nep-hea New Economics Papers
on Health Economics
Issue of 2017‒10‒15
nineteen papers chosen by
Yong Yin
SUNY at Buffalo

  1. Different Strokes for Different Folks: Experimental Evidence on the Effectiveness of Input and Output Incentive Contracts for Health Care Providers with Different Levels of Skills By Manoj Mohanan; Grant Miller; Katherine Donato; Yulya Truskinovsky; Marcos Vera-Hernández
  2. Dementia, Help with Financial Management, and Well-Being By Anek Belbase; Geoffrey T. Sanzenbacher
  3. How Much Does Out-of-Pocket Medical Spending Eat Away at Retirement Income? By Melissa McInerney; Matthew S. Rutledge; Sara Ellen King
  4. Age-Profile Estimates of the Relationship Between Economic Growth and Child Health By Joseph Cummins; Anaka Aiyar
  5. The Effect of Indian Residential Schools on Height and Body Mass Post-1930 By Donna Feir & M. Chris Auld
  6. The healthy immigrant paradox and health convergence By Constant, Amelie
  7. The effect of private health insurance on self-assessed health status and health satisfaction in Germany By Petilliot, René
  8. Paralyzed by Panic: Measuring the Effect of School Closures during the 1916 Polio Pandemic on Educational Attainment By Keith Meyers; Melissa A. Thomasson
  9. Selection in Health Insurance Markets and Its Policy Remedies By Michael Geruso; Timothy Layton
  10. Does Multispecialty Practice Enhance Physician Market Power? By Laurence C. Baker; M. Kate Bundorf; Daniel P. Kessler
  11. Should Flavors be Banned in E-cigarettes? Evidence on Adult Smokers and Recent Quitters from a Discrete Choice Experiment By John Buckell; Joachim Marti; Jody L. Sindelar
  12. Healthy Business? Managerial Education and Management in Healthcare By Nicholas Bloom; Renata Lemos; Raffaella Sadun; John Van Reenen
  13. Health and Health Inequality during the Great Recession: Evidence from the PSID By Chenggang Wang; Huixia Wang; Timothy J. Halliday
  14. I Can't Sleep! Relative Concerns and Sleep Behavior By Akay, Alpaslan; Martinsson, Peter; Ralsmark, Hilda
  15. The increasing longevity gap by lifetime earnings and its distributional implications By Kemptner, Daniel; Haan, Peter; Lüthen, Holger
  16. ICT-Enabled Social Innovation for Active and Healthy Ageing: Redesigning long-term care and independent living in Europe By Maria Cesira Urzi Brancati; Csaba Kucsera; Gianluca Misuraca
  17. Understanding effective approaches to promoting mental health and preventing mental illness By David McDaid; Emily Hewlett; A-La Park
  18. Preference updating in public health risk valuation By Mehmet Kutluay; Roy Brouwer; Richard S. J. Tol
  19. Sources of health financing and health outcomes: A panel data analysis By Fujii, Tomoki

  1. By: Manoj Mohanan (Duke University); Grant Miller (Stanford University & NBER); Katherine Donato (Harvard University); Yulya Truskinovsky (Harvard T.H. Chan School of Public Health); Marcos Vera-Hernández (University College London & IFS)
    Abstract: A central issue in designing performance incentive contracts is whether to reward the production of outputs versus use of inputs: the former rewards efficiency and innovation in production, while the latter imposes less risk on agents. Agents with varying levels of skill may perform better under different contractual bases as well—more skilled workers may be better able to innovate, for example. We study these issues empirically through an experiment enabling us to observe and verify outputs (health outcomes) and inputs (guideline adherence) in Indian maternity care. We find that both output and input incentive contracts achieved comparable reductions in post-partum hemorrhage (PPH) rates, the dimension of maternity care most sensitive to provider behavior and the largest cause of maternal mortality. Interestingly, and in line with the theory, providers with advanced qualifications performed better and used new health delivery strategies under output incentives, while providers with and without advanced qualifications performed equally under input incentives.
    JEL: D86 J41 O15
  2. By: Anek Belbase; Geoffrey T. Sanzenbacher
    Abstract: Earlier research indicated that the vast majority of retirees with dementia do not use the U.S. Social Security Administration’s Representative Payee Program, despite the fact that many have lost the capacity to manage their own finances. However, that research also indicated that most retirees with dementia do have access to informal caregivers who could assist them (e.g., a resident adult child or non-impaired spouse), but the research did not examine whether those individuals provided assistance specifically with financial management. This paper uses the National Health and Aging Trends Study to determine whether beneficiaries with dementia receive help from their informal caregivers in managing their finances. The paper also examines the financial well-being of those with assistance compared to those without assistance.
