Declining population part I: taking care of retirees

The featured article in tomorrow’s NY Times Magazine is about Europe’s declining population caused by low birthrate.

DO RETIREES REALLY NEED A LOT OF YOUNG WORKERS TO SUPPORT THEM?

First let me address the notion, strangely accepted by both left and right, that it’s necessary to have an increasing number of young workers to support people who are old and retired. The left uses this as a reason for wanting more immigration. The right says this means that people need to have more children.

In the modern era, thanks to technological innovation, worker productivity is very high and keeps increasing every year. The coming robot revolution will take worker productivity to new levels. In the future, one worker and two robots may be able to produce as much as three workers today. This means that fewer workers are need to support the same number of retirees.

The three basic necessities of life are food, clothing, and shelter. Food and clothing are extremely cheap and keep getting cheaper every year. If you think that clothing isn’t quite that super-cheap, that’s because you shop at stores where most of the cost of the clothing is due to marketing costs rather than production costs. If you ever go to a place where poor people buy clothes, you will see how inexpensive it can be to clothe yourself.

Shelter is expensive today, but that’s because of barriers (such as zoning and building permit requirements) which artificially restrict the supply. However, with a declining population comes an excess of housing, so declining population predicts declining housing prices in the future. Furthermore, future technological progress should theoretically should make it less expensive to construct new dwellings just as it’s now less expensive to grow crops or manufacture clothing compared to the past.

There is, perhaps, a fourth basic necessity: healthcare. Unlike the other basic necessities, the cost of healthcare is not going down. This is primarily because healthcare has to be delivered by high-wage individuals such as medical doctors, and technology doesn’t seem to have much of an impact on the ratio of healthcare-worker time per patient.

With regards to doctors, there is no reason why their numbers cannot be greatly increased. There are approximately three times as many people graduating law school each year as graduating medical school. If some of those law students became medical students, the doctor shortage would be easily solved without any loss of people doing work that adds actual value to the economy.

One thing that does not increase the availability of healthcare is immigration of non-healthcare workers. Immigrants have their own medical problems, thus compete with natives for access to a limited number of doctors and other healthcare professionals. The unskilled immigrant is the worst thing for the healthcare problem, because they don’t make enough money to even pay for their own basic needs without government subsidy. (See my very important blog post on the externalities of unskilled immigrant workers.)

I reach the conclusion that there will be no future crisis with respect to retirees. They will not be out on the streets starving to death. They will not be a crushing drain on a modern nation’s productivity. Nothing needs to be done today except, perhaps, to increase the supply of doctors.

TO BE CONTINUED?

There’s a lot more to say about declining population, but I don’t want to become like Mencius Moldbug who writes book-length blog posts. So maybe there will be a part II tomorrow.

Comments

[JewishAtheist]

but I don’t want to become like Mencius Moldbug who writes book-length blog posts

No offense, but the difference between you and MM is a lot more than length. :-)

[New Anon]

"Most studies show an uptick in the birthrate in countries that implement some pro-child program, but a very small one."

The difference is not small between countries which spend money on subsidized childcare and paid maternity leave and countries that do not (The white US birthrate being an odd exception).

Sweden's birthrate was 1.88 last year in country that is over 90% white and still gets a majority of her immigrants from other European nations, according to statistics Sweden and the birth rate is up about 3% this year.

Though Sweden is not at replacement level, their population decline is much much much more gradual than in Italy where the birth rate is 1.2-1.3.

If a population is aging because of a birth rate that is marginally below 2.1, the decline is managable, but once you drop below 1.7, a country will experience very rapid population decline which threatens economic performance over time.

It would be better to have a steady, manageable fall in fertility than a very rapid one.

[Peter]

Europe's declining birthrates are not necessarily a permanent phenomenon. Germany's rate in 2007 was said to be the highest in 18 years, France is at or even slightly above replacement, and births in Britain are up enough that there's a serious shortage of midwives. Spain, Italy, and some countries in Eastern Europe still have very low rates, but the possibility of future increases cannot be ruled out.

A theory I've had for a while is that there's a sort of equilibrium in birthrates. They can decline very low, but at some point will turn around.

[amir]

It seems to me that doctor's wages are not the reason for rising medical costs. All the American doctors I know complain that doctors don't make as much as they used to. While the dietery, wardrobe and housing needs of humans basically have not changed, medical needs have changed. Before the expensive MRI was invented nobody needed an MRI. Today everybody needs an MRI to figure out why they have tension headaches.
Once, people were content dying six months after cancer was diagnosed. Now people have to get diagnosed a year or two earlier, get an extra three years of expensive treatments and die a year later than they would have anyway.
OK, I'm being a litle cynical, but you get the point. I don't think doctors wages are the primary reason for rising healthcare costs.

