nep-hea New Economics Papers
on Helth Economics
Issue of 2005‒02‒01
nine papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. How did the 2003 Prescription Drug Re-importation Bill Pass the House? By Tower, Edward; Grabowski, Henry; Gokcekus, Omer; Adams, Mike
  2. Autopsy on an Empire: Understanding Mortality in Russia and the Former Soviet Union By Brainerd, Elizabeth; Cutler, David M.
  3. The Disability Discrimination Act in the UK: Helping or Hindering Employment Amongst the Disabled? By Bell, David; Heitmueller, Axel
  4. Wage and Benefit Changes in Response to Rising Health Insurance Costs By Dana Goldman; Neeraj Sood; Arleen Leibowitz
  5. Income and the Use of Prescription Drugs by the Elderly: Evidence from the Notch Cohorts By John R. Moran; Kosali Ilayperuma Simon
  6. Did the HMO Revolution Cause Hospital Consolidation? By Robert Town; Douglas Wholey; Roger Feldman; Lawton R. Burns
  7. Steming the Tide? The Effect of Expanding Medicaid Eligibility on Health Insurance By Lara D. Shore-Sheppard
  8. The Changing American Hospital in the Twenty-first Century 14th Annual Herbert Lourie Memorial Lecture on Health Policy By Ralph W. Muller
  9. Are the Benefits of Medicine Worth What We Pay for It? 15th Annual Herbert Lourie Memorial Lecture on Health Policy By David M. Cutler

  1. By: Tower, Edward; Grabowski, Henry; Gokcekus, Omer; Adams, Mike
    Abstract: This paper examines the major interest groups in the debate over allowing the wholesale re-importation of prescription drugs through the Pharmaceutical Market Access Act. By making use of the logit model, we see the effects that each of these groups has had on the voting behavior of the 108 th Congress on the bill. We find evidence suggesting that Representatives are maximizing their electoral prospects: Contributions from pharmaceutical manufacturers and HMOs significantly influence the probability of voting for the Bill. Similarly, Representatives are sensitive to their constituency’s interest: employment in pharmaceutical manufacturing and the presence of senior citizens are also taken into account. However, the decision was by and large a partisan one: Party affiliation was the most important factor in passing the Bill.
    Keywords: Voting behavior, Health, Trade Policy
    JEL: D72 I18 F13
    Date: 2005
  2. By: Brainerd, Elizabeth (Williams College, CEPR, WDI and IZA Bonn); Cutler, David M. (Harvard University and NBER)
    Abstract: Male life expectancy at birth fell by over six years in Russia between 1989 and 1994. Many other countries of the former Soviet Union saw similar declines, and female life expectancy fell as well. Using cross-country and Russian household survey data, we assess six possible explanations for this upsurge in mortality. Most find little support in the data: the deterioration of the health care system, changes in diet and obesity, and material deprivation fail to explain the increase in mortality rates. The two factors that do appear to be important are alcohol consumption, especially as it relates to external causes of death (homicide, suicide, and accidents) and stress associated with a poor outlook for the future. However, a large residual remains to be explained.
    Keywords: health, mortality, Russia, Eastern Europe
    JEL: I12 J10 P36
    Date: 2005–01
  3. By: Bell, David (University of Stirling); Heitmueller, Axel (London Business School and IZA Bonn)
    Abstract: The enactment of the Americans with Disabilities Act (ADA) in 1990 triggered a substantial academic debate about its consequences on employment rates of disabled people. In contrast, the employment provision of the 1996 Disability Discrimination Act (DDA) in Britain has received little attention. This paper provides robust evidence that, similar to the ADA in the US, the DDA has had no impact on the employment rate of disabled people or possibly worsened it. Possible reasons for this are low take-up of financial support, low levels of general awareness about the Act among disabled people and employers, and limited knowledge about the true costs of required adjustments.
