nep-hea New Economics Papers
on Health Economics
Issue of 2014‒02‒02
thirty-six papers chosen by
Yong Yin
SUNY at Buffalo

  1. Investing in Health Infrastructure: How Decentralization Matters By Bernard Dafflon; Francois Vaillancourt
  2. The Demand for Tobacco in Post-Unification Italy By Carlo Ciccarelli; Gianni De Fraja
  3. Surviving the Genocide: The Impact of the Rwandan Genocide on Child Mortality By Federico Ciani; Gianna Claudia Giannelli
  4. Are Recessions Good for Your Health? When Ruhm Meets GHH By He, Hui; Huang, Kevin X. D.; Hung, Sheng-Ti
  5. Early Life Circumstance and Mental Health in Ghana By Achyuta Adhvaryu; James Fenske; Anant Nyshadham
  6. Is work bad for health? The role of constraint vs choice By Caroli, Eve; Bassanini, Andrea
  7. Price Regulation and Parallel Imports of Pharmaceuticals. By Brekke, Kurt R.; Holmås, Tor Helge; Straume, Odd Rune
  8. Hospital expenditures and the red herring hypothesis: Evidence from a complete national registry By Gregersen, Fredrik Alexander; Godager, Geir
  9. Decomposing the productivity differences between hospitals in the Nordic countries By Kittelsen, Sverre A.C.; Persson, Benny Adam; Rehnberg, Clas; Anthun, Kjartan S.; Goude, Fanny; Rättö, Hanna; Hope, Øyvind; Häkkinen, Unto; Medin, Emma; Kalseth, Birgitte; Kilsmark, Jannie
  10. How does end of life costs and increases in life expectancy affect projections of future hospital spending? By Melberg, Hans Olav; Sørensen, Jan
  11. Economic Status, Air Quality, and Child Health: Evidence from Inversion Episodes By Jans, Jenny; Johansson, Per; Nilsson, J Peter
  12. Health care integration in the Russian federation: conceptual framework, evaluation, and new instruments By Igor Sheiman; Vladimir Shevski
  13. Spatial structures of health outcomes and health behaviours in Scotland: Evidence from the Scottish Health Survey By Arnab Bhattacharjee; Taps Maiti; Dennis Petrie
  14. Worker's Mental Health and Conditions of Working Life By Juntaro Yamaoka; Miki Kobayashi
  15. Global Health Partnerships: Governance, Leadership, and Organizational Reform By Rutger Daems, PhD; Edith Maes, DBA
  16. Could a Website Really Have Doomed the Health Exchanges? Multiple Equilibria, Initial Conditions and the Construction of the Fine By Florian Scheuer; Kent Smetters
  17. Does Medical Malpractice Law Improve Health Care Quality? By Michael Frakes; Anupam B. Jena
  18. Equilibrium Health Spending and Population Aging in a Model of Endogenous Growth - Will the GDP Share of Health Spending Keep Rising? By Isaac Ehrlich; Yong Yin
  19. Breaking the Link Between Legal Access to Alcohol and Motor Vehicle Accidents: Evidence from New South Wales By Jason M. Lindo; Peter Siminski; Oleg Yerokhin
  20. Every Breath You Take – Every Dollar You’ll Make: The Long-Term Consequences of the Clean Air Act of 1970 By Adam Isen; Maya Rossin-Slater; W. Reed Walker
  21. Tobacco Control Campaign in Uruguay: Impact on Smoking Cessation during Pregnancy By Jeffrey E. Harris; Ana Inés Balsa; Patricia Triunfo
  22. Contraception and the Fertility Transition By Bhattacharya, Joydeep; Chakraborty, Shankha
  23. "Incentive for Gatekeepers and Their Demand Inducement: An Empirical Analysis of Care Managers in the Japanese Long-Term Care Insurance " By Shinya Sugawara; Jiro Nakamura
  24. Adverse selection and heterogeneity of demand responsiveness By Normann Lorenz
  25. Analysis of Cigarette Tax Structure as a Requirement for an Effective Tax Policy: Evaluation and Simulation for Argentina By Frank Chaloupka; Martin Gonzalez-Rozada; German Rodriguez Iglesias; Veronica Schoj
  26. Labor market effects of sports and exercise: Evidence from Canadian panel data By Lechner, Michael; Sari, Nazmi
  27. Externalities of national pharmaceutical policy when markets are integrated through parallel trade By Birg, Laura
  28. Examining the Structure of Spatial Health Effects using Hierarchical Bayes Models By Eibich, Peter; Ziebarth, Nicolas
  29. A weighty issue revisited: the dynamic effect of body weight on earnings and satisfaction in Germany By Kropfhäußer, Frieder; Sunder, Marco
  30. Reducing binge drinking? The effect of a ban on late-night off-premise alcohol sales on alcohol-related hospital stays in Germany By Marcus, Jan; Siedler, Thomas
  31. Can Amputation Save the Hospital? The Impact of the Medicare Rural Flexibility Program on Demand and Welfare By Schmidt-Dengler, Philipp; Gowrisankaran, Gautam; Lucarelli, Claudio; Town, Robert
  32. Regulation of Pharmaceutical Prices: Evidence from a Reference Price Reform in Denmark By Kaiser, Ulrich; Méndez, Susan; Rønde, Thomas; Ullrich, Hannes
  33. Growth and Welfare Effects of Health Care in Knowledge Based Economies By Kuhn, Michael; Prettner, Klaus
  34. Subsidizing Health-Conscious Behavior Now or Later By Danilowicz, Kamila; Schwager, Robert
  35. Reference-Dependent Effects of Unemployment on Mental Health By Grunow, Martina
  36. Limited Attention and the Demand for Health Insurance By Fels, Markus

  1. By: Bernard Dafflon (University of Fribourg); Francois Vaillancourt (University of Montreal)
    Abstract: This paper examines the infrastructure–decentralization nexus in the production of health services with a particular emphasis on the issue of health infrastructure. The first part of the paper presents evidence on health services and infrastructure spending in health for various countries or groups of countries showing the importance of infrastructure spending in the provision of health services. The second part of the paper examines why and how health services are joint production with collective and private characteristics. These characteristics affect the decentralization of such services and thus the decentralization of health infrastructure; it also raises the issue of who should finance what in health care. The third part examines case studies and policy choices in USA, Canada and Switzerland related to various aspects of health care and health infrastructure financing.
