nep-hea New Economics Papers
on Health Economics
Issue of 2009‒09‒19
fifteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Fine Tuning of Health Insurance Regulation: Unhealthy Consequences for an Individual Insurer By Johannes Schoder; Peter Zweifel
  2. A Pharmaceutical Innovation – Is it Worth the Money? Whose Money? By Michele Sennhauser; Peter Zweifel
  3. Capping Risk Adjustment? By Patrick Eugster; Peter Zweifel
  4. Optimal savings and heallth spending over the life cycle By Tamara Fioroni
  5. Human Health Care and Selection Effects. Understanding Labour Supply in the Market for Nurses By Francesca Barigozzi; Gilberto Turati
  6. The effect of comprehensive smoking bans in European workplaces By Federica Origo; Claudio Lucifora
  7. Smoking Persistence Across Countries: An Analysis Using Semi-Parametric Dynamic Panel Data Models with Selectivity By Dimitrios Christelis; Anna Sanz-de-Galdeano
  8. Contribution of health to economic development: a survey and overview By Husain, Muhammad Jami
  9. Measuring the quality of education and health services : the use of perception data from Indonesia By Dasgupta, Basab; Narayan, Ambar; Skoufias, Emmanuel
  10. Are Recessions Good for Everyone's Health? The Association Between Mortality and the Business Cycle by Race in the U.S. By Matias Fontenla; Fidel Gonzalez; Troy Quast
  11. Food Assistance Programs and Healthy Diet among Low-Income Individuals By Lee, Jonq-Ying
  12. A Study of Self-Reported and Actual BMI By Lee, Jonq-Ying
  13. Health Insurance and Productivity: Evidence from the Manufacturing Sector By Sang Nguyen; Alice Zawacki
  14. Predictors of sickness absence and presenteeism: Does the pattern differ by a respondent’s health? By Böckerman, Petri; Laukkanen, Erkki
  15. Insurer Bargaining and Negotiated Drug Prices in Medicare Part D By Darius Lakdawalla; Wesley Yin

  1. By: Johannes Schoder (Socioeconomic Institute, University of ZurichAuthor-Name: Michele Sennhauser; Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich)
    Abstract: This paper sheds light on some unexpected consequences of health insurance regulation that may pose a big challenge to insurers’ risk management. Because mandated uniform contributions to health insurance trigger risk selection efforts risk adjustment (RA) schemes become necessary. A good deal of research into the optimal RA formula has been performed (Ellis and Van de Ven [2000]). A recent proposal has been to add ”Hospitalization exceeding three days during the previous year” as an indicator of high risk (Beck et al. [2006]). Applying the new formula to an individual Swiss health insurer, its payments into the RA scheme are postdicted to explode, reaching up to 13 percent of premium income. Its mistake had been to successfully implement Managed Care, resulting in low rates of hospitalization. The predicted risk management response is to extend hospital stays beyond three days, contrary to stated policy objectives also of the United States.
    Keywords: Health insurance, regulation, risk adjustment, risk management
    JEL: I18 L51 H51
    Date: 2009–09
  2. By: Michele Sennhauser (Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich)
    Abstract: This study seeks to provide evidence for deciding whether or not a pharmaceutical innovation should be included in the benefit list of social health insurance. A discrete choice experiment (DCE) was conducted in Germany to measure preferences for modern insulin therapy. Of the 1,100 individuals interviewed in 2007, 200 suffered from type 1 diabetes, 150 from insulin-treated type 2 diabetes, and 150 from insulin-naive type 2 diabetes. The long-acting insulin analogue ”Insulin Detemir” is compared to human insulin as the status quo. The DCE contains two price attributes, copayment and increased contributions to health insurance. As one would expect, non-affected non-diabetics and insulin-naive diabetics exhibit higher willingness-to-pay (WTP) values through copayment (adjusted for probability of contracting diabetes), while affected type 1 and insulin-treated type 2 diabetics have higher WTP through increased contributions. However, WTP values exceed the extra treatment cost in both financing alternatives, justifying inclusion of the innovation in the benefit list from a cost-benefit point of view.
