Chicago’s Model Health-Care Fix

It may not seem obvious from news reports, but health-care costs in the U.S. have been growing remarkably slowly. Among the many forces that have caused the slowdown are efforts such as those by Chicago Mayor Rahm Emanuel to change how health-care dollars are spent — a strategy that other cities and states can learn from.

For the past five years, Chicago has kept its health-care bill for employees and retirees roughly flat, at about $450 million a year. And reflected in this success are reforms that hold much promise for the future.

From Bloomberg View – Articles by Peter R. Orszag

Another Piece of Obamacare That Trump Should Keep

To get a sense of the future of American health care, amidst the post-election uncertainty, watch what happens to the Center for Medicare and Medicaid Innovation. This agency, created as part of the Affordable Care Act, has attracted substantial opposition. A recent proposal to change reimbursement to doctors for administering certain drugs, in particular, has led to calls that it be abolished. But let’s hope the center survives, because it could prove crucial to any new effort to raise the value of health care in the U.S.

From Bloomberg View – Articles by Peter R. Orszag


We Already Have Health-Risk Scores. Now Let’s Use Them.

Most Americans know they have a personal credit score, and many know where to find it. Few know they also have a personal health-risk score. If these were better known, and better constructed, health insurance markets in the U.S. would work more smoothly.

Commercial health insurance plans, as well as Medicare, Medicaid and other government programs, generate risk scores every year for most of the people they cover. These scores are estimates of each person’s cost of care, compared with the average costs in a large population. And they play a big role in health insurance; they’re often used, for example, to determine how much more insurers are paid for sicker beneficiaries.

From Bloomberg View – Articles by Peter R. Orszag

Education and Taxes Can’t Reduce Inequality

Very often, proposals to even out income inequality advise one of two things: Expand people’s access to education and/or raise the top tax rates. Yet even a big increase in the share of people with a college degree would have only a minimal effect on earnings inequality, research has shown. And now it turns out that a substantial increase in the top marginal tax rate wouldn’t do any better.

The economists Bill Gale and Melissa Kearney (colleagues of mine at the Brookings Institution) and I recently looked into the tax-rate question and found that even a big increase in the marginal tax rate for top earners would have shockingly little effect on after-tax inequality.

From Bloomberg View – Articles by Peter R. Orszag

Health Care Costs and Patient Health

Healthcare costs vary greatly depending on where you are. While this fact is empirically known there is some debate about the reasons why. For decades, the Dartmouth Atlas of Health Care has published research indicating that the varying healthcare costs are attributed to differences in practice. That is, different hospitals go about treating illness in different ways, each resulting in different costs. What the Dartmouth team also finds, most notably, is that higher costs do not parallel higher quality. Therefore, it should be possible to reduce costs without diminishing quality of care. This position has been acknowledged and embraced publicly by many leaders in this arena, including American economist Peter Orszag.

Peter Orszag

Do health care costs relate to quality of care? (photo: Getty Images)

However, a new Brookings Institute report disagrees. Louise Sheiner, a senior fellow at Brookings, accepts that healthcare costs differ geographically, but asserts that varying methods of medical practice are not to blame. Rather, her report claims that the overall health of patients is what causes the variation in cost. Essentially, the states with higher healthcare costs have sicker people. Those states have sicker people, she explains, because of socioeconomic factors affecting the need for medical care.

The correlation between costs and overall health is the crucial point of the two perspectives. Sheiner holds that a diabetic patient in a state with a high prevalence of diabetes is ultimately less healthy than an apparently similar diabetic person in a state where diabetes is less common. Based on this position, the variation in Medicare costs across states is caused mostly by the underlying health of the people in the state. How doctors treat patients has no effect at all.

A way to examine this idea is by analyzing the spending of people on Medicare as they move from one state to another. A recent paper produced by academics from MIT and the University of Chicago examined just that, and found the costs changed as soon as Medicare beneficiaries moved. That change happened regardless of if they moved to high-spending area or a low-spending one.

From that, we can determine that the overall health of a patient determines, at most, half of the differing costs. It is starting to look better for the Dartmouth team.

Also, consider how easily health care costs can vary. A patient’s bill will vary greatly depending on what hospital the ambulance takes them to, though the quality of care will not.

So what we know is that health care costs fluctuate significantly and overall health of patients cannot account for the majority of it. Therefore, there most be ways to lower costs without diminishing quality of care — good news for Americans.

from Peter Orszag Healthcare

The World’s Most Common Fear

In this clip, comedian Jerry Seinfeld jokes about how widespread the fear of public speaking is. It is true that public speaking, or glossophobia, is almost always present on lists of top ten phobias. It is often found somewhere near the fear of flying and fear of spiders. A quick Google search reveals a multitude of lists of tips and even entire websites devoted to helping people conquer glossophobia. But there is less available information about why we are so afraid of speaking in front of crowds. So why do we tremble at the thought of addressing a crowd? In a world: Evolution.

There is an evolutionary origin to our fear of public speaking. In every person, there is a caveman/cavewoman lurking. Part of our brain belongs to that caveperson. Any fight or flight decision you make in a split second is the work of that caveperson, ever working to preserve your lives. Your reflexes, instincts and gut-feelings are all vestiges of a time before our prefrontal-cortex let logic dictate our choices. Those animalistic tendencies have more power over us then we’d like to admit. Those instincts help us more often than not and have most likely saved your life at some point. Sometimes, however, they can hold us back. The fear of public speaking is an example of that.

Addressing an audience requires us to separate from the group — something our inner caveperson wants to avoid at all costs. Early in human development, maintaining position in a social group was absolutely necessary for survival. Aristotle taught us that we are social animals, but the need to cooperate with a group was even more absolute when we were fighting off saber tooth tigers and trying to survive long winters. For your inner caveperson, public speaking is literally a life or death situation. That explains why you have such visceral, physical reactions: your heart races, palms sweat and voice shakes with nerves. Every instinct demands you return to the fold, less you be caught in the wild alone and vulnerable.

So how do we calm our inner caveperson? For some, the knowledge that your instincts are getting ahead of you may be enough to take the edge off. It is important not to try and silence the caveperson totally. Trying to bury or ignore it will only amplify it. Instead, you need to accept that inner terror for what it is: an artifact of an earlier version of yourself. Love you inner caveperson and the voice will become quieter until eventually it is just a peep. Many of the worlds best orators still feel nervous before an engagement. The key is to not let that nervousness get the better of you.

from Peter Orszag