    Date: 2014–01–14
  2. By: Carlo Ciccarelli (University of Rome "Tor Vergata"); Gianni De Fraja (Nottingham School of Economics)
    Abstract: This paper studies the demand for tobacco products in post-unification Italy. We construct a very detailed panel dataset of annual consumption in the 69 Italian provinces from 1871 to 1913, which is then used to estimate the demand for tobacco products. We find support for the Becker and Murphy (1988) rational addiction model. We also find that, in the period considered, tobacco was a normal good in Italy: aggregate tobacco consumption increased with income. Subsequently, we consider separately the four types of products which comprise aggregate tobacco (fine-cut tobacco, snuff, cigars, and cigarettes), and tentatively suggest that habit formation was a stronger factor in the persistence of consumption than physical addiction. The paper ends by showing that the introduction of the Bonsack cigarette rolling machine in the early 1890s did not coincide with changes in the structure of the demand for tobacco, suggesting cost-driven technological change.
    Keywords: smoking, Italian Kingdom, rational addiction, panel data
    JEL: D11 N33 I18
    Date: 2014–01
  3. By: Federico Ciani; Gianna Claudia Giannelli
    Abstract: Between April and July 1994 Rwanda experienced a tremendous wave of inter-ethnic violence that caused at least 500,000 deaths. Combining birth history data drawn from the 2000 Rwanda Demographic and Health Survey with prefecture-level information on the intensity of the conflict, we examine the impact of the civil war on infant and child mortality. War exposure is measured exploiting the differential effects of timing of birth and genocide intensity at the household and geographic level. Considering both in utero and postnatal war exposure, we estimate discrete time proportional hazard models of child mortality for the exposed and the unexposed birth cohorts. We find large positive effects of exposure to the conflict on infant and child mortality. Moreover, restricting our sample to the survivors, we find that child mortality is significantly impacted by war exposure, increasing the hazard rate by nearly 6 percentage points on average. This result holds true also for children who were only exposed while in utero. This evidence points to the existence of long-term disruptive effects on the cohorts of children exposed to the violence.
    Keywords: genocide, child mortality, child health, survival analysis, Rwanda
    JEL: I20 J13 O12 Z13
    Date: 2013
  4. By: He, Hui; Huang, Kevin X. D.; Hung, Sheng-Ti
    Abstract: This paper first documents several important business cycle properties of health status and health expenditures in the US. We find that health expenditures are pro-cyclical while health status is counter-cyclical. We then develop a stochastic dynamic general equilibrium model with endogenous health accumulation. The model has four distinct features: 1) Both medical expenditures and leisure time are used to produce health stock; 2) Health enters into production function; 3) Depreciation rate of health stock negatively depends on working hours; 4) Health enters into utility function. We calibrate the model to US economy. The results show that the model can jointly rationalize the counter-cyclicality of health status and pro-cyclicality of medical expenditure. We also investigate the relative importance of each feature in affecting the business cycle properties of health status. We find that the joint presence of the time channel (feature 1) and the production channel (features 2 and 3) is crucial in replicating counter-cyclicality of health status.
    Keywords: business cycles; health status; health expenditure
    JEL: E22 E32 I12
    Date: 2014–01
  5. By: Achyuta Adhvaryu; James Fenske; Anant Nyshadham
    Abstract: We study the origins of adult mental health using early life income fluctuations. Combining a time series of real producer prices of cocoa with a nationally representative household survey in Ghana, we show that a one standard deviation rise in the cocoa price in early life decreases the likelihood of severe mental distress in adulthood by 3 percentage points (or half the mean prevalence) for cohorts born in cocoa-producing regions relative to other regions. Impacts on related personality traits are consistent with this result. Maternal nutrition, reinforcing childhood investments, and adult circumstance are operative channels of impact.
    Keywords: early life, mental health, endowments, commodity prices, Ghana
    JEL: I12 I15 O12
    Date: 2014
  6. By: Caroli, Eve; Bassanini, Andrea
    Abstract: This paper reviews the literature on the impact of work on health. We consider work along two dimensions: (i) the intensive margin, i.e. how many hours an individual works and (ii) the extensive margin, i.e. whether an individual is in employment or not, independent of the number of hours worked. We show that most of the evidence on the ne gative health impact of work found in the literature is based on situations in which workers have essentially no control (no choice) over the amount of work they provide. In essence, what is de trimental to health is not so much work per se as much as the gap which may exist between the actual and the desired amount of work, both at the intensive and extensive margins.