    Keywords: Health insurance, discrete-choice experiment, preferences, diabetes
    JEL: I11 H51 I18
    Date: 2009–09
  3. By: Patrick Eugster (Socioeconomic Institute, University of ZurichAuthor-Name: Michele Sennhauser; Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich)
    Abstract: When premiums are community-rated, risk adjustment (RA) serves to mitigate competitive insurers’ incentive to select favorable risks. However, unless fully prospective, it also undermines their incentives for efficiency. By capping its volume, one may try to counteract this tendency, exposing insurers to some financial risk. This in term runs counter the quest to refine the RA formula, which would increase RA volume. Specifically, the adjuster, ”Hospitalization or living in a nursing home during the previous year” will be added in Switzerland starting 2012. This paper investigates how to minimize the opportunity cost of capping RA in terms of increased incentives for risk selection.
    Keywords: Health insurance, regulation, risk adjustment, risk management
    JEL: I18 L51 H51
    Date: 2009–09
  4. By: Tamara Fioroni
    Abstract: This paper investigates the relationship between saving and health spending in a two-period overlapping generations economy. Individuals work in the first period of life and live in retirement in old age. Health spending is an activity that increases the quality of life and longevity. Empirical evidence shows that both health spending and saving behave as luxury goods but their behavior differs markedly according to the level of per capita GDP. The share of saving on GDP has a concave shape with respect to per capita GDP, whereas the share of health spending on GDP increases more than proportionally with respect to per capita GDP. Their ratio is nonlinear with respect to income, i.e. first increasing and then decreasing. This ratio, in the proposed model, is equal to the ratio between the elasticity of the utility function with respect to saving and the elasticity of the utility function with respect to health.
    Keywords: Intertemporal Choice, Health Spending, Adult Mortality, Saving
    JEL: D91 I12 E21
    Date: 2009–02
  5. By: Francesca Barigozzi; Gilberto Turati
    Abstract: In this note we study (adverse) selection in a labour supply model where potential applicants are characterised by different vocational premiums and skills. We show how the composition of the pool of active workers changes as wage increases. Contrary to standard results, average productivity does not necessarily increase monotonically in the wage rate. We provide conditions such that a wage increase deteriorates either the average productivity or the average vocation of workers accepting the job. Our results are relevant to understand the potential impacts of a wage increase as a policy aimed at solving shortage in the market for nurses.
    Keywords: nurses labour supply, skill and vocation.
    JEL: J24 J32 I11
    Date: 2009–07
  6. By: Federica Origo; Claudio Lucifora
    Abstract: In recent years many countries of the European Union (EU) have implemented comprehensive smoking bans to reduce exposure to tobacco smoke in public places and all indoor workplaces. Despite the intense public debate, research on the impact of smoking regulation on health, particularly within the workplace, is still very limited. In this paper, we use a Diff-in Diff approach and comparable micro-data -- for a large number of European countries -- to evaluate the impact of national comprehensive smoking bans on both perceived workers’ health and presence of respiratory problems within workplaces. Results show that the introduction of comprehensive smoking bans has a significant effect on workers’ perceived health, particularly on the probability of exposure to smoke and fumes, also when we control for risk exposure. When we explore differences across countries, we find that the impact is stronger in countries starting with relatively worse perceived health conditions at the workplace.
    Keywords: Smoking bans, workers health, Difference-in-Differences
    JEL: I18 J28
    Date: 2009–03
  7. By: Dimitrios Christelis (SHARE and CSEF, University of Naples Federico II); Anna Sanz-de-Galdeano (Universitat Autònoma de Barcelona and IZA)
    Abstract: We provide new cross-country evidence on smoking persistence in Europe, which can be due to both true state dependence and individual unobserved heterogeneity. We distinguish between the two by using semi-parametric panel data selection methods, applied to both the smoking participation and the cigarette consumption decision. We find that for both smoking decisions true state dependence is generally much smaller, but still important, when unobserved individual heterogeneity is taken into account. We also uncover large differences in true state dependence across countries and relate these differences to discrepancies in smoking regulations, social norms on and tolerance towards smoking behaviour, and awareness of the health risks associated with smoking.
