Most people don’t think much of congress, but think better of their own representatives. When people read newspaper articles about events they know personally, they are surprised to see how wrong such articles can be. These illustrate the importance of checking your general beliefs against specific cases you come across. In this spirit, I take special notice of a
All that's available without shelling out cash is a short abstract that's a little bit confusing.
The introduction of Medicare Part D has generated interest in the cost of providing drug coverage to the elderly. Of paramount importance -- often unaccounted for in budget estimates -- are the salutary effects that increased prescription drug use might have on other Medicare spending. This paper uses longitudinal data from the Medicare Current Beneficiary Survey (MCBS) to estimate how prescription drug benefits affect Medicare spending. We compare spending and service use for Medigap enrollees with and without drug coverage. Because of concerns about selection, we use variation in supply-side regulations of the individual insurance market -- including guaranteed issue and community rating -- as instruments for prescription drug coverage. We employ a discrete factor model to control for individual-level heterogeneity that might induce bias in the effects of drug coverage. Medigap prescription drug coverage increases drug spending by $170 or 22%, and reduces Medicare Part A spending by $350 or 13% (in 2000 dollars). Medigap prescription drug coverage reduces Medicare Part B spending, but the estimates are not statistically significant. Overall, a $1 increase in prescription drug spending is associated with a $2.06 reduction in Medicare spending. Furthermore, the substitution effect decreases as income rises, and thus provides support for the low-income assistance program of Medicare Part D.
Doug S I understood what you said but perhaps my assumptions are wrong.
My assumptions:1.Before Medicare started paying for the drugs the patients, who would have had to pay for the drugs themselves, chose not buy them.2.They did not buy the drugs for themselves because they did not think that the benefits yielded by the drugs was worth the cost of the drugs. Here is my assumption may be wrong, I assume that in there cost benefit annalists they were not reducing the value of the drugs because if they got the disease that drugs prevent that Medicare would cover a procedure to fix it anyway. This is I guess a weak assumption.
Robin Hanson,What happened to the plan of the first paragraph? What conclusions do you draw from your local knowledge that we cannot draw from just the article?
Floccina: You're getting it backwards; the paper was saying that for every $1.00 paid out in prescription drug benefits, other expenses dropped by $2.06. Therefore, subsidizing the prescription drugs has resulted in less Medicare spending.
If true does that mean that to the average Medicare recipient (rich and poor alike) the benefit of the drugs was not worth the cost? If they had to pay for the drugs, and evidently doubly so for the procedures, they would not buy them. Doesn’t that mean that the net benefits were not worth the cost to them! Based on this evidence would the rational thing be to cut the drug and procedures? And if you feel too bad about that, give them the cash and let them do with as they please.
All that's available without shelling out cash is a short abstract that's a little bit confusing.
The introduction of Medicare Part D has generated interest in the cost of providing drug coverage to the elderly. Of paramount importance -- often unaccounted for in budget estimates -- are the salutary effects that increased prescription drug use might have on other Medicare spending. This paper uses longitudinal data from the Medicare Current Beneficiary Survey (MCBS) to estimate how prescription drug benefits affect Medicare spending. We compare spending and service use for Medigap enrollees with and without drug coverage. Because of concerns about selection, we use variation in supply-side regulations of the individual insurance market -- including guaranteed issue and community rating -- as instruments for prescription drug coverage. We employ a discrete factor model to control for individual-level heterogeneity that might induce bias in the effects of drug coverage. Medigap prescription drug coverage increases drug spending by $170 or 22%, and reduces Medicare Part A spending by $350 or 13% (in 2000 dollars). Medigap prescription drug coverage reduces Medicare Part B spending, but the estimates are not statistically significant. Overall, a $1 increase in prescription drug spending is associated with a $2.06 reduction in Medicare spending. Furthermore, the substitution effect decreases as income rises, and thus provides support for the low-income assistance program of Medicare Part D.
I'm not quite sure what they're saying.
Doug S I understood what you said but perhaps my assumptions are wrong.
My assumptions:1.Before Medicare started paying for the drugs the patients, who would have had to pay for the drugs themselves, chose not buy them.2.They did not buy the drugs for themselves because they did not think that the benefits yielded by the drugs was worth the cost of the drugs. Here is my assumption may be wrong, I assume that in there cost benefit annalists they were not reducing the value of the drugs because if they got the disease that drugs prevent that Medicare would cover a procedure to fix it anyway. This is I guess a weak assumption.
Robin Hanson,What happened to the plan of the first paragraph? What conclusions do you draw from your local knowledge that we cannot draw from just the article?
Floccina: You're getting it backwards; the paper was saying that for every $1.00 paid out in prescription drug benefits, other expenses dropped by $2.06. Therefore, subsidizing the prescription drugs has resulted in less Medicare spending.
Off topic but look at this:
http://www.marginalrevoluti...“Overall, a $1 increase in prescription drug spending is associated with a $2.06 reduction in Medicare spending.”
If true does that mean that to the average Medicare recipient (rich and poor alike) the benefit of the drugs was not worth the cost? If they had to pay for the drugs, and evidently doubly so for the procedures, they would not buy them. Doesn’t that mean that the net benefits were not worth the cost to them! Based on this evidence would the rational thing be to cut the drug and procedures? And if you feel too bad about that, give them the cash and let them do with as they please.
"cleverly used the legal, regulatory and political machinery to deny national hospital chains entry into the market."
Selfish, dishonest, thieving greed.
"This sure seems more about signaling regional pride than about helping sick people cope with rising medical costs. "
I can't see how this could be read any other way.
Tom, that study considered only two patients; I want to hear about a lot more patients before I'll get intrigued. :)
More research to back up the Hansonian perspective:
http://www.bonkersinstitute...