    Keywords: Santé; travail; retraite; heures travaillées; licenciement; choix individuel; health; work; retirement; hours worked; job loss; individual choice;
    JEL: I10 I31 J22 J28
    Date: 2014–01
  7. By: Brekke, Kurt R. (Dept. of Economics, Norwegian School of Economics and Business Administration); Holmås, Tor Helge (Uni Rokkan Centre); Straume, Odd Rune (University of Minho)
    Abstract: This paper studies the effects of price regulation and parallel imports in the on-patent pharmaceutical market. First, we develop a theory model in which a pharmacy negotiates producer prices with a brand-name firm and then sets retail prices. We show that the effects of price regulation crucially depend on whether the producer faces competition from parallel imports. While parallel imports improve the bargaining position of the pharmacy, price regulation counteracts this effect and may even be profitable for the producer. Second, we use a unique dataset with information on sales and prices at both producer and retail level for 165 substances over four years (2004-7). Exploiting exogenous variation in the regulated price caps, we show that stricter price regulation reduces competition from parallel imports. While the effect is clearly negative on producer profits for substances without parallel imports, the e¤ect is not significant for substances with parallel imports. Finally, we show that stricter price regulation reduces total expenditures, but the e¤ect is much stronger for substances with parallel import. Thus, our results suggest that price regulation may promote both static and dynamic efficiency in the presence of parallel imports.
    Keywords: Pharmaceutical market; Price regulation; Parallel imports.
    JEL: I11 I18 L13 L51 L65
    Date: 2014–01–10
  8. By: Gregersen, Fredrik Alexander (Campus Akershus University Hospital, Institute of Clinical Medicine, University of Oslo); Godager, Geir (Department of Health Management and Health Economics)
    Abstract: The aim of this paper is to contribute to the debate on population aging and growth in health expenditures. The Red Herring hypothesis, i.e., that hospital expenditures are driven by the occurrence of mortal illnesses, and not patients’ age, forms the basis of the study. The data applied in the analysis are from a complete registry of in-patient hospital expenditures in Norway from the years 1998-2009. Since data registration is compulsory and all hospital admissions are recorded, there is no self-selection into the data. Mortality related hospital expenditures were identified by creating gender-cohort specific panels for each of the 430 Norwegian municipalities. We separated the impact of mortality on current hospital expenditures from the impact of patients’ age and gender. This approach contributes to the literature by applying sensible aggregation methods on a complete registry of inpatient hospital admissions. We apply model estimates to quantify the mortality related hospital expenditures for twenty age groups. The results show that mortality related hospital expenditures are a decreasing function of age. Further the results clearly support that, both age and mortalities should be included when predicting future health care expenditure. The estimation results suggest that 9.2 % of all hospital expenditure is associated with treating individuals in their last year of life.
    Keywords: mortality related expenditures; hospital expenditures; red herring hypothesis; ageing
    JEL: H51 I12 I19
    Date: 2013–05–08
  9. By: Kittelsen, Sverre A.C. (Frisch Centre); Persson, Benny Adam (Frisch Centre); Rehnberg, Clas (Karolinska Institutet, Stockholm); Anthun, Kjartan S. (SINTEF); Goude, Fanny (Karolinska Institutet); Rättö, Hanna (National Institute for Health and Welfare – THL, Helsinki); Hope, Øyvind (SINTEF); Häkkinen, Unto (National Institute for Health and Welfare – THL, Helsinki); Medin, Emma (Karolinska Institutet, Stockholm); Kalseth, Birgitte (SINTEF); Kilsmark, Jannie (Danish Institute of health research, Copenhagen)
    Abstract: Previous studies indicate that Finnish hospitals have significantly higher productivity than in the other Nordic countries. We decompose the productivity levels into technical efficiency, scale efficiency and country specific possibility sets (technical frontiers). Data have been collected on operating costs and patient discharges in each DRG group for all hospitals in the Nordic countries. We find that there are small differences in scale and technical efficiency between countries, but large differences in production possibilities (frontier position). The results are robust to the choice of bootstrapped Data Envelopment Analysis (DEA) or Stochastic Frontier Analysis (SFA) as frontier estimation methodology.
    Keywords: Productivity; Hospitals; Efficiency; DEA; SFA
    JEL: C14 I12
    Date: 2014–01–23
  10. By: Melberg, Hans Olav (Department of Health Management and Health Economics); Sørensen, Jan (University of Southern Denmark)
    Abstract: This article examines the extent to which differences in life-expectancy are associated with shifts in average hospital costs for different age groups. The size of the shift is important because it makes a large difference to the importance of demographic factors when projecting future health expenditures. The effect of increases in life expectancy on the cost curves is identified by comparing two countries with different life expectancies, but which are very similar on other variables like culture, technology and health systems (Norway and Denmark). Using data from the National Patient Registries the paper compares the ratio of average spending on individuals who die and individuals who survive in different age groups in these two countries. After controlling for cohort, the best fit between the age related cost curves is achieved when the cost curve in the country with a two year longer life expectancy is shifted by two years. For instance, seventy year olds in the country with the longest life expectancy have an everage cost ratio that is comparable to sixty-eight year olds in the country with the shorter life expectancy. This suggests that increases in life expectancy are associated with shifts in the cost curves and that the shift is proportional to the shift in life expectancy.
