Starting With Curious

Once confined to bastions of political correctness like Boston and Berkeley, recycling bins are a staple of modern life in America.  There is certainly a lot of variation – compare, say, Madison (recycling Nirvana)  to Milwaukee (not so much) – but it is a given that we should be recycling more, and that public policy should require and promote it.

Or is it?  Several articles recently have called into question the economics of recycling.  Much of the print debate follows predictable party lines: the Natural Resources Defense Council tends to support it, while the libertarian Cato Institute finds flaws.  John Tierney, writing in the New York Times, notes that recycling tends to lose money.  He does admit the environmental benefits, especially in curbing carbon emissions, but cites the EPA in stating that these are primarily due to recycling a few materials, specifically paper, cardboard, and metals. He goes on to wonder why both the public and many elected officials continue to promote recycling, suggesting that much of it is from liberal do-gooders who want not only to feel virtuous, but to force others to as well.

As I see it, there are several important issues he ignores.  First, few people have argued that recycling makes sense on primarily economic grounds, especially in the US.  Given the heavy subsidies for extractive industries (mining, oil, etc.) and manufacturing, the playing field is not level.  In the absence of these subsidies, and if externalities (such as the cost of future damages due to climate change) were factored in, the economics would look very different.  Rather, the benefits are in large part environmental.  One that Tierney and others dismiss is the preservation of space that would be devoted to landfills.  He ridicules the contention that we are running out of space to place trash.  True, there is a lot of space in the US where trash could be dumped.  But it is also true that no one wants it in their backyard.  The further the trash must travel, the more it costs to dispose of, and the more greenhouse emissions that are generated.  And the argument that landfills can be converted back into nice natural areas is questionable.  A pristine area that is used for dumping and then “restored” is no longer pristine.  There is more to an ecosystem than planting grass and (usually non-native) trees.  I have seen many reclaimed landfills, and while they are better than an open trash pit, they’re not exactly Yellowstone or Pictured Rocks or even Kettle Moraine.

Tierney also postulates that the greenhouse gas benefit isn’t that great.  He points out that recycling a ton of aluminum saves 20 tons of carbon, whereas you would need to recycle 60 tons of glass to save the same 20 tons of carbon.  This is specious, as this is not the relevant question.  In both cases you save a ton of carbon, which was the goal.  It’s a bit like saying you can buy an ounce of gold with an ounce of 10 dollar bills, but you’d need 50 pounds of quarters to buy the same ounce of gold.  You still get the gold. At the same price.

My biggest beef with his argument is the dismissal of recycling as a quasi-religious (his words, not mine) exercise in feeling good.  First of all, most actual religious activity offers no economic benefit to humanity, but we encourage and subsidize it anyway.  Besides, the fact that recycling may be driven by non-economic considerations isn’t necessarily a bad thing.  Intrinsic motivation, such as a desire to improve the planet, is typically more powerful than extrinsic factors like money.  (Indeed, this fact has been used to argue against financial incentives for quality metrics for physicians.)  Psychologists and neural scientists have also long known that acts of altruism – such as recycling – produce a variety of psychological benefits, sometimes referred to as the “helper’s high.”  Given the dire predictions about climate change, and the seeming inevitability of fundamental disruptions to our environment and lifestyle, giving people a sense of hope and optimism has some merit.  Most importantly, the real goal isn’t recycling, it’s generating less stuff in the first place.  The environmental mantra is “Reduce, Reuse, Recycle.” Recycling is the last resort.  But by making people more aware of the waste they generate, recycling might lead to reduction and reuse.  I wonder if, in that regard, we’ve made recycling too easy, and it would be better to have those systems where people need to do their own sorting.  The more I need to think about the waste I generate, the more likely I am to try to create less of it.  And that’s an additional benefit that a traditional economic analysis ignores.

Fortunately, the majority of Americans agree.  A 2014 Nielsen study showed broad support for recycling, and specifically that people would be willing to spend more (an average of 10-13%) for products that are either made from recycled materials or themselves more able to be recycled.

Perhaps next we can talk about composting….

“She had a temperature of 101.4,” the child’s mother told me in the ER.  When I asked if that was the highest it had gotten, she replied “Oh no, it got as high as 100.8.”

As I considered how to respond, the father slowly interjected, “Wait a minute, 101.4 is higher than 100.8.”

Mom could scarcely contain her scorn. “No it isn’t,” she sneered.  Turning to me for validation, she said “101.4 is not higher than 100.8,right?”

“Actually, he’s right, 101.4 is higher,” I said gently, prompting a satisfied smile from the father and a look of incredulity from the mother.

At the time I found this amusing.  But lack of health literacy and numeracy is both common and concerning.  According to a 2006 report, only 12% of Americans are sufficiently proficient in health literacy, lagging most of the rest of the industrialized world.  Poor health literacy interferes with the ability of people to manage their own health, and undermines efforts to improve patient-centered decision making.

