Orthodox economist Greg Mankiw weighed in on the health-care debate in Sunday’s New York Times, with a heavy dose of cost-benefit analysis, plus a personal note about the doses of cholesterol-lowering statins he takes every day. Makiw reasons that since his daily pill costs roughly “$150,000 for each year of life saved,” this shows that health care can’t be equal. “Society” just can’t afford to keep everyone healthy!
Here is a nice response to Mankiw from economist Jeff Ely, on the blog Cheap Talk:
The centerpiece of Greg Mankiw’s column in the New York Times is this paragraph about the little white pill he takes every day:
Not long ago, I read that a physician estimated that statins cost $150,000 for each year of life saved. That approximate figure reflects not only the dollars patients and insurance companies spend on the treatment but also — and just as important — an estimate of how effective it is in prolonging life. (That number is for men. Women have a lower risk of heart disease.)
Mankiw used the word cost but I would say that what he is referring to is price. With monopolized drugs and dysfunctional health care insurance there is a huge difference between price and cost. And with this in mind, Mankiw’s column completely misses the real economic problem exemplified by his pills.
For a more in-depth discussion of statins and how they relate to “monopolized drugs and dysfunctional health care insurance,” check out the article by Mark Hyman, MD on Why Cholesterol May Not Be the Cause of Heart Disease (on Huffington Post; hat-tip to CKS). Even though I, too, take my dose of statins every day (and I’m willing to bet that my dose is higher than Greg’s!), I don’t have any trouble understanding Hyman’s argument: that part of the reason it is widely believed that high (LDL) cholesterol causes heart disease is that the pharmaceutical companies have developed a pill that lowers (LDL) cholesterol! In fact, as Hyman points out, the causes of heart disease are much more complex.
Yet more evidence that it may be easier for an MD to be critical about economics and policy than it is for an economics PhD.