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America’s Health Fix:
Case & Deaton’s Deaths of Despair, Part I

2,670 words

During the 1970s and 1980s, when libertarian ideas were in the air, Ayn Rand a fashionable writer, Ronald Reagan and Margaret Thatcher had romped to power, and the Chicago Boys were invited to demonstrate the merits of free-market economics in South America, a lively debate was being pursued in libertarian circles on how far freedom can go.

Didn’t free individuals have the right to take their own lives, to sell themselves into slavery, to run grave risks to their health in the pursuit of pleasure or for any other reason? Did every adult have the right to every drug? If soft drugs could be decriminalized, why not hard drugs? The argument for decriminalization was that free adults had the right to make, take, or break their own lives as they saw fit. At a practical level, it was argued that the decriminalization would undercut the power of the drug barons and make hard drugs safer, firstly because illegality had created drug barons, gang wars, and an irresponsible supply chain; secondly, because the market would inexorably (that “hidden hand” of free-market forces again) ensure that demand rose for uncontaminated supplies while the purveyors of dangerous compounds would lose to the more honest competition. “Give the adult the right to choose,” many libertarians urged; “the state has no right to criminalize the purveyance of addictive drugs.”

With the widespread legal prescribing of the opioid analgesic OxyContin forty years later, the United States became the testing ground for a social experiment in that very sense of “the individual’s right to choose.”

Anne Case and Angus Deaton, the compilers of this sad and distressing report, Deaths of Despair and the Future of Capitalism (it began life as an academic paper published in 2015), are economists from Princetown University. They’re acknowledged experts in their field with no axe to grind, no conspiracy network to disclose, no social order they long to bring down. Anne Case’s special field is the relation of economics to health and the links between economic and health status. Sir Andrew Deaton was awarded a Nobel Prize in 2015 “for his analysis of consumption, poverty, and welfare.” He is also known for his criticism of development aid on the grounds that it runs counter to the principles of international free trade, principles of which he is a fervent supporter.

As if struck by the radical conclusions which can be drawn by anyone learning of the extent of American opioid drug addiction, how much grief it has caused, how many families it has ruined, and how many deaths it has led to, the writers are at pains to stress throughout their book that they fundamentally approve of America’s free-market system and that capitalism and democracy are the optimal ways forward for mankind. They tell the reader that they had planned at first to call their book Deaths of Despair and the Failure of Capitalism, but they decided to replace the “failure of capitalism” with “future of capitalism” to stress their underlying optimism.

Case and Deaton are critical economists, not sociologists. They make no call to arms nor demand far-reaching political consequences or social reform. Their major task is to provide empirical evidence to demonstrate the extent of the opioid epidemic in the United States and how it happened.

Far from drawing radical conclusions from what they observe, Case and Deaton are anxious to abate fears that the opioid crisis might constitute an indictment of capitalism as such. Their message is that the opioid crisis is simply one more crisis to be managed as other crises have been managed in the past. In only one aspect of American life do they stress the need for radical change, and that is in the American health insurance and pension systems. A country’s health system, they argue, enjoys a special case status and needs to be exempted from being shaped by the economics of supply and demand which shape other industries. The writers then home in on statistics which lay bare the extent of the crisis. These are often surprising, often shocking, and sometimes appalling:

The US health care system, which absorbs 18% of the American gross domestic product (GDP) was $10,739 per person in 2017, about four times what the country spends on defense and about three times what it spends on education, is needlessly eating away at workers’ wages. (p. 191)

As they put it rather well, “the (health care) industry is not very good at promoting health, but it excels at promoting the wealth of health care providers.” (p.193)

Health care costs are rising and taking larger bites out of median incomes:

The percentage of income that is available for things other than health care has fallen from 95% in 1860 to 82% today. (p. 203)

The writers question whether the existing system is a genuine supply and demand system in any case. Something of a closed shop operates against alternative medicine, limits the number of qualified physicians coming onto the market every year, and ensures that a complete non-transparency dominates in all aspects of health care provision and costs. Competing insurance firms duplicate administrative work, tying down resources that could be employed in the promotion of good health.

