nep-hea New Economics Papers
on Health Economics
Issue of 2011‒11‒28
27 papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Still Unequal at Birth - Birth Weight, Socioeconomic Status and Outcomes at Age 9 By Mark E McGovern
  2. The Effect of Health and Employment Risks on Precautionary Savings By Johannes Geyer
  3. Market Size and Pharmaceutical Innovation By Dubois, Pierre; de Mouzon, Olivier; Scott Morton, Fiona; Seabright, Paul
  4. Smoking within the Household: Spousal Peer Effects and Children's Health Implications By Canta, Chiara; Dubois, Pierre
  5. Health outcomes for children born to teen mothers in Cape Town, South Africa By Nicola Branson; Cally Ardington; Murray Leibbrandt
  6. Early childbearing, human capital attainment and mortality risk By Cally Ardington; Alicia Menendez; Tinofa Mutevedzi
  7. The Weight of Success: The Body Mass Index and Economic Well-being in South Africa By Martin Wittenberg
  8. Risk Classification and Health Insurance By Georges Dionne; Casey G. Rothschild
  9. The Effects of Vocational Rehabilitation for People with Mental Illlness By Steven Stern; John Pepper; David Dean; Robert Schmidt
  10. Intergenerational transmission of non-communicable chronic diseases By Goulão, Catarina; Pérez-Barahona, Agustín
  11. Doctors' remuneration schemes and hospital competition in two-sided markets with common network externalities By Bardey, David; Cremer, Helmuth; Lozachmeur, Jean-Marie
  12. Strategic Pricing and Health Price Policies By Bonnet, Céline; Réquillart, Vincent
  13. Adverse Selection, Moral Hazard and the Demand for Medigap Insurance By Michael Keane; Olena Stavrunova
  14. The impact of public basic research on industrial innovation: Evidence from the pharmaceutical industry By Toole, Andrew A.
  15. Health Consequences of an Eclectic Social Security Regime: The Case of Turkey By Hasan Tekguc
  16. Impacts of Activities in Crushing Plant on Environment and Occupational Health of Workers Involved By Susana Bem; Judite Bem
  17. The Causes and Consequences of the Demographic Transition By David Canning
  18. Progress in Health around the World By David Canning
  19. Poverty and health behaviour: Comparing socioeconomic status and a combined poverty indicator as a determinant of health behaviour By Aue, Katja; Roosen, Jutta
  20. Financial Incentives, the Timing of Births, Birth Complications, and Newborns’ Health: Evidence from the Abolition of Austria’s Baby Bonus By Beatrice Brunner; Andreas Kuhn
  21. The Importance of State Anti-Discrimination Laws on Employer Accommodation and the Movement of their Employees onto Social Security Disability Insurance By Richard V. Burkhauser; Lauren H. Nicholas; Maximilian D. Schmeiser
  22. Consumption and Differential Mortality By Michael Hurd; Susann Rohwedder
  23. The Influence of Public Policy on Health, Wealth and Mortality By John Karl Scholz; Ananth Seshadri
  24. Social security and the rise in health spending: a macroeconomic analysis By Zhao, Kai
  25. The Impact of the Macroeconomy on Health Insurance Coverage: Evidence from the Great Recession By John Cawley; Asako S. Moriya; Kosali I. Simon
  26. Can Governments Do It Better? Merger Mania and Hospital Outcomes in the English NHS By Martin Gaynor; Mauro Laudicella; Carol Propper
  27. Malaria: An Early Indicator of Later Disease and Work Level By Sok Chul Hong

  1. By: Mark E McGovern (University College Dublin)
    Abstract: Birth weight is an important aspect of public health which has been linked to increased risk of infant death, increased cost of care, and a range of later life outcomes. Using data from a new Irish cohort study, I document the relationship between birth weight and socioeconomic status. A strong asso- ciation with maternal education does not appear to be due to the timing of birth or complications during pregnancy, even controlling for a wide range of background characteristics. However, results do suggest intergenerational persistence in the transmission of poor early life conditions. A compar- ison with the UK Millennium Cohort Study reveals similar social gradients in both countries. Birth weight predicts a number of outcomes at age 9, including test scores, hospital stays and health. An advantage of the data is that I am able to control for a number of typically unmeasured variables. I determine whether parental investments as measured by the quality of interaction with the child, parenting style, or school quality mediate the association between birth weight and later indicators. For test scores, there is evidence of non-linearity. Boys are more adversely affected than girls, and I find that the effects of low birth weight (<2,500g) are particularly strong. I also consider whether there are heterogeneous effects by ability using quantile regression. These results are consistent with a literature which finds that there is a causal relationship between early life conditions and later outcomes.