    Keywords: Hospital expenditures; ageing; life expectancy
    JEL: C13 H51 I12 I13
    Date: 2013–12–20
  11. By: Jans, Jenny (Uppsala Center for Labor Studies); Johansson, Per (Uppsala Center for Labor Studies); Nilsson, J Peter (Uppsala Center for Labor Studies)
    Abstract: On normal days, the temperature decreases with altitude, allowing air pollutants to rise and disperse. During inversion episodes, a warmer air layer at higher altitude traps pollu- tants close to the ground. We show how readily available NASA satellite data on vertical temperature proles can be used to measure inversion episodes on a global scale with high spatial and temporal resolution. Then, we link inversion episode data to ground level pollution monitors and to daily in- and outpatient records for the universe of children in Sweden during a six-year period to provide instrumental variable estimates of the eects of air quality on children's health. The IV estimates show that the respiratory illness health care visit rate increases by 8 percent for each 10 m=m3 increase in PM10; an es- timate four times higher than conventional estimates. Importantly, by linking the health care data to detailed records of parental background characteristics, we show that chil- dren from low-income households suer signicantly more from air pollution than children from high income households. Finally, we provide evidence on the importance of several mechanisms that could contribute to the dierence in the impact of air pollution across children in rich and poor households.
    Keywords: Air pollution; Health; inversions; environmental policy; instrumental variable; nonparametric regression; socio-economic gradient in health
    JEL: I12 I14 J24 Q53
    Date: 2014–01–20
  12. By: Igor Sheiman (National Research University Higher School of Economics); Vladimir Shevski (National Research University Higher School of Economics)
    Abstract: Fragmentation in organization and discontinuities in the provision of medical care are problems in all healthcare systems, whether it is the mixed public-private system in the USA, national health services in the UK, or insurance-based ones in Western Europe and Russia. In all of these countries, a major challenge is to improve integration in order to improve efficiency and health outcomes. This article assesses issues related to fragmentation and integration in conceptual terms and argues that key attributes of integration are teamwork, coordination, and continuity of care. It then presents a summary of integration problems in Russia and presents the results of a large survey of physicians concerning the attributes of integration. It is argued that the characteristics of the national service delivery model do not ensure integration. The Semashko model of service delivery, although designed as an integrated model, has been distorted under pressure of the process of specialization of care. It is also argued that larger organizational forms of service provision, like policlinics and integrated hospital-policlinics, do not have higher scores of integration indicators than smaller ones. Proposals to improve integration in Russia are presented with the focus on the regular evaluation of integration and fragmentation, regulation of integration activities, enhancing the role of PHC providers, and economic incentives
    Keywords: health policy, medical service integration, coordination of care, continuity of care, primary health care
    JEL: Z19
    Date: 2013
  13. By: Arnab Bhattacharjee (Heriot-Watt University); Taps Maiti (Michigan State University); Dennis Petrie (University of Melbourne)
    Abstract: Socioeconomic characteristics, health behaviours, and the utilisation and quality of healthcare are prime examples of socioeconomic, cultural and demographic phenomena that are inherently spatial in nature. Understanding the spatial structure of these factors is particularly relevant in order to efficiently allocate resources. This paper explores the general equilibrium spatial structure of health outcomes and health behaviours across Scottish health boards using a variant of the spatial Durbin model which allows for an a priori unknown spatial weights matrix. The results suggest that there is substantial spatial dynamics in behaviours across Health Boards and that these spillovers are, as expected, asymmetric. We then demonstrate how the model can be used to estimate the behavioural and health impact of a targeted education policy within each health board taking into account both the direct effect on the particular health board itself and the indirect effect in terms of spillovers. The results illustrate how the dynamic effects play a large role in designing place based policies that maximise the overall effectiveness of health interventions. Taking into account the spatial dynamics allows policy makers to better target resources and interventions on particular clusters where the direct and indirect spillover benefits are likely to be the greatest in terms of improving health.
    Keywords: spatial econometrics, spatial weights matrix, spatial Durbin model, health outcomes, health behaviours, health care utilisation
    JEL: I12 I18 C33
    Date: 2014
  14. By: Juntaro Yamaoka (Graduate School of Economics, Kobe University); Miki Kobayashi (Graduate School of Economics, Kobe University)
    Date: 2014–01
  15. By: Rutger Daems, PhD; Edith Maes, DBA (Corresponding author: Dr. Edith Maes, Maastricht School of Management, Endepolsdomein 150, 6229 EP Maastricht, The Netherlands;; mobile phone +32 476 330 497)
    Abstract: The past decades have seen the rise of international partnership between the public and private sectors to address grand challenges encountered in the provision of health services and access to medicines in developing countries. This paper reviews the governance aspects of this relationship and provides insight into how these multi-stakeholder alliances function and have evolved. In particular, we will be focusing on two prominent formally established organizations, namely: The Global Fund to fight AIDS, Tuberculosis and Malaria, and the Global Alliance for Vaccines and Immunization (GAVI). The paper examines how these enterprises managed to overcome divergent viewpoints and cultural differences, the control and risk management of programs in resource-strapped environments, and how reform has improved the efficiency of these social enterprises. This multi-stakeholder approach aims to bring together the stakeholders in a new form of consensus-building and decision-making. Despite their common purpose to save lives, the proliferation of actors in public-private partnerships requires leadership skills that are different from managing private or public enterprises separately.
