nep-hea New Economics Papers
on Health Economics
Issue of 2008‒09‒13
25 papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. The Intergenerational Transmission of Health in Early Childhood By Katja Coneus ; C. Katharina Spieß
  2. School Nutrition Programs and the Incidence of Childhood Obesity By Millimet, Daniel L.; Tchernis, Rusty; Husain, Muna
  3. Demographic Transitions: analyzing the effects of mortality on fertility By Luis Angeles
  4. Active Transport, Public Transportation, and Obesity in Metropolitan Areas of the United States. By Thomas K. Tiemann; Paul Miller; Erika Lamanna
  5. Inferences for Selected Location Quotients with Applications to Health Outcomes. By Gemechis D. Djira; Frank Schaarschmidt; Bichaka Fayissa
  6. Use of modern medical care for pregnancy and childbirth care : does female schooling matter ? By Somanathan, Aparnaa
  7. Aggregate economic shocks, child schooling and child health By Ferreira, Francisco H. G.; Schady, Norbert
  8. An evaluation of the initial impact of the medical assistance program for the poor in Georgia By Hou, Xiaohui; Chao, Shiyan
  9. HIV/AIDS, climate change and disaster management : challenges for institutions in Malawi By Suarez, Pablo; Givah, Precious; Storey, Kelvin; Lotsch, Alexander
  10. So you want to quit smoking : have you tried a mobile phone ? By Labonne, Julien; Chase, Robert S.
  11. Health reform, population policy and child nutritional status in China By Bredenkamp, Caryn
  12. Medical migration : what can we learn from the UK's perspective ? By Rutten, Martine
  13. Exploring the links between HIV/AIDS, social capital, and development By David, Antonio C.; Li, Carmen A.
  14. Potential applications of conditional cash transfers for prevention of sexually transmitted infections and HIV in Sub-Saharan Africa By Medlin, Carol; de Walque, Damien
  15. The impact of price subsidies on child health care use : evaluation of the Indonesian healthcard By Somanathan, Aparnaa
  16. Cocaine production and trafficking : what do we know ? By Mejia, Daniel; Posada, Carlos Esteban
  17. Goodness of fit in models for mortality data By Carlo Giovanni Camarda; Maria Durban
  18. The Global Joint Distribution of Income and Health By Thanasis Stengos; Ximing Wu; Andreas Savvides
  19. Housing, Health and Happiness By Matias Cattaneo; Sebastian Galiani; Paul Gertler; Sebastian Martinez; Rocio Titiunik
  20. The Marginal Willingness to Pay for Longevity: A Better Way to Value Changes in Mortality Hazard By Neil Bruce; Robert Halvorsen
  21. Health, lifestyle, Growth By Coppola, Gianluigi
  22. Inside the War on Poverty: The Impact of Food Stamps on Birth Outcomes By Douglas Almond; Hilary W. Hoynes; Diane Whitmore Schanzenbach
  23. The Effect of Medicare Coverage for the Disabled on the Market for Private Insurance By John F. Cogan; R. Glenn Hubbard; Daniel P. Kessler
  24. Measuring Welfare and the Effects of Regulation in a Government-Created Market: The Case of Medicare Part D Plans By Claudio Lucarelli; Jeffrey Prince; Kosali Simon
  25. Human Well-Being over the Life Cycle: Longitudinal Evidence from a 20-Year Panel By Bert G.M. Van Landeghem

  1. By: Katja Coneus ; C. Katharina Spieß
    Abstract: The prevalence and importance of children¿s physical health problems have been increasingly recognized in recent years. Physical health problems of children such as obesity, motor impairment and chronic diseases cause social costs. Further, they can lead directly to adult physical health problems, which cause additional social costs. This paper examines the intergenerational link and transmission of both maternal and paternal health on children¿s health in Germany. We investigate this issue using data from the German Socio-Economic Panel (SOEP), making particular use of the mother and child questionnaires. These data allow us to capture a broad set of health measures: anthropometric, self-rated health and "more objective" health measures. The results indicate significant relationships between parental and child health in the first and third year of life. In order to take into account the endogeneity of parental health, we estimate fixed effect models. Overall, we find, controlling for parental income, education and family composition, that parents who experience poor health have children with significantly poorer health. For example, the father¿s body mass index (BMI) is a predictor for their children¿s BMI. Mothers who consider their health as good, have also healthier children.
