nep-hea New Economics Papers
on Health Economics
Issue of 2014‒03‒15
seventeen papers chosen by
Yong Yin
SUNY at Buffalo

  1. Raising the Excise Tax on Cigarettes: Effects on Health and the Federal Budget By Congressional Budget Office
  2. Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision By Congressional Budget Office
  3. Approaches to Reducing Federal Spending on Military Health Care By Congressional Budget Office
  4. Does federalism induce patients’ mobility across regions? Evidence from the Italian experience By Elenka Brenna; Federico Spandonaro
  5. Does it pay to be a doctor in France? By Samson, Anne-Laure; Dormont, Brigitte
  6. A Weighty Issue Revisited: The Dynamic Effect of Body Weight on Earnings and Satisfaction in Germany By Frieder Kropfhäußer; Marco Sunder
  7. The Long-Term Game: An Analysis of the Life Expectancy of National Football League Players By Ruud Koning; Victor Matheson; Anil Nathan; James Pantano
  8. Health Responses to a Wealth Shock: Evidence from a Swedish Tax Reform By Erixson, Oscar
  9. Connections Matter: How Personal Network Structure Influences Biomedical Scientists’ Engagement in Medical Innovation By Llopis,Oscar; D’Este,Pablo
  10. Effects of Obesity and Physical Activity on Health Care Utilization and Costs By Jan Häußler
  11. Hospital Treatment Rates and Spill-Over Effects: Does Ownership Matter? By Badi H. Baltagi; Yin-Fang Yen
  12. Breastfeeding and Child Disability: A Comparison of Siblings from the United States By George L. Wehby
  13. Effects of Prescription Drug Insurance on Hospitalization and Mortality: Evidence from Medicare Part D By Robert Kaestner; Cuiping Long; G. Caleb Alexander
  14. The Effects of Medicare on Medical Expenditure Risk and Financial Strain By Silvia Helena Barcellos; Mireille Jacobson
  15. Negative Tests and the Efficiency of Medical Care: What Determines Heterogeneity in Imaging Behavior? By Jason Abaluck; Leila Agha; Christopher Kabrhel; Ali Raja; Arjun Venkatesh
  16. A Tale of Two Cities? The Heterogeneous Impact of Medicaid Managed Care By Marton, James; Yelowitz, Aaron; Talbert, Jeffrey
  17. Optimal Price-Setting in Pay for Performance Schemes in Health Care By Søren Rud Kristensen; Luigi Siciliani; Matt Sutton

  1. By: Congressional Budget Office
    Abstract: CBO has analyzed the impact of a hypothetical increase in the federal excise tax on cigarettes to demonstrate the complex links between policies that aim to improve health and effects on the federal budget.
    Date: 2012–06–13
  2. By: Congressional Budget Office
    Abstract: On June 28, 2012, the Supreme Court issued a decision that essentially made the expansion of the Medicaid program under the Affordable Care Act (ACA) a state option. This report presents updated projections of the budgetary effects of the coverage provisions of the ACA to reflect the Supreme Court's decision.
    Date: 2012–07–24
  3. By: Congressional Budget Office
    Abstract: The health care benefits provided to military service members, retirees, and their families are more generous than those generally provided through private or employment-based health insurance. Between 2000 and 2012, the cost of providing military health care increased by 130 percent (after adjusting for inflation). This report examines some options for constraining those costs. The largest savings would come from increasing cost sharing for military retirees.
    Date: 2014–01–16
  4. By: Elenka Brenna (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Federico Spandonaro (Università degli Studi di Roma "Tor Vergata")
    Abstract: In recent years, the accreditation of private hospitals followed by the decentralisation of the Italian NHS into 21 regional health systems, has furnished a good empirical ground for investigating the "voting with their feet" Tiebout principle. We consider the competition between public and private hospitals - and the rules supervising the financial agreements between regional authorities and providers of hospital care - as a potential determinant factor for cross border mobility in the Italian NHS. The model we propose considers an institutional variable set at a regional level that, ceteris paribus, succeeds in driving CBM flows towards accredited private hospitals. We assume that some northern and central regions accredited private providers not only to meet the internal need of hospital care, but also with the aim of attracting patients' inflows from other regions, particularly from the South of Italy, where the services supplied do not cover such a broad range of hospital specialization and/or do not guarantee the same perceived quality of care. The geographical gradient in this context is considerable: in 2011 the southern regions show a negative balance of - 1.046 billion euro for patients' migration, while the northern ones report a surplus of 863 million euro. Evidence, both from the normative inspection and the statistical analysis, suggests the presence of strategic incentives provided by some regions with the twofold objective of accrediting a good quality health system and contextually overcoming the risk of production excess by driving financial resources from patients' inflows.