[Brick Oven Bill]

The going rate for a surrogate mother in the US seems to be around $25,000. In India, the number is around $5,000. As oil depletes, and cultures become desperate, this price will go down.

If declining populations become a problem, or if a nationalistic leader comes to power, expect national surrogacy initiatives. I’d keep an eye on Putin, he’s already sponsoring fertilization parties for white Russian couples.

[Polanski]

Good post. Another thing to consider is that workers will be retiring later, because they will be healthier. We need to find a way to provide low-cost drugs to all citizens.

We should try to dispense with this idea of "being a doctor." Let's face it: being a pediatrician or general practitioner is not that cognitively challenging--yet we overpay. That has to be changed.

Same thing with lawyers--bottom line is that they are the most overpaid people on the planet, given the relative easiness of their profession.

[Half Sigma]

Polanski: "Same thing with lawyers--bottom line is that they are the most overpaid people on the planet, given the relative easiness of their profession."

Only BIGLAW lawyers are overpaid, the rest of the profession isn't.

No one who has been through law school thinks it's easy. I have both a JD and an MBA, and the MBA was a joke compared to the rigor of law school.

I have also worked in computer programming for many years, so I can tell you that computer programming isn't any more difficult than law.

[Peter]

Another thing to consider is that workers will be retiring later, because they will be healthier.

Recent experience would indicate otherwise. Retirement ages in the United States are sinking like a stone even as life expectancy rises. 55 is the new 65, and if trends continue 50 will be the new 65. It may soon be routine for people to spend more time in retirement than in the working world.

[Peter]

No one who has been through law school thinks it's easy. I have both a JD and an MBA, and the MBA was a joke compared to the rigor of law school.
I have also worked in computer programming for many years, so I can tell you that computer programming isn't any more difficult than law.

You clearly have some decent quant/technical skills, as shown by the fact you were able to work as a programmer. The typical law student would not be able to work in programming at all, and for that manner might not make it through an MBA program, due to inadequate math skills.

[antenna]

This comment implies that the right is against illegal immigration and the left is all for it. Actually it is the reverse. Republican business owners... construction companies, farmers, tech companies, restaurants, meat plants... require a source of cheap labor.

In fact, the fastest way to end illegal immigration is to crack down on republican employers.

Leftist labor unions want illegal immigration halted immediately, but once they find themselves up to their necks in illegals leftists feel there is no alternative but to take care of them along with everyone else.

Right wing business models depend on cheap illegal labor, slave labor almost, to keep their shaky enterprises functioning.

As usualy it is the poor, the left, the laborers, who pay and pay and pay, and then get all the blame.....

[Polanski]

HS

I find law about as complex as farting and preparing lasagna at the same time. I had a funny conversation with 1 of the writers on the "Law & Order" franchise, and we both agreed that the most difficult aspect to writing for the show was to make the legal stuff complicated, and, therefore, portray the lawyers as "brilliant."

I guess the sine qua non of law is becoming a Supreme Court justice.

So, which is more difficult: writing a majority opinion on an abortion-related case, or writing on same for "L&O"?

[David Alexander]

he’s already sponsoring fertilization parties for white Russian couples

There are black Russians?

The white US birthrate being an odd exception

I think that's due to cheap housing and energy costs when compared to Europe. It's much easier to consider having more kids when three and four bedroom homes with two to three baths are commonplace, and one has a large vehicle to transport children.

Food and clothing are extremely cheap and keep getting cheaper every year.

At this point in time, I would consider it to be foolish to estimate that these basic staples will become cheaper in price, especially when so much of it is shipped via petroleum based transport, and sometimes made with refined petroleum products.

technology doesn’t seem to have much of an impact on the ratio of healthcare-worker time per patient

The problem is that despite advanced medical technology, you still need somebody to sit and effectively watch and clean up after sick people. All of those old people are going to need somebody who makes $8 - $10/hr to watch them at home or in various controlled settings to ensure their health and safety, and when they're in the hospital, they'll need somebody who makes twice that to ensure a proper daily regime for their care.

If some of those law students became medical students, the doctor shortage would be easily solved

If medical schools are already picking the best students of those who apply (let's exclude affirmative action), then increasing the number of doctors simply means taking the unwanted students who were unable to attend in the first place. The high IQ of law school could easily go to medical school, but somehow, they made a decision to make their money in law and not medicine. Increasing the number of doctors does nothing to make this group want medicine as a profession, especially if wages go down in the field due to the increased pool of doctors.

In India, the number is around $5,000.

What kind of retard in a first world nation would allow for their child to be born to a surrogate in an environment like India?

