What is and isn't worth paying for in public health

Bill Gates on which public health interventions are most worthwhile in developing countries:

BG: The way that this is talked about is, what’s a year of life worth? They call it a disability-adjusted life year (DALY). When you’re running a poor country health-care system, you can’t treat a year of life as being worth more than, say, $200, $300 or else you’ll bankrupt your health system immediately. So, with very few exceptions, you do nothing for cancer. If you get cancer, you’re going to die. And so none of the stuff that’s going on in the U.S. about $300,000 a year chemotherapy drugs is relevant.

Even simple things don’t pass the test. We’re on the verge of saying that Africa should do blood pressure medicine because it’s become generic and so cheap and that’s such a common issue in terms of heart attack death, the so-called polypill is so cheap that it’s one of the few non-infectious disease things that meets the dollars per DALY threshold to actually go into a poor healthcare system and say this is worth it given the extremely finite not only financial resources, but personnel resources, that you have.     

But here’s the good news for these countries. If you spend the less than 2 percent of what the rich countries spend, but you spend it on vaccinations and antibiotics, you get over half of all that healthcare does to extend life. So you spend 2 percent and you get 50 percent. If you spend another 80 percent you’re at over 90 percent.

Immigration in the Cote d'Ivoire

Interestingly, immigration seems to be at the heart of the Cote d'Ivoire's recent conflicts.  The story is, in some ways, similar to that of the U.K. in recent years, where years of open immigration contributed to economic growth and cultural enrichment, but also to a deep-seated resentment of immigrants when the economy turned bad.

After independence, the Cote d'Ivoire maintained an open, business-friendly economy, and allowed in many immigrants from its poorer neighboring countries who were happy to participate in the "Ivorian miracle."  The Ivorian miracle, according to Lonely Planet, "was foremost an agricultural one," and immigrant laborers played a large role in allowing the economy to thrive.  But when global commodity prices crashed in the '80s and '90s, the economy stagnated.  And, as so often happens, the stagnant economy caused many citizens to focus their frustrations on the wave of recent immigrants.

This eventually led to the civil war.  The government spent the '90s passing jingoistic laws debating the concept of Ivorian ethnicity.  Christian Bouquet describes how universities and government began to "reflect on the definition of a new identity concept with a view towards 'scientifically' establishing the criteria of Ivorian citizenship."  Politics descended into ethnic factionalism, which lead to a coup and almost a decade of "crisis" and frequent small bouts of violence.

Stories like these make the U.S.'s centuries long open immigration policies all the more remarkable.  Although the U.S. story is obviously a unique one in that the government's pro-immigration policies were made much, much easier by the thousands of miles of "available" and "unoccupied" land on its western frontier.

The recent experience of the Cote d'Ivoire, the U.K. and Scandinavian seems much more common.  Are there any other examples of countries that have opened their borders to immigrants and not seen a spike in hostility towards immigrants?  Canada seems like a decent candidate in this regard.

Health care markets v. public health care

Marc Roberts et al. on why health care markets fail:

Moreover even where there are markets, they are often imperfectly competitive, and physicians can determine much in the way of patient behavior.  Given these departures from the competitive ideal, it is not surprising that microeconomic theory has offered few explanations for macro-level health outcomes or for the rate of growth of national health expenditures.  

But also why government health care fails:

Poorly run government bureaucracies and inefficient state-owned companies have proliferated, in part because of their political advantages.  Using the public sector to provide patronage rather than service, employment rather than output, allows government to build up a political base.  Workers are identifiable, easy to organize, and often grateful to political leaders for their employment.  Customers, on the other hand, are harder to identify and organize and are likely to have less at stake.  These factors often lead to an overstaffed, poorly managed, high-cost public sector, with unhelpful staff, crumbling facilities, and poor service.  

So where do they come down on the issue?  They fudge:

Because (the privatization movement) is so widespread, we want to let readers know our view of such matters.  Whether new arrangements will perform better than current practice is a complex empirical question.  As we argue throughout this book, in predicting outcomes, the devil is often in the details--especially when it comes to how organizations are managed and governed.  In our view, the applicability of the market model to health care varies with specific circumstances: Is a given market large enough to support a reasonable number of efficient, independent competitors?  Do customers know enough, or can they be given enough information, to choose intelligently?  Will the savings that result from the competitive pressures be greater than the resources used up through higher transaction costs?  In our view, health reforms should answer such questions before deciding on policy.  

Legal reform v. behavioral change in health reforms

Here's Hsiao et al. on the importance of considering social norms and behavioral change when enacting health reforms:

Experience has also taught us that, because of its complexity, the behavior of a health-care system is not easy to control.  Change payment schemes, and doctors and hospitals are likely to modify their behavior to defend their incomes.  Impose regulations on hospitals, and reports may be adjusted to show more compliance than actually occurs.  Create new payroll taxes, and some businesses will seek to avoid them.  Furthermore, the causal relationships in the system are complex.  Change incentives to hospitals to foster efficiency, but not the authority of hospital managers, and the new scheme may produce little change.  Institute competitive bidding in situations where there are few competitors, and the hoped-for decline in prices and costs may not occur.  