    Keywords: smoking, panel data, selectivity
    JEL: C33 C34 D12 I10 I12
    Date: 2009–09–01
  8. By: Husain, Muhammad Jami
    Abstract: The policies for better health, poverty reduction, and less inequality, throughout the world, require thorough understanding of both the processes and causal paths that underlie the intricate relationship between health and wealth (income). This is deemed difficult, contingent, and only partially understood. The adage 'health is wealth' is still, primarily, an intuitive proposition. A vast majority of researchers instead present theoretical and empirical arguments of the reverse proposition, i.e. 'wealth is health'. A recent strand of the literature, however, reflects changes in the perceptions: improvements of health and longevity are no longer viewed as a mere end- or by-product of economic development; but argued as one of the key determinants of, and therefore means to achieve, economic development and poverty reduction. Hence, better health does not have to wait for an improved economy; rather, measures to reduce the burden of disease, to give children healthy childhoods, to increase life expectancy etc. will in themselves contribute to creating richer economies. Drawing on the traditional and emerging perspectives on the health-income relationship, this literature review presents a non-exhaustive survey of existing methodological approaches and their results that are applied to track and measure how health influences economic outcomes.
    Keywords: Health,income,economic growth,life expectancy,mortality,causality
    JEL: I10 O40 J11
    Date: 2009
  9. By: Dasgupta, Basab; Narayan, Ambar; Skoufias, Emmanuel
    Abstract: Satisfaction surveys offer a potentially convenient and cost-effective means for measuring the quality of services. However, concerns about subjectivity and selection bias impede greater use of satisfaction data. This paper analyzes satisfaction data about health and educational services from the 2006 second round of the Governance and Decentralization Survey in Indonesia to assess whether satisfaction data can serve as reliable indicators of quality, despite dubiously high levels of reported satisfaction. The authors use an expectation disconfirmation model that posits that a user’s satisfaction with a facility improves with the (positive) difference between the actual quality of the facility and the household’s expected standard for quality, which is influenced by its socioeconomic characteristics. The findings show that, after taking into account the expectations of households, reported satisfaction does vary significantly with objective indicators of quality. The analysis also checks for possible selection bias affecting the results by using a two-stage selection model. The model yields policy-relevant insights into the aspects of service delivery that most affect satisfaction, highlights differences across rich and poor districts, and shows that once the role of expectations has been factored in, the variation in user satisfaction can be highly informative for policymakers and researchers alike.
    Keywords: Housing&Human Habitats,Health Monitoring&Evaluation,Governance Indicators,Access to Finance,Education For All
    Date: 2009–08–01
  10. By: Matias Fontenla (Department of Economics, University of New Mexico); Fidel Gonzalez (Department of Economics and International Business, Sam Houston State University); Troy Quast (Department of Economics and International Business, Sam Houston State University)
    Abstract: In this paper we study the effect of the business cycle on the mortality rate of the major racial groups in the U.S. Using county-level data from 1999 to 2005, we find that the unemployment rate is negatively related to mortality for whites and latinos but that there is not a statistically significant relationship for blacks. Moreover, the magnitude of this relationship is larger for latinos than for whites. Finally, the relationship becomes more pronounced for latinos and whites as the proportion of population of that race increases. Taken together, these findings suggest that the procyclical association between mortality and the business cycle identified in previous studies of the general U.S. population may vary by race.