    Keywords: public private partnership, global health partnership, governance, leadership, reform
    Date: 2014–01
  16. By: Florian Scheuer; Kent Smetters
    Abstract: Public attention has focused on how the launch of the national health exchanges could impact the types of risks who initially enroll and thereby affect future premiums and enrollment. We introduce simple dynamics into a standard model of insurance under adverse selection to show that such “initial conditions” can indeed matter. When firms are price-takers, the market can converge to a Pareto-inferior “bad” equilibrium if there are at least three equilibria, which we suggest has empirical support. Strategic pricing eliminates Pareto dominated equilibria but requires common knowledge of preference and risk distributions. Changing the fine on non-participants from a fixed amount to a fraction of equilibrium prices increases the range of initial conditions consistent with reaching the “good” equilibrium while reducing the “badness” of the bad equilibrium — all without increasing the fine value in the good equilibrium. Allowing insurers to quickly change prices can encourage them to experiment with strategic pricing if market fundamentals are not perfectly known, increasing the chance of reaching the good equilibrium independently from initial conditions.
    JEL: D4 D8 H3 I1
    Date: 2014–01
  17. By: Michael Frakes; Anupam B. Jena
    Abstract: Despite the fundamental role of deterrence in justifying a system of medical malpractice law, surprisingly little evidence has been put forth to date bearing on the relationship between medical liability forces on the one hand and medical errors and health care quality on the other. In this paper, we estimate this relationship using clinically validated measures of health care treatment quality constructed with data from the 1979 to 2005 National Hospital Discharge Surveys and the 1987 to 2008 Behavioral Risk Factor Surveillance System records. Drawing upon traditional, remedy-centric tort reforms—e.g., damage caps—we estimate that the current liability system plays at most a modest role in inducing higher levels of health care quality. We contend that this limited independent role for medical liability may be a reflection upon the structural nature of the present system of liability rules, which largely hold physicians to standards determined according to industry customs. We find evidence suggesting, however, that physician practices may respond more significantly upon a substantive alteration of this system altogether—i.e., upon a change in the clinical standards to which physicians are held in the first instance. The literature to date has largely failed to appreciate the substantive nature of liability rules and may thus be drawing limited inferences based solely on our experiences to date with damage-caps and related reforms.
    JEL: I18 K13
    Date: 2014–01
  18. By: Isaac Ehrlich; Yong Yin
    Abstract: The apparently unrelenting growth in the GDP-share of health spending (SHS) has been a perennial issue of policy concern. Does an equilibrium limit exist? The issue has been left open in recent dynamic models which take income growth and population aging as given. We view these variables as endogenously determined within an overlapping-generations, human-capital-based endogenous-growth model, where a representative parent makes all life-cycle consumption and investment decisions, and life and health protection are subject to diminishing returns. Our prototype model, allowing for both quantity and quality of life as desired goods, yields equilibrium upper bounds for SHS. Our calibrated simulations also account for observed trends in reproductive choices, population aging, life expectancy, and economic growth. The analysis offers new insights about factors that drive long-term trends in aging and health spending and establishes a direct relation between health investments at young age and the equilibrium, steady-state rate of economic growth.
    JEL: I1 I15 J11 J17 J24 O4
    Date: 2014–01
  19. By: Jason M. Lindo; Peter Siminski; Oleg Yerokhin
    Abstract: A large literature has documented significant public health benefits associated with the minimum legal drinking age in the United States, particularly because of the resulting effects on motor vehicle accidents. These benefits form the primary basis for continued efforts to restrict youth access to alcohol. It is important to keep in mind, though, that policymakers have a wide variety of alcohol-control options available to them, and understanding how these policies may complement or substitute for one another can improve policy making moving forward. Towards this end, we propose that investigating the causal effects of the minimum legal drinking age in New South Wales, Australia provides a particularly informative case study, because Australian states are among the world leaders in their efforts against drunk driving. Using an age-based regression-discontinuity design applied to restricted-use data from several sources, we find no evidence that legal access to alcohol has effects on motor vehicle accidents of any type in New South Wales, despite having large effects on drinking and on hospitalizations due to alcohol abuse.
    JEL: I18 K32
    Date: 2014–01
  20. By: Adam Isen; Maya Rossin-Slater; W. Reed Walker
    Abstract: This paper examines the long-term impacts of in-utero and early childhood exposure to ambient air pollution on adult labor market outcomes. We take advantage of a new administrative data set that is uniquely suited for addressing this question because it combines information on individuals' quarterly earnings together with their counties and dates of birth. We use the sharp changes in ambient air pollution concentrations driven by the implementation of the 1970 Clean Air Act Amendments as a source of identifying variation, and we compare cohorts born in counties that experienced large changes in total suspended particulate (TSP) exposure to cohorts born in counties that had minimal or no changes. We find a significant relationship between TSP exposure in the year of birth and adult labor market outcomes. A 10 unit decrease in TSP in the year of birth is associated with a 1 percent increase in annual earnings for workers aged 29-31. Most, but not all, of this effect is driven by an increase in labor force participation. In present value, the gains from being born into a county affected by the 1970 Clean Air Act amount to about $4,300 in lifetime income for the 1.5 million individuals born into these counties each year.