    Keywords: patient choice, hospital accreditation, competition, cross border mobility, federal NHS.
    JEL: I11 I18 H3
    Date: 2014–02
  5. By: Samson, Anne-Laure; Dormont, Brigitte
    Abstract: This paper examines whether general practitionersí(GPsí) earnings are high enough to keep this profession attractive. We set up two samples, with longitudinal data relative to GPs and executives. Those two professions have similar abilities but GPs have chosen a longer education. To measure if they get returns that compensate for their higher investment, we study their career proÖles and construct a measure of wealth for each individual that takes into account all earnings accumulated from the age of 24 (including zero income years when they start their career after 24). The stochastic dominance analysis shows that wealth distributions do not differ significantly between male GPs and executives but that GP wealth distribution dominates executive wealth distribution at the first order for women. Hence, while there is no monetary advantage or disadvantage to be a GP for men, it is more profitable for women to be a self-employed GP than a salaried executive.
    Keywords: GPs; executive; self-employed; earning profile; longitudinal data; stochastic dominance;
    JEL: D31 J31 I11 C23
    Date: 2014–02
  6. By: Frieder Kropfhäußer; Marco Sunder
    Abstract: We estimate the relationship between changes in the body mass index (bmi) and wages or satisfaction, respectively, in a panel of German employees. In contrast to previous literature, the dynamic models indicate that there is an inverse u-shaped association between bmi and wages among young workers. Among young male workers, work satisfaction is affected beyond the effect on earnings. Our finding of an implied optimum bmi in the overweight range could indicate that the recent rise in weight does not yet constitute a major limitation to productivity.
    Keywords: Obesity, earnings, System-GMM estimator, dynamic panel model, SOEP
    JEL: J24 J28 J31 J71
    Date: 2014
  7. By: Ruud Koning (Department of Economics and Econometrics, University of Groningen); Victor Matheson (Department of Economics and Accounting, College of the Holy Cross); Anil Nathan (Department of Economics and Accounting, College of the Holy Cross); James Pantano (Department of Economics and Accounting, College of the Holy Cross)
    Abstract: The National Football League (NFL) has recently received significant negative media attention surrounding the safety of its players, revolving largely around the long term health risks of playing the sport. Recent premature deaths and instances of suicide associated with chronic traumatic encephalopathy and other football related injuries have brought the sport under increased scrutiny. By comparing mortality rates of the general population to mortality rates of players from the 1970 and 1994 NFL seasons, we test whether or not participation in football is significantly harmful to the longevity of the players. We conclude that, in total, players in the NFL have lower mortality rates than the general population. However, there is evidence that line players have higher mortality rates than other players and that those who played more games have higher mortality rates than those who played fewer games.
    Keywords: National Football League, premature deaths, survivability, injuries
    JEL: L83 I10 I19
  8. By: Erixson, Oscar (Research Institute of Industrial Economics (IFN))
    Abstract: This essay contributes in two ways to the literature on the effects of economic circumstances on health. First, it deals with reverse causality and omitted variable bias by exploiting exogenous variation in inherited wealth generated by the unexpected repeal of the Swedish inheritance tax. Second, it analyzes responses in health outcomes from administrative registers. The results show that increased wealth has limited impacts on objective adult health over a period of six years. This is in line with what has been documented previously regarding subjective health outcomes. If anything, it appears as if the wealth shock resulting from the tax reform leads people to seek care for symptoms of disease, which result in that cancer is detected and possibly treated earlier. One possible explanation for this preventive response is that good health is needed for enjoying the improved consumption prospects generated by the wealth shock.
