nep-hea New Economics Papers
on Health Economics
Issue of 2013‒09‒24
nine papers chosen by
Yong Yin
SUNY at Buffalo

  1. Health Consequences of Transitioning to Retirement and Social Participation: Results based on JSTAR panel data By HASHIMOTO Hideki
  2. Mental Health in France, Policies and Actors : Developing administrative knowledge in a segmented world By Philippe Mossé; Caroline Maury; Nicolas Daumerie; Jean-Luc Roelandt
  3. International Health Economics By Mark Egan; Tomas J. Philipson
  4. Physician Beliefs and Patient Preferences: A New Look at Regional Variation in Health Care Spending By David Cutler; Jonathan Skinner; Ariel Dora Stern; David Wennberg
  5. Equilibria in Health Exchanges: Adverse Selection vs. Reclassification Risk By Benjamin R. Handel; Igal Hendel; Michael D. Whinston
  6. Insurer Competition and Negotiated Hospital Prices By Kate Ho; Robin S. Lee
  7. Impact of Mortality-Based Performance Measures on Hospital Pricing: the Case of Colon Cancer Surgeries By Avi Dor; Partha Deb; Michael Grossman; Gregory Cooper; Siran Koroukian; Fang Xu
  8. Work Incentives of Medicaid Beneficiaries and The Role of Asset Testing By Pashchenko, Svetlana; Porapakkarm, Ponpoje

  1. By: HASHIMOTO Hideki
    Abstract: Despite an extensive amount of published economic, psychological, and public health research, a consensual view on the causal relationship between retirement and health remains to be articulated. This lack of consensus is arguably due to the diversity in the transitional process from employment to full retirement, the usage of various characteristics of outcome measures, social and economic conditions affecting the retirement decision, and the impact of crowding-out by activities not related to formal work (e.g., in the family and community network). We used panel data from the Japanese Study of Aging and Retirement (JSTAR) to scrutinize the complex relationships among employment status transition; physical, functional, and cognitive aspects of health measures; and types of social participation. We confirmed that transitioning from employment to retirement is a diverse and gradual process with distinct gender-related aspects. Social participation is significantly related to exiting formal work situations for men, but not for women. There were distinct patterns of health transition across employment status transition, by types of health measures, and by reasons for retirement. Regression analyses were conducted to identify the effect of retirement, as leave from paid work, on health conditions. Variables included in the analyses accounted for social participation, stress received from the former job, and reasons for retirement. The results which included propensity weighting reveal that psychological distress and cognitive function decline after retirement for men, but not for women. Retirement from jobs with high stress was followed by an improvement in health, especially among men. Additional results indicate that retirement is accompanied by increased social participation. Social participation ameliorates psychological distress and cognitive decline among men, but not among women. Limitations in the instrumental activities of daily life as well as in grip strength are not considerably affected by retirement. Among women, retirement to engage in family care significantly and heavily affected the level of psychological distress. These results indicate that the theories on which aspects of health status determine—and are determined by—the mode of employment status transition should be improved. Policies on work and health in the elderly population should not seek a one-size-fits-all solution, but should target different segments in terms of work characteristics, economic and social needs, and gender roles in the household.
    Date: 2013–09
  2. By: Philippe Mossé (LEST - Laboratoire d'économie et de sociologie du travail - CNRS : UMR6123 - Université de Provence - Aix-Marseille I - Université de la Méditerranée - Aix-Marseille II); Caroline Maury (Agro Paris Tech - Institut national de la recherche agronomique (INRA)); Nicolas Daumerie (CCOMS - Centre collaboratif OMS - WHO(OMS)); Jean-Luc Roelandt (CCOMS - Centre collaboratif OMS - WHO(OMS))
    Abstract: The new mental health care policy, which has been set up in France, involves a change of paradigm, which has been going on since the 2000s: the emphasis is shifting from psychiatry to mental health care. This shift mainly concerns the knowledge about mental health is produced and circulates among an increasingly large number of bodies. Mainly grounded on actor interview analysis, official reports and blueprints, this study shows that the results of this process are numerous. They include the development of ambulatory care and strong moves towards decentralization. More data and knowledge are therefore to be shared in this more complex system. However, the French State, in the form of the central administration, is taking advantage of this move and is still contributing significantly to the definition and implementation of the new policy. On the other hand, the new governance dynamic is not leading to standardization of medical practices, as the mental health field remains highly heterogeneous.