    Keywords: Intergenerational transmission, child health, parental health, early childhood
    JEL: I1 I12 J13
    Date: 2008
  2. By: Millimet, Daniel L. (Southern Methodist University); Tchernis, Rusty (Indiana University); Husain, Muna (Southern Methodist University)
    Abstract: In light of the recent rise in childhood obesity, the School Breakfast Program (SBP) and National School Lunch Program (NSLP) have received renewed attention. Using panel data on over 13,500 primary school students, we assess the relationship between SBP and NSLP participation and (relatively) long-run measures of child weight. After documenting a positive association between SBP participation and child weight, and no association between NSLP participation and child weight, we present evidence indicating positive selection into the SBP. Allowing for even modest positive selection is sufficient to alter the results, indicating that the SBP is a valuable tool in the current battle against childhood obesity, whereas the NSLP exacerbates the current epidemic.
    Keywords: School Breakfast Program, National School Lunch Program, child health, obesity, program evaluation
    JEL: C31 H51 I18 I28
    Date: 2008–08
  3. By: Luis Angeles
    Abstract: The e¤ect of mortality reductions on fertility is one of the main mech- anisms stressed by the recent growth literature in order to explain demo- graphic transitions. We analyze the empirical relevance of this mechanism based on the experience of all countries since 1960. We distinguish be- tween the e¤ects on gross and net fertility, take into account the dynamic nature of the relationship and control for alternative explanatory factors and for endogeneity. Our results show that mortality plays a large role in fertility reductions, that the change in fertility behavior comes with a lag of about 10 years and that both net and gross fertility are a¤ected. We …nd comparatively little support for explanations of the demographic transition based on economic development or technological change.
    Keywords: mortality, fertility, demographic transitions, uni…ed growth models.
    Date: 2008–07
  4. By: Thomas K. Tiemann (Department of Economics, Elon University); Paul Miller (Department of Health and Human Performance, Elon University); Erika Lamanna (Department of Economics, Elon University)
    Abstract: There is a well established relationship between exercise and weight in individuals. Recently, relationships between less urban sprawl and more leisure exercise and between certain urban characteristics usually associated with less sprawl and exercise for transportation have been found. This paper completes the less-sprawl-more exercise for transportation-lower weight sequence by finding that counties in metropolitan areas where more people complete their journey to work by walking, biking, or taking public transportation have fewer people who are overweight.
    JEL: I18 R10
    Date: 2008–07
  5. By: Gemechis D. Djira; Frank Schaarschmidt; Bichaka Fayissa
    Abstract: Location quotient (LQ) is an index frequently used in geography and economics to measure the relative concentration of activities. This quotient is calculated in a variety of ways depending on which group to use as a reference. Here, we focus on simultaneous inference for the ratios of the individual proportions to the overall proportion based on binomial data. Apparently, this is a multiple comparison problem and multiplicity adjusted location quotients have not been addressed up to now. In fact, there is a negative correlation between the comparisons. The quotients can be simultaneously tested against unity and simultaneous confidence intervals can be constructed for the LQs based on existing probability inequalities and by directly using the asymptotic joint distribution of the associated z-statistics. The proposed inferences are appropriate for analysis based on sample surveys. A real data set is used to demonstrate the application of multiplicity adjusted LQs. A simulation study is also carried out to assess the performance of the proposed methods in terms of achieving a nominal coverage probability. It is observed that the coverage of the simple Bonferroni adjusted Fieller intervals for LQs is just as good as the coverage of the method which directly takes the correlations into account.
    Keywords: Location quotients, Fieller's theorem, Multiple comparison.