    Keywords: Early Life Conditions, Birth Weight, Health Inequalities, Test Scores
    Date: 2011–11–16
  2. By: Johannes Geyer
    Abstract: This paper extends the idea of using ex-ante risk measures in a model of precautionary savings by explicitly simulating future net-income risks. The uncertainty measure takes into account the interdependency of labour market status and health. The model is estimated for prime age males using the German Socio-Economic Panel Study for years 2001-2007. The empirical analysis is conducted using a measure for saving stocks and saving flows. The latter model allows to control for individual specific effects. I find evidence for precautionary savings in response to the uncertainty measures. The results are robust and stable across specifications. There is evidence for a share of precautionary wealth of about 14 to 17 percent.
    Keywords: Precautionary savings, health, employment, risks
    JEL: D91 E21
    Date: 2011
  3. By: Dubois, Pierre; de Mouzon, Olivier; Scott Morton, Fiona; Seabright, Paul
    Abstract: This paper quanti…es the relationship between market size and innovation in the pharmaceutical industry. We estimate the elasticity of innovation, as measured by the number of new chemical entities appearing on the market for a given disease class, to the potential market size represented by the willingness of su¤erers of diseases in that class (and others acting on their behalf such as insurers and governments) to spend on their treatment during the patent lifetime. We …nd positive signi…cant elasticities with a point estimate under our preferred speci…cation of 25.2%. This suggests that at the mean market size an additional $1.8 billion is required in additional patent life revenue to induce the invention of one additional new chemical entity. An elasticity substantially and signi…cantly below one-half is also a plausible implication of the hypothesis that innovation in pharmaceuticals is becoming more di¢ cult and expensive over time, as costs of regulatory approval rise and as the industry runs out of "low hanging fruit".
    Keywords: Innovation, Market Size, Elasticity, Pharmaceuticals
    JEL: O31 L65 O34
    Date: 2011–04
  4. By: Canta, Chiara; Dubois, Pierre
    Abstract: This paper studies spousal peer effects on the smoking behaviour and their implication for the health of children through passive smoking. Smoking decisions are modeled as equilibrium strategies of an incomplete information game within the couple. Using data from the French Health Survey 2002-2003, we identify two distinct effects linked to spousal behaviour: a smoking enhancing effect of smoking partners and a smoking deterring effect of non smoking partners. On the one hand, having a smoking partner might make smoking more valuable because of the possibility of smoking together. On the other hand, having a non smoking partner might reduce the utility of smoking because the smoker partially internalises the nuisance imposed on the partner. An implication of these findings is that the smoking behaviour could differ qualitatively in couples in which both partners smoke and in which just one partner smokes. This interpretation is supported by our finding that the respiratory health of children is negatively affected only if both parents smoke.