    Keywords: santé mentale ; politique de santé ; France
    Date: 2013
  3. By: Mark Egan; Tomas J. Philipson
    Abstract: Perhaps because health care is a local service sector, health economists have paid little attention to international linkages between domestic health care economies. However, the growth in domestic health care sectors is often attributed to medical innovations whose returns are earned worldwide. Because world returns drive innovation and innovation is central to spending growth, spending growth in a given country is thereby highly affected by health care economies and policies of other countries. This paper analyzes the unique positive and normative implications of these innovation-induced linkages across countries when governments centrally price health care. Providing world returns to medical innovation under such central pricing involves a public-goods problem; the taxation to fund reimbursements involves a private domestic cost with an international benefit of medical innovation. This has the direct normative implication that medical innovations have inefficiently low world returns. It also has the positive implication that reimbursements in one country depend negatively on those of others; reimbursements are “strategic substitutes” through free riding. Because reimbursements are strategic substitutes, world concentration of health care is a significant issue. A small European country has no access-innovation trade-off in its pricing; it will have low reimbursements because it does not affect world returns and sees the same innovations regardless of its reimbursement policy. The public-goods problem of innovation thereby implies that the United States, despite being the world’s largest buyer, will pay the highest reimbursements. This problem also implies that free riding counteracts the standard positive impact of larger world markets on innovation when health care concentration falls. Indeed, currently, health care is highly concentrated; about half of world health care spending occurs in the United States, despite that fact that it makes up only about one-fifth of the world economy. We assess the effect that emerging markets will have on this concentration and thus world returns. We use pharmaceutical reimbursement data from 1996–2010 to provide IV estimates of the degree to which domestic reimbursements are strategic substitutes. We find that these estimates imply that world returns from innovation may actually fall from a growth in “market size” of BRICS countries as a result of increased free riding in non-BRICS countries. The overall analysis has important positive implications for spending patterns across countries as well as normative implications for evaluating domestic or regional health care reforms.
    JEL: F0 F42 I1 I11 I18
    Date: 2013–08
  4. By: David Cutler; Jonathan Skinner; Ariel Dora Stern; David Wennberg
    Abstract: There is considerable controversy about the causes of regional variations in healthcare expenditures. We use vignettes from patient and physician surveys, linked to Medicare expenditures at the level of the Hospital Referral Region, to test whether patient demand-side factors, or physician supply-side factors, explains regional variations in Medicare spending. We find patient demand is relatively unimportant in explaining variations. Physician organizational factors (such as peer effects) matter, but the single most important factor is physician beliefs about treatment: 36 percent of end-of-life spending, and 17 percent of U.S. health care spending, are associated with physician beliefs unsupported by clinical evidence.
    JEL: H51 I1 I11 I18
    Date: 2013–08
  5. By: Benjamin R. Handel; Igal Hendel; Michael D. Whinston
    Abstract: This paper studies regulated health insurance markets known as exchanges, motivated by their inclusion in the Affordable Care Act (ACA). We use detailed health plan choice and utilization data to model individual-level projected health risk and risk preferences. We combine the estimated joint distribution of risk and risk preferences with a model of competitive insurance markets to predict outcomes under different regulations that govern insurers' ability to use health status information in pricing. We investigate the welfare implications of these regulations with an emphasis on two potential sources of inefficiency: (i) adverse selection and (ii) premium reclassification risk. We find that market unravelling from adverse selection is substantial under the proposed pricing rules in the Affordable Care Act (ACA), implying limited coverage for individuals beyond the lowest coverage (Bronze) health plan permitted. Although adverse selection can be attenuated by allowing (partial) pricing of health status, our estimated risk preferences imply that this would create a welfare loss from reclassification risk that is substantially larger than the gains from increasing within-year coverage, provided that consumers can borrow when young to smooth consumption or that age-based pricing is allowed. We extend the analysis to investigate some related issues, including (i) age-based pricing regulation (ii) exchange participation if the individual mandate is unenforceable and (iii) insurer risk-adjustment transfers.
