Should Doctors and Dentists Regulate Their Competitors?


An article in Modern Healthcare, “Should state medical boards be allowed to set scope-of-practice? Supreme Court will decide,” poses an important question that would seem like a no-brainer at first glance. Yet, the question deserves a second look. State medical boards are typically composed of members from the industry the board regulates. Thus, it’s common for these boards to take positions in the industry’s self-interest. At issue is an effort by the North Carolina Board of Dental Examiners to prohibit dental hygienists from performing teeth whitening services in mall kiosks, day spas and non-dental offices. Dentists who offer teeth whitening in their offices often supervise dental technicians and hygienists, who perform the actual service. Allowing those same dental technicians and hygienists to perform the work without the supervision of a dentist undercuts dentists’ prices and reduces their profits. According to Modern Healthcare:

The removal of stains from teeth can be a lucrative business for dentists. Starting in 2003, the dental board sent out numerous cease-and-desist orders to competitors who were accused of illegally practicing dentistry. The Federal Trade Commission (FTC) sought to encourage price competition for peroxide treatments by forbidding the state dental board in 2011 from taking action against lower-cost providers that offer teeth-whitening services. A federal appeals court upheld the FTC decision in 2013.

Yet Another Reason Why Obamacare Health Insurance Prices Make so Little Sense


Proponents of government run health care have an inexplicable disdain for geographic variability. They often seem to assume that physicians, treatments, and outcomes should be constant across the entire United States. Any variations in price, treatment modality, or expenditure ranks as a sure sign of an improperly run health care system.

The problem is that normal human activities vary even over relatively compact geographic areas, and the variations often reflect the exigencies of daily life rather than administrative boundaries. For example, when a company took the trouble to analyze credit and loyalty card data about its customer’s shopping habits, it found that even a relatively compact area like a city had distinct variations in its shopping and retail use patterns.

The maps below are reproduced from a Boston Consulting Group article about what the company learned about its pricing power. In the beginning, the company had the single pricing zone for all of Georgia shown in the left hand map panel. The right hand map panel shows how its pricing zones changed after customer habits were considered. Of interest is the fact that Atlanta ended up with multiple pricing zones. High population density makes it harder to move around, limits customer mobility, and people’s ability to access goods and services. The report notes that in Atlanta, stores serving the same clusters of customers often are “located along commuting corridors.”


The Verdict Is In?


Politico‘s headline was unambiguous ― “The verdict is in: Obamacare lowers uninsured.”

Well, my goodness, I would certainly hope so after spending several hundred billions of dollars to do just that. We can’t be sure how much has been spent so far, but the legislation called for over $1,000 billion over ten years. Let’s see ― it has been in effect for four years now, so is that $400 billion so far?

The Politico article reports that the Commonwealth Fund estimates 9.5 million fewer uninsured, and the Urban Institute finds 8 million newly insured adults. Let’s round it up to ten million. That would make $40,000 for each newly insured person. Wow!

Of course, there are some problems with even these optimistic numbers. Chris Conover delves deeply into the methodology in Forbes. But I want to add a few other observations –

The Mystery of Hospitals’ Medicaid Profitability: Evidence from Arizona


Advocates of consumer-driven health reform want to shrink the role of government. One of the things we want is for Medicaid dependents to have greater choice of coverage, perhaps even through vouchers or tax credits that would allow them to choose private coverage. We know that Medicaid patients face poor access to care and that increasing the number of people on Medicaid increases emergency-department use. And yet, it has also been argued that hospitals lose money on Medicaid patients. However, this cannot make sense because hospitals constantly lobby to expand Medicaid. They never join with proposals to move Medicaid patients to private coverage. This is especially baffling because scholars also believe that some proportion of people who take advantage of a Medicaid expansion drop private coverage to take up Medicaid.

Evidence from Arizona leads to an explanation. Arizona hospitals heavily lobbied Governor Brewer to expand Medicaid in line with Obamacare. This expansion resulted in a reduction in so-called “uncompensated costs” from about 8 percent of hospitals’ revenue in the summer of 2013 to under 5 percent in April 2014. As well, Arizona hospitals operating margin increased from $140 million for 2013 to date to $184 million for 2014 to date, an increase in operation margin from 4.0 percent to 5.2 percent.