    Keywords: Smoking, Social Interaction, Simultaneous Game Model, Health
    JEL: C31 D10 I12
    Date: 2011–10
  5. By: Nicola Branson (SALDRU, School of Economics, University of Cape Town); Cally Ardington (SALDRU, School of Economics, University of Cape Town); Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town)
    Abstract: This paper analyzes the effect of being born to a teen mother on child health outcomes in South Africa using propensity score reweighting. Exploiting the longitudinal nature of the Cape Area Panel Study, we estimate the probability of being a teen mother conditional on pre-childbirth characteristics. We use this score to construct a weighted counterfactual group of children born to mothers over nineteen whose pre-childbirth characteristics are very similar to the teen mother sample except for their age at the birth of their first child. Our reweighted regressions indicate that being born to a teen mother has some significant adverse effects on child health, especially among Coloured children. In particular, children born to teens are more likely to be underweight at birth and to be stunted with the negative effect being double the size for Coloureds than Africans. No negative impact of teenage childbearing is found on head circumference at birth or the incidence of incomplete first year immunizations. These results remain robust even when we simulate influential unobservable effects in both the reweighting equation and the outcome equation.
    Date: 2011–03
  6. By: Cally Ardington (SALDRU, School of Economics, University of Cape Town); Alicia Menendez (Harris School, University of Chicago); Tinofa Mutevedzi (Africa Centre for Health and Population Studies)
    Abstract: This paper uses a rich longitudinal dataset to examine the relationship between teen fertility and both subsequent educational outcomes and mortality risk in rural South Africa. Human capital deficits among teen mothers are large and significant, with earlier births associated with greater deficits. In contrast to many other studies, we find no clear evidence of selectivity into teen childbearing in either schooling trajectories or pre-fertility household characteristics. Enrolment rates among teen mothers only begin to drop in the period immediately preceding the birth and future teen mothers are not behind in their schooling relative to other girls. Older teen mothers and those further ahead in school for their age pre-birth are more likely to continue schooling after the birth. Following women over a six year period we document a higher mortality risk before the age of 30 for teen mothers that cannot be explained by household characteristics in early adulthood.
    Date: 2011–03
  7. By: Martin Wittenberg (DataFirst, SALDRU, School of Economics, University of Cape Town)
    Abstract: We show that body mass increases with economics resources among most South Africans, although not all. Among Black South Africans the relationship is non-decreasing over virtually the entire range of incomes/wealth. Furthermore in this groupd other measures of success (e.g. employment and education) are also associated with increases in body mass. This is true both in 1998 (the Demographic and Health Survey) and 2008 (National Income Dynamics Survey). This suggests the body mass can be used as a crude measure of wellbeing. Used in this way it suggests that unemployment is involuntary. This is true even if we control for household fixed effects. This is joint SALDRU/DataFirst Working Paper as part of the Mellon Data Quality Project.
    Keywords: obesity, asset index, body mass index
    JEL: D31 I19 I32
    Date: 2011–09
  8. By: Georges Dionne; Casey G. Rothschild
    Abstract: Risk classification refers to the use of observable characteristics by insurers to group individuals with similar expected claims, compute the corresponding premiums, and thereby reduce asymmetric information. An efficient risk classification system generates premiums that fully reflect the expected cost associated with each class of risk characteristics. This is known as financial equity. In the health sector, risk classification is also subject to concerns about social equity and potential discrimination. We present different theoretical frameworks that illustrate the potential trade-off between efficient insurance provision and social equity. We also review empirical studies on risk classification and residual asymmetric information.
    Keywords: Adverse selection, classification risk, diagnostic test, empirical test of asymmetric information, financial equity, genetic test, health insurance, insurance rating, insurance pricing, moral hazard, risk classification, risk characteristic, risk pooling, risk separation, social equity
    JEL: D80 D82 D86 G22 I11 I18
    Date: 2011
  9. By: Steven Stern; John Pepper; David Dean; Robert Schmidt
    Abstract: : The public-sector Vocational Rehabilitation (VR) program is a $3 billion federal-state partnership designed to provide employment-related assistance to persons with disabilities. There is, however, relatively little-known about the long-term efficacy of VR programs. This paper utilizes unique and detailed administrative and employment data to examine both short and longer-term employment impacts for all persons diagnosed with mental illness who applied for VR services in the state of Virginia in State Fiscal Year 2000. These data provide quarterly information on VR services and employment outcomes from 1995 to 2010. Estimates from our model of service provision and labor market outcomes reveal that VR services generally have positive long-run labor market outcome effects that appear to substantially exceed the cost of providing services.