    Date: 2017–09
  3. By: Melissa McInerney; Matthew S. Rutledge; Sara Ellen King
    Abstract: The adequacy of retirement income – from Social Security benefits and other sources – is substantially reduced by Medicare’s high out-of-pocket (OOP) costs. This project uses the 2002-2014 Health and Retirement Study to calculate post-OOP benefit ratios, defined as the share of either Social Security benefits or total income available for non-medical spending. The project decomposes the share of income that is going toward premium payments and services delivered and examines how these post-OOP benefit ratios differ by age, gender, income, supplemental insurance coverage, and health status. The project also updates previous studies’ estimates to document how OOP spending and the post-OOP income ratios changed following the introduction of Medicare Part D prescription drug coverage in 2006 and the closing of the “donut hole” coverage gap in 2010, which decreased OOP costs under Part D for those spending moderate amounts on prescriptions.
    Date: 2017–10
  4. By: Joseph Cummins (Department of Economics, University of California Riverside); Anaka Aiyar (Cornell University)
    Abstract: For the last several years, there has been a debate in the academic literature regarding the association between economic growth and child health in under-developed countries, with many arguing the association is strong and robust and several new papers arguing the association is weak or nonexistent. Focusing on child growth faltering as a process that unfolds over the first several years of life, we provide new evidence tracing out the relationship between macroeconomic trends and the trajectory of child growth through age 5. Using two novel regression models that each harness different kinds of within- and between-country variation, and data on over 600,000 children from 38 countries over more than 20 years, our estimates of the association are relatively small but precise, and are consistent across both estimators. We estimate that a 10% increase in GDP around the time of a child's birth is associated with a decrease in the rate of loss of HAZ of about 0.002 SD per month over the first two years of life, which generates a cumulative effect of around 0.04 SD by age 3 that then persists through age 5. Our estimates are small compared to most previously published statistically significant estimates, more precisely estimated than previous insignificant estimates, and relate to a broader population of children than previous estimates focused on dichotomous outcomes.
    Keywords: anthropometrics; child health; economic growth
    JEL: I15 J13 O15
    Date: 2017–10
  5. By: Donna Feir & M. Chris Auld (Department of Economics, University of Victoria)
    Abstract: We study the effects of Canadian Indian residential schooling on two anthropometric measures of health during childhood: adult height and body weight. We use repeated cross-sectional data from the 1991 and 2001 Aboriginal Peoples Surveys and detailed historical data on school closures and location to identify the effect of residential schooling on these outcomes. We find some evidence that on average residential schooling increases adult height and decreases adult body weight of those that attended. However, these effects are concentrated after the 1950s when the schools were subject to tighter health regulations and students were selected to attend residential school based partly on their need for medical care that was otherwise unavailable. Residential schooling is only one policy in Canada that impacted Status Indian peoples’ health, so our results must be understood in the broader social context. We also document significant increases in height and body weight for Status Indian people born after the 1960s which is suggestive of non-trivial changes in diet and living conditions during this time period.
    Keywords: Indigenous peoples, residential schools, health, stature, weight, identity, schooling
    JEL: I12 I14 I15 I18 N32
    Date: 2017–10–11
  6. By: Constant, Amelie (Princeton University, GLO, UNU-MERIT, and CESifo)
    Abstract: The health status of people is a precious commodity and central to economic, socio-political, and environmental dimensions of any country. Yet it is often the missing statistic in all general statistics, demographics, and presentations about the portrait of immigrants and natives. In this paper we are concerned with international migration and health outcomes in the host countries. Through a general literature review and examination of specific immigration countries, we provide insights into the Healthy Immigrant Paradox and the health assimilation of immigrants as we also elucidate selection and measurement challenges. While health is part of human capital, health assimilation is the mirror image of earnings assimilation. Namely, immigrants arrive with better health compared to natives and their health deteriorates with longer residence in the host country, converging to the health of natives or becoming even worse. A deeper understanding of immigrant health trajectories, and disparities with natives and other immigrants is of great value to societies and policymakers, who can design appropriate policy frameworks that address public health challenges, and prevent the health deterioration of immigrants.