    JEL: C12 R11
    Date: 2008–09
  6. By: Somanathan, Aparnaa
    Abstract: Controversy exists over whether the estimated effects of schooling on health care use reflect the influence of unobserved factors. Existing estimates may overstate the schooling effect because of the failure to control for unobserved variables or may be downwardly biased due to measurement error. This paper contributes to the resolution of this debate by adopting an instrumental variable approach to estimate the impact of female schooling on maternal health care use. A school construction program in Indonesia in the 1970s is used to construct an instrumental variable for education. The choice between use and non-use of maternal health services is estimated as a function of schooling and other variables. Data from the Indonesia Family Life Survey are used for this paper. Standard regression models estimated in the paper indicate that each additional year of schooling does indeed have a significant, positive effect on maternal health care use. Instrumental variable estimates of the schooling effect are larger. The results suggest that schooling has a positive impact on maternal health care use even after eliminating the effect of unobserved variables and measurement error. This paper moves beyond previous work on the impact of education on health care use by adopting an IV approach to address the problem of endogeneity and measurement error. IV methods have been used widely in the labour economics literature to examine the impact of schooling on wages and other labour market outcomes but rarely to estimate the effect of schooling on health outcomes.
    Keywords: Health Monitoring&Evaluation,Population Policies,Health Systems Development&Reform,Gender and Health,Primary Education
    Date: 2008–05–01
  7. By: Ferreira, Francisco H. G.; Schady, Norbert
    Abstract: Do aggregate economic shocks, such as those caused by macroeconomic crises or droughts, reduce child human capital? The answer to this question has important implications for public policy. If shocks reduce investments in children, they may transmit poverty from one generation to the next. This paper uses a simple framework to analyze the effects of aggregate economic shocks on child schooling and health. It shows that the expected effects are ambiguous, because of a tension between income and substitution effects. The paper then reviews the recent empirical literature on the subject. In richer countries, like the United States, child health and education outcomes are counter-cyclical: they improve during recessions. In poorer countries, mostly in Africa and low-income Asia, the outcomes are pro-cyclical: infant mortality rises, and school enrollment and nutrition fall during recessions. In the middle-income countries of Latin America, the picture is more nuanced: health outcomes are generally pro-cyclical, and education outcomes counter-cyclical. Each of these findings is consistent with the simple conceptual framework. The paper discusses possible implications for expenditure allocation.
    Keywords: Health Monitoring&Evaluation,Population Policies,Economic Theory&Research,Health Systems Development&Reform,Labor Policies
    Date: 2008–08–01
  8. By: Hou, Xiaohui; Chao, Shiyan
    Abstract: As part of the recent health reform effort, the government of Georgia launched a Medical Assistance Program in June 2006 to provide health insurance to its poor population. So far the program covers slightly over 50 percent of the poor and provides benefit coverage for outpatient and inpatient care. This paper estimates initial impact of the Medical Assistance Program and assesses whether the benefits have reached the poorest among those eligible, using utilization data from June 2006 to December 2006. Based on the analysis using a regression discontinuity design and a three-part model, the paper presents two main findings. First, the Medical Assistance Program has significantly increased utilization of acute surgeries/inpatient services by the poor. Second, the benefits have successfully reached the poorest among the poor. These two findings indicate that government efforts to improve the poor's access to and utilization of health services are yielding results. The paper emphasizes that the initial dramatic increase in surgeries must be interpreted with caution, given the possible misclassification or misreporting of acute surgeries in the data. The paper also stresses the need to continue monitoring implementation of the Medical Assistance Program and further improve program design, particularly the targeting mechanism, to achieve better efficiency, effectiveness and overall equity in access to health care services.
    Keywords: Health Monitoring&Evaluation,Health Systems Development&Reform,Health Economics&Finance,,Health Law
    Date: 2008–04–01
  9. By: Suarez, Pablo; Givah, Precious; Storey, Kelvin; Lotsch, Alexander
    Abstract: Southern African institutions involved in disaster management face two major new threats: the HIV/AIDS pandemic (eroding organizational capacity and increasing vulnerability of the population), and climate change (higher risk of extreme events and disasters). Analyzing the combined effects of these two threats on six disaster-related institutions in Malawi, the authors find evidence of a growing gap between demand for their services and capacity to satisfy that demand. HIV/AIDS leads to staff attrition, high vacancy rates, absenteeism, increased workload and other negative effects enhanced by human resources policies and financial limitations. Many necessary tasks cannot be carried out adequately with constraints such as the 42 percent vacancy rate in the Department of Poverty and Disaster Management Affairs, or the reduction of rainfall stations operated by the Meteorological Service from over 800 in 1988 to just 135 in 2006. The authors highlight implications of declining organizational capacity for climate change adaptation, and formulate recommendations.