    Keywords: etraining, mental illness, treatment effects
    JEL: C21 I19 J24
    Date: 2011–07
  10. By: Goulão, Catarina (TSE-Gremaq, Inra); Pérez-Barahona, Agustín (INRA-AgroParistech and Ecole Polytechnique)
    Abstract: We introduce a theoretical framework that contributes to the understanding of the non-communicable chronic diseases (NCDs) epidemics: even if NCDs are not "biologically" communicable, they may spread due to the transmission of unhealthy activities such as unhealthy diet, physical inactivity, and smoking. In particular, we study the intergenerational dimension of this mechanism. We found that, due to the "social" transmission of NCDs, agents choose lower health conditions and higher unhealthy activities than what is socially optimal. Taxes on unhealthy activities, that may subsidize health investments, can be used to restore the social optimum. Finally, we also observe that our model is consistent with the existence of regional asymmetries regarding the prevalence of obesity and NCDs.
    Keywords: Health capital, Chronic diseases and obesity, Social transmission
    JEL: H21 H23 I18
    Date: 2011–01–14
  11. By: Bardey, David (University of Rosario (Bogota, Colombia) and Toulouse School of Economics); Cremer, Helmuth (Toulouse School of Economics (IDEI and GREMAQ-CNRS)); Lozachmeur, Jean-Marie (Toulouse School of Economics (IDEI and GREMAQ-CNRS))
    Abstract: This paper uses a two-sided market model of hospital competition to study the implications of different remunerations schemes on the physicians’ side. The two-sided market approach is characterized by the concept of common network externality (CNE) introduced by Bardey et al. (2010). This type of externality occurs when occurs when both sides value, possibly with different intensities, the same network externality. We explicitly introduce e¤ort exerted by doctors. By increasing the number of medical acts (which involves a costly effort) the doctor can increase the quality of service offered to patients (over and above the level implied by the CNE). We fi…rst consider pure salary, capitation or fee-for-service schemes. Then, we study schemes that mix fee-for-service with either salary or capitation payments. We show that salary schemes (either pure or in combination with fee-for-service) are more patient friendly than (pure or mixed) capitations schemes. This comparison is exactly reversed on the providers’ side. Quite surprisingly, patients always loose when a fee-for-service scheme is introduced (pure of mixed). This is true even though the fee-for-service is the only way to induce the providers to exert e¤ort and it holds whatever the patients’ valuation of this effort. In other words, the increase in quality brought about by the fee-for-service is more than compensated by the increase in fees faced by patients.
    JEL: D41 L11 L12
    Date: 2011–02
  12. By: Bonnet, Céline; Réquillart, Vincent
    Abstract: Healthier food diet is likely to prevent numerous non communicable diseases. Then there is a growing interest in evaluating the impact of food price taxation on food consumption. However, strategic reactions of both manufacturers and retailers are missing in empirical analysis. Rather, passive pricing is assumed. We develop a structural econometric model, to analyze vertical relationships between the food industry and the retail industry. We apply this model to the beverage industry and consider taxation of sugar. After selecting the ’best’ model of vertical relationships, we simulate different taxation scenarios. We consider excise tax as well as ad valorem tax. We find that firms behave differently when facing an ad valorem tax or an excise tax. Excise tax is overshifted to consumer prices while ad valorem tax is undershifted to consumer prices. We find that an excise tax based on sugar content is the most efficient at reducing soft drink consumption. Our results also indicate that ignoring strategic pricing by firms leads to misestimate the impact of taxation by 15% to 40% depending on the products and the tax implemented.
