nep-hea New Economics Papers
on Health Economics
Issue of 2015‒12‒01
eighteen papers chosen by
Yong Yin
SUNY at Buffalo

  1. Information Frictions and Adverse Selection: Policy Interventions in Health Insurance Markets By Benjamin R. Handel; Jonathan T. Kolstad; Johannes Spinnewijn
  2. The Welfare Cost Of Antimicrobial Resistance - Tuberculosis As An Illustrative Example By Hickson, Kerry
  3. The first stages of the mortality transition in England:a perspective from evolutionary biology By Romola J. Davenport
  4. ON PLAGUE IN A TIME OF EBOLA By Grada, Cormac O
  5. Community rating in health insurance: trade-off between coverage and selection By Bijlsma, Michiel; Boone, Jan; Zwart, Gijsbert
  6. Population, Migration, Ageing and Health: A Survey By Christian Dustmann; Giovanni Facchini; Cora Signorotto
  7. The Economic Burden of Out-of-Pocket Medical Expenditures Before and After Implementation of the Medicare Prescription Drug Program By Ayse Akincigil; Karen Zurlo
  8. The Affordable Care Act, Medicare Costs, and Retirement Security By Alicia H. Munnell; Anqi Chen
  9. Cost-effectiveness of the mental health and development model for schizophrenia-spectrum and bipolar disorders in rural Kenya By Victoria de Menil; Martin Knapp; David McDaid; Shoba Raja; Joyce Kingori; Milka Waruguru; Sarah Kippen Wood; Saju Mannarath; Crick Lund
  10. Birth weight and long-term outcomes in a developing country By Baguet, Marie; Dumas, Christelle
  11. Does Activating Sick-Listed Workers Work? Evidence from a Randomized Experiment By Kai Rehwald; Michael Rosholm; Bénédicte Rouland
  12. The reform of ISEE and its impact on the health and social care for non self-sufficient patients in Tuscany By Letizia Ravagli
  13. International Comparison Of South African Private Hospitals Price Levels By Luca Lorenzoni; Tomas Roubal
  14. The Labour Market Impacts of Obesity, Smoking, Alcohol Use and Related Chronic Diseases By Marion Devaux; Franco Sassi
  15. Effects of Government Education and Health Expenditures on Economic Growth: A Meta-analysis By Awaworyi, Sefa; Yew, Siew Ling; Ugur, Mehmet
  16. On the inverse relationship between ex-ante and ex-post moral hazard: the case of smokers By Guido Citoni
  17. On equity in health and health care consumption: the role of moral hazard By Guido Citoni
  18. Tobacco and alcohol excise taxes for improving public health and revenue outcomes : marrying sin and virtue ? By Bird,Richard M.

  1. By: Benjamin R. Handel; Jonathan T. Kolstad; Johannes Spinnewijn
    Keywords: Information frictions, adverse selection, policy interventions
    JEL: D80 I13
    Date: 2015–11
  2. By: Hickson, Kerry (CAGE)
    Abstract: The recent increase in antimicrobial resistance has received concern from the government and media. The twentieth century history of tuberculosis in England and Wales presented here shows that some of the more extreme apocalyptic scenarios are unlikely. The paper shows that preventive medicine can play a major role; that the threat should reduce the use of antimicrobials; and the scope for government to intervene with sound public health policies. The paper also estimates the value of twentieth century health gains associated with eliminating tuberculosis in England and Wales to be worth at least $127 billion, which provides a warning about the potential gains that could be lost without initiatives to prevent antimicrobial resistance.
    Keywords: Antimicrobial resistance, tuberculosis, twentieth century, England and Wales, mortality, morbidity JEL Classification: I11, I18, J17
    Date: 2015
  3. By: Romola J. Davenport
    Abstract: This paper examines the origins of the Mortality Revolution from an evolutionary point of view, in terms of the trade-offs between virulence and disease transmission. For diseases that are transmitted person-to-person and cannot persist outside a host then there is evidence of strong selective pressure against high host lethality. However for pathogens which don’t depend on their human host for transmission or can persist outside a human host (including plague, typhus, smallpox and malaria) then the conflict between virulence and dispersal is reduced. Importantly, the properties that permitted these diseases to be so lethal also made it easier for relatively weak interventions to break the chain of disease transmission. The early control of these major diseases was associated with large reductions in mortality, but also shifted the distribution of causes of death towards the less virulent diseases of the extremes of age and of poverty.