    JEL: H40 H51 I12 I14 J17 J18 J31 Q51 Q53 Q58
    Date: 2014–01
  21. By: Jeffrey E. Harris; Ana Inés Balsa; Patricia Triunfo
    Abstract: Background. In 2005, Uruguay instituted a nationwide tobacco control campaign that has resulted in a substantial decline in nationwide smoking rates. We sought to determine the quantitative contributions of each of the major tobacco control measures adopted by the Uruguayan government. We focused sharply on smoking cessation by pregnant women and on the effect of quitting smoking during pregnancy on birth weight. Data. We analyzed a nationwide registry of all pregnancies in Uruguay during 2007–2012, supplemented by data on cigarette prices and various governmental policies. Methods. We estimated linear probability models of quitting smoking in the third trimester as well as linear models of the effect of quitting on birth weight. Our explanatory variables included maternal characteristics, provider-level and national-level policy interventions, and real price. In our models of quitting smoking, we used taxes as an instrument to address price endogeneity. In our models of birth weight, we used tobacco control policies as instruments to address the endogeneity of smoking cessation. Results. During 2007–2012, the proportion of pregnant women who had quit smoking by their third trimester increased markedly from 15 to 42 percent. Each of the major non-price tobacco control measures – including programs to treat nicotine dependence at health centers, banning of advertising nationwide, rotating warnings with pictograms on each pack, restriction of brands to a single presentation, and an increase in the size of pictograms to 80% of the front and back of each pack – was separately associated with a significant increase in the rate of quitting. During 2007–2009, tobacco manufacturers responded to tax increases and non-price policies by moderating their pretax prices. Quitting smoking by the third trimester increased birth weight by an estimated 163 grams. Conclusion. Uruguay’s nationwide tobacco control campaign led to a substantial increase in the likelihood that a pregnant smoker would quit by her third trimester. Each of the major tobacco control measures adopted by the government had a measurable impact on the rate of quitting and thus on neonatal health.
    JEL: D12 I12 I18
    Date: 2014–01
  22. By: Bhattacharya, Joydeep; Chakraborty, Shankha
    Abstract: Three profound changes - the mortality, fertility and contraception transitions - characterized the Victorian era in England. Economists, following Becker (1960), focus on the first two and underplay the third by assuming couples can achieve their fertility target at no cost. The historical experience from Victorian England is at odds with this view of costless fertility regulation. We incorporate costly fertility limitation into the Becker paradigm: in our story, the mortality transition spurs on a contraception revolution which, in turn, makes it possible for the fertility transition to arrive. In the model, generationally-linked households with heterogeneous income choose between two contraception strategies, one ``traditional'', the other ``modern''. The modern comes with a higher fixed cost (reflecting social opposition and informational barriers characteristic of the times), but has a lower variable cost when it comes to averting childbirths. While the initial adopters of the modern technology are the rich -- those unfazed by the higher fixed cost -- eventually everyone switches so as to economize on the variable cost. What hastens the switch is the decline in child mortality. Increased adoption of modern contraception unleashes a social diffusion process causing more people to switch, lowering fertility further and across all socioeconomic groups. The model is consistent with broad time-series and cross-sectional patterns of the English fertility transition.
    Keywords: child mortality, fertility, demographic transition, contraception
    JEL: I12 J11 O40
    Date: 2014–01–22
  23. By: Shinya Sugawara (Faculty of Economics, The University of Tokyo); Jiro Nakamura (Advanced Research Institute for the Sciences and Humanities, Nihon University)
    Abstract:    This study analyzes incentives and supplier-induced demand of care man- agers, middlemen between consumers and service providers in the Japanese social insurance program for long-term care. Care managers can be consid- ered as pure gatekeepers in that their function is limited to referral to spe- cialists and they themselves do not provide care. Rewards for care managers are rendered by capitation, which is considered as a cost-effective payment mechanism for insurers. However, many care managers actually work for rms that also operate service provision sectors. The service providers are rewarded by the fee-for-service payment and have motivation to induce ex- cess consumer demand. Thus, the violation of neutrality of care managers might yield an nancial burden on social insurance. In this study, we em- pirically analyze the behavior of care managers by checking whether they cause supplier-induced demand. Our estimation results detect the existence of care manager-induced demand for care managers who work for rms that jointly operate in service provision sectors; however, those who operate only care management do not induce demand. Based on the estimation results, we conduct a quantitative analysis and show that the care manager-induced produces a considerable nancial burden on social insurance. Keyword: Elderly care; Gatekeepers; Incentive; Supplier-induced demand; Japanese Long-Term Care Insurance program; Care managers
    Date: 2014–01
  24. By: Normann Lorenz
    Abstract: This paper analyzes the distortions of (health) insurers' benefit levels due to adverse selection if individuals' responsiveness to differences in contracts is heterogeneous. Within a discrete choice model with two risk types and imperfect competition the following results are shown: In the pooling equilibrium, a positive correlation of low risk and high responsiveness (e.g., younger individuals being both healthier and faster to switch insurers than older individuals) increases the distortion of the uniform benefit level if the share of low risks is small; if the share of low risks is large, the reverse holds, but only if the average level of responsiveness is high. In the separating equilibrium, a positive correlation increases the distortion of the contract for the low risks, unless the number of insurers offering the contract for the high risks is very small or a large share of the high risks chooses the contract designated for the low risks. These results imply that the welfare effects of a policy intervention of making individuals more responsive crucially depend on which risk types' responsiveness is increased more. The results also have implications for the estimation of the level of risk aversion and of the welfare effects of adverse selection.