    Keywords: excise tax, ad valorem tax, vertical contracts, strategic pricing, differentiated products, soft drinks
    JEL: H32 L13 I18
    Date: 2011–04
  13. By: Michael Keane (School of Economics, University of New South Wales); Olena Stavrunova (Economics Discipline Group, University of Technology, Sydney)
    Abstract: The size of adverse selection and moral hazard effects in health insurance markets has important policy implications. For example, if adverse selection effects are small while moral hazard effects are large, conventional remedies for inefficiencies created by adverse selection (e.g., mandatory insurance enrolment) may lead to substantial increases in health care spending. Unfortunately, there is no consensus on the magnitudes of adverse selection vs. moral hazard. This paper sheds new light on this While both adverse selection and moral hazard effects of Medigap have been studied separately, this is the first paper to estimate both in an unified econometric framework. We develop an econometric model of insurance demand and health care expenditure, where adverse selection is measured by sensitivity of insurance demand to expected expenditure. The model allows for correlation between unobserved determinants of expenditure and insurance demand, and for heterogeneity in the size of moral hazard effects. Inference relies on an MCMC algorithm with data augmentation. Our results suggest there is adverse selection into Medigap, but the effect is small. A one standard deviation increase in expenditure risk raises the probability of insurance purchase by 0.037. In contrast, our estimate of the moral hazard effect is much larger. On average, Medigap coverage increases health care expenditure by 32%.
    Keywords: health insurance; adverse selection; moral hazard; health care expenditure
    JEL: D82 C34 C35
    Date: 2011–11–01
  14. By: Toole, Andrew A.
    Abstract: While most economists believe that public scientific research fuels industry innovation and economic growth, systematic evidence supporting this relationship is surprisingly limited. In a recent study, Acemoglu and Linn (2004) identified market size as a significant driver of drug innovation in the pharmaceutical industry, but they did not find any evidence supporting science-driven innovation from publicly funded research. This paper uses new data on biomedical research investments by the U.S. National Institutes of Health (NIH) to examine the contribution of public research to pharmaceutical innovation. The empirical analysis finds that both market size and NIH funded basic research have economically and statistically significant effects on the entry of new drugs with the contribution of public basic research coming in the earliest stage of pharmaceutical drug discovery. The analysis also finds a positive return to public investment in basic biomedical research. --
    Keywords: R&D,NIH,social return,biomedical,research lags,public science,new molecular entities
    JEL: O31 O32 L65 H51
    Date: 2011
  15. By: Hasan Tekguc (Mardin Artuklu Univeristy; Mardin Artuklu Univeristy)
    Abstract: Until 2008 access to healthcare was very stratified in Turkey depending on the insurance scheme the employed person belonged to. A widely accepted ranking of health services of different pension schemes in Turkey (from best to worst) is Government Employees Retirement Fund (GERF),Social Insurance Institution (SII) for workers, Bağ-Kur (BK) for urban self-employed and farmers, Green Card (a means-tested poverty relief scheme), and uncovered population with no formal right to access hospital services. The reforms enacted between 2004 and 2008 had gradually eliminated the stratification in access to health care among separate schemes. Even though the Turkish Statistical Institute (TurkStat) has tracked satisfaction with health services; to our knowledge, our paper is the first attempt that tries to validate the above ranking empirically using an objective and cumulative measure. In order to test this claim, we chose age-adjusted average age of death and age-adjusted death rate as outcome variables. We were able to obtain the most comprehensive data for insurees of SII for the period 2000-10, of BK for 2004-10 (separately for urban self-employed and farmers) and of Green Card old age pensioners for 2007-10 (no data for GERF). Among the groups for which data is available, SII members have the highest age-adjusted age of death as expected: for men (women) average age of death is 66 (68.5) years for SII insurees, 63.7 (66.5) for farmers in BK and 65.2 (64.5) for self-employed BK insurees. Green Card beneficiaries have the highest age adjusted death rate as expected. If the death rate prevailing for other insurees had held for Green Card members as well, the death toll would have been halved (from 64,062 to 31,700 for 2009) for old age pensioners in Green Card. Unfortunately we are unable to adjust our findings for income level and education so all the differences could not be attributed to stratified access to healthcare.