    Keywords: demographic transition, mortality transition, evolutionary biology, smallpox, vaccination. JEL Classification: I14; I15; I18; N33; N93
    Date: 2015
  4. By: Grada, Cormac O (University College Dublin)
    Abstract: Ebola and plague share several characteristics, even though the second and third plague epidemics dwarfed the 2014-15 Ebola outbreak in terms of mortality. This essay reviews the mortality due to the two diseases and their lethality; the spatial and socioeconomic dimensions of plague mortality; the role of public action in containing the two diseases; and their economic impact.
    Keywords: plague, mortality, health, economic history JEL Classification: I1, N
    Date: 2015
  5. By: Bijlsma, Michiel; Boone, Jan; Zwart, Gijsbert
    Abstract: We analyze the role of community rating in the optimal design of a risk adjustment scheme in competitive health insurance markets when insurers have better information on their customers' risk profiles than the sponsor of health insurance. The sponsor offers insurers a menu of risk adjustment schemes to elicit this information. The optimal scheme includes a voluntary reinsurance option. Additionally, the scheme should sometimes be complemented by a community rating requirement. The resulting inefficient coverage of low-cost types lowers the sponsor's cost of separating different insurer types. This allows the sponsor to redistribute more rents from low-cost to high-cost consumers.
    Keywords: cherry picking; health insurance; mechanism design; risk adjustment
    JEL: D02 I13
    Date: 2015–11
  6. By: Christian Dustmann (University College London); Giovanni Facchini (University of Nottingham); Cora Signorotto (University of Milan)
    Abstract: We review the literature on recent demographic changes in Europe, focusing on two of the main challenges brought about by an ageing population: severe labor shortages in many sectors of the economy and growing pressures on both health and welfare systems. We discuss how and to what extent migration can contribute to address these challenges both from a short and a long term perspective. Finally, we identify several areas in which more research is needed to help devising more effective policies to cope with a greying society.
    Date: 2015–11
  7. By: Ayse Akincigil; Karen Zurlo
    Abstract: Older Americans, although covered by Medicare, bear a large economic burden of medical expenses in the form of premiums for Medicare and supplemental plans, as well as the cost of uncovered or under-covered medical services. This study compares the patterns of this economic burden in 2010 with the baseline year of 2005. The period covered was marked by economic shocks, health care technology innovations and major Medicare reforms, including implementation of the prescription drug (Part D) program and changes in premium rules. Consequently, we present a description of the economic burden and do not attempt to make causal inferences. The definition of expenditures is limited to three components of out-of-pocket (OOP) medical spending: premiums, prescription drugs costs, and health services. While this definition is a limitation of the study, it also allows the researchers to focus on the costs most likely to be affected by improved access to prescription drugs and premium reforms.
    Date: 2015–11
  8. By: Alicia H. Munnell; Anqi Chen
    Abstract: Rising Medicare costs have been a major contributor to projected long-run budget deficits, and rising out-of-pocket costs have become an increasing challenge to individuals’ retirement security. The 2010 Patient Protection and Affordable Care Act (ACA) made substantial changes to Medicare, designed both to im­prove the program’s finances and to reduce the out-of-pocket costs faced by retirees. However, the Office of the Actuary (OACT) at the Centers for Medicare & Medicaid Services (CMS) warns that the assumed impact of the ACA may be overly optimistic and that realized savings may be far more muted. As a result, since 2010, OACT each year has released a set of alter­native projections to illustrate Medicare expenditures if current-law payment reductions are not sustained. This brief compares the baseline projections in the an­nual Medicare Trustees Report with OACT’s alternative projections. The discussion proceeds as follows. The first section discusses the ACA changes and the projected decline in Medicare expenditures. The second section examines how the reductions in expenditures trans­late into lower out-of-pocket spending for beneficia­ries. The third section outlines the key differences in assumptions between the Medicare Trustees Report and OACT’s alternative projections. The fourth sec­tion examines how the two sets of projections have changed over time. The conclusion is that they have been converging, suggesting increasing agreement that the ACA will significantly reduce long-run Medi­care costs.