    Keywords: disability, employment, difference-in-difference, discrimination
    JEL: J2 I18 J71 J78
    Date: 2005–01
  4. By: Dana Goldman; Neeraj Sood; Arleen Leibowitz
    Abstract: Many companies have defined-contribution benefit plans requiring employees to pay the full cost (before taxes) of more generous health insurance choices. Research has shown that employee decisions are quite responsive to these arrangements. What is less clear is how the total compensation package changes when health insurance premiums rise. This paper examines employee compensation decisions during a three-year period when health insurance premiums were rising rapidly. The data come from a single large firm with a flexible benefits plan wherein employees explicitly choose how to allocate compensation between cash wages and other benefits. Under such an arrangement, higher health insurance premiums must induce changes in the composition of total compensation%u2013either in lower after-tax wages or in decreased contributions to other benefits. The results suggest that about two-thirds of the premium increase is financed out of cash wages and the remaining one-thirds is financed by a reduction in benefits.
    JEL: J33
    Date: 2005–01
  5. By: John R. Moran; Kosali Ilayperuma Simon
    Abstract: We use exogenous variation in Social Security payments created by the Social Security benefits notch to estimate how retirees' use of prescription medications responds to changes in their incomes. In contrast to estimates obtained using ordinary least squares, instrumental variables estimates based on the notch suggest that lower-income retirees exhibit considerable income sensitivity in their use of prescription drugs. Our estimates are potentially useful for thinking about the health care usage implications of any changes in transfer payments to the elderly that may occur in the future, and for evaluating the benefits of the recently enacted Medicare prescription drug benefit.
    JEL: I12 I18
    Date: 2005–01
  6. By: Robert Town; Douglas Wholey; Roger Feldman; Lawton R. Burns
    Abstract: During the 1990s US healthcare markets underwent a significant transformation. Managed care rose to become the dominant form of insurance in the private sector. Also, a wave of hospital consolidation occurred. In 1990, the mean population-weighted hospital Herfindahl-Hirschman Index (HHI) in a Health Services Area (HSA) was .19. By 2000, the HHI had risen to .26. This paper explores whether the rise in managed care caused the increase in hospital concentration. We use an instrumental variables approach with 10-year differences to identify the relationship between managed care penetration and hospital consolidation. Our results strongly imply that the rise of managed care did not cause the hospital consolidation wave. This finding is robust to a number of different specifications.
    JEL: I11 L12
    Date: 2005–01
  7. By: Lara D. Shore-Sheppard
    Abstract: Despite considerable research, there is little consensus about the impact of Medicaid eligibility expansions for low-income children. In this paper, I reexamine the expansions' impact on Medicaid take-up and private insurance "crowd-out." Focusing on the most influential estimates of the expansions' impact, I show that while many of the critiques leveled at these estimates have little effect on their magnitude, accounting for age-specific trends in coverage produces estimates similar to others in the literature. Estimating the impact of later expansions using additional years of data, I find low rates of take-up and no evidence of crowding out.
    JEL: I1
    Date: 2005–01
  8. By: Ralph W. Muller (CEO, University of Pennsylvania Health System)
    Abstract: One is always hesitant to speak about the future. A famous philosopher from New York, Yogi Berra, said "Making predictions is difficult, especially about the future," and I have some trepidation about doing so now. There is also the difficulty of understanding what really has happened in the past. I recall the Bolshevik general in 1917 who said "The future is clear, but the past is very murky." We anticipate the future with more clarity than is justified, even as we disagree on what is happening right now or what happened before. In that vein, I will describe the role of the American hospital in our health care system, and the challenges it must meet, reviewing first the murky past by summarizing trends that have made hospitals what they are today.
    JEL: I11 I12 I18
    Date: 2003–04
  9. By: David M. Cutler (John F. Kennedy School of Government, Harvard University)
    Abstract: Is medical care worth it? Conventional wisdom says no, but my answer is emphatically yes. The benefits that we have received from medical advance are enormously greater than the costs. I suggest that public policy far outweighs the importance of cost containment relative to coverage expansion; we could in fact spend more and get a lot more for our health care dollars. In what follows, I talk about the costs and benefits of medical advance, focusing on two areas where I have done the most work: improvements in cardiovascular disease care and care for low birth weight infants. In each case, I present evidence that the benefits justify the costs, and discuss what that implies for public policy. I note at the outside that I shall be summarizing a large volume of research that I and others have done. I have compiled my views into a book, YOUR MONEY OR YOUR LIFE (2004, Oxford University Press), that the interested reader should consult.
    JEL: I12 I18
    Date: 2004–04

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