    Keywords: age-adjusted age of death, eclectic healthcare, Turkey
    Date: 2011–10
  16. By: Susana Bem; Judite Bem
    Abstract: Abstract With the development of societies there is a growing demand for raw materials for the construction industry, among which the crushed materials existing in the various categories, as set down the specifications of the services of competent bodies. In the long term and as a result of overuse such demands lead to exhaustion of mines and environmental degradation. These materials are produced in crushing plants, which have characteristics of development of its activities, being an aggressive environment for the people involved and, likewise, to the surrounding environment, deteriorating air, water and soil. As for the workers, since the production process, may present in the medium and long term, the emergence of so-called occupational diseases or occupational diseases, these diseases that can lead people to the inability to work and even death. It should be noted that occupational diseases relating to mineral extraction are properly characterized in the literature. In Brazil there's labor and welfare legislation they impose on public and private sectors, the zeal with health workers, and the non-compliance, characterizes the disrespect for life and health of employees, liable to punishment. Likewise, today, there is a growing concern in the world, both in public and private sectors, about the legacy of extractive activities, the need to reassess the system of production and exploitation of mineral resources used to make it sustainable and ensure the existence of future generations, compared to its current unsustainable, and especially with regard to the costs involved. The aim of this study is the importance of the process of comminution in the environment and humans. It will use a literature review, theoretical and descriptive method, as well as statistics from the Ministry of Social Security in Brazil. The reduction of environmental degradation and occupational diseases of workers require more appropriate production techniques as well as major prevention strategies. To do so, you should seek the development of new demands in the area of construction compatible with the reduced use of mineral inputs and labor. Keywords: Environment, crushing facilities, safety, occupational diseases
    Date: 2011–09
  17. By: David Canning (Harvard School of Public Health)
    Abstract: The causes and consequences of the demographic transition are considered in light of the recent book by Dyson (2010) on demography and development. In the last 50 years the world has seen an exogenous decline in mortality that generated a decline in fertility and an increase in urbanization that has had profound economic, social and political consequences. However, historically, declines in mortality and fertility, and escape from the Malthusian trap, have required countries to have already undergone considerable economic and political development. We therefore argue for two way causality between the demographic transition and economic and political outcomes.
    Keywords: demographic transition, fertility, mortality
    Date: 2011–11
  18. By: David Canning (Harvard School of Public Health)
    Abstract: Health is a key component of human development. This paper looks at how health is measured, and the convergence of health across countries. We argue that health measures should account for illness as well as mortality, but in practice life expectancy as a reasonably proxy for population health. While health is improving we see two distinct groups of countries in the data, clustering around different long run steady states. Many countries have experienced large health gains without prior income gains and in countries not affected by HIV/AIDS the last 40 years have been a success story in terms of health.
    Keywords: health, life expectancy, human development
    Date: 2011–11
  19. By: Aue, Katja; Roosen, Jutta
    Abstract: Studies in the area of health economics and public health have shown that low socioeconomic status (SES) and poverty are related to lower levels of health. Attempts to explain these differences have often made reference to the observation that poor health behaviours cluster in low SES respectively poverty groups. However, relatively little attention has been paid to the defining concept of SES and its appropriate measurement. Therefore data from the German Socio-Economic Panel are used to analyse the relationship between two multidimensional measurements to describe a) poverty respectively b) a low SES and health behaviour, including dietary behaviour, weight status and health behaviour in general. This study shows that both multidimensional indicators allow identifying an inverse relationship between low SES respectively poverty and several types of health behaviour. However, comparing both indicators it is evident that individuals may be affected by poverty in different ways which has various effects on their health behaviour. Additionally, future research should focus not only on multidimensional poverty measurements but also on dynamic effects.