October is Health Literacy Month, underscoring efforts by individuals and organizations to raise awareness of the issue and spur improvements.  An example I learned about recently: Children’s Hospital of Philadelphia is opening the South Philadelphia Community Health and Literacy Center, which will bring together clinics, a recreation center, and a library to address a variety of community needs.  It will include a Consumer Health Resource Center targeting health literacy needs.

As providers there is much we can do as well:

• Use “teach back” when educating patients and families to check for understanding and identify additional learning needs
• Rather than asking “Do you have any questions?” end with “What questions to you have?”, thus normalizing the questioning process
• Augment numbers with simple graphs to illustrate numeric concepts – these are more intuitive than percentages, for example

Improving health literacy is integral to our work as care providers.  After all, the word doctor comes from the Latin docere, meaning to teach. And nurse comes from nutricia which meant, among other things, a female tutor.  Now if only I could figure out this new math….

It is sadly not uncommon, in a market economy, for a seller to take advantage of those with a desperate need in order to maximize profits.  War profiteering is one familiar example.   US Marine General Smedley Butler, in his 1935 book “War Is A Racket,” decried military contractors who, in the heat of World War I, jacked up their profits to as much as 1700%.  This seems completely outrageous.  So what do we make of Turing Pharmaceuticals, a start-up run by a former hedge fund manager, which bought the rights to a 62-year old drug called pyramethamine (used to treat parasitic infections including malaria)?  Turing raised the wholesale price of the drug, which costs about a dollar a pill to manufacture, from $13.50 (already a 1350% profit margin) to $750 (75,000%).

A slew of such multiple-order-of-magnitude price hikes in medications has occurred in the past couple of years.  High prices for pharmaceuticals are often defended on the basis of the expense of research and development, and the fact that so many prospective new drugs fail.  But how can one argue that in the case of a drug that has been on the market for six decades, during which time the pretty tidy 13-fold markup must have paid off the R&D costs?  Which, by the way, were incurred by someone else.

Medication prices are an important driver of the high cost of health care in the US.   Prices for pharmaceuticals in the US are more than twice as high as in the next highest nation.  And remember, unlike clinic visits or hospital stays, where there may be important differences that obscure such comparisons, here we are comparing apples to apples (or aspirin to aspirin): it is by and large the same drugs available in Milwaukee as in Milan or Munich or Madrid.

Every other nation controls its costs in one of two ways.  In many countries, where the government is the largest purchaser of medications because of some form of nationalized healthcare, it simply leverages that bargaining power to negotiate better prices with the pharmaceutical companies.  Interestingly, the government is also the largest purchaser of drugs in the US, too: between Medicare, Medicaid, the military, and the veteran’s health system.  However, when the Medicare drug benefit was created in 2003, Congress explicitly prohibited the agency from negotiating prices.  Another approach is to set price limits on approved medications, as is done, for example, in Switzerland.  While this might reek of big government, the Swiss are hardly known as regulatory fanatics.  Moreover, this is tolerated despite the fact that two of the largest drug companies in the world are based in Switzerland, where the pharmaceutical industry accounts for 6% of GDP (compared with only 1% in the US).  These companies can still make a very handsome profit, and support their research and development, but at about half the cost to the public as in the US.

Indeed, if the real reason for high drug prices is to support R&D, it would appear the US is subsidizing new drugs for the rest of the world, which would be problematic enough.  But even Martin Shkreli, the CEO of Turing who engineered the Daraprim price hike, admits it’s really just about making his company as profitable as possible.  That sounds like profiteering of the kind Gen. Butler warned about.  As far back as the Civil War, the False Claims Act (still on the books) was passed to prevent such behavior, and contractor malfeasance in the Iraq War led to the War Profiteering Prevention Act of 2007.  When will we see a Pharma Profiteering Prevention Act?

Transparent (\tran(t)s-ˈper-ənt). adj.

1. allowing light to pass through so that objects behind can be distinctly seen
2. free from pretense or deceit; easily understood

The buzzword in healthcare today is transparency, and especially price transparency.  The foundation of market-based reforms, including but not at all limited to the passage of the Affordable Care Act, is the concept of consumerism:  the notion that people with good information about quality and cost will make choices based on value.  There is a great deal of debate about every word in that sentence, but for the moment let’s focus on cost.

Cost, like beauty, is in the eye of the beholder.  To a consumer, the relevant question is “How much of my money will I have to give you to get your service?”  Ideally, this would be answered before the purchase.  How many of us go into a store, load up the cart, and then wait for the bill to arrive a month later?  In some settings, like a grocery store, pricing is easy.  Buying a car, on the other hand, may be more complicated.  There is the sticker price, but no one really pays that.  You negotiate a price with the dealer, and then you might also negotiate a price for a trade-in.  In all those cases you also need to account for taxes, and perhaps some fees.  But at the end, perhaps with pencil and paper and a calculator, you can figure out what the item will cost before you commit to buying it.

In healthcare, the complications are exponentially higher.  There is the sticker price (also known as the “charge master price”) which again, no one ever pays.  Then, depending on the insurance you have, there is an already-negotiated discount on that sticker price.  How much of that discounted price is coming out of your pocket in turn depends on the insurance terms: whether you need to pay a fixed amount per service (co-pay); whether you have to pay a percentage of the charge (coinsurance); and whether there is a minimum amount per year that you must pay before the insurance even kicks in (deductible).  But the biggest obstacle to transparency is the fact that it’s very difficult to know in advance what items are going to be in the cart.