    Keywords: Inheritances; Tax reform; Wealth shock; Objective health
    JEL: D10 H30 I10 I12 I14
    Date: 2014–02–28
  9. By: Llopis,Oscar; D’Este,Pablo
    Abstract: In this study, we analyze the determinants of biomedical scientists’ participation in various types of activities and outputs related to medical innovation. More specifically, we argue that scientists occupying brokerage positions among their contacts will in a more favorable position to deliver medical innovation outcomes, compared to scientists embedded in more dense networks. However, we also theorize that beyond a threshold, the coordination costs of brokerage may surpass its potential benefits. In addition to that, we study the influence of two individual-level attributes as potential determinants of the participation in medical innovation activities: cognitive breadth and perceived beneficiary impact. We situate our analysis within the context of the Spanish biomedical research framework, where we analyze a sample of 1,309 biomedical scientists.
    Keywords: Social Capital, Ego-Network Brokerage, Medical innovation, Translational Research, Perceived Beneficiary Impact, Cognitive Breadth
    JEL: D85 Z13 O31
    Date: 2014–03–05
  10. By: Jan Häußler (Department of Economics, University of Konstanz, Germany)
    Abstract: The study analyses the combined influence of obesity and lifestyle behaviors on health care utilization and health care costs. Therefore I analyze the interaction of obesity, nutrition and physical activity based on a community level dataset from a German city. In addition to the expected convex effects of age and chronic diseases for utilization, the results indicate that BMI and physical inactivity have an independent influence on G.P. visits as well as for hospitalization. The key finding of the cost analysis is that health care costs increase in consequence of a completely sedentary lifestyle by 505 € independent of the individual’s BMI level. The results also confirm that compared to individuals of normal weight, the medical costs of the group of overweight people (by 377 €) and the group of obese people (by 565 €) are significantly increased. Even without significant weight reductions public programs against a sedentary lifestyle can be a way to reduce health care spending, and thus a sole focus on weight reduction might underestimate the additional benefits of changes in lifestyle behaviors.
    Keywords: Health Care Costs, Costs of obesity, Physical Activity
    JEL: I12 H51
    Date: 2014–03–06
  11. By: Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Yin-Fang Yen (School of Public Administration, Southwestern University in Finance and Economics, China)
    Abstract: This paper studies the effect of hospital ownership on treatment rates allowing for spatial correlation among hospitals. Competition among hospitals and knowledge spillovers generate significant externalities which we try to capture using the spatial Durbin model. Using a panel of 2342 hospitals in the 48 continental states observed over the period 2005 to 2008, we find significant spatial correlation of medical service treatment rates among hospitals. We also get mixed results on the effect of hospital ownership on treatment rates that depends upon the market structure where the hospital is located and which varies by treatment type.
    Keywords: Spatial Lag, Hospital Ownership, Spillover Effects, Panel Data
    JEL: I10 C21
    Date: 2014–01
  12. By: George L. Wehby
    Abstract: Little is known about whether breastfeeding may prevent disabilities throughout childhood. We evaluate the effects of breastfeeding on child disability using data from the National Survey of Family Growth merged to the National Health Interview Survey for a large nationally representative sample of children aged 1 to 18 years from the U.S. including over 3,000 siblings who are discordant on breastfeeding status/duration. We focus on a mother fixed effect model that compares siblings in order to account for family-level unobservable confounders and employ multiple specifications including a dynamic model that accounts for disability status of the prior child. Breastfeeding the child for a longer duration is associated with a lower risk of child disability, by about 0.2 percentage-points per month of breastfeeding. This effect is only observed on the intensive margin among breastfed children, as any breastfeeding has no effect on the extensive margin. We conclude that very short breastfeeding durations are unlikely to have an effect on reducing disability risk.
    JEL: I12 J13 J24
    Date: 2014–02
  13. By: Robert Kaestner; Cuiping Long; G. Caleb Alexander
    Abstract: We examine whether obtaining prescription drug insurance through the Medicare Part D program affected hospital admissions, expenditures associated with those admissions, and mortality. We use a large, geographically diverse sample of Medicare beneficiaries and exploit the natural experiment of Medicare Part D to obtain estimates of the effect of prescription drug insurance on hospitalizations and mortality. Results indicate that obtaining prescription drug insurance through Medicare Part D was associated with an 8% decrease in the number of hospital admissions, a 7% decrease in Medicare expenditures, and a 12% decrease in total resource use. Gaining prescription drug insurance through Medicare Part D was not significantly associated with mortality.