    Date: 2015–11
  9. By: Victoria de Menil; Martin Knapp; David McDaid; Shoba Raja; Joyce Kingori; Milka Waruguru; Sarah Kippen Wood; Saju Mannarath; Crick Lund
    Abstract: Background. The treatment gap for serious mental disorders across low-income countries is estimated to be 89%. The model for Mental Health and Development (MHD) offers community-based care for people with mental disorders in eleven low- and middle-income countries. Methods. In Kenya, using a pre-post design, 117 consecutively enrolled participants with schizophrenia-spectrum and bipolar disorders were followed-up at 10 and 20 months. Comparison outcomes were drawn from the literature. Costs were analysed from societal and health system perspectives. Results. From the societal perspective, MHD cost Int$ 594 per person in the first year and Int$ 876 over two years. The cost per healthy day gained was Int$ 7.96 in the first year and Int$ 1.03 over two years – less than the agricultural minimum wage. The cost per DALY averted over two years was Int$ 13.1 and Int$ 727 from the societal and health system perspectives, respectively – on par with antiretrovirals for HIV. Conclusions. MHD achieved increasing returns over time. The model appears cost-effective and equitable, especially over two-years. Its affordability relies on multi-sectoral participation nationally and internationally.
    Keywords: Africa; community mental health; economic outcomes; global mental health; severe mental disorders
    JEL: J1
    Date: 2015–05–21
  10. By: Baguet, Marie; Dumas, Christelle
    Abstract: This paper analyzes the empirical relationship between endowment at birth and long-term outcomes. Birth weight has been shown to influence outcomes later in life, suggesting that in-utero shocks have long lasting consequences. However, traditional measures of human capital at birth (i.e. birth weight) are potentially measured with error and endogenous. We deal with such issues thanks to the use of a long panel of children born in 1983 in Cebu (Philippines) and interviewed repeatedly until 2005. Our contribution is threefold. First, we build a refined health endowment measure netted out from prenatal investments. Our results show that the usual estimate of birth weight exceeds by 50\% the true causal effect of birth weight on later outcomes. Second, initial endowments affect trajectories both through the human capital production function and parental investment. The effect of birth endowment fades out over time but remains until adulthood. The fading out is very limited for health outcomes but more pronounced for educational outcomes. Finally, we find that parents tend to reinforce initial health endowments, but the effect of this behavior has almost no effect on final outcomes.
    Keywords: human capital investment; health; inequality; endowments; Philippines
    JEL: J13 J18 J24 O10
    Date: 2015–11–23
  11. By: Kai Rehwald (Aarhus University [Aarhus] - Aarhus University); Michael Rosholm (Aarhus University [Aarhus] - Aarhus University); Bénédicte Rouland (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes)
    Abstract: Using data from a large-scale randomized controlled trial conducted in Danish job centers, this paper investigates the effects of an intensification of mandatory return-to-work activities on the subsequent labor market outcomes for sick-listed workers. Using variations in local treatment strategies, both between job centers and between randomly assigned treatment and control groups within a given job center, we compare the relative effectiveness of alternative interventions. Our results show that the use of partial sick leave increases the length of time spent in regular employment and non-reliance on benefits, and also reduces the time spent in unemployment. Traditional active labor market programs and the use of paramedical care appear to have no effect at all, or even an adverse effect.
    Keywords: Long-term Sickness, Vocational Rehabilitation, Treatment Effects, Randomized Controlled Trial
    Date: 2015–11–13
  12. By: Letizia Ravagli (Istituto Regionale per la Programmazione Economica della Toscana)
    Abstract: The access to and cost sharing of many social services conform to the Equivalent Economic Situation Indicator (Indicatore della Situazione Economica Equivalente – ISEE). The Prime Ministerial Decree (DPCM) 159/2013 has profoundly changed the modalities for the computation of ISEE. The reform’s implementation process requires that the suppliers of public services adapt to the new discipline, by revising both the entry thresholds and the cost-sharing modalities. Because of this, it is absolutely necessary for the bodies involved in service provision and for those charged with the regulation of the access and cost-sharing modalities to get acquainted beforehand with the possible effects of reform. The cost-sharing system for social and health services for dependent people is heavily affected by reform. In fact, the DPCM 159/201 tackled consistently and broadly the issue of non self-sufficiency. This document presents a first evaluation of the impact that the ISEE reform might have on the health and social services for non self-sufficient people. The analysis was supported by the INPS database on the income tax return statements (Dichiarazioni Sostitutive Uniche – DSU) of Tuscan citizens for 2013 and on the sample survey of families “European Union Statistics on Income and Living Condition” (EU-SILC) conducted in 2011.