Case and Deaton, at times, give the impression that such failings in the American health care system are systematic of the United States — but that is not true. What seems to be true, and this would require another book and another study to prove or disprove, is that an array of failings — for instance, the duplication of work, exorbitant liability claims, slack federal control, lobbying, the influencing of doctors — are more prevalent and more substantial in the US than in other countries. This makes the US health care system peculiarly susceptible to a crisis that one too-easily approved, promoted, and prescribed prescription drug may cause.

So it is that aspects of the healthcare system in the United States undoubtedly contributed to the over-prescription of opioids. The writers note that many doctors in the US, being in private practice, can benefit financially from increasing the volume of patients that they see, as well as by ensuring patient satisfaction. However, in other countries — Germany for example — doctors in public practice are paid a flat rate per patient, which means there, too, is an incentive to increase the number of patients; and after a few superficial questions, dismiss them from the surgery clutching a prescription. The free-market notion of “customer satisfaction” can take an ominous turn in any doctor’s surgery, not only in the United States.

The focus of this book is arguably at once too detailed (it abounds with tables, graphs, and statistics) and at the same time paradoxically too vague. The proposals for coping with the epidemic or how to run health care differently in the US are lacking in substance and have clearly not been worked out in detail. The main focus of the study is the crisis itself and not how to deal with it. It seeks to explain the causes of an opioid epidemic that struck the white working class of the United States at the end of the 1990s and has cost, according to the writers, over half a million lives; lives that, based on pre-epidemic falling mortality rates, would probably be alive today if there had been no epidemic. The epidemic was brought about, the writers state bluntly, because “the Food and Drug Administration approved the use of what is essentially legalized heroin.” (p.10)

In their first chapter, entitled “The Calm Before the Storm,” the writers note that mortality rates in the 45-54 age group of white Americans in the United States had been falling dramatically throughout the twentieth century. Close to 1,500 per 100,000 at the beginning of the twentieth century, the level had fallen to under 400 by 1999. Although black mortality rates in comparative age groups are still higher than the rates for whites, the gap has begun to close significantly. This is not so much owed to falling black rates (although this is taking place) as to a sudden and sharp rise in white mortality rates. The writers quite rightly note that it is much harder to monitor morbidity rates than mortality rates, but insist that “we can be sure” that people were leading better lives at the same time as mortality rates were falling. So, not only mortality rates rose, so did morbidity rates. A drug of despair is never a happy drug, and taking it does not bode well for the taker’s health in general.

The statistical analysis presented by the writers precedes from a dispassionate comparison of data and a deduction by exclusion. They are principally concerned with the sudden rise in mortality rates of the white working class (defined for the purposes of this book as those not holding a bachelor’s degree) from the beginning of the twenty-first century in the United States.

Two notable facts are stated at the start. Firstly, mortality rates for working-class whites in the USA bottomed out at the beginning of this century and then began to rise. Secondly, this trend has so far only occurred in the United States. From these stark and startling facts, the writers determine to identify the culprit within what they call “American exceptionalism.” What is unique to the situation in the United States? What is the supplementary factor that makes the crisis specifically American? After all, the writers point out, the entire Western world experienced many of the negative factors at play in the United States that might be seen as contributory causes:

  • Unemployment
  • Rapidly rising healthcare costs
  • White dissatisfaction and sense of disenfranchisement
  • Rapid replacement of unskilled jobs by technology
  • Outsourcing to cheap labor countries
  • A decline in union membership
  • The rise of subcontracting and zero-hour contracts

Case and Deaton could have, but do not, mention falling white birth rates.

“Something important, awful, and unexpected is happening.” (p. 30) Those and other factors play their part, but why is the situation regarding life expectancy and drug addiction especially grim in the USA? The mortality hike among working-class whites has been so significant that the total national life expectancy for the US fell from 78.8 in 2014 to 78.5 in 2016, according to the World Bank Group, a fall that was wholly attributable to the rise in working-class white mortality.

