts to bring health spending down focus on the demand side, either through changing the availability of insurance or through managing insurance-backed spending through eligibility rules, co-pays and deductibles.  As Mitch McConnell learned recently, kicking people off of health insurance plans is not a good way to win votes.

Todd Buchholz who worked under President Bush #41 argues in a recent WP op-ed that supply solutions to health care costs are not getting sufficient attention.  He makes four suggestions:
1) Build more medical schools to increase the supply of doctors (increasing enrollment at existing schools would yield the same result)
2) Allow nurse practitioners and physician assistants to open and manage walk-in clinics (some states allow this but most do not)
3) Recognize drug approvals from other advanced countries so that new drugs can enter the market more quickly and cheaply
4) Legal reforms to reduce unnecessary tests and procedures

Some of these issues are more complex than Buchholz allows.  Also he misses other supply-side reforms such as encouraging more immigrant doctors to practice here.  The overarching idea, however, is that by increasing competition and lowering unit costs, health care spending could start going down.

Saturday, August 5, 2017

Marijuana access lets Dutch students grades go to pot

Economic research often extends beyond prices and output.  One recent study looks at what happens in a Dutch university town when a law is passed proscribing marijuana access to students who are not residents of the Netherlands.  As reported in WP, the academic performance of the non-Dutch students improved; their odds of passing a course increased by at least 5 percent.  The performance increase was greatest among students who were performing at a lower level.

Marijuana legalization is based on a wide range of value judgments, of which academic performance is but one dimension.  A key implication of this study is that there is likely to be some adverse impact on learning if marijuana becomes more accessible.  Of course, pot advocates might naturally ask if this experiment were repeated except this time telling the Belgian and French students that they cannot buy Heineken!