Let’s take one of the simplest things I can think of: a sore throat.  How much does it cost to take care of a sore throat?  Well, you’ll need a provider to ask you some questions and examine you.  Then, it needs to be determined whether it is caused by a bacteria (which would be treated with antibiotics) or a virus (which needs only medication for symptoms).  Not everyone needs a test for the bacteria, since the likelihood of a strep throat correlates with the exam findings.  And then even for cases where there is a bacterial infection (strep), the choice of antibiotic might be affected by whether the patient has allergies.  So the answer to how much will it cost is – it depends.  Not very satisfying.  And that’s the easiest one!

As a provider, I could look at an expected resource use based on prior experience.  Of the last 100 people who came in with sore throat, 60 needed a strep test, 30 were diagnosed with strep, and of those 28 got penicillin and 2 something else.  I can then calculate an average price.  If that’s what I subsequently charge, some individuals (someone who doesn’t need a strep test or antibiotics) might pay more than they would under the old system, while those who need both a test and a prescription might pay less, but at least they would have a guaranteed price up front.

Some providers have started to do this with some other common conditions and procedures, such as joint replacements for adult patients.  But there are unfortunately few conditions that lend themselves to this kind of calculation, as there are simply too many “what ifs.”  This is particularly true in pediatrics, for several reasons.  First, there is more natural variation.  A sore throat in a 2 year old is different than in a 7 year old which is different than a 15 year old.  Second, the number of children with most conditions is fairly small, making it hard to do this sort of estimate.  Pediatric providers are also at a disadvantage because a general hospital might decide to offset that uncertainty by cross-subsidizing pediatric care from their much larger adult business.  Say for example that the average adult sore throat costs $70, but for kids it’s anywhere from $60 to $100. Charging $70 across the board for both adult and pediatric patients undercuts the provider that only cares for kids.  Pediatrics becomes a loss leader.

One of the reasons so much health care is paid for under an insurance system is because it is so difficult to know the costs up front.  But with high deductible plans and increasing cost sharing, patients are becoming consumers, and buying healthcare is more like buying a car.  I am skeptical, however, that despite all the talk about “transparency” that costs in health care will ever be distinctly seen, much less free from pretense or easily understood.   An unsuccessful quest for transparency may undermine the push toward consumerism.  Single payer, anyone?

Today’s supermarkets in many ways are something out of a 1960s science fiction story.  Bar code scanners and payment via cell phone (not to mention the cell phone itself) are just two things that would have seemed a bit far out back when I was watching the original Star Trek.  But that’s nothing compared with genetically modified organisms (GMOs), those agricultural products that arise when genes are transferred between species.  GMO corn and soy, for example, contain a gene from a bacterium that makes the plant resistant to herbicides.  The idea of taking a gene from a soil bacterium and transferring it into a corn plant seems so routine now, it’s hard to remember how mind-blowing it was not too long ago.

All of the available evidence (which is considerable but by no means exhaustive at this point) suggests that the products of this genetic engineering themselves pose no harm to human health.  That’s good news.  But it’s more complicated than that.  There remain important ethical and ecological issues.  And, as discussed in a recent editorial in the New England Journal of Medicine, there are potential indirect health issues that have not been previously considered.  For instance, the “Roundup-ready” GMO corn and soy (which make up the vast majority of those products in the US today) allow farmers to use large amounts of the herbicide glyphosate, which has now been shown to be a likely carcinogen.

At the very least, people should be able to choose whether they want to purchase a product that contains GMOs.  For myself, I choose not to because I don’t want to support the use of toxic herbicides, or the corporate agriculture system.  Others may doubt the evidence of the safety of the products themselves (which for the record I don’t), or may simply be squeamish about moving genes between species.  The idea that consumers should be allowed to choose – and need to be informed to be able to do so – is behind the move by several states to require labeling of products that contain GMOs.  64 other countries already do so, including the entire European Union and Brazil, a country with a substantial GMO-based agricultural sector.  The US Congress, however, recently passed a law proscribing a federal requirement for such labeling, and also prohibiting state or local governments from enacting any such requirement.  This prohibition has been pushed by Big Ag, using the argument that they shouldn’t be required to label products that are shown to be safe.

That’s beside the point.  We label the fiber content of clothing – no one is claiming cotton or silk are unsafe.  It’s just that I should know what a shirt is made of so I can decide which one I want.  If something is unsafe we shouldn’t be labeling it, we should be removing it from the shelves.  Labeling isn’t about safety, it’s about consumer choice.

During those 1960s Star Trek episodes, in the New York area, I frequently saw commercials for Syms, a men’s clothing store.  Sy Syms, touting his low prices, would say “An educated consumer is our best customer.”  That concept wasn’t too far out then, and it shouldn’t be today.  I wish Monsanto and its subsidiary, the House of Representatives, saw it that way.