The writers are scrupulous in their interpretation of data, and they are always ready to make allowances for factors that could distort results or need to be taken into consideration. Those who wish to delve more into the matter from this perspective will not be disappointed by the book. Case and Deaton first locate an unprecedented rise in deaths among US non-BA (non-university-educated) whites in specific areas, mostly small towns and rural areas. They identify three major causes of rising death rates: suicides, drug overdoses, and alcohol-related deaths.

This death pattern is obviously one of abandonment and despair. It is not a trend which in any way affects the well-to-do. Developments in the global economy widely commented on and reiterated again here are that BA whites have, on the whole, profited massively from globalization and the specialization of work. Non-BA whites massively have not. The writers note that what economists call the “earnings premium” — that is, the proportional difference in earnings resulting from a BA degree — had doubled from the late 1970s to the beginning of the new century. Brain is replacing brawn in an increasingly light-weight, feminized virtual global world.

Cane and Deaton draw no conclusion from the fact that non-BA whites have a strong sense that they are not represented in public life, which can be expected to feed as well as feed on despair within a given human collective. It was that sense of non-representation which has created political repercussions throughout Europe and also in the USA, but the writers do not concern themselves with politics. Brexit is only once mentioned, when it is dismissed as a “catastrophe” (p. 223). Case and Deaton express no views on the election of Donald Trump and his success or failure in dealing with the opioid crisis.

Rather, Case and Deaton simply give us the facts.

In 2017, 158,000 Americans died from what we call deaths of despair: suicide, overdoses, and alcoholic liver disease and cirrhosis. That is the equivalent of three full 737 MAXs falling out of the day every day, with no survivors. (p. 94)

When they turn to the specific subject of opioids, the statistics are more shocking still. Opioids prescribed by physicians accounted for fully a third of all opioid deaths in 2017 and a quarter of the 70,237 drug overdose deaths that year. Perhaps most astonishing of all: more than a third of all US adults — 98 million people — were prescribed opioids in one year: 2015 (p. 113). “As late as 2017, there were still fifty-eight opioid prescriptions for every hundred Americans.” (p. 247) 29.7 million US citizens have no health care insurance at all to meet the costs of high and ever-higher healthcare costs. The writers do not say what percentage of addicts had health insurance coverage.

So, what are opioids? Merriam Webster defines an opioid as “a natural, semisynthetic, or synthetic substance that typically binds to the same cell receptors as opium and produces similar narcotic effects (such as sedation, pain relief, slowed breathing, and euphoria.”

There are natural opioids such as morphine, and there are synthetic opioids, which include the standard opioid prescription drugs.

The groundwork for the opioid crisis was laid in the 1980s, when pain increasingly became seen as a medical problem in itself, one that required adequate treatment at a time when skepticism was growing about the efficacy of surgery to deal with complaints such as back pain. US states began to pass intractable pain treatment acts, which removed the threat of prosecution for physicians who treated their patients’ pain aggressively with controlled substances. In 1995, the American Pain Society, a physicians’ organization in Chicago, launched a campaign that framed pain as a “fifth vital sign” that should be monitored and managed as a matter of course, in the same way as heart rate and blood pressure are.

It had long been customary for doctors to administer strong opioids to the terminally sick when the potential for addiction is irrelevant. In the course of the 1980s, strong opioids were also increasingly prescribed for pain relief both as an alternative to intrusive surgery and for pain relief after surgery. Evidence, subsequently revealed as unsubstantiated but widely believed at the time, was published in peer journals that a new kind of opioid, the sustained release opioid (designed to be released gradually over a prolonged period of time) was less addictive than other opioids.

The crisis in the US began with a flooding of the market in the mid-1990s with an opioid called OxyContin, which had been approved by the FDA in 1968. OxyContin is a sustained release formulation of oxycodone, derived from thebaine, an opiate alkaloid found in opium. OxyContin (soon to be nicknamed “hillbilly heroin”) was manufactured by a company called Purdue Pharmaceutical located in Stamford, Connecticut.