    Keywords: Population Policies,HIV AIDS,Hazard Risk Management,Health Monitoring&Evaluation,Climate Change
    Date: 2008–05–01
  10. By: Labonne, Julien; Chase, Robert S.
    Abstract: Tobacco use, which is rising quickly in developing countries, kills 5.4 million people a year worldwide. This paper explores the impacts of mobile phone ownership on tobacco consumption. Indeed, mobile phone ownership could affect tobacco consumption because individuals might pay for their communication with money they would have spent on tobacco. Using panel data from 2,100 households in 135 communities of the Philippines collected in 2003 and 2006, the analysis finds that mobile phone ownership leads to a 20 percent decline in monthly tobacco consumption. Among households in which at least one member smoked in 2003, purchasing a mobile phone leads to a 32.6 percent decrease in tobacco consumption per adult over the age of 15. This is equivalent to one less pack of 20 cigarettes per month per adult. The results are robust to various estimation strategies. Further, they suggest that this impact materializes through a budget shift from tobacco to communication.
    Keywords: Tobacco Use and Control,Alcohol and Substance Abuse,Consumption,E-Business,Adolescent Health
    Date: 2008–06–01
  11. By: Bredenkamp, Caryn
    Abstract: This paper examines the determinants of child nutritional status in seven provinces of China during the 1990s, focusing specifically on the role of two areas of public policy, namely health system reforms and the one child policy. The empirical relationship between income and nutritional status, and the extent to which that relationship is mediated by access to quality healthcare and being an only-child, is investigated using ordinary least squares, random effects, fixed effects, and instrumental variables models. In the preferred model - a fixed effects model where income is instrumented - the author find that being an only-child increases height-for-age z-scores by 0.119 of a standard deviation. The magnitude of this effect is found to be largely gender and income neutral. By contrast, access to quality healthcare and income is not found to be significantly associated with improved nutritional status in the preferred model. Data are drawn from four waves of the China Health and Nutrition Survey.
    Keywords: Health Monitoring&Evaluation,Population Policies,Transport Economics Policy&Planning,Health Systems Development&Reform,Rural Poverty Reduction
    Date: 2008–04–01
  12. By: Rutten, Martine
    Abstract: This paper seeks to determine the macro-economic impacts of migration of skilled medical personnel from a receiving country's perspective. The resource allocation issues are explored in theory, by developing an extension of the Rybczynski theorem in a low-dimension Heckscher-Ohlin framework, and empirically, by developing a static computable general equilibrium model for the United Kingdom with an extended health sector component. Using simple diagrams, an expansion of the health sector by recruiting immigrant skilled workers in certain cases is shown to compare favorably to the (short-term) long-term alternative of using domestic (unskilled) workers. From a formal analysis, changes in non-health outputs are shown to depend on factor-bias and scale effects. The net effects generally are indeterminate. The main finding from the applied model is that importing foreign doctors and nurses into the United Kingdom yields higher overall welfare gains than a generic increase in the National Health Service budget. Welfare gains rise in case of wage protection.
