Category: Incentives

The Son of Jonas Salk Calls Operation Warp Speed “Absolutely Extraordinary”

A screen capture from the Replica Edition of the NYT, p. A4 for Thurs., Nov. 18, 2020.

(p. A4) A 76-year-old man in La Jolla, Calif., says he will get a coronavirus but not the way he got a polio vaccine when he was 9 — lined up in the kitchen next to his two siblings. Their father had sterilized the needles and syringes by boiling them on the stove.

The father was Dr. Jonas Salk, who had developed the vaccine.

. . .

At the time, the vaccine had gone through trials with small numbers of children. A trial with 1.8 million children did not begin until the next year, and the vaccine did not receive approval as safe and effective until a year after that — a timetable that he said made the development of coronavirus vaccine candidates in just months “absolutely extraordinary.” He said he had been concerned about pressure from the Trump administration to have a vaccine ready by Election Day. But he also said the decision to back the development of vaccines through Operation Warp Speed, the federal effort to accelerate vaccine development, “was quite positive.”

For the full story, see:

Barron, James. “Coronavirus Update; ‘l Just Didn’t Feel the Shot’.” The New York Times (Wednesday, November 18, 2020): A4.

(Note: ellipsis added.)

(Note: after considerable time spent searching, I was unable to find this article on the nytimes.com web site. I searched on 11/21/20 for the article that had appeared in-print on 11/18/20. In my experience, it is extremely rare for so recent a print article to be missing from the online web site. So, for documentary purposes, I have reproduced a screen capture of the article from the Replica Edition. (For subscribers to the NYT, The Replica Edition provides an online replica of the print edition for the previous 30 days of issues of the NYT.)

California Government Allowed “Buildup” of “Fuel for Future Blazes”

(p. A1) California is one of America’s marvels. By moving vast quantities of water and suppressing wildfires for decades, the state has transformed its arid and mountainous landscape into the richest, most populous and bounteous place in the nation.

. . .

(p. A16) The intensity of the fires . . . reflects decades of policy decisions that altered those forests, according to Robert Bonnie, who oversaw the United States Forest Service under President Barack Obama. And the cost of those decisions is now coming due.

In an effort to protect homes and encourage new building, governments for decades focused on suppressing fires that occurred naturally, allowing the buildup of vegetation that would provide fuel for future blazes. Even after the drawbacks of that approach became clear, officials remained reluctant to reduce that vegetation through prescribed burns, wary of upsetting residents with smoke or starting a fire that might burn out of control.

That approach made California’s forests more comfortable for the estimated 11 million people who now live in and around them. But it has also made them more susceptible to catastrophic fires. “We’ve sort of built up this fire debt,” Mr. Bonnie said. “People are going to have to tolerate smoke and risk.”

For the full story, see:

Christopher Flavelle. “Mankind’s Feats Place California At Climate Risk.” The New York Times (Monday, September 21, 2020): A1 & A15.

(Note: ellipses added.)

(Note: the online version of the story has the date September 20, 2020, and has the title “How California Became Ground Zero for Climate Disasters.”)

Litan and Mankiw Endorse Paying People to Take Vaccine

(p. 5) What’s the best way to get the economy back on track after the Covid-19 recession? Simple: Achieve herd immunity. And what’s the best way to achieve herd immunity? Again, simple: Once a vaccine is approved, pay people to take it.

That bold proposal comes from Robert Litan, an economist at the Brookings Institution. Congress should enact it as quickly as possible.

. . .

Recent research by the University of Chicago economists Austan Goolsbee and Chad Syverson has found that the government-mandated shutdowns account for just a small part of the decline in economic activity. The main reason people aren’t spending is that they are afraid to leave their homes and contract the virus. That hypothesis explains my own behavior. I have not stepped foot on an airplane or inside a restaurant for six months.

. . .

Immunology, meet economics. One of the first principles of economics — perhaps the most important — is that people respond to incentives. Applying this principle to the case at hand, Mr. Litan recommends that the government pay $1,000 to whoever gets the vaccine. With a large enough incentive, most Americans are likely to get vaccinated.

This proposal is textbook economics. (I’ve written some of the textbooks.) As all economics students learn, when an activity has a side effect on bystanders, that effect is called an externality. In the presence of externalities, the famous theorems of economics that justify laissez-faire do not apply. Adam Smith’s vaunted invisible hand can no longer work its magic.