73 Million Would Lose Employer-Based Benefits if Tax Exclusion were Eliminated


0Allison Percy of the Congressional Budget Office has published estimates of what would happen if employer-based health insurance was taxable to employees. Currently, employer-based health insurance is excluded from both income tax and payroll taxes for Medicare and Social Security. According to Percy, 73 million would lose employer-based benefits by 2017, of which 54 million would get their coverage from Obamacare exchanges. The number of uninsured would increase by 12 million. Percy also shows the distribution of this effect by household income. This is an important estimate for post-Obamacare reform, because Percy’s model simply taxes the value of employer-based insurance without returning any of those tax dollars to the people as a tax credit for the purchase of individual health insurance. (Of course, some of those 54 million getting health insurance from Obamacare exchanges will have lower premiums because their health insurers receive subsidies in their names.) Those of us who advocate reforming the tax code to give individuals tax credits for health insurance have always been beaten back by anxiety over losing employer-based benefits. Percy’s conclusions help us understand how much money we would have to allocate to tax credits to overcome the loss of employer-based benefits after including them as taxable income.

Why Does the FDA Only Act (or Overreact) After a Crisis? The 2012 Meningitis Outbreak


The FDA has just issued regulations and policy positions on compounding pharmacies that sell their products across state lines. A compounding pharmacy is a pharmacy that practices like most pharmacies did until well into the 20th century: Pharmacists actually compound chemicals into a medicine, rather than dispensing a pill or vial made by a manufacturer. That is why the mortar and pestle is the traditional symbol of pharmacy. Traditionally, the Food and Drug Administration did not scrutinize these pharmacies. In 2012, the New England Compounding Center was responsible for sending impure steroid injections to twenty states, which caused an outbreak of fungal meningitis that infected 751 people and killed 64. Congress reacted by passing amendments to the Drugs Quality and Security Act in November 2013, giving the FDA the power to regulate compounding pharmacies.

The question nobody asked was: Is this necessary? There was no general crisis of quality in compounding pharmacies. Authorities in Massachusetts shut down two pharmacies and investigated three more. The New England Compounding Center went bankrupt in December 2012.

Hits and Misses


Variety of Medicine in Pill BottlesAdherence to drug therapy varies by both the color and shape of the pill!

Don’t clean out the litter box: Cat poop may fight cancer.

You look good on paper! Company will Photoshop your graduation pics to make you look slimmer.

Why is divorce more common among families with girls? (It’s not what you think)

Pincushion therapy: Acupuncture reduces hormonal “hot flashes.”

Health Wonk Review is up: “ObamaCare is creating uncertainty and increased government control of society, which holds down economic growth” says NCPA senior Fellow John R. Graham.

Households Only Finance 70 Percent of Their Own Consumption, Down From 93 Percent in 1959


The leftish think tank Demos has published a very thorough criticism of how we measure Gross Domestic Product. Scholar Lew Daly argues that we give government too little credit for its spending, because government invests in goods and services that increase total GDP. For example, household incomes increased dramatically in the 20th century. This is due to an increase in “human capital,” much of which is due to education, which is government funded. So, government funding of education is good! Interestingly, Mr. Daly’s evidence relating education to human-capital development and rising incomes is mostly from the 1950s. Needless to say, this is before public-sector-unions or the federal government got involved, and a period in which most people would agree public schools did a better job than today.

Mr. Daly notes with concern that household incomes have been shrinking as a share of GDP for some years now. However, he does not connect this with the fact that households control less of their own consumption than they did in earlier decades. When third parties control so much of what we consume, and we believe those third parties are financed by others, it is unsurprising that those third parties will seize control of a greater share of GDP. Mr. Daly’s Figure 6 shows us that in 1959, households financed 92.8 percent of their own consumption. By 2009, that had fallen to 70.3 percent, with government and employers supplying the balance.


Hits and Misses


iStock_000004347437XSmallSome children now eligible for adult organ transplants.

Number of induced labors for early-term deliveries dropped 12 percent, 2006-2012.

Medical privacy: Let patients opt out of HIPAA and manage their own data.

36 percent increase in global use of antibiotics “alarming“.

Medicare expanding telehealth coverage to include wellness, psychotherapy, psychoanalysis.

Commonwealth Fund: 57 Percent of People Potentially Eligible for Obamacare Coverage Have Still Not Visited Exchange


A few days ago, the pro-Obamacare Commonwealth Fund released a report, Gaining Ground, cheerleading the results of Obamacare so far. Even the New York Times was a little guarded in its reception of the report, opining:

Most of the newly insured people had no trouble finding a primary care doctor, and most waited less than two weeks for an appointment. Whether that will hold true when millions more patients flood into the market remains to be seen.

That’s for sure. What the Commonwealth Fund report really confirms is what this blog has maintained for a long while: Obamacare exchanges attracted people in immediate need of medical care. 60 percent of those who enrolled have seen a doctor, been to a hospital, or filled a prescription. On the other hand, 57 percent of people potentially eligible for Obamacare coverage have still not even visited a health-insurance online exchange (Exhibit 6). And that figure is for the period starting April 1, when the full-court press to enroll everybody was at its fiercest.