nep-hea New Economics Papers
on Health Economics
Issue of 2005‒07‒18
five papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Prioritizing public health expenditures when there is a private alternative By Hoel, Michael
  2. Health Status and Labour Force Status of Older Working-Age Australian Men By Lixin Cai; Guyonne Kalb
  3. Does Falling Smoking Lead to Rising Obesity? By Jonathan Gruber; Michael Frakes
  4. Denial of Death and Economic Behavior By Wojciech Kopczuk; Joel Slemrod
  5. Refundable Tax Credits for Health Insurance: The Sensitivity of Simulated Impacts to Assumed Behavior By David W. Emmons; Eva Madly; Stephen A. Woodbury

  1. By: Hoel, Michael (Dept. of Economics, University of Oslo)
    Abstract: Cost-effectiveness analysis often plays an important role in prioritization among different types of public health expenditures. Cost-effectiveness is defined as the maximal health benefits for given expenditures on health care. With a private health sector as a supplement to the public sector, the socially optimal ranking of treatments to be included in the public health program is changed. The larger are the costs per treatment for a given benefit-cost ratio, the higher priority should the treatment be given. The more heterogeneous preferences for a particular treatment are, the lower priority should this treatment be given. If the health budget does not exceed the socially optimal size, treatments with sufficiently low costs should not be performed by the public health system if there is a private alternative
    Keywords: public health; prioritization; cost-effectiveness analysis
    JEL: H42 H51 I10 I18
    Date: 2005–05–25
  2. By: Lixin Cai (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Guyonne Kalb (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: The trend of declining labour force participation by older working-age men, combined with an ageing population, has led many industrialised nations to develop policies encouraging older male workers to remain in the labour force. A better understanding of how an individual’s health influences the labour force participation decision among this group of workers would facilitate the development of effective policies. The current research uses the Household, Income and Labour Dynamics in Australia (HILDA) survey to investigate the issue. The longitudinal nature of the three-wave HILDA data, which are currently available, allows for a better control for unobserved heterogeneity than was possible with earlier data. Therefore, more efficient estimates of the direct health effects on labour force participation can be obtained than in a cross-sectional analysis. Unobserved factors are likely to affect both health and labour force status, therefore we estimate a model that takes the correlation between the two error terms in the health and labour force status equations into account. The results show that controlling for unobserved heterogeneity and the correlation between the two equations is important. That is, the estimated variances of the unobserved heterogeneity terms are significantly different from zero in both equations and the two error terms are correlated. Any restriction on the correlation between the two equations appears to lead to underestimation of the direct health effects.
    Date: 2005–07
  3. By: Jonathan Gruber; Michael Frakes
    Abstract: The strong negative correlation over time between smoking rates and obesity have led some to suggest that reduced smoking is increasing weight gain in the U.S.. This conclusion is supported by the findings of Chou et al. (2004), who conclude that higher cigarette prices lead to increased body weight. We investigate this issue and find no evidence that reduced smoking leads to weight gain. Using the cigarette tax rather than the cigarette price and controlling for non-linear time effects, we find a negative effect of cigarette taxes on body weight, implying that reduced smoking leads to lower body weights. Yet our results, as well as Chou et al., imply implausibly large effects of smoking on body weight. Thus, we cannot confirm that falling smoking leads in a major way to rising obesity rates in the U.S.
    JEL: H1 I1
    Date: 2005–07
  4. By: Wojciech Kopczuk; Joel Slemrod
    Abstract: We model denial of death and its effect on economic behavior. Attempts to reduce death anxiety and the possibility of denial of mortality-relevant information interact with intertemporal choices and may lead to time-inconsistent behavior and other %u201Cbehavioral%u201D phenomena. In the model, repression of signals of mortality leads to underconsumption for unsophisticated individuals, but forward-sophisticated individuals may over-consume in anticipation of future denial and may seek ways to commit to act according to one%u2019s mortality prospects as currently perceived. We show that the mere possibility of engaging in this kind of denial leads to time-inconsistent but efficient behavior. Refusal to face up to the reality of death may help explain a wide range of empirical phenomena, including the underutilization of tax-advanced inter vivos gifts and inadequate purchase of life insurance.
    JEL: D11 D81 D91
    Date: 2005–07
  5. By: David W. Emmons (American Medical Association); Eva Madly (W.E. Upjohn Institute); Stephen A. Woodbury (W.E. Upjohn Institute and Michigan State University)
    Abstract: We replicate and extend a simulation model developed by Jonathan Gruber with the goals of illuminating Gruber's modeling of health insurance coverage under a tax credit and examining the sensitivity of the results to changes in the model's key parameters. The replications suggest that a refundable tax credit of $1,000 for a single individual or $2,000 for a family for private health insurance would reduce the number of uninsured individuals by between 17.5 and 28 percent and require new government expenditures of between $16.6 and $44 billion, of which about $7.4 - $9.7 billion would be for coverage of previously uninsured individuals. These wide simulated ranges highlight the uncertainty inherent in modeling the effects of health insurance tax credits and suggest that progress on the issue of tax credits for health insurance will require improved evidence on the likely take-up rate of a credit.Keywords: Sullivan, TANF, eligibility, vehicle, asset limits
    Keywords: health, insurance, Gruber, tax, credit, Woodbury, Emmons, Upjohn
    JEL: I18 H23
    Date: 2005–07

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