[antenna]

And you can ask any nurse at any hospital and they will tell you the fastest way to reduce health care costs is to allow the immigration of foreign physicians. Instead of Americans going to India for surgery why not let Indians come here instead? Because, the American Medical Association, the physician labor union, has a financial death grip on Congress.

The supply of physicians is tightly regulated in America by the AMA. One way they control is through the medical school entrance exam, the MCAT. If there is a projected shortage of physicians the MCAT gets a little easier, if there are too many physicians according to the AMA 'paycheck test' the MCAT gets a little more difficult.

[antenna]

Lets not forget that Senator Bill Frist, the first physician US Senate Majority Leader, might have been the republican nominee had he not been investigated for insider trading and deciding not to run for re election....http://www.washingtonpost.com/wp-dyn/content/article/2005/09/21/AR2005092102065.html

[anonymous 1]

Because, the American Medical Association, the physician labor union, has a financial death grip on Congress... The supply of physicians is tightly regulated in America by the AMA.

There is some truth to this. The lack of control over numbers of graduates is one of the reasons why there are law is a super saturated field right now and the pay for average lawyer has been dropping for the last 30 yrs. The AMA can make the argument that public safety will be seriously jeapardized by relaxing the standards (that they largely set) for the building of new medical schools or the bringing in of more foreign doctors. In so doing, the pay for doctors is higher than it would otherwise be.

The ABA has been largely impotent to stop more lawyers and law schools from being churned out in the same time period. It has actually facilitated this process. Maybe they can't make the same public safety argument against the addition of more and more graduates every year. Maybe they allow such a process for self- serving reasons as well.

[dreamin]

Lots and lots of immigrants are employed in the health care field. Who do you think works as home health aids? Who do you think scrubs the floors in nursing homes?

In New York, just about all CNAs, HHAs, etc. are foreign born.

[Rob]

technology doesn’t seem to have much of an impact on the ratio of healthcare-worker time per patient.

This may be true, but technology can improve efficiency so the total amount of labor is lower. Laproscopic surgery gets the same results with shorter hospital stays. Better diagnostics reduce follow-up visits.

Med school admission is not efficient. Almost every school, I think W Virginia's osteopathy school excepted, requires interviews, despite the fact that they have almost no predictive validity.

Every school has competitive admissions, and people apply to 10+ schools on average. Schools have to ensure a full class, not just accept the best applicants. There is no reason to believe that all the best applicants get in.

Some huge chunk of people take post-bacc programs or medical masters, which reduces the flow of students into school. It is not clear that post-bacc programs result in better physicians, but people spend longer in school just to keep up.

And since the average physician is older when he starts practicing, it reduces the supply of medical care.

Also, it is very possible that someone who has lots of potential in medicine will switch fields rather than go through the process.

allow the immigration of foreign physicians....if there are too many physicians according to the AMA 'paycheck test' the MCAT gets a little more difficult.

We already import lots of doctors from the developing world. Medical school class size varies little from year to year. MCAT scores are also standardized every year: making the test harder would have no effect on the supply of doctors.

I don't know if expanding med schools and taking in the next tier of applicants would produce better doctors than importing physicians from the developing world. But that's the important question.

Doctors make lots of money on average, but the opportunity cost for 4 years of med school, huge debt, making very little during residency, and high taxes afterwards, I don't think the IRR of medical is all that great.

[antenna]

So true. You would think that since most legislators are attorneys that the ABA would have way more clout in congress than the AMA.

Someone posted earlier that the third year of law school could be eliminated and that law school in general could be replaced by a 4 month barberi course. I hope the same is not true for a course on heart surgery.

[antenna]

I was talking to the admissions person of a hospital I was getting admitted to a few years ago and he had a photo of his son on the wall, just graduated from med school.

"He is making a thousand dollars an hour now...."

[antenna]

Also when I was admitted just last year I was put in a private ER room and allow to just lay there for about four hours, watching the medical staff go about a fairly non rushed routine. Finally when I put my clothes back on and was about to walk out they were able to escort me to the x-ray room.

I later found out why when I saw the bill. total $4800. X-rays $500. Physician $300. Private Er room $4000 billed at $1000 per hour.

I just never paid it. I can out gangster any hospital you can name.....

[antenna]

Perhaps part of the problem is they don't include courses in how to be a gangster in medical school or hospital administration school. They have to learn on the job....

[antenna]

If they would have explained to me they were going to bill me $1000 per hour for a private ER room and I knowingly accepted this I would have paid it.

Perhaps if they had explained on the invoice WHY they had such a staggering ER cost that they had to bill $1000 per hour to cover expenses I would have paid it...

The hospital billing procedure is so obviously fraudulent that most people should probably just not pay and wait to get sued and make the hospital explain it all to a jury.

[anonymous 1]

"He is making a thousand dollars an hour now...."