    Keywords: Equivalent Economic Situation Indicator (ISEE), non self-sufficiency
    Date: 2014
  13. By: Luca Lorenzoni; Tomas Roubal
    Abstract: The health system in South Africa is unique in many ways. South Africa spends 41.8% of total health expenditures on private voluntary health insurance – more than any OECD country – but only 17% of the population – mostly high income citizens - can afford to purchase private insurance. Given the magnitude of private health expenditures, the activities in the private health care market have an important impact on the functioning of the health care system as a whole. Medical schemes (private health insurance) in South Africa mainly finance care that is predominantly delivered by private providers (i.e., private hospitals, specialists, general practitioners, pharmacies). Therefore, these schemes primarily finance an alternative to seeking care in the public sector and offer services that duplicate those available in the public sector.<BR>Le système de santé sud-africain est unique à plusieurs égards. L'assurance maladie privée volontaire représente 41.8% des dépenses totales de santé sud-africaines - plus que tous les pays de l'OCDE - mais seul 17% de la population – surtout des citoyens à revenus élevés - peut souscrire à une assurance privée. Compte tenu de l'étendue des dépenses de santé privées, les activités du marché privé ont un impact important sur le fonctionnement du système de santé dans son ensemble. Les assurances maladie privées en Afrique du Sud financent principalement des soins fournis par des professionnels privés (hôpitaux privés, spécialistes, généralistes, pharmacies). Elles représentent par conséquent une alternative à la recherche de soins dans le secteur public et offrent les mêmes services que ce dernier.
    JEL: C43 D24 I13 M41
    Date: 2015–10–28
  14. By: Marion Devaux; Franco Sassi
    Abstract: This paper examines the labour market impacts of lifestyle risk factors and associated chronic diseases, in terms of employment opportunities, wages, productivity, sick leave, early retirement and receipt of disability benefits. It provides a review of the evidence of the labour market outcomes of key risk factors (obesity, smoking and hazardous drinking) and of a number of related chronic diseases, along with findings from new analyses conducted on data from a selection of OECD countries. Overall, the evidence suggests that chronic diseases and associated risk factors have potentially large detrimental labour market impacts, but with mixed findings in some areas. Obesity and smoking clearly impair employment prospects, wages and labour productivity. Cardiovascular diseases and diabetes have negative impacts on employment prospects and wages, and diabetes, cancer and arthritis lower labour productivity. Alcohol use, cancer, high blood pressure and arthritis have mixed effects on employment and wages, and are not always linked with increased sickness absence (e.g. cardiovascular diseases and high blood pressure). Finally, this paper stresses the importance of these findings for the economy at large, and supports the use of carefully designed chronic disease prevention strategies targeting people at higher risk of adverse labour market outcomes, which may lead to substantial gains in economic production through a healthier and more productive workforce.<BR>Ce document examine les impacts sur le marché du travail des facteurs de risque liés aux modes de vie et des maladies chroniques associées, en termes d'opportunités d'emploi, de salaire, de productivité, de congés maladie, de retraite anticipée et de prestations d'invalidité. Il fournit une revue de la littérature des impacts sur le marché du travail des principaux facteurs de risque (obésité, tabagisme et consommation à risque d’alcool) ainsi que d'un certain nombre de maladies chroniques associées, et présente également les résultats de nouvelles analyses empiriques pour une sélection de pays de l’OCDE. Ce travail a révélé que généralement, les maladies chroniques et les facteurs de risques associés ont des impacts néfastes sur le marché du travail potentiellement importants, mais avec des effets mixtes dans certains cas. L’obésité et le tabagisme nuisent clairement à la probabilité d'emploi, aux salaires et la productivité du travail. Les maladies cardiovasculaires et le diabète ont des impacts négatifs sur la probabilité d'emploi et les salaires, et le diabète, le cancer et l'arthrite réduisent la productivité au travail. La consommation à risque d'alcool, les cancers, l'hypertension artérielle et l’arthrite ont des effets mixtes sur l'emploi et les salaires, et ne sont pas toujours liés à une augmentation de l'absentéisme (par exemple, les maladies cardiovasculaires et l'hypertension artérielle). Enfin, ce document souligne l'importance de ces résultats pour l'Économie au sens large, et soutient la mise en place de stratégies de prévention des maladies chroniques, soigneusement conçues, ciblant les personnes les plus vulnérables sur le marché du travail, qui peuvent conduire à des gains importants de production économique grâce à une main-d'oeuvre en meilleure santé et plus productive.