    Keywords: poverty, social inequality, diet, BMI, health behaviour, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Health Economics and Policy, I1, I3,
    Date: 2010
  20. By: Beatrice Brunner (University of Zurich, Department of Economics); Andreas Kuhn (University of Zurich, Department of Economics)
    Abstract: We analyze the fertility and health effects resulting from the abolition of the Austrian baby bonus in January 1997. The abolition of the benefit was publicly announced about ten months in advance, creating the opportunity for prospective parents to (re-)schedule conceptions accordingly. We find robust evidence that, within the month before the abolition, about 8% more children were born as a result of (re-)scheduling conceptions. At the same time, there is no evidence that mothers deliberately manipulated the date of birth through medical intervention. We also find a substantial and significant increase in the fraction of birth complications, but no evidence for any resulting adverse effects on newborns’ health.
    Keywords: baby bonus; scheduling of conceptions; timing of births; policy announcement; abolition effect; birth complications; medical intervention
    JEL: H31 J13
    Date: 2011–11
  21. By: Richard V. Burkhauser (Cornell University); Lauren H. Nicholas (University of Michigan); Maximilian D. Schmeiser (Federal Reserve Board of Governors)
    Abstract: The rate of application for Social Security Disability Insurance (SSDI) benefits, as well as the number of beneficiaries has been increasing for the past several decades, threatening the solvency of the SSDI program. One possible remedy is to promote continued employment amongst those experiencing the onset of a work limiting disability through the provision of workplace accommodations. Using the Health and Retirement Study data linked to Social Security administrative records and a state fixed effects model, we find that the provision of workplace accommodation reduces the probability of application for SSDI following disability onset. We estimate that receipt of an accommodation reduces a worker’s probability of applying for SSDI by 30 percent over five years and 21 percent over 10 years. We then attempt to control for the potential endogeneity of accommodation receipt by exploiting exogenous variation in the implementation of state and federal anti-discrimination laws to estimate the impact of workplace accommodation on SSDI application in an instrumental variables (IV) model. While our coefficients continue to indicate that accommodation reduces SSDI application, we obtain implausibly large estimates of this effect. Overall our results imply that increasing accommodation is a plausible strategy for reducing SSDI applications and the number of beneficiaries.
    Date: 2011–09
  22. By: Michael Hurd (RAND); Susann Rohwedder (RAND)
    Abstract: It is well-established that differential mortality according to wealth or income introduces bias into age profiles of these variables when estimated on cross-sectional or synthetic cohort data. However, little is known about whether this association is also found with consumption, and if so, how strong this association is. In this paper we use panel data on total household spending from the Health and Retirement Study (HRS) and its supplemental study, the Consumption and Activities Mail Survey (CAMS), to estimate differences in consumption by survival status to the next survey wave. We quantify the bias in age profiles of consumption that results from differential mortality when estimating the age profiles on cross-sectional data or on synthetic cohort data. We find that the bias is smaller than that found for wealth or income.
    Date: 2011–09
  23. By: John Karl Scholz (University of Wisconsin); Ananth Seshadri (University of Wisconsin)
    Abstract: In this project we extend an augmented lifecycle model, incorporating a Grossman-style model of health capital, to enhance understanding of factors influencing consumption, wealth and health. We develop three primary results when using the model to explore the effects of stylized versions of Medicare and Social Security on wealth and longevity. First, our model calibration implies consumption and health are complements. As health depreciates with age, households will get less utility from consumption than would be in the case of a lifecycle model that does not endogenize health. Second, it appears that forward-looking households, when confronted by a substantially reduced safety net, will respond by reducing consumption and by reducing their health investment and therefore longevity. Third, there is a potentially important difference between short- and long- run responses to policy.