Dude, most specialty doctors do not make anywhere near this. True, there are a few fields that can still do very well:
cardiology
radiology
dermatology
gastroenterology
heme-oncology
any of the surgical subspecialties
believe it or not psychiatry in CA right now also is high paying (contract psychiatrists with corrections make about 175-180 an hour and can bill up to 10 hrs to the state about 4-5 days a week

I may be forgetting a few fields. But, of the fields listed, except for cash only fields like plastic surgery or elective dermatology, very few fields are going to generate more than 400K to 500K net. And, a lot of the specialty guys are making a lot less than that- I can post national salary surveys for medicine to prove this if you need me to.

Even the cash only elective fields might have some difficulty making more than that on average. This might be different in other parts of the country- I'm in CA. But, gerneally, medicine has had a massive decline in income over the past 20 years- good or bad.

I would tell anyone who was interested in medicine now the same thing I would tell wannabe lawyers, consider something else. Dentists are actually making mroe than the average doctor. Also, working on Wall St. is probably more lucrative for high IQ people, on average, than any of these options. A lot of people who are doctors, lawyers or dentists could have been working on Wall St.

Seriously, if you want to make a lot of money and have the initiative and high IQ:
get a hard science PhD (preferably in EE, chemistry, pharmacy, biology, maybe physics) or an MD and maybe or maybe not get an MBA and work for a hedge fund. What does anyone else think?

[antenna]

I think the commercial construction is completely under the radar as far as massive compensation because most large construction companies are privately held, usually be just a small handful of partners.

That 2 billion dollar airport your city just built? One or two people made one or two hundred million dollars on that.

The billion dollar condo/transit terminal your city council just passed? One or two men just added another couple hundred million to their island bank accounts that they hide from their wives.......

[antenna]

I know Dick Grasso took lots of flack for his one time 186 million retirement package from the NYSE and CEOs from big name companies like TYCO went to jail for defrauding 30 or 40 million. Heck larger commercial construction company owners make that much in one year and no one bats an eye......

[amir]

"I later found out why when I saw the bill. total $4800. X-rays $500. Physician $300. Private Er room $4000 billed at $1000 per hour.:

As you can see, lowering the doctor's salary is not going to reduce health care costs.

[antenna]

Jeff Fastow made off with I think 40 million after a high risk criminal career at Enron. If he owned one of the larger privately held commercial construction companies he could have made that easily in just one year.

Go to ENR, engineering news and record, and look at the list of the 400 largest US general construction companies. See how many of them are private (the vast majority) and see how many of the have just one or two owners (most). How many of them have gross revenue of over a hundred million (lots). Net profit after tax is above ten percent.

Even now I'd go into construction before even hedge fund banking.

[Half Sigma]

re: emergency room fees

The hospital is allowed to bill an outrageous amount to make up for the people who are treated but who don't pay their bills. In fact, the vast majority of uninsured do NOT pay their bills. Hospitals are prohibited, by law, from denying emergency treatment just because a patient has no money.

It's a messed up system, and it's NOT free-market, but that's what we have because of stupid laws.

[antenna]

All I'm saying is that from talking to several nurses and non doctor health care workers they all said that in their opinion the fastest way to reduce health care costs was to modify the J-1 ahd H-1 visa programs to allow foreign physicians to move to the US and practice medicine and see patients directly.

They could have just been expressing frustration that it is legal and prevalent in the health care field to allow immigrant labor for every position except doctor. This was in 2002 or 2003 though.

Possibly the J-1 restrictions have changed to allow foreign doctors to directly see patients.

I know one fear was that peer oversight for doctors was so lax that a wave of overseas physicians could start committing unrestrained medical crimes against humanity. Using more foreign medical labor clearly implies a stregnthening of medical oversight and enforcement, something the medical profession seems to fear worse than an uninsured accident victim.

[antenna]

re: emergency room fees

I know hospitals are allowed to cost shift to compensate for uninsured patients.

But I think they allowed me to languish for several hours in a private ER room even though they could have seen me nearly immediately, merely to keep the meter running at 1000 dollars an hour.

That would constitute an unethical act that would border on torture or a crime against humanity, but the financial incentive is clearly there and my suspicion is justified by the fact that as soon as I threatened to leave they found the time to get my xrays and send in the doctor.

But I think we as a country are used to the HealthSouth model of medicine ( http://www.thehealthcareblog.com/the_health_care_blog/2005/06/industry_scrush.html }, which explains the Obama phenomenon perfectly to me.

[antenna]

re: commercial construction over hedge fund banking.

Remember that Dick Cheney chose to be CEO of Halliburton, a large commercial construction company, after Iraq I and seems to be using it as a laundering tool of some sort in Iraq II....