A classic example of a negative externality is pollution, and the simplest and least invasive policy solution is a tax on emissions. In economics-speak, such a tax internalizes the externality: It induces polluters to take the cost of pollution into account by giving them a financial incentive to cut emissions. That’s why I have written here many times that a tax on carbon emissions is the best way to deal with global climate change.

Vaccination confers a positive externality. When you get vaccinated, you benefit not only yourself but also your fellow citizens by helping society take a step toward herd immunity. In this case, internalizing the externality requires not a tax but a subsidy, as Mr. Litan suggests.

For the full commentary, see:

N. Gregory Mankiw. “A Vaccine Subsidy Licks 2 Crises With One Shot.” The New York Times, SundayReview Section (Sunday, September 13, 2020): 5.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Sept. 9, 2020, and has the title “Pay People to Get Vaccinated.”)

The Robert Litan op-ed mentioned above is:

Litan, Robert E. “Want Herd Immunity? Pay People to Take the Vaccine.” Brookings Institute Op-Ed. (Tues., Aug. 18, 2020) URL: https://www.brookings.edu/opinions/want-herd-immunity-pay-people-to-take-the-vaccine/.>

The Goolsbee and Syverson NBER working paper mentioned above is:

Goolsbee, Austan, and Chad Syverson. “Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline 2020.” NBER Working Paper #27432, June 2020.

At Nonprofit Hospitals Revenue Rises and Charity Care Falls

(p. 7) On paper, the average value of community benefits for all nonprofits about equals the value of the tax exemption, but there is tremendous variation among individual hospitals, with many falling short. There is also intense disagreement about how those community benefits are calculated and whether they actually serve the community in question.

Charity medical care is what most people think of when it comes to a community benefit, and before 1969 that was the legal requirement for hospitals to qualify for tax-exempt status. In that year, the tax code was changed to allow for a wide range of expenses to qualify as community benefits. Charitable care became optional and it was left up to the hospitals to decide how to pay back that debt. Hospitals could even declare that accepting Medicaid insurance was a community benefit and write off the difference between the Medicaid payment and their own calculations of cost.

An analysis by Politico found that since the full Affordable Care Act coverage expansion, which brought millions more paying customers into the field, revenue in the top seven nonprofit hospitals (as ranked by U.S. News & World Report) increased by 15 percent, while charity care — the most tangible aspect of community benefit — decreased by 35 percent.

. . .

The average chief executive’s package at nonprofit hospitals is worth $3.5 million annually. (According to I.R.S. regulations, “No part of their net earnings is allowed to inure to the benefit of any private shareholder or individual.”) From 2005 to 2015, average chief executive compensation in nonprofit hospitals increased by 93 percent. Over that same period, pediatricians saw a 15 percent salary increase. Nurses got 3 percent.

For the full commentary, see:

Ofri, Danielle. “Nonprofit Hospitals Are Too Profitable.” The New York Times, SundayReview Section (Sunday, February 23, 2020): 7.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Feb. 20, 2020, and has the title “Why Are Nonprofit Hospitals So Highly Profitable.”)

The Politico article mentioned in the passages quoted above, is:

Diamond, Dan. “Health Care; How Hospitals Got Richer Off Obamacare.” Politico (Posted July 17, 2017). Available from https://www.politico.com/interactives/2017/obamacare-non-profit-hospital-taxes/.

Stents Do Not Reduce Heart Attacks or Deaths

(p. A17) The findings of a large federal study on bypass surgeries and stents call into question the medical care provided to tens of thousands of heart disease patients with blocked coronary arteries, scientists reported at the annual meeting of the American Heart Association on Saturday [Nov. 16, 2019].

The new study found that patients who received drug therapy alone did not experience more heart attacks or die more often than those who also received bypass surgery or stents, tiny wire cages used to open narrowed arteries.

That finding held true for patients with several severely blocked coronary arteries. Stenting and bypass procedures, however, did help some patients with intractable chest pain, called angina.

. . .

Stenting costs an average of $25,000 per patient; bypass surgery costs an average of $45,000 in the United States. The nation could save more than $775 million a year by not giving stents to the 31,000 patients who get the devices even though they have no chest pain, Dr. Hochman said.

. . .

But getting a stent does not obviate the need for medical therapy, Dr. Boden noted. Since patients with stents need an additional anti-clotting drug, they actually wind up taking more medication than patients who are treated with drugs alone.

About a third of stent patients develop chest pain again within 30 days to six months and end up with receiving another stent, Dr. Boden added.