  11. By: Lee, Jonq-Ying
    Keywords: healthy eating index, food assistance program, low-incom households, Health Economics and Policy,
    Date: 2009
  12. By: Lee, Jonq-Ying
    Keywords: self-reported BMI, actual BMI, obese, Health Economics and Policy,
    Date: 2009
  13. By: Sang Nguyen; Alice Zawacki
    Abstract: This paper examines the relationship between employer-sponsored offers of health insurance and establishments’ labor productivity. Our empirical work is based on unique plant level data that links the 1997 and 2002 Medical Expenditure Panel Survey-Insurance Component with the 1992, 1997, and 2002 Census of Manufactures. These linked data provide information on employer-provided insurance and productivity. We find that health insurance offers are positively associated with levels of establishments’ labor productivity. These findings hold for all manufacturers as well as those with fewer than 100 employees. Our preliminary results also show a drop in health care costs from the 75th to the 25th percentile would increase the probability of a plant offering insurance by 1.5-2.0 percent in both 1997 and 2002. The results from this paper provide encouraging and new empirical evidence on the benefits employers may reap by offering health insurance to workers.
    Keywords: Employer-provided health insurance, labor productivity, manufacturing industries
    Date: 2009–09
  14. By: Böckerman, Petri; Laukkanen, Erkki
    Abstract: Objectives: We examine the predictors of sickness presenteeism in comparison with sickness absenteeism. The paper focuses on the effects of working-time match and efficiency demands and differentiates the estimates by a respondent’s self-assessed health. Methods: We use survey data covering 884 Finnish trade union members in 2009. We estimate logit models. All models include control variables such as the sector of the economy and the type of contract. Results: Working-time match between desired and actual weekly working hours reduces both sickness absence and presenteeism in the whole sample that consists of workers with all health levels. The point estimates reveal that working-time match decreases the prevalence of sickness absence by 7% and presenteeism by 8%. However, the estimates that differentiate by a respondent’s health show that this pattern prevails only for those workers who have poor health. Hence, the point estimates for those who have poor health are much larger than the ones for the whole sample. Working-time match reduces the prevalence of sickness absence by 21% and presenteeism by 20% for those workers who have poor health. In contrast, working-time match has no influence whatsoever on the prevalence of work-related sickness for those who have good health. We also find that efficiency demands increase presenteeism in the whole sample. However, additional results reveal that this pattern prevails only for those workers who have good health. Conclusions: The effects of working-time match and efficiency demands on the prevalence of sickness absence and presenteeism are strongly conditional upon a worker’s self-assessed health level. Therefore, the worker’s initial health is an important attribute that has to be taken into account when one is designing appropriate policies to reduce sickness absence and presenteeism.
    Keywords: Absenteeism; Sickness absence; Presenteeism
    JEL: I10
    Date: 2009–09–02
  15. By: Darius Lakdawalla; Wesley Yin
    Abstract: A controversial feature of Medicare Part D is its reliance on private insurers to negotiate drug prices and rebates with retail pharmacies and drug manufacturers. Central to this controversy is whether increases in market power—an undesirable feature in most settings—confer benefits in health insurance markets, where larger buyers may obtain better prices for their members. We test whether insurers that experience larger enrollment increases due to Part D negotiate lower drug prices with pharmacies. Overall, we find that 100,000 additional insureds lead to 2.5-percent lower pharmacy prices negotiated by the insurer, and 5-percent reductions in pharmacy profits earned on prescriptions filled by enrollees of that insurer. Estimated enrollment effects are much larger for drugs with therapeutic substitutes, and virtually zero for branded drugs without therapeutic substitutes. We also present evidence that most insurer savings are, on the margin, passed on as lower premiums. Out-of-sample estimation suggests that modest insurer consolidation would generate significant savings to Medicare, along with premium reductions and enrollment increases. Finally, we find that greater enrollment leads to lower pharmacy prices negotiated by insurers for their non-Part D market—an external benefit to the commercially enrolled associated with administering Part D through private insurers.
    JEL: I1 I18
    Date: 2009–09

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