    JEL: D82 G22 I11 I13 I18
    Date: 2013–09
  6. By: Kate Ho; Robin S. Lee
    Abstract: We examine the impact of increased health insurer competition on negotiated hospital prices. Insurer competition can lead to lower premiums and reduced industry surplus, thereby depressing hospital prices; however, hospitals may also leverage fiercer insurer competition when bargaining in order to negotiate higher prices. We rely on a theoretical bargaining model to derive a regression equation relating negotiated prices to the degree of insurer competition, and use the presence of Kaiser Permanente in a hospital's market as a measure of insurer competition. We estimate a model of consumer demand for hospitals and use it to derive many of the other independent variables specified in the regression equation. Leveraging a unique dataset on negotiated prices between hospitals and commercial insurers in California in 2004, we find that increased insurer competition reduces hospital prices on average, but has a positive and empirically meaningful effect on the prices of attractive and high utility generating hospitals. This heterogeneous effect across hospitals—which has not been emphasized in the recent literature on hospital-insurer bargaining—provides incentives for hospital investment and consolidation, and implies that hospital market power can lead to high input prices even in markets where many insurers are present.
    JEL: I11 L13 L40
    Date: 2013–09
  7. By: Avi Dor; Partha Deb; Michael Grossman; Gregory Cooper; Siran Koroukian; Fang Xu
    Abstract: We estimate price regressions for surgical procedures used to treat colon cancer, a leading cause of cancer mortality. Using a claims database for self-insured employers, we focus on transaction prices, rather than more commonly available billing data that do not reflect actual payments made. Although the responsiveness of prices to hospital performance depends on the impact of quality on the slope of the quantity-demand of the payers, which are not known a priory, it is often assumed that higher performing hospitals are able to command higher prices. To test this hypothesis we construct performance rankings, based on hospital excess-mortality and incorporate them into our price models. We are interested in the type information available to large payers who negotiate prices on behalf of their members. To get a cancer-specific index we emulate the widely-reported risk-adjustment methodology used in the federal Hospital Compare reporting system for ranking cardiac performance. The effects were consistently negative in all models (adverse quality reduces price), though not significant. However, we observe a rational pricing structure whereby higher treatment complexity is reflected in higher price differentials, controlling for patient characteristics and market structure.
    JEL: I11 I13 L11 L15
    Date: 2013–09
  8. By: Pashchenko, Svetlana; Porapakkarm, Ponpoje
    Abstract: Having low income is one of the requirements for Medicaid eligibility. Given that earning ability is unobservable, once an individual with high labor income stops working it is impossible to distinguish him from those whose potential labor income is low. This can affect the ability of Medicaid to target the most disadvantaged people given that a large fraction of its beneficiaries do not work. In this paper we ask two questions: 1) Does Medicaid significantly distort work incentives? 2) Can the insurance-incentives trade-off of Medicaid be improved without changing the size of the redistribution in the economy? Our tool is a general equilibrium model with heterogeneous agents calibrated using the Medical Expenditure Panel Survey Dataset to match the life-cycle patterns of employment and insurance take-up behavior as well as the key aggregate statistics. We find that around 20% of Medicaid enrollees do not work in order to be eligible. These distortions are costly for the economy: if Medicaid eligibility could be linked to (unobservable) productivity the resulting ex-ante welfare gains are equivalent to 1.5% of the annual consumption. We show that asset testing can achieve a similar outcome but only if asset limits are allowed to be different for workers and non-workers.
    Keywords: health insurance, Medicaid, labor supply, asset testing, general equilibrium, life-cycle models
    JEL: D52 D91 E21 H53 I13 I18
    Date: 2013–09–13
  9. By: Peine; Moors
    Abstract: In this paper, we strive to unravel in how far current practices of Health Technology Assessment (HTA) are suitable to guide health policy decisions about personal health systems (PHS). We focus on the implicit representations of users and their position in the innovation process that underly established HTA practices, and explore in how far these representations are conducive to health technology decisions that support older people in meaningful and active lives. Our analysis builds on Callon’s recent distinction between prosthetic and habilitation social policies [M. Callon, Economic Markets and the Rise of Interactive Agencements: From Prosthetic Agencies to Habilitated Agencies, in: T. Pinch, R. Swedberg (Eds.), Living in a Material World: Economic Sociology Meets Science and Technology Studies, The MIT Press, Cambridge, 2008, pp. 29-56]. We revisit the results of two case studies that we conducted in the fields of Point-of-Care Diagnostics, set in the domains of primary and secondary care, and care robot service platforms operating in domestic environments. By contrasting these cases we demonstrate how a different logic of addressing values in innovation feeds into either prosthetic or habilitation policy decisions about health technology. Based on this analysis, we argue that HTA practices in the context of PHS need to incorporate a logic of valuing health technology in order to fully deliver the potential of PHS to the lives of older persons.
    Keywords: Innovation, health technology, ageing, user representation, care robots, HTA
    Date: 2013–09

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