    Date: 2011–09
  24. By: Zhao, Kai
    Abstract: In this paper, I develop a quantitative macroeconomic model with endogenous health and endogenous longevity and use it to study the impact of Social Security on aggregate health spending. I find that Social Security increases the aggregate health spending of the economy via two channels. First, Social Security transfers resources from the young with low marginal propensity to spend on health care to the elderly (age 65+) with high marginal propensity to spend on health care. Second, Social Security raises people's expected future utility and thus increases the marginal benefit from investing in health to live longer. In the calibrated version of the model, I show that the positive impact of Social Security on aggregate health spending is quantitatively important. The expansion of US Social Security since 1950 can account for approximately 43% of the dramatic rise in US health spending as a share of GDP over the same period (i.e. from 4% of GDP in 1950 to 13% of GDP in 2000). I also find that this positive impact of Social Security has two interesting policy implications. First, the negative effect of Social Security on capital accumulation in this model is significantly smaller than what previous studies have found, because Social Security induces extra years of life via health spending and thus encourages private savings for retirement. Second, Social Security has a significant spill-over effect on public health insurance programs (e.g. Medicare). As Social Security increases health spending and longevity, it also increases the insurance payments from these programs, thus raising their financial burden.
    Keywords: Social Security; Health Spending; Savings; Longevity
    JEL: H30 I00 E20 E60
    Date: 2011–06
  25. By: John Cawley; Asako S. Moriya; Kosali I. Simon
    Abstract: This paper investigates the impact of the macroeconomy on the health insurance coverage of Americans. We examine panel data from the Survey of Income and Program Participation (SIPP) for 2004-2010, a period that includes the Great Recession of 2007-09. We find that a one percentage point increase in the state unemployment rate is associated with a 1.67 percentage point (2.12%) reduction in the probability that men have health insurance; this effect is strongest among college-educated, white, and older (50-64 year old) men. For women and children, the unemployment rate was not significantly correlated with the probability of health insurance coverage through any source. When one examines the source of coverage, it becomes apparent that a one percentage point increase in the unemployment rate is associated with a 1.37 percentage point (4.69%) higher probability that a child is covered by public health insurance. Based on the point estimates in this paper, we estimate that 9.3 million adult Americans, the vast majority of whom were men, lost health insurance due to a higher unemployment rate alone during the 2007-09 recession. This is roughly nine times more than lost health insurance during the previous (2001) recession. We conclude with a discussion of how components of recent health care reform may influence these relationships in the future.
    JEL: E32 J32 J6
    Date: 2011–11
  26. By: Martin Gaynor; Mauro Laudicella; Carol Propper
    Abstract: The literature on mergers between private hospitals suggests that such mergers often produce little benefit. Despite this, the UK government has pursued an active policy of hospital merger. These mergers are initiated by a regulator, acting on behalf of the public, and justified on the grounds that merger will improve outcomes. We examine whether this promise is met. We exploit the fact that between 1997 and 2006 in England around half the short term general hospitals were involved in a merger, but that politics means that selection for a merger may be random with respect to future performance. We examine the impact of mergers on a large set of outcomes including financial performance, productivity, waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity. In addition, mergers reduce the scope for competition between hospitals.
    JEL: I11 I18 L13 L32
    Date: 2011–11
  27. By: Sok Chul Hong (Department of Economics, Sogang University, Seoul)
    Abstract: The effect of early-life exposure to malaria on disability and work level in old age has been rarely studied. This study investigates this less explored question over the past one and a half century. First, using longitudinal lifetime records of Union Army veterans, I estimate that exposure to a malarial environment in early life (c.1840) substantially increased the likelihood of having various chronic diseases and not working in old age (c.1900). Second, from data on US cohorts born between 1891 and 1965, I find that those exposed to a higher level of the antimalaria campaign, which began in 1920, suffered less from work disability in old age than otherwise. This effect was substantial among cohorts born in high-risk malaria counties. Third, I seek the same implications for the modern period by linking World Health Organization¡¯s country statistics on disability-adjusted life years (DALYs) among older populations in 2004 to country-level malaria risk in 1946. In the paper, I discuss possible mechanisms and propose the significance of malaria eradication and early-life conditions from a longer-term perspective.
    Keywords: Early-Life Exposure to Malaria, Chronic Disease, Work Disability, DALYs, Aging, Malaria Eradication, Anti-Malaria Campaign, Cohort Study, Cross-Country Study
    JEL: I12 I18 J14 O15
    Date: 2011–10

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