[anonymous 1]

All I'm saying is that from talking to several nurses and non doctor health care workers they all said that in their opinion the fastest way to reduce health care costs was to modify the J-1 ahd H-1 visa programs to allow foreign physicians to move to the US and practice medicine and see patients directly... They could have just been expressing frustration that it is legal and prevalent in the health care field to allow immigrant labor for every position except doctor. This was in 2002 or 2003 though.

Talk to more than a few nurses to gauge the situation. The discussion is a lot more complicated than that. This is what physician salaries are more like and few of even the specialty doctors are making a 'thousand dollars an hour.'

http://www.allied-physicians.com/salary_surveys/physician-salaries.htm

Doctors are across the board doing better than the average lawyer and (as they should) doing better than the average citizen. However, my guess is that the nurses you spoke to are giving you a skewed opinion that belies the actual data. The bulk of health care costs are not caused by sky high physician salaries.

[antenna]

You kind of make my point for me though when you say that half million a year isn't a lot. Skewed reality.

But still, I'm guessing those figures are direct salary compensation only and don't count the investment income many physicians make from, among other things, pharmaceutical industry promo fees.

Earlier I used the Bill Frist example of insider trading of hospital shares as a kind of oblique example of non-salary compensation that is fairly common from what I understand as a non-expert non-doctor outsider.

I have heard second hand stories of hospitals charging 2 or three dollars for rubber gloves that cost them 2 or 3 cents, from a rubber glove company owned by a company owned by a subsidiary of a physicians group of hospital staff or something.....

[antenna]

So yes it is way more complicated than that because what do you call it when the MRI company is making BIG money and the physician ordering the imagery is a part owner of the MRI lab?

[antenna]

And I dispute that just because candidates make it through the gauntlet of artificial barriers to practice, like hospital residents suffering CIA interrogation style sleep deprivation that suits no convincing practical purpose, are in fact the high IQ candidates. It almost looks like they would NOT be the high IQ candidates.

I think the high IQ candidate was the one who started a construction company and built the hospital, not the dumb a$$es like Frist who overbought the stock.....

[antenna]

Yeah dumba$$es like Frist who overbought the stock and have to defraud the whole country on health care costs to get their money back. That's not high IQ....

[antenna]

Hospitals and hospital vendors fight like mad dogs not to disclose their costs and ownership hmmmmm wonder why.....

[anonymous 1]

You kind of make my point for me though when you say that half million a year isn't a lot. Skewed reality.

I never said that.

What I said is that a few specialties can still make the big money but nobody is (on average) making the 'thousand dollars an hour' you erroneously claimed.

But still, I'm guessing those figures are direct salary compensation only and don't count the investment income many physicians make from, among other things, pharmaceutical industry promo fees.

I'm guessing you have no idea how to discern facts from anecdotal data. I'm guessing that until or unless you provide actual data anywhere to back up your specious points it's probably worthless talking to you. I'm guessing that you spoke to certain people who told you what you wanted to hear and prefer not to engage in serious discussion with people who differ from your set opinion and have actual data to back up their points. I'm guessing I'm right on all these counts and that your rejoinder will likely be another 'guess' or telling me what your neighbor Jim said about doctors and health care 2 weeks ago.

[antenna]

If your standard for 'actual data' is a link to an internet site that I'm guessing has connections to the AMA then I could flood this message board with thousands of second hand media reports of medical fraud, including unappealing to unethical non salary physician income.

Here is a link to why drugs cost so much.... http://en.wikipedia.org/wiki/First_DataBank
(First DataBank, Inc. (FDB), currently owned by Hearst Corporation, is a publisher of pharmaceutical industry market information and information technology. The firm, headquartered in San Bruno, California, is best known for its controversial drug pricing surveys of the McKesson Corporation, a drug wholesaler, to determine benchmarks for what drug retailers in the United States are charged by wholesalers. First DataBank is the top publisher of pharmaceutical market surveys, which in turn are used by insurers, state health programs and other drug buyers for the purpose of negotiating reimbursement rates paid to pharmacies and other providers.[1]...A consumer coalition filed separate suits in a Boston, Massachusetts federal court against drug wholesaler McKesson Corporation and First DataBank, accusing the companies of artificially inflating drug prices. The lawsuits say that McKesson and FDB conspired from 2002 through 2005 to set the list prices artificially high. The suit against First DataBank accused it of limiting its survey of wholesalers to a single company, McKesson.

The plaintiffs contend that the practices have driven up the wholesale cost of drugs for institutional buyers, including health insurers and government programs such as Medicaid, which in turn has cost taxpayers and insurance buyers billions of dollars...)

[antenna]

First Databank is owned by the Hearst Corporation that is in turn owned by a private trust, called of course the Hearst Trust.