    Keywords: Health Monitoring&Evaluation,Health Systems Development&Reform,Labor Markets,Population Policies,Health Economics&Finance
    Date: 2008–04–01
  13. By: David, Antonio C.; Li, Carmen A.
    Abstract: This paper attempts to quantify the impact of the HIV/AIDS epidemic on social capital with cross-country data. Using data from the World Values Survey, the authors estimate reduced-form regressions of the main determinants of social capital controlling for HIV prevalence, institutional quality, social distance, and economic indicators. The results obtained indicate that HIV prevalence affects social capital negatively. The empirical estimates suggest that a one standard deviation increase in HIV prevalence will lead to a decline of at least 1 percent in trust, controlling for other determinants of social capital. Moving from a country with a relatively low level of HIV prevalence, such as Estonia, to a country with a relatively high level, such as Uganda, there is a more than 11 percent point decline in social capital. These results are robust in a number of dimensions and highlight the empirical importance of an additional mechanism through which HIV/AIDS hinders the development process.
    Keywords: Population Policies,Social Capital,HIV AIDS,Disease Control&Prevention,Inequality
    Date: 2008–07–01
  14. By: Medlin, Carol; de Walque, Damien
    Abstract: A growing number of developing countries have introduced conditional cash transfer programs that provide money to poor families with certain contingencies attached - such as requiring school attendance or regular immunization and health check-ups. As the popularity of conditional cash transfer programs has grown, experimentation with potential applications in other areas of health, such as sexual and reproductive health, and HIV prevention, in particular, has also increased. Evaluations of conditional cash transfer programs have focused almost exclusively on uptake of health and educational services, which make relatively low demands of participants compared with more complex interventions, which require the cessation of risky behaviors, such as smoking, obesity, and substance abuse. The literature on contingency management - based on the principle that behavioral change occurs when appropriate behaviors are reinforced and rewarded - provides a richer picture of the complexity of the use of conditionality to encourage healthy behavioral change. This paper examines developing countries'experiences with conditional cash transfer programs and the results of trials in clinical settings on the efficacy of contingency management, and addresses their relevance for designing conditional cash transfer programs to address risky sexual behavior and promote the prevention of sexually transmitted infections and HIV in Sub-Saharan Africa.
    Keywords: Health Monitoring&Evaluation,Population Policies,Adolescent Health,Disease Control&Prevention,HIV AIDS
    Date: 2008–07–01
  15. By: Somanathan, Aparnaa
    Abstract: Financial barriers to seeking care are frequently cited as one of the main causes of underutilization of child health care services. This paper estimates the impact of Indonesia's healthcard on health care use by children. Evaluation of the healthcard effect is complicated by the fact that card allocation was non-random. The analysis uses propensity score matching to control for systematic differences between treatment and control groups. A second potential source of bias is related to contemporaneous, exogenous influences on health care use unrelated to the healthcard itself. Using panel data collected prior to and after the introduction of the healthcard, a difference-in-differences estimator is constructed to eliminate the effects of exogenous changes over time. The author finds that although health care use declined for all children during the crisis years of 1997-2000, use of public sector outpatient services declined much less for children with healthcards. The protective effect of the healthcard on public sector use was concentrated among children aged 0-5 years. The healthcard had no significant impact on use of private sector services. The results highlight the need to provide adequate protection against the financial burden of health care costs, particularly during economic crises.
    Keywords: Health Monitoring&Evaluation,Health Systems Development&Reform,Housing&Human Habitats,Health Economics&Finance,Population Policies
    Date: 2008–05–01
  16. By: Mejia, Daniel; Posada, Carlos Esteban
    Abstract: The main purpose of this paper is to summarize the information currently available on cocaine production and trafficking. The paper starts by describing the available data on cocaine production and trade, the collection methodologies (if available) used by different sources, the main biases in the data, and the accuracy of different data sources. Next, it states some of the key empirical questions and hypotheses regarding cocaine production and trade and takes a first look at how well the data match these hypotheses. The paper states some of the main puzzles in the cocaine market and studies some of the possible explanations. These puzzles and empirical questions should guide future research on the key determinants of illicit drug production and trafficking. Finally, the paper studies the different policies that producer countries have adopted to fight against cocaine production and the role consumer countries play in the implementation of anti-drug policies.
