Epidemics and Public Goods

In a recent article about Ebola in the Wall Street Journal, Peter Piot, the Director of the London School of Tropical Medicine & Hygiene, referred to epidemics like Ebola as what economists refer to as a public good.  For most readers of the Wall Street Journal, I’d imagine that the economic definition of public good might be familiar.  It might not be for most of those interested in public health but without economics and business training. 

Public goods have two key characteristics: being non-excludable and non-rival.  Non-excludable means that it is impossible to keep someone from experiencing it.  Non-rival means that one person’s experiencing it doesn’t limit another person’s experience.  National defense has characteristics of a public good—everyone in a country experiences it and my enjoyment of the United States’ national defense does not limit anyone else’s experience.

So, an epidemic does have these characteristics—everyone gets to experience the risk and no one is excluded from the exposure to the risk.

While the epidemic has characteristics of a public good, some solutions do not have elements of public goods but instead have externalities.  For example, for a vaccine, if I get the dose no one else can have it.  But, when I get the dose, my protection also provides some amount of protection for those around me.

The funding of public goods comes at the public expense and there must be a way to determine how much of the public good the public desires.  Externalities imply that individuals will either overconsume (in the case of negative externalities) or underconsume (in the case of positive externalities like a vaccine) the good without some type of incentive or enforcement.   

Within national borders or provincial borders within a country, it is possible to have laws that encourage or require specific behaviors, to provide monetary incentives,  or to coordinate activity through a Department of Ministry of Health.  Economists would ask about the costs and benefits of such rules or coordinating efforts.  When the epidemic is within borders the power to regulate, incentivize, and enforce is clear. 

When the epidemic is actually an international pandemic the situation is more challenging.  There is no authority that has the same type of legislative role or public health coordinating role internationally as a government within a province or nation.  As a result, efforts at coordination are, of necessity, more voluntary. 

Given the risks of the emergence of new infectious diseases and the resurgence of old ones, this is a time to consider how best to develop international cooperation for to deal with future international epidemics.  Someone may find a way to provide incentives across countries that are enforceable and that lead to better coordination and appropriate amounts of action.  If not, this is an opportunity for those who want to conduct business (and run countries) with humanity in mind to think carefully about how to encourage stakeholders to act not just with local or national humanity in mind, but with all of humanity in mind. 

Hospice "Under-Use"

The end-of-life care system in the United States is not part of the health care system that often gets high reviews.  We have a system of hospice care that can be used to facility what some call a "high quality dying experience," although whether it is important to have a high quality experience of approaching death or to having on until very end and have what some consider to be a "lower quality dying experience" is a matter of opinion.  In other words, what constitutes a high quality dying experience is a matter of opinion.  Not everyone's utility (or their family members' utility) is maximized by the same choices.

Still, many think of hospice care as potentially less expensive, providing better management of the condition approaching death, and providing an opportunity for family of the dying individual to manage their own interests better.  In that case, the quantity of hospice care demanded is often perceived to be "less than what would be expected".  For a long time people have asked why.

Many reasons have been given.  Perhaps people don't understand hospice.  Perhaps patients of their families have a disutility of even dealing with the hospice decision as it means that they are admitting that they are close to death.  Perhaps providers have a disutility of discussing the issue with patients.

Or, perhaps, according to a news piece featured in the Johns Hopkins Bloomberg School of Public Health news feed last week (the news piece can be found here: http://www.upi.com/Health_News/2013/01/25/Hospice-under-use-due-to-enrollment-rules/UPI-85761359090049/) the reason is an even more basic economic one.

The news piece reports on an article in Health Affairs (a very good health policy journal) that was worked on by a colleague of mine, Colleen Barry.  The work found that many hospice care facilities have rules that limit enrollment opportunities for patients with more complex needs.  This is more likely to be true in facilities that are smaller and for-profit.  Some, one may question the profit and the capacity of some hospice facilities.

This raises the interesting question about whether a focus on demand side policy interventions is misplaced.  In other words, should we be educating families more?  Should we be educating physicians more?  Should we be working on improving the decision making process?  Or should we, instead, be focused on changing incentives for the supply side?

No definitive answer here, but it does give us something to think about.  The news piece says that the Health Affairs article suggests that Medicare could consider raising the per day reimbursement rate for complex patients.  The big question--would that solve the problem or create new ones by making it easier for more people to enroll.