I'm guessing the trustees are non-physicians simply because life is too short but you can look it up yerself if so inclined but I'm warning you now you'll get nowhere...http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001041076

[antenna]

So right away a completely nontransparent family trust has taken control of wholesale drug prices globally and inflated health care costs by billions of dollars, and as a cherry on top that trust is also one of the largest media conglomerates in the world. Very James Bond.....

[anonymous 1]

If your standard for 'actual data' is a link to an internet site that I'm guessing has connections to the AMA then I could flood this message board with thousands of second hand media reports of medical fraud, including unappealing to unethical non salary physician income.

When a person has no remaining arguments, attack the source of the evidence as being biased even if there is no clear reason why it should be biased.

Ideally, you should give a study/survey on controversial points you make. Otherwise, second hand media reports of fraud are interesting but not scientific enough for this site (only my opinion as it relates to this site, of course). By the way, you may or may not be right about this tangential point you just made. I have no idea though based on the lack of evidence you've given.

[antenna]

McKesson is a good place to start because it is the largest health care company in the world and has a long and storied history of massive global fraud.... http://en.wikipedia.org/wiki/McKesson_%26_Robbins_scandal_%281938%29
(... McKesson & Robbins scandal (1938)
From Wikipedia, the free encyclopedia
Jump to: navigation, search

The McKesson & Robbins, Inc. scandal of 1938 was one of the major financial scandals of the 20th century. The company had been taken over in 1925 by Philip Musica, who had previously used Adelphia Pharmaceutical Manufacturing Company as a front for bootlegging operations. Musica, a twice-convicted felon, used assumed names to conceal his true identity in taking control of the two companies: Frank D. Costa at Adelphia Pharmaceutical and F. Donald Coster at McKesson & Robbins. Although he was successful in expanding the company’s legitimate business operations, Musica recruited three of his brothers, also working under assumed names, one outside the company and two inside it, to generate bogus sales documentation and to pay commissions to a shell distribution company under their control Eventually, McKesson & Robbins’ treasurer, Julian Thompson, discovered the distribution company was bogus. It was eventually determined that about $20 million of the $87 million in assets on the company’s balance sheet were phony...)

[antenna]

if you are interested in reading the actual court documents for First Databank you'll need pacer access but here is another funny newspaper article from today....(Connecticut sues McKesson on racketeering charges By Scott Malone

BOSTON, May 28 (Reuters) - The state of Connecticut sued McKesson Corp (MCK.N: Quote, Profile, Research, Stock Buzz) on Wednesday on charges that the drug wholesaler violated anti-racketeering laws by conspiring to artificially inflate the wholesale prices used to determine payments by private and public insurance plans.

The suit, filed in U.S. District Court in Boston, alleges that McKesson and publishing company First DataBank conspired to expand to 25 percent from 20 percent the difference between the price retailers paid for prescription drugs, known as the wholesale acquisition cost, or WAC, and average wholesale price, or AWP.

The suit cites First DataBank as a co-conspirator.)...http://www.reuters.com/article/marketsNews/idUSN2834771420080528

[antenna]

Oh wait here it is.

www.hagens-berman.com/files/Attachment_B_Class_%20Plaintiffs_Amended_Memorandum1164664165632.pdf

NEW ENGLAND CARPENTERS HEALTH. BENEFITS FUND, PIRELLI ARMSTRONG ... v. FIRST DATABANK, INC., a Missouri. corporation; and McKESSON

[antenna]

RESULTS
Of 835 eligible physicians 444 (53%) responded, of whom 37% reported engaging in pharmaceutical-sponsored clinical trials and/or lectures to supplement their incomes. In our multivariable analysis, subspecialists versus generalist physicians (odds ratio [OR], 1.85; 95% confidence interval [CI], 1.14 to 2.99), physicians in private group-single specialty and academic practice versus physicians in solo practice (OR, 2.30; 95% CI, 1.19 to 4.44 and OR, 2.56; 95% CI, 1.17 to 5.61, respectively), and physicians with higher versus lower annual incomes (OR, 1.22; 95% CI, 1.04 to 1.44) had a greater odds of participation in these activities. Additionally, physicians dissatisfied with their income had a 140% greater odds of participation (OR, 2.36; 95% CI, 1.45 to 3.83) than those who were satisfied with their income.

CONCLUSIONS
A substantial number of internists engage in pharmaceutical industry-sponsored clinical trials and/or lectures in an effort to supplement their incomes. Physician dissatisfaction with income appears to partially explain such participation.
Keywords: pharmaceutical industry, physician income, clinical trials, conflicts of interest

http://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=1494790

[anonymous 1]

By the way, i'm sort of in agreement that physicians engaging in speaking activities are at variance with what is good for the long term financial health of health care. Drug trial participation is different for reasons I'll get into.