Health reform and the goal-based approach

Here's Williams Hsiao (and others) discussing health reform as a means to an end, a very relevant issue in regards to Oregon's recent Medicaid experiment:

Our approach to such questions is based on looking at the health-care system as a means to an end... Our method focuses on the need to identify goals explicitly, diagnose causes of poor performance systematically, and devise reforms that will produce real changes in performance.  We will argue that reform must be strategic, based on honest means-end analyses of what is likely to happen in a particular national context.  Reforms need to be judged, not on reformers' intentions, but by the changes they actually produce.  

I was somewhat guilty of this in my opinions about the ACA.  Rather than argue for health insurance as a means to improve health outcomes or as a means to improve financial security, I often discussed health care as a right.  Maybe it should be a right, but why?  In creating good policy, this rights-based approach seems much less helpful than a goal-based approach.

Culture and Economic Development Predictions

Scott Sumner has some interesting thoughts on culture's role in economic development:

Take two very poor countries, North Korea and Pakistan.  Then ask which one is likelier to be rich in 50 years time?  I’d say North Korea, and if you hooked Smith up to a lie detector, I imagine he’d do the same.  But why? 

For me the answer would be culture, culture, culture.  But not culture in the sense that ignorant people use the term “culture.”  Rather culture as a sort of residual... Suppose it were the case that both Koreas were currently desperately poor, and India and Bangladesh were rich, while Pakistan was poor.  In that case I’d predict Pakistan would do much better over time, even though nothing changed in the personal characteristics of the people I happen to have met who were Korean or South Asian.  One notices cultural patterns in development, but that doesn’t mean one knows which particular cultural characteristics explain those patterns.

I thought this was worth exploring.  To take it another step, I wondered which countries one might expect to be the next development success stories based on cultural factors.

My winners:

Vietnam - They are starting from a low base -- GDP per capita of $3,412, lower than India or Nicaragua.  I've read several reports in recent months about how Vietnam has been snapping up job low-wage jobs from places like China and Singapore.  Culturally, it is considered part of East Asia, with Wikipedia citing "the long-term Chinese influence on its civilization, in terms of politics, government and Confucian social and moral ethics."  It borders China, and unlike, say, Kyrgyzstan or Mongolia, it borders a part of China that is developing.  It has strong literacy rates and school enrollment rates (better school enrollment than China).

Colombia - South America, as a continent, has been doing quite well in recent years, and the cultural argument supports the idea that this will continue.  The tricky part is choosing just one country.  Argentina and Uruguay are culturally most similar to Europe (97% of Argentina's population is of at least partial European descent), but Argentina is suffering from a run of terrible governance and Uruguay is tiny.  Chile has already developed, so we can't choose them.  Venezuela and Colombia have similar cultural makeups with 20% of the population of European ancestry and most of the rest having some sort of mixed European, American Indian and African background.  Venezuela has unfortunately also suffered from terrible governance in recent years, while Colombia has enjoyed more than a decade of solid governance now.  They recently concluded a free trade agreement with the U.S. and security has greatly improved over the past decade.  The security situation is still dicey, but if President Santos can negotiate a peace deal with the FARC, that will put them in terrific position to see great improvements going forward.  If not, there will be less optimism going forward.

Obviously, Central Europe and Russia also have a good claims under the cultural argument, although they're already relatively far along the development spectrum.

What is Abidjan like?

I've never lived in a developing country before so I have no real idea what to expect.  I've spent time in the posh parts of Buenos Aires and Cairo and, in terms of comforts, neither felt very different from a developed country.  I suspect that Abidjan will be considerably more challenging.  

My only real knowledge is from anecdotes and Lonely Planet West Africa.

Before the conflict, Cote d'Ivoire -- particularly Abidjan -- was considered the jewel of West Africa.  Despite the violence, there are still a bunch of French ex-pats living there.  International summits used to take place there, but now they go to Dakar.  According to a Fulbrighter who's currently there, it's pretty posh for a West African city -- swimming pools, French pastries, gelato and wifi.  One fancy hotel used to have an ice skating rink, although it's unclear if that still exists.  

Lonely Planet says that "Abidjan's skyline is every bit as breathtaking as Chicago's," which I find hard to believe.  It's built along a lagoon (I've never lived by a lagoon) and it has a (cheap) commuter ferry service.  Hiring a regular taxi for the day costs $30-50.  

Law enforcement officers will apparently ask for bribes; I've never been asked for a bribe before.  According to Lonely Planet, you can politely refuse, so long as you have your paper with you.  Sounds a bit nerve-wracking.