    Keywords: Adverse selection, discrete choice
    JEL: I13
    Date: 2014
  25. By: Frank Chaloupka; Martin Gonzalez-Rozada; German Rodriguez Iglesias; Veronica Schoj
    Abstract: This study describes the cigarette demand and the tobacco tax structure in Argentina in order to identify which type of consumption tax can be increased by the government to reduce tobacco use in the short run. Based on the elasticity estimates and the cigarette tax structure, we analyze the possibility of implementing a tax increase government policy to reduce cigarette consumption. An analysis of each tobacco consumption tax is provided, with the twofold purpose of describe the variety of taxes affecting the consumption of cigarettes and to determine the impact of tobacco tax hikes. The cigarette tax structure in Argentina is very complex. Three excise duties plus VAT levied cigarettes consumption. Tobacco taxes have a dissimilar, vague origin, their bases differ significantly and are not applied similarly for cigarette and the other tobacco products. Additional Emergency Tax (a permanent emergency tax) and Special Tobacco Fund (that works as a subsidy to the tobacco production) are applied only to cigarettes; meanwhile internal tax rate is 60% for cigarettes but 16% or 20% to other tobacco products. Ad valorem taxes account for most of the tobacco tax structure in Argentina. The exception is a little component of the FET tax, which is a specific tax. The long-run cigarette consumption elasticity with respect to retail prices is -0.299, while the long-run income elasticity is 0.411. With these figures, a 10% increase in real prices will reduce long-run total cigarette consumption by 2.99%, and a 10% increase in real income will raise long-run consumption by 4.11%. Simulation exercises shows that increasing the price of cigarettes will increase government revenues, as well as a large decrease in cigarette consumption.
    Keywords: tobacco control policies, cigarette demand, tobacco tax structure, public health policies
    JEL: H2 I1 I18
    Date: 2014–01
  26. By: Lechner, Michael; Sari, Nazmi
    Abstract: Based on the Canadian National Population Health Survey we estimate the effects of individual sports and exercise on individual labor market outcomes. The data covers the period from 1994 to 2008. It is longitudinal and rich in life-style, health, and physical activity information. Exploiting these features of the data allows for a credible identification of the effects as well as for estimating dose-response relationships. Generally, we confirm previous findings of positive long-run income effects. However, an activity level above the current recommendation of the WHO for minimum physical activity is required to reap in the long-run benefits.
    Keywords: Physical activity, Canadian National Population Health Survey, individual sports participation, human capital, labor market, matching estimation
    JEL: I12 I18 J24 L83 C21
    Date: 2014–01
  27. By: Birg, Laura
    Abstract: This paper studies externalities of nationally determined cost-sharing systems, in particular coinsurance rates (patients pay a percentage of the price), under pharmaceutical parallel trade, i.e. trade outside the manufacturer's authorized distribution channel, in a two-country model with a vertical distributor relationship. Parallel trade generates a price-decreasing competition effect in the destination country and a price-increasing double marginalization effect in the source country. An increase of the coinsurance rates in the destination country of the parallel import mitigates the double marginalization effect in the source country. An increase of the coinsurance rate in the source country reinforces the competition effect in the destination country. --
    JEL: F12 I11 I18
    Date: 2013
  28. By: Eibich, Peter; Ziebarth, Nicolas
    Abstract: This paper makes use of Hierarchical Bayes Models to model and estimate spatial health effects. We focus on Germany, combining rich individual-level household panel data with administrative county level information to estimate spatial county-level health dependencies. As dependent variable, we use the generic, continuous, and quasi-objective SF12 health measure. Our findings reveal strong and highly significant spatial dependencies and clusters. The strong and systematic county-level impact is comparable to an age effect on health of up to 31 years. Even 20 years after the peaceful German reunification, we detect a clear spatial East-West health pattern that equals an age impact on health of up to 9 life years. --
    JEL: C11 C21 I18
    Date: 2013
  29. By: Kropfhäußer, Frieder; Sunder, Marco
    Abstract: We estimate the effect of changes in the body mass index on wages and satisfaction in a panel of German employees. Dynamic models indicate that satisfaction with life in general and with health are responsive to weight changes, but wages and satisfaction with work are not. These results mainly corroborate earlier findings from static panel or cross-sectional models. --
    JEL: J24 J71 I31
    Date: 2013
  30. By: Marcus, Jan; Siedler, Thomas
    Abstract: Excessive alcohol consumption among youth and young adults is a major public health concern. On March 1, 2010 the German federal state of Baden-W rttemberg banned the sale of alcoholic beverages between 10pm and 5am in off-premise outlets (e.g. kiosks, petrol stations, supermarkets). We use rich monthly administrative data from a 70 percent random sample of all hospitalizations for the years 2007-2010 in Germany in order to evaluate the impact of this policy on alcohol-related hospitalizations. Applying a difference-in-difference approach, we find that the policy change reduces alcohol-related hospitalizations among adolescents and young adults by about 9 percent. The empirical results suggest that limiting late hours during which alcoholic beverages are allowed to be sold is an effective and rather "costless" public health initiative for reducing high-risk drinking among youth and young adults. --