    Keywords: Health Monitoring&Evaluation,Environmental Economics&Policies,Crime and Society,Crops&Crop Management Systems,Economic Theory&Research
    Date: 2008–05–01
  17. By: Carlo Giovanni Camarda; Maria Durban
    Abstract: Mortality data on an aggregate level are characterized by very large sample sizes. For this reason, uninformative outcomes are evident in common Goodness-of-Fit measures. In this paper we propose a new measure that allows comparison of different mortality models even for large sample sizes. Particularly, we develop a measure which uses a null model specifically designed for mortality data. Several simulation studies and actual applications will demonstrate the performances of this new measure with special emphasis on demographic models and Pspline approach.
    Keywords: Goodness of fit, P-splines, R2, Mortality
    Date: 2009–09
  18. By: Thanasis Stengos (University of Guelph, Canada and The Rimini Centre for Economic Analysis, Italy); Ximing Wu (Texas A&M University, USA); Andreas Savvides (Cyprus University, Cyprus and Oklahoma State University, USA)
    Abstract: We investigate the evolution of global welfare in two dimensions: income per capita and life expectancy. First, we estimate the marginal distributions of income and life expectancy separately. More importantly, in contrast to previous univariate approaches, we consider income and life expectancy jointly and estimate their bivariate global distribution for 137 countries during 1970 - 2000. We reach several conclusions: the global joint distribution has evolved from a bimodal into a unimodal one, the evolution of the health distribution has preceded that of income, global inequality and poverty has decreased over time and the evolution of the global distribution has been welfare improving. Our decomposition of overall welfare indicates that global inequality would be underestimated if within-country inequality is not taken into account. Moreover, global inequality and poverty would be substantially underestimated if the dependence between the income and health distributions is ignored.
    Keywords: Income; Health; Global Distribution; Inequality; Poverty
    Date: 2008–01
  19. By: Matias Cattaneo (Department of Economics, University of Michigan); Sebastian Galiani (Department of Economics, Washington University in St. Louis); Paul Gertler (Haas Business School, University of California); Sebastian Martinez (World Bank); Rocio Titiunik (Department of Agricultural and Resource Economics, University of California)
    Abstract: Despite the importance of housing for people’s well-being, there is little evidence on the causal impact of housing and housing improvement programs on health and welfare. In this paper, we help to fill this gap by investigating the impact of a large-scale effort by the Mexican Government to replace dirt floors with cement floors on child health and adult happiness. We find that replacing dirt floors with cement floors significantly improves the health of young children. Specifically, we find significant decreases in the incidence of parasitic infestations, diarrhea, and the prevalence of anemia, and an improvement in children’s cognitive development. Additionally, we find that replacing dirt floors by cement floors significantly improves adult welfare, as measured by increased satisfaction with their housing and quality of life, as well as by lower scores on depression and perceived stress scales.
    JEL: I12 I38 H43
    Date: 2008–08
  20. By: Neil Bruce; Robert Halvorsen
    Abstract: One of the most contentious issues concerning benefit-cost analyses of environmental and other regulatory programs has been the valuation of reductions in mortality risks. The conceptual basis for most valuation exercises has been the value of a statistical life (VSL). However, despite decades of both theoretical and empirical research on the meaning and measurement of the VSL concept, there is no consensus concerning the validity of the results it produces in actual applications. In this paper we review the development and application of the VSL approach and then propose what we believe to be a better way to value changes in mortality hazard.
    Date: 2007–03
  21. By: Coppola, Gianluigi
    Abstract: In this paper we try to explain why lifestyle may have a positive impact on economic growth. First of all, we consider health affecting consumer’s utility and we define also a Health Production Function where health is the output and the consumer’s good are the inputs. In this approach we define lifestyle as the return to scale of the Health Production Function A first result is that an increase of consumer’s personal income may have a positive or a negative effect on health. According this result, we modify the Solow Growth Model. We consider health as labour-augmenting. The result is a semi-endogenous model in which the population growth affects positively the income per capita growth, if lifestyle is positive.