For the full story, see:

Kolata, Gina. “Drugs Are Shown to Reduce Need For Surgery to Fix Blocked Arteries.” The New York Times, First Section (Sunday, November 17, 2019): A17.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date Nov. 16, 2019, and has the title “Surgery for Blocked Arteries Is Often Unwarranted, Researchers Find.” The online version says that the page number of the New York print edition was A19. The page number of my National edition was A17.)

High Palladium Prices Incentivize More Mining and Search for Substitutes

(p. B13) Palladium prices are at their highest level in nearly two decades, as investors bet that rising global growth will buoy automobile production and stoke demand for the rare metal.

. . .

Longer term, the auto industry may consider switching to platinum in gasoline engines if the price of palladium continues to climb, some market participants said.

Shree Kargutkar, portfolio manager at Sprott Asset Management, said he thinks platinum provides a better long-term value alternative to palladium given palladium’s sharp rise.

Still, changes in the automotive industry don’t pose an immediate threat to the rally, he said. Those shifts and mining companies’ efforts to bring more areas of supply on line to capitalize on higher prices are likely to take years.

“We’re not at a point where the palladium bulls have something to worry about,” he said.

For the full story, see:

Ira Iosebashvili and Amrith Ramkumar. “Palladium Soars on Hopes for Growth.” The Wall Street Journal (Tuesday, Oct. 24, 2017): B13.

(Note: ellipsis added.)

(Note: the online version of the story has the date Oct. 23, 2017, and the title “Palladium Prices Soar in Sign of Global Growth and Auto Demand.” Where there are minor differences in wording, the passages quoted above follow the online version.)

Fear of Malpractice Suits Increases Useless Medical Care by 5%

(p. B4) Researchers from Duke and M.I.T. . . . offer what is perhaps the most precise estimate of how much defensive medicine matters, at least for care in the hospital. They found that the possibility of a lawsuit increased the intensity of health care that patients received in the hospital by about 5 percent — and that those patients who got the extra care were no better off.

“There is defensive medicine,” said Jonathan Gruber, a health economist at M.I.T. and an author of the paper, which was published in draft form Monday [July 23, 2018] by the National Bureau of Economic Research. “But that defensive medicine is not explaining a large share of what’s driving U.S. health care costs.”

Mr. Gruber and Michael D. Frakes, a Duke economist and lawyer, looked at the health care system for active-duty members of the military. Under longstanding law, such patients get access to a government health care system but are barred from suing government doctors and hospitals for malpractice. Their family members can also use the military hospitals, but they can sue for malpractice if they wish.

Their study looked at what happened to the hospital care that military members received when a base closing forced them to use their benefits in civilian hospitals, where it was possible to sue. Spending on their health care increased, particularly on extra diagnostic tests.

They also found that, even within the military hospitals, family members who could sue tended to get more tests than those who could not.

For the full commentary, see:

Margot Sanger-Katz. “Doctors’ Fear of Lawsuits May Hit Patients in the Wallet, Study Hints.” The New York Times (Tuesday, July 23, 2018): B4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date July 23, 2018, and has the title “A Fear of Lawsuits Really Does Seem to Result in Extra Medical Tests.”)

The Frakes and Gruber working paper, mentioned above, is:

Frakes, Michael D., and Jonathan Gruber. “Defensive Medicine: Evidence from Military Immunity.” National Bureau of Economic Research, Inc., NBER Working Paper # 24846, July 2018.

Under Chinese Socialized Medicine, Long Waits, Bribes, and Violent Attacks on Physicians Are Common

(p. A1) BEIJING — Well before dawn, nearly a hundred people stood in line outside one of the capital’s top hospitals.

They were hoping to get an appointment with a specialist, a chance for access to the best health care in the country. Scalpers hawked medical visits for a fee, ignoring repeated crackdowns by the government.

. . .

The long lines, a standard feature of hospital visits in China, are a symptom of a health care system in crisis.

. . .

(p. A8) Instead of going to a doctor’s office or a community clinic, people rush to the hospitals to see specialists, even for fevers and headaches. This winter, flu-stricken patients camped out overnight with blankets in the corridors of several Beijing hospitals, according to state media.

Hospitals are understaffed and overwhelmed. Specialists are overworked, seeing as many as 200 patients a day.

And people are frustrated, with some resorting to violence. In China, attacks on doctors are so common that they have a name: “yi nao,” or “medical disturbance.” Continue reading “Under Chinese Socialized Medicine, Long Waits, Bribes, and Violent Attacks on Physicians Are Common”

Finnish Universal Basic Income Did Not Increase Labor Supply

(p. A8) A much-watched experiment in Finland failed to provide evidence that offering people a guaranteed income is the answer to some of the insecurities caused by potentially profound changes in the jobs market.