    Date: 2015–11–26
  15. By: Awaworyi, Sefa; Yew, Siew Ling; Ugur, Mehmet
    Abstract: Using a sample of 306 estimates drawn from 31 primary studies, this paper conducts an empirical synthesis of the link between economic growth and government expenditure on education or health using meta-analysis. We also explain the heterogeneity in empirical results. We find that the effect of government education expenditure on growth is positive, whereas the growth effect of government health expenditure is negative. Our meta-regression analysis suggests that factors such as econometric specifications, publication characteristics as well as data characteristics explain the heterogeneity in the literature. We also find no evidence of publication selectivity.
    Keywords: Government education expenditure; government health expenditure; human capital; economic growth
    JEL: E6 E62 H5 H51 H52
    Date: 2015–04–11
  16. By: Guido Citoni
    Abstract: In the paper I start from the observation that smokers' use of services is less than expected and I suggest that this finding is coherent with an hypothesis: there is a psychological component, leading to increased/reduced consumption if the illness was not/was generated by ex-ante moral hazard.I illustrate the amount and significance of such psychological effect by estimating with Italian survey data, a consumption function for medical consultations and diagnostic screenings, in which smokers represent a group with high ex-ante moral hazard and low ex-post moral hazard, while former smokers have low ex-ante moral hazard and high ex-post moral hazard.The results confirm the theory, though in an asymmetric way: past smokers' consumption shows a strong and significant increase, while current smokers' reduction of use is lower and not always significant.
    Keywords: smokers; past-smokers; health care consumption; moral hazard
    Date: 2015–01–15
  17. By: Guido Citoni
    Abstract: In the paper I criticize the neglect by the theory of equality of opportunities of the issue of ex-post moral hazard. I discuss of the three components of ex-post moral hazard: the first is the usual overconsumption due to a low or zero price, the second is a psychological component, leading to increased consumption if the illness was not generated by ex-ante moral hazard, and the third is the wrong/excess consumption due to the desire of reducing the time cost of services use.I illustrate the bias implicit in the theory of equality of opportunities due to the omission of ex-post moral-hazard and I show that stigmatizing ex-ante moral-hazard without doing the same for ex-post moral hazard is unfair.
    Keywords: moral hazard; health care consumption; equality of opportunities
    Date: 2015–10–15
  18. By: Bird,Richard M.
    Abstract: Excise taxes on alcohol and tobacco have long been a dependable and significant revenue source in many countries. More recently, considerable attention has been paid to the way in which such taxes may also be used to attain public health objectives by reducing the consumption of products with adverse health and social impacts. Some have gone further and argued that explicitly earmarking excise taxes on alcohol and tobacco to finance public health expenditures?marrying sin and virtue as it were?will make increasing such taxes more politically acceptable and provide the funding needed to increase such expenditures, especially for the poor. The basic idea?tax ?bads? and do ?good? with the proceeds?is simple and appealing. But designing and implementing good ?sin? taxes is a surprisingly complex task. Earmarking revenues from such taxes for health expenditures may also sound good and be a useful selling point for new taxes. However, such earmarking raises difficult issues with respect to budgetary rigidity and political accountability. This note explores these and other issues that lurk beneath the surface of the attractive concept of using increased sin excises on alcohol and tobacco to finance ?virtuous? social spending on public health.
    Keywords: Public Sector Development,Health Monitoring&Evaluation,Economic Theory&Research,Debt Markets,Taxation&Subsidies
    Date: 2015–11–23

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