    Keywords: health;lifestyle; growth
    JEL: I00 O40
    Date: 2008–09–08
  22. By: Douglas Almond; Hilary W. Hoynes; Diane Whitmore Schanzenbach
    Abstract: This paper evaluates the health impact of a signature initiative of the War on Poverty: the roll out of the modern Food Stamp Program (FSP) during the 1960s and early 1970s. Using variation in the month the FSP began operating in each U.S. county, we find that pregnancies exposed to the FSP three months prior to birth yielded deliveries with increased birth weight, with the largest gains at the lowest birth weights. These impacts are evident with difference-in-difference models and event study analyses. Estimated impacts are robust to inclusion of county fixed effects, time fixed effects, measures of other federal transfer spending, state by year fixed effects, and county-specific linear time trends. We also find that the FSP rollout leads to small, but statistically insignificant, improvements in neonatal infant mortality. We conclude that the sizeable increase in income from Food Stamp benefits improved birth outcomes for both whites and African Americans, with larger impacts for births to African American mothers.
    JEL: H51 I1 I3
    Date: 2008–09
  23. By: John F. Cogan; R. Glenn Hubbard; Daniel P. Kessler
    Abstract: Subsidies for health insurance for chronically ill, high-cost individuals may increase coverage in the broader population by improving the functioning of insurance markets. In this paper, we assess an historical example of a policy intervention of this sort, the extension of Medicare to the disabled, on the private insurance coverage of non-disabled individuals. We use data on insurance coverage from the Panel Study of Income Dynamics from before and after the extension of Medicare to the disabled to estimate the effect of the program on private insurance coverage rates in the broader population. We find that the insurance coverage of individuals who had a health condition that limited their ability to work increased significantly in states with high versus low rates of disability. Our findings suggest that that subsidizing individuals with high expected health costs is an effective way to increase the private insurance coverage of other high-cost individuals.
    JEL: I1
    Date: 2008–09
  24. By: Claudio Lucarelli; Jeffrey Prince; Kosali Simon
    Abstract: Medicare's prescription drug benefit (Part D) has been its largest expansion of benefits since 1965. Since the implementation of Part D, many regulatory proposals have been advanced to improve this government-created market. Among the most debated are proposals to limit the number of options, in response to concerns that there are "too many" plans. In this paper we study the welfare impacts of limiting the number of Part D plans. To do this, we first provide evidence that consumers view Medicare Part D plans as differentiated products. In doing so, we determine how much Medicare beneficiaries value the plans' various features -- an important measurement not only for our analysis, but also because these features are heavily dictated by policy. Second, using our demand- and supply-side estimates, we conduct several policy experiments to understand the implications of reducing the number of plans. Specifically, we assess the effects on equilibrium premia and welfare from removing plans that cover "the gap," reducing the maximum number of plans each firm can offer per region, and, for validation purposes, the impact of a recent major merger. Our counterfactuals regarding removal of plans provide an important assessment of the losses to consumers (and producers) resulting from government limitations on choice. These costs must be weighed against the widely discussed expected gains from limiting options (due to expected reductions in consumer search costs) when considering new restrictions on the number of plans that can be offered. We find that the search costs should be at least two thirds of the average monthly premium in order to justify a regulation that allows only two plans per firm, and that this number would be substantially lower if the limitation in the number of plans is coupled with a decrease in product differentiation (e.g., by removing plans that cover "the gap").
    JEL: H42 H51 I11 I18 L13 L51 L88
    Date: 2008–09
  25. By: Bert G.M. Van Landeghem
    Abstract: This paper uses longitudinal data from the German Socioeconomic Panel (GSOEP) to analyze the course of subjective well-being over the life cycle. The long time dimension offers an opportunity to disentangle ageing effects from fixed birth co- hort effects. The paper ¯finds that the U-shaped pattern of life satisfaction over age is less supported in a longitudinal analysis, and that the observed trajectory can vary across model specifications. Moreover, assets and material well-being seem to play an important role in determining the course of satisfaction over life time. The upsurge of happiness after mid-life seems to be more robust to model specifications, which might imply that the latter is inherent to mankind.
    Keywords: subjective well-being, life cycle happiness, ageing, birth cohorts, U-shape, German Socio-Economic Panel
    JEL: C23 I31 J10
    Date: 2008

This nep-hea issue is ©2008 by Yong Yin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.