First, keep in mind one of the study's limitations the authors admit to:
Finally, we do not have data on the level of payment for or the quality of pharmaceutical-sponsored activities in which the physicians engaged. The honoraria amounts and degree of autonomy allowed to physicians in delivering lectures and performing and reporting clinical trials may vary significantly among physicians and individual pharmaceutical companies.

1) There are too many doctors in America for every one to receive a substantial kick back from the drug company. The study offers no idea on the average amount a doctor was receiving for services rendered.
2) I think there is a difference between being paid a service for giving a lecture or participating in a drug trial (which is absolutely necessary for the FDA to approve a drug) and receiving a 'kickback' for fraudulent reasons. What the doctors are doing may not always be good for the long term health of medicine or for their own long term financial interests, but it is not fraudulent or illegal. And, to reiterate, clinical drug trials are essential for FDA approval. Doctors should demand compensation for their participation and not be expected to apologize for it.
3) I doubt (but cannot prove) that a doctor would not include such a supplement in their overall incomes that they report to salary surveys.

Overall, a respectable study with limitations. I would rather rely on studies or surveys than anecdotal data, and I have no problem being open minded about what I read as anyone can see.

[quadrupole]

Strange... you seem to assume that those now going to law school could hack med school. I suspect that's not true. Most folks go into medicine from some kind of hard science (or at least premed) background. Most folks go into law school from some sort of liberal arts background.

While I've seen hard science types who could hack law school... I've never encountered an english or polisci major with a prayer in hell of transitioning to med school.

[antenna]

Harvard Medical School To Reexamine Conflicts of Interest Policy
Reevaluation comes amid allegations of unreported income against three Harvard psychiatrists
Published On Monday, June 16, 2008 5:17 PM
By JUNE Q. WU
Crimson Staff Writer

The AMA only suggests that hospital Following allegations that three Harvard physicians violated federal and university research conflict-of-interest policies, Harvard Medical School will be assessing its current regulations and improving implementation.

Senator Charles E. Grassley, an Iowa Republican, brought to light possible conflicts of interest earlier this month when he revealed that psychiatrists Joseph Biederman, Thomas J. Spencer, and Timothy E. Wilens of Mass. General Hospital failed to report the full amount they earned from drug companies over the last seven years, according to the senator's investigation.

Biederman and Wilens admitted to earning over $1.6 million from pharmaceutical companies last March when Harvard and Mass. General asked the Medical School professors to "take a second look" at the income they received from consulting since 2000....

http://www.thecrimson.com/article.aspx?ref=523895

[antenna]

Grassley said he believed the payments may be higher than reported because the investigation analysis showed that the adjusted payment amounts were still lower compared to the drug companies' records. "Basically, these forms were a mess," Grassley said in comments included in the report (New York Times, 6/8). He wrote, "Why weren't Harvard and Mass General watching over these doctors?" adding, "The answer is simple: They trusted these physicians to honestly report this money" (Wall Street Journal, 6/9). Grassley said the investigation of improper payment disclosures showed that there is a need for a national reporting system that would track drug industry payments to researchers.

http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=52614

[antenna]

FDAnews Drug Daily Bulletin
June 5, 2008 | Vol. 5 No. 110

Medical Schools Flunk Conflict-of-Interest-With-Pharma Test

One in 10 U.S. medical schools surveyed by the American Medical Students Association (AMSA) have no policies on financial conflicts of interest with drug companies or policies the group deemed unacceptable, earning them a grade of F.

The survey, completed May 30, is the latest addition to growing concern by legislators, advocacy groups and academia over conflicts of interest with pharmaceutical companies. In April, an Association of American Medical Colleges task force recommended that academic medical centers “strongly discourage” their faculty from speaking at industry-sponsored conferences.

That same month saw the Massachusetts Senate vote to ban gifts of any value from pharmaceutical and device companies to physicians or healthcare facilities.

It also saw charges in the Journal of the American Medical Association that Merck employees guest-authored and ghostwrote medical literature attributed to external, academically associated authors for its painkiller Vioxx (rofecoxib). Earlier, an FDA proposal to relax guidelines for journal articles on off-label use of drugs drew congressional oversight.

http://fdanews.com/newsletter/article?issueId=11648&articleId=107362

[DiverCity]

Well, at the risk of posting something remotely on (the original) topic, you should not trust the government's statistics on productivity, HS. Hedonistic adjustments, seasonal adjustments and the like are just some of the manipulative concepts adopted to mask the depth of the problems we're facing. Declining birth rates most certainly ARE a problem from, inter alia, an economic perspective. Tell me how in the world the SS system can exist when there is one retiree for every two workers? You think so-called productity gains can offset the tax that will be required to pay benefits? Absolutely not. We're facing, and that right soon, a financial meltdown given the myopic approach of the ruling politico-bankers.