    JEL: I12 I18 D04
    Date: 2013
  31. By: Schmidt-Dengler, Philipp; Gowrisankaran, Gautam; Lucarelli, Claudio; Town, Robert
    Abstract: This paper seeks to understand the impact of the Medicare Rural Hospital Flexi- bility (Flex) Program on rural resident hospital choice and welfare. The Flex program created a new class of hospital, the Critical Access Hospital (CAH), which receives more generous reimbursement in return for limits on capacity and length of stay. We fi nd that conversion to CAH status reduced inpatient admissions by a mean of 5.4%, of which almost all was driven by factors other than capacity. The program increased consumer welfare if it reduced the closure rate by at least 4 percentage points. --
    JEL: D12 I18 I11
    Date: 2013
  32. By: Kaiser, Ulrich; Méndez, Susan; Rønde, Thomas; Ullrich, Hannes
    Abstract: Reference prices constitute a main determinant of patient health care reimbursement in many countries. We study the effects of a change from an "external" (based on a basket of prices in other countries) to an "internal" (based on comparable domestic products) reference price system. We find that while our estimated consumer compensating variation is small, the reform led to substantial reductions in list and reference prices as well as co-payments, and to sizeable decreases in overall producer revenues, health care expenditures, and co-payments. These effects differ markedly between branded drugs, generics, and parallel imports with health care expenditures and producer revenues decreasing and co-payments increasing most for branded drugs. The reform also induced consumers to substitute from branded drugs - for which they have strong preferences - to generics and parallel imports. This substitution also explains the small increase in consumer welfare despite a substantial decrease in expenditures. --
    JEL: I18 C23 D22
    Date: 2013
  33. By: Kuhn, Michael; Prettner, Klaus
    Abstract: We study the effects of a labor-intensive health care sector within an R&D-driven growth model with overlapping generations. Health care increases longevity and labor participation/productivity. We examine under which conditions expanding health care enhances growth and welfare. Even if the provision of health care diverts labor from productive activities, it may still fuel R&D and economic growth if the additional wealth that comes with expanding longevity translates into a more capital/machine-intensive final goods production and, thereby, raises the return to developing new machines. We establish mild conditions under which an expansion of health care beyond the growth-maximizing level is Pareto-improving. --
    JEL: I11 O41 O11
    Date: 2013
  34. By: Danilowicz, Kamila; Schwager, Robert
    Abstract: We examine subsidies for health care when consumers have present-biased preferences, which lead them to underestimate the effect of today s consumption on future health. We compare immediate subsidies paid for health-conscious consumption and future subsidies rewarding a good health outcome. We show that, while both policies can implement the first best choice, doing so by future subsidies results in higher costs for the government. This arises since the individual anticipates that, from today s perspective, she will make biased use of future subsidies. Hence, in order to create the same incentive effect, a future subsidy must be higher in present value terms. --
    JEL: H31 D91 I18
    Date: 2013
  35. By: Grunow, Martina
    Abstract: This paper provides an empirical analysis of reference-dependent effects of unemployment on mental health. I show that the negative effect of unemployment on mental health depends on expectations about the future employment status. Several contributions to the literature have shown that the perception of the individual employment status depends on the surrounding unemployment rate. We argue that expectations are a possible link between unemployment rates and the individual employment status regarding changes in mental health. Theoretical foundation comes from models for reference-dependent preferences with endogenous reference points. We provide a simple theoretical model to motivate and structure the empirical analysis. Using data from the German Socio-Economic Panel, we estimate a pairwise interacted model for employment status and expectations over two time periods. Life satisfaction is used as a proxy for mental health. To identify a causal effect of unemployment, expectations and their interactions on mental health, the analysis relies on fixed effects and exogenous entries into unemployment due to plant closures. We confirm the standard result that unemployment has a negative effect on mental health. Furthermore, the results deliver empirical evidence for reference-dependent effects of unemployment on mental health. We find that becoming unemployed unexpectedly has a more severe negative effect on mental health as if the unemployment was expected. Therefore, this paper contributes to the understanding of how mental health is affected by unemployment and delivers empirical support for the theoretical models of reference-dependent utility. --
    JEL: C23 I10 D03
    Date: 2013
  36. By: Fels, Markus
    Abstract: We analyze how customers with limited attention value and choose among health plans. We show how the model can accommodate three observations regarding plan choice. First, people tend to overweight the premium and thus underappreciate the value of health insurance. Second, insurance companies may have a strong incentive to reduce quality and to hide these shortcomings in the fine print while attracting customers with insufficiently lower premiums. Finally, the willingness-to-pay for insurance is subadditive creating an incentive for providers to unbundle comprehensive plans. We discuss how these three effects may result in a fundamental dilemma for policy makers. --
    JEL: D18 D89 I11
    Date: 2013

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