Purdue Pharmaceutical was founded in 1892 by medical doctors John Purdue Gray and George Frederick Bingham in Manhattan and was then called the Purdue Frederick Company. It was, by all accounts, a Tony Bungay sort of company, promoting invigorating tonics. One included sherry! But the company remained relatively obscure during the first half of the twentieth century. In 1952, the company was sold to the brothers Raymond and Mortimer Sackler, the sons of Jewish immigrants from Galicia. The Sacklers founded the Creedmore Institute for Psychological Studies, where they engaged in research into the psycho-biology of schizophrenia and manic depressive psychosis.

In the 1990s, the Sacklers saw an opportunity for Purdue Frederick to capture a niche market in the pharmaceutical business. That niche? Medicinal analgesics.

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2 Comments

  1. Lord Shang
    Posted June 25, 2020 at 1:47 am | Permalink

    “It was, by all accounts, a Tony Bungay sort of company, promoting invigorating tonics.” I think the reviewer meant to write “Tono Bungay”, after the HG Wells novel.

    Interesting information. I look forward to the next installment. I have a genetic disorder which has resulted in my being prescribed various opioids (never Oxy, though) many times. I don’t see the big deal. I never had any addiction or physiological issues. Is Walker or Deaton arguing that opioids are inherently dangerous and irresponsible? Or are they simply too easy to abuse? My understanding of the alleged “opioid crisis” is that too many whites are (ab)using the drugs for recreational purposes. My very real concern is that hysterical, nanny-state legislation meant to protect morons from their own behaviors could result in those of us who really need these wonderful drugs not being able to obtain them. That would be an outrage! Already, I’ve found it more difficult to obtain what I’ve used many times before.

    BTW, the free market needs no empirical proof of its value (though such proof is abundantly available). We can know its logic deductively. That said, I would point out that the results from free market reforms in South America were overwhelmingly positive.

    • Franz
      Posted June 26, 2020 at 12:07 am | Permalink

      “My very real concern is that hysterical, nanny-state legislation meant to protect morons from their own behaviors could result in those of us who really need these wonderful drugs not being able to obtain them.”

      You’re right to be concerned: It’s about to get worse. I waited till I read part II of this to supply an addition.

      After a veteran friend committed suicide when he was denied pain treatment, I checked the situation out. Most of us who did industrial work in our younger days are in the same boat, so I discovered the most excellent Dr. Josh Bloom. As I guessed, it’s a lot of smoke and mirrors, along with games with numbers, but the “crisis” was misreported and confused many issues from the start.

      But by zero coincidence, the decisions made the DEA, FDA and CDC much more powerful. In the last few years, thanks to Purdue, every trip to your doctor is now Federally Monitored.

      But Dr Bloom at least provides some insight for us normal citizens:

      From Opioid Malfeasance: “It appears that the CDC set out to discredit the effectiveness of opioids in long term use — regardless of the available evidence — using a scientifically invalid process called “cherry picking.”

      https://www.acsh.org/news/2016/12/05/opioid-malfeasance-cdc-guess-who-getting-hurt-10531

      From Fed Double Down On Pills: “So, I guess if we make fewer pills then fewer people will die from fentanyl. Which is fine except for a 25% drop in opioid prescriptions over the past five years has been accompanied by a 25-fold increase in fentanyl deaths. Yeah, that’s gonna work.”

      But for the longest and best: Who Is Telling The Truth About Prescription Opioid Deaths? DEA? CDC? Neither? (Warning, lots of graphs.) From 2018 and the best basic overview I have seen.

      https://www.acsh.org/news/2018/11/05/who-telling-truth-about-prescription-opioid-deaths-dea-cdc-neither-13569

      All of Dr Blooms articles on the crisis are worth it. But the more he exposes the trickery and flat out lying the government is doing, the more they pile on more of the same.

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