    JEL: I12 I13 I18
    Date: 2014–02
  14. By: Silvia Helena Barcellos; Mireille Jacobson
    Abstract: We estimate the current impact of Medicare on medical expenditure risk and financial strain. At age 65, out-of-pocket expenditures drop by 33% at the mean and 53% among the top 5% of spenders. The fraction of the population with out- of-pocket medical expenditures above income drops by more than half. Medical- related financial strain, such as problems paying bills, is dramatically reduced. Using a stylized expected utility framework, the gain from reducing out-of-pocket expenditures alone accounts for 18% of the social costs of financing Medicare. This calculation ignores the benefits of reduced financial strain and direct health improvements due to Medicare.
    JEL: I13
    Date: 2014–03
  15. By: Jason Abaluck; Leila Agha; Christopher Kabrhel; Ali Raja; Arjun Venkatesh
    Abstract: We develop a model of the efficiency of medical testing based on the frequency of negative CT scans for pulmonary embolism. The model is estimated using a 20% sample of Medicare claims from 2000-2009. We document enormous heterogeneity in testing conditional on patient population. Less experienced physicians and those practicing in high spending areas test more low-risk patients. Assessing the efficiency of current practices requires calibration assumptions regarding the costs of testing, the benefits of treatment and the likelihood of false positives. While we cannot tell whether any particular testing decision was mistaken in the context of our model, we find that collectively–given these additional calibration assumptions–there are systematic differences between doctor testing practices and the recommendations of our model of optimal testing. According to our model, 90-99% of doctors test even when costs exceed expected benefits; optimal testing thresholds would increase social welfare by 20-35%. Shifting doctor practice to weight risk factors differently could increase net welfare in our model by 275%.
    JEL: I0 I12
    Date: 2014–03
  16. By: Marton, James; Yelowitz, Aaron; Talbert, Jeffrey
    Abstract: Evaluating Accountable Care Organizations is difficult because there is a great deal of heterogeneity in terms of their reimbursement incentives and other programmatic features. We examine how variation in reimbursement incentives and administration among two Medicaid managed care plans impacts utilization and spending. We use a quasi-experimental approach exploiting the timing and county-specific implementation of Medicaid managed care mandates in two contiguous regions of Kentucky. We find large differences in the relative success of each plan in reducing utilization and spending that are likely driven by important differences in plan design. The plan that capitated primary care physicians and contracted out many administrative responsibilities to an experienced managed care organization achieved significant reductions in outpatient and professional utilization. The plan that opted for a fee-for-service reimbursement scheme with a group withhold and handled administration internally saw a much more modest reduction in outpatient utilization and an increase in professional utilization.
    Keywords: Medicaid; Managed Care; Child Health
    JEL: I18 I38 J13
    Date: 2014
  17. By: Søren Rud Kristensen; Luigi Siciliani; Matt Sutton
    Abstract: The increased availability of process measures implies that quality of care is in some areas de facto verifiable. Optimal price-setting for verifiable quality is well-described in the incentive-design literature. We seek to narrow the large gap between actual price-setting behaviour in Pay-For-Performance schemes and the incentive literature. We present a model for setting prices for process measures of quality and show that optimal prices should reflect the marginal benefit of health gains, providers’ altruism and the opportunity cost of public funds. We derive optimal prices for processes incentivised in the Best Practice Tariffs for emergency stroke care in the English National Health Service. Based on published estimates, we compare these to the prices set by the English Department of Health. We find that actual tariffs were lower than optimal, relied on an implausibly high level of altruism, or implied a lower social value of health gains than previously used.
    Keywords: Pay For Performance; provider behaviour; optimal price-setting
    JEL: D82 I11 I18 L51
    Date: 2014–02

This nep-hea issue is ©2014 by Yong Yin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.