Second Response to Alexander on Medicine

Scott Alexander has responded to my response to his critique of my position on medical effectiveness. 

On the US taxpayer experiment, where I pointed out a big selection bias re the age range, he’s ready to set it aside:

I’m not sure what’s going on here. … I think my case is still strong if we stick with the lower treatment effect or ignore Goldin entirely.

On the Karnataka experiment, Scott thinks it unfair of me not to point out that he agrees that they saw a medical utilization effect, but only when spillovers were taken into account. However, I don’t see why that matters; my point is that they saw large (74% to 400%) effects on hospital utilization among 52,000 subjects over 3.5yrs, but didn’t see overall health effects. I don’t see how this study “has too low power”. 

But Scott’s main point, and thus the one I will focus on here, is that he isn’t alone in misunderstanding me, and maybe I’m not being very coherent:

I guess I must be misrepresenting him, and I apologize. But I can’t figure out how these claims fit together coherently with what he’s said in the past. So I’ll lay out my thoughts on why that is, and he can decide if this is worth another post where he clarifies his position. The marginal unit of health care doesn’t come clearly marked. If we want to cut the marginal unit of health care (for example, following Robin’s recommendation to cut health care in half) we need to cut specific things. If you would otherwise get ten treatments in a year, you need to cut out five if you want to halve health care like Robin suggests. Which five? You could make the decision centrally (the medical establishment decides some interventions are less valuable than others, and insurance stops covering those) or in a decentralized free-market way (customers get less insurance, increasing the cost of medical care and causing them to make harder trade-offs about when to get it), but somebody has to make this decision at some point. On what basis do they make it? … how do we halve medical care? In his CATO Unbound article, I interpret him as saying it didn’t matter how you did it, because “most any way to implement such a cut would likely give big gains.”

But immediately after those quoted words, I say: 

The obvious first place to cut would be our government and corporate subsidies for medicine, including direct payments, tax exemptions, and regulatory requirements. … one could consider taxing medicine, limiting it by law, or nationalizing the industry and using agency budgets to limit spending. … At least you can change your own medical behavior: if you would not pay for medicine out of your own pocket, then don’t bother to go when others offer to pay; the RAND experiment strongly suggests that on average such medicine is as likely to hurt as to help.

A few paragraphs before these words I explain my general logic:

Taken at face value, our inability to see much health impact from the disturbances we have observed suggests that such disturbances increase or decrease helpful and harmful medicine in roughly equal amounts. This in turn suggests that if we were to reduce medical spending via a disturbance similar in character to the types of disturbances we have observed, such a spending reduction would also reduce helpful and harmful medicine in roughly equal amounts.

While I feel this quote is pretty clear, I also agree with Scott that he isn’t the only person to misunderstand me. So let me try again.

Every study on the marginal effect of medicine has some way it operationalizes “marginal medicine” for the purpose of that study. In geographic variation studies, it is the medicine done in places that spend more on medicine, but not in places that spend less. For studies that compare large to small hospitals, it is the treatments done in large but not small hospitals. For experiments that vary the price of medicine or insurance, it is the medicine chosen by subjects who faced lower prices, but not chosen by those who faced higher prices. I remember at some point also suggesting using treatments with a lower Cochrane Review rating. 

My key point was and is that each of these operationalized definitions of “marginal medicine” offers a concrete way to avoid marginal medicine. As an individual considering various possible treatments, here are five ways:

1. Ask about a treatment’s Cochrane Review rating,

2. Ask if a treatment is done in low spending geographic regions,

3. Ask if treatments are done in small hospitals,

4. Ask your doctor how strongly they recommend a particular treatment; decline if recommendation is weak. (I’ve done this.)

5. Ask yourself and associates if you would be willing to pay for them out of your own pocket, if insurance did not cover them.

Maybe even better to ask several of these questions, and average their answers. 

As a wonk considering various possible policies, you can also consider regulating or subsidizing/taxing based on these indicators. Or consider policies that make more patients face higher personal prices for treatment. When I said “most any way to implement such a cut” I had in mind these sort of options; most any should help. Though my favorite option is still creating agents who face strong direct incentives. 

Re Scott’s offered trilemma, I pick #3, though the consensus med position doesn’t identify enough marginal med to cut med in half, and I don’t claim non-marginal med works “well”. “Monkey trap” is not letting go of marginal med, as some of it must help.