[anonymous 1]

One in 10 U.S. medical schools surveyed by the American Medical Students Association (AMSA) have no policies on financial conflicts of interest with drug companies or policies the group deemed unacceptable, earning them a grade of F.

I really don't see the purpose of a lot of these recent posts of yours.

For one, you are conflating legal with illegal activities. What Grassley is investigating might be illegal. The PUBMED article discusses presumably legal activities. It is possible that both might suggest a conflict of interest in the eyes of some.

However, the fact still remains that Big Pharma needs MD speakers for its dinner lectures to MD's. I won't dispute that some of them do well financially. This is still a LEGAL activity.

The fact remains that Big Pharma AND the FDA need MD's to run the clinical drug trials that are necessary to win approval to bring a drug to the market. This is still a LEGAL activity. As I said, doctors should not be expected to seek approval for legally doing work that requires their expertise and incurs for them potential liability.

To preempt your coming rejoinder, I won't dispute that both of the legal activities above can potentially be open to abuse in unscrupulous hands. Unless you've got more 'evidence' I don't see what the point is of bringing more and more referrals to case examples of abuse occurring. Abuse occurs in every facet of life. Should we bring article after article highlighting cases of domestic violence to show that marriage should be outlawed? Should we bring articles highlighting pre- pubescents shooting and killing other kids/adults to show that having children should be outlawed?

[antenna]

The articles are basically about disclosure. The doctors received fees that they did not disclose, which violated the (weak) disclosure policies at their hospitals. Congress is worried that the practice is so prevalent that they are considering greater oversight.

Why the practice of receiving millions in undisclosed fees is problematic is something you'll have to argue over with the administrators at Harvard. There rules were broken, not mine.

[antenna]

We are clearly in an age when the public is more sophisticated about gangster business practices and the medical profession is going to have to be more sophisticated in its financial scams to keep up.

Five or ten years ago I may not have cared that my heart doctor was receiving compensation from the company that makes the heart drug that costs 20% of my annual income for the non-generic version that was funded mostly by the government and my taxes to begin with. Now that obviously gangster business practices are driving health care into the ground I am beginning to care...

[antenna]

I've been ripped off too many times at the hospital to ever blindly trust a doctor ever again. They are going to have to get used to living under the same rules as everyone else and that means it is going to get harder and harder to blindly rob me as I drift in and out of consciousness during a medical emergency.

Doctors need to disclose their non-salary income. Hospitals need to disclose their prices, not keep them as trade secrets, so I can compare prices at different health care facilities. Hospitals need to justify why their mark ups are hundreds of percent, including vendor names and ownership. Doctors and big Pharma have to stop ripping me off by taking government sponsored research and patenting it for themselves, which is called 'stealing' in the outside world. The AMA needs to drop needless barriers to entry to medical school and needless onerous requirements to graduate that do nothing except discourage good people from being doctors.

Someone posted earlier that if they dont make at least half a million a year it is simply not worth going to med school. Puleez.

We have seen organized crime take over our stock market, our mortgage industry, global banking, our medical industry....

The AMA is on thinner ice right now than the polar ice sheet and if we have to start sending financial criminal doctors to prison they can share jail cells with people like Jeff Fastow who also thought he could dazzle us with his b*llsh*t....

[antenna]

And people need to be able to sue for medical errors. The entire argument these days for staying in the US instead of going to Thailand for certain procedures is that you can't sue your Thai doctor. We, in Ca. you can sue your US doctor either so .... why NOT go to Thailand? You doctors are complaining now but just keep it up and see what happens....

[antenna]

If a doctor receives compensation from the drug company for a drug he prescribes to me he should DISCLOSE that to ME.

It may be legal, illegal, ethical, unethical or whatever....according to ME, since I am the one paying huge gobs of money from my dishwasher job or my delivery job or whatever to keep you happy with you six figures....you gangster doctor piece of garbage.....

[antenna]

The last time I was in the hospital the doctor charged me $300 for about 15 minutes of his time, which was completely fine with me. It was worth it. I was glad he was there. He helped me out a lot.

But the hospital itself left me to languish for HOURS and charged me $1000 per hour while they took their time!!!!!

I feel the doctor must have been somehow complicit and must have somehow been compensated for the effort and risk of robbing me like that.

I was in pain and anxiety and to top it off I was watching a complex financial fraud occuring during my time of need.

I'll say again that you gangster doctors are on thinner ice than the polar ice sheet right now.

Keep acting like you are smarter than everyone else and watch what happens because we are getting smarter and smarter all the time....