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Tag Archives: US healthcare system

Industries afflicted with Baumol's Disease have slower productivity growth.

It might be tough to use statistics to judge US health care.

Among OECD countries (Organization for Economic Cooperation and Development), from 1980 to 1999, for life expectancy, the US ranked #19 and Canada was #5. However, the order flips–US #1 and Canada #4–once you exclude fatal injuries like auto accidents, suicides and murder.

Similarly, the US has had a higher infant mortality rate than Canada. The reason, though, could relate to our higher incidence of teenage pregnancies. Teenagers tend to give birth to babies with a higher mortality rate because of their lower birth weights.

You see where this is going. If a candidate defends his healthcare policy by referring to a health outcome like life expectancy or infant mortality rates, we need to be sure that the statistic actually reflects our healthcare system and not another characteristic of our society. And it even gets more complicated because we could say that we have 3 healthcare systems: Medicaid, Medicare and private insurance with a fourth on the way when statewide healthcare exchanges begin.

On which statistics would you base your your policy preferences for the US healthcare system? Or maybe we should just remember what Benjamin Disraeli (1804-1881), British Prime Minister under Queen Victoria said:

“There are three kinds of lies: lies, damned lies, and statistics.”

Election Economics Topics:

 

Sources: In this 2007 NY Times column, Harvard professor N. Gregory Mankiw looks “Beyond Those Health Care Numbers” while I also referred to this Forbes article and this econtalk podcast on misleading healthcare system statistics. Finally, for a perspective that takes us away from the stats and to the bigger ideas that are driving this election, do look at what Princeton economist Uwe Reinhardt says in his NY Times economix.com articles.

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Industries afflicted with Baumol's Disease have slower productivity growth.

Could Cheesecake Factory help us fix our healthcare system?

Touring the kitchen of a Cheesecake Factory restaurant, you would see arrival, refrigeration and storage areas, and cutting, mixing, chopping and combining zones. Preparing the 308 dinner choices that their menu offers, chefs use recipes that specify ingredients and amounts but exclude seasoning and timing details. Essentially divided between prepping and cooking, the kitchen is reminiscent of a well-organized factory.

In a wonderful New Yorker articleAtul Gawande tells us that the people who run the different parts of our healthcare system might learn a lot in a Cheesecake kitchen. Cheesecake and the US healthcare system both offer a vast array of goods and services that are individually produced. Cheesecake has a standardized backend and efficient friendly service. Its prices are relatively low and its consumers appear happy. Meanwhile, the US healthcare system is coping with escalating costs, mediocre service and inconsistent quality.

In his article, Dr. Gawande takes his readers from his dining experience and subsequent research at Cheesecake to one family’s calamitous hospital visit and his own mother’s well-coordinated knee replacement. Successfully, he demonstrates that coordination of many individuals and services is tough, doable and crucial for a restaurant chain that serves 80 million people and also for a medical system.

Dr. Gawande’s suggestions took me to economist Randall Bartlett and his Teaching Company course, “Thinking Like an Economist.”  Discussing Pareto optimality, Dr. Bartlett said that a policy improves social welfare if it makes even just one person better off without making anyone worse off. I wondered whether the suggestions for improving our healthcare system can ever achieve sociologist Vilfredo Pareto’s criteria.

You can read more about Vilfredo Pareto here. I do recommend listening to Dr. Bartlett’s lectures and reading the New Yorker article.

 

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