Early results from a pilot program suggest that providing unemployed people with a minimum income doesn’t encourage them to find work, . . .

. . .

“The Finnish government hoped that UBI would increase labor supply and employment, but it did not,” said Christopher Pissarides, a professor of economics at the London School of Economics and a Nobel Prize winner.

For the full story, see:

Paul Hannon. “Basic Income Experiment Didn’t Boost Employment.” The Wall Street Journal (Saturday, Feb. 9, 2019): A8.

(Note: ellipses added.)

(Note: the online version of the story has the date Feb. 8, 2019, and has the title “Experiment in Finland With Guaranteed Income Creates Less Stress but No Jobs.”)

Absence of For-Profit Hospitals Hurts New York State

(p. A17) House Democrats’ new Medicare for All bill asserts “a moral imperative . . . to eliminate profit from the provision of health care.”
. . .
The Empire State’s hospital industry has been 100% nonprofit or government-owned for more than a decade. It’s a byproduct of longstanding, unusually restrictive ownership laws that squeeze for-profit general hospitals. The last one in the state closed its doors in 2008.
A report last year from the Albany-based Empire Center shows the unhappy results. The state health-care industry’s financial condition is chronically weak, with the second-worst operating margins and highest debt loads in the country. And there’s no evidence that expunging profit has reduced costs. New York’s per capita hospital spending is 18% higher than the national average.
The overall quality of New York’s hospitals, even factoring in Manhattan’s flagship institutions, is poor. Their average score on the federal government’s Hospital Compare report card was 2.18 stars out of five–last out of 50 states. Their collective safety grades from the Leapfrog Group and Consumer Reports magazine have also been dismal.
The state’s nonprofit hospitals also fall short on accessibility for the uninsured. On average they devoted 1.9% of revenues to charity care in 2015, a third less than privately owned hospitals nationwide.
Finally, New York’s antiprofit policy doesn’t even prevent people from getting rich. Seven-figure salaries are common among the state’s hospital executives. If banning profit is an effective way to improve health-care, there’s no evidence to be found in New York.

For the full commentary, see:
.Bill Hammond. “Banishing Profit Is Bad for Your Health; The Medicare for All proposal from House Democrats follows New York state’s bad example.” The Wall Street Journal (Tuesday, March 19, 2019): A17.
(Note: ellipsis internal to first paragraph, in original; ellipsis between paragraphs, added.)
(Note: the online version of the commentary has the date March 18, 2019.)

Small Spanish Firms Less Likely to Hire with Higher Minimum Wage

(p. B1) MADRID — As Spain grapples with a turbulent political crisis, one of Europe’s last Socialist governments may soon fall amid the rise of a new nationalism in the country. But whatever the outcome, Prime Minister Pedro Sánchez is leaving behind a signature legacy: a record increase in the minimum wage.
The 22 percent rise that took effect in January, to 1,050 euros (about $1,200) a month, is the largest in Spain in 40 years. Yet the move has ignited a debate over whether requiring employers to pay more of a living wage is a social watershed, or a risky attempt at economic engineering.
. . .
(p. B4) Over 95 percent of businesses in Spain are small and medium-size firms, many of which operate with thin margins, according to Celia Ferrero, the vice president of the National Federation of Self-Employed Workers.
“You won’t find people disputing that higher wages are needed,” said Ms. Ferrero, whose organization represents many smaller businesses. “The question is whether firms can afford it. Higher wages and social security taxes simply make it more expensive for employers to hire or maintain staffers.”
“It’s not that they don’t want to pay; they literally can’t,” she added.
Lucio Montero, the owner of General Events, which makes booths and backdrops for firms displaying wares at big conventions, employs eight workers on the outskirts of Madrid. He pays each €1,400 a month.
The higher minimum wage and increased social security charges will put upward pressure on his labor bill and already thin margins, he said. It is a cost that he can ill afford.
“I would need to think twice about hiring more people,” said Mr. Montero, walking around his tiny, sawdust-covered factory floor.

For the full story, see:
Liz Alderman. “Spain’s Minimum Wage Has Surged. So Has Debate.” The New York Times (Friday, March 8, 2019): B1 & B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date March 7, 2019, and has the title “Spain’s Minimum Wage Just Jumped. The Debate Is Continuing.”)