    Keywords: Health status, Healthy Immigrant Paradox, International migration, Assimilation, Age-Cohort-Period effects, Selection, Aging
    JEL: I10 I12 I14 I18 F22 J11 J14 J15 J24 J61 O15
    Date: 2017–09–26
  7. By: Petilliot, René
    Abstract: In Germany, private health insurance covers more innovative and costly treatments than public insurance. Moreover, privately insured individuals are treated preferentially by doctors. In this article, I use subjective health data to examine whether these superior features of private insurance actually transfer into better health. I focus on German adolescents who are still in education to control for selection and account for differences in health-conscious behavior between publicly and privately insured individuals. I find that privately and publicly insured individuals do not differ in health, which contrasts with previous research. Hence, doctors appear to be the sole profiteers of the private insurance system and billions of euros could be saved by aligning private and public health insurance.
    Keywords: Health satisfaction,Self-assessed health status,Private health insurance,Public health insurance,Selection
    JEL: I11 I12 I13 I18 I31
    Date: 2017
  8. By: Keith Meyers; Melissa A. Thomasson
    Abstract: We leverage the 1916 polio pandemic in the United States as a natural experiment to test whether short-term school closures result in reduced educational attainment as an adult. With over 23,000 cases of polio diagnosed in 1916, officials implemented quarantines and closed schools. Since the pandemic occurred during the start of the 1916 school year, children of working age may have elected not to return to school. Using state-level polio morbidity as a proxy for schooling disruptions, we find that children ages 14-17 during the pandemic had less educational attainment in 1940 compared to their slightly older peers.
    JEL: I18 N22 N3
    Date: 2017–09
  9. By: Michael Geruso; Timothy Layton
    Abstract: In this essay, we review the theory and evidence concerning selection in competitive health insurance markets and discuss the common policy tools used to address the problems it creates. We begin by outlining some important but often misunderstood differences between two types of conceptual frameworks related to selection. The first, which we call the fixed contracts approach, takes insurance contract provisions as given and views selection as influencing only insurance prices in equilibrium. The second, the endogenous contracts approach, treats selection as also influencing the design of the contract itself, including the overall level of coverage and coverage for services that are differentially demanded by sicker consumers. After outlining the selection problems, we discuss four commonly employed policy instruments that affect the extent and impact of selection: 1) premium rating regulation, including community rating; 2) consumer subsidies or penalties to influence the take-up of insurance; 3) risk adjustment; and 4) contract regulation. We discuss these policies with reference to two markets that seem especially likely to be targets of reform in the short and medium term: Medicare Advantage and the individual insurance markets reformed by the Affordable Care Act of 2010.
    JEL: H22 H4 I1 I13 I18
    Date: 2017–09
  10. By: Laurence C. Baker; M. Kate Bundorf; Daniel P. Kessler
    Abstract: In markets for health services, vertical integration – common ownership of producers of complementary services – may have both pro- and anti-competitive effects. Despite this, no empirical research has examined the consequences of multispecialty physician practice – a common and increasing form of vertical integration – for physician prices. We use data on 40 million commercially insured individuals from the Health Care Cost Institute to construct indices of the price of a standard office visit to general-practice and specialist physicians for the years 2008-2012. We match this to measures of the characteristics of physician practices and physician markets based on Medicare Part B claims, aggregating physicians into practices based on their receipt of payments under a common Taxpayer Identification Number. Holding fixed the degree of competition in their own specialty, we find that generalist physicians charge higher prices when they are integrated with specialist physicians, and that the effect of integration is larger in uncompetitive specialist markets. We find the same thing in the reciprocal setting – specialist prices are higher when they are integrated with generalists, and the effect is stronger in uncompetitive generalist markets. Our results suggest that multispecialty practice has anticompetitive effects.
    JEL: I11
    Date: 2017–09
  11. By: John Buckell; Joachim Marti; Jody L. Sindelar
    Abstract: E-cigarettes are available in over 7,000 flavors, whereas all flavors but menthol are banned in combustible cigarettes. The FDA recently requested a ban on e-cigarette flavors, but was rejected. The FDA is again considering this ban and also a ban on menthol in combustible cigarettes, but there is little information on the impacts of alternative bans on the market for combustible and e-cigarettes. Our study provides these much-needed estimates. We conduct a discrete choice experiment on a nationally representative sample of 2,031 adult smokers and recent quitters that we collected. We estimate preferences for flavors and other attributes and use these preferences to predict the demand for each cigarette type and for “none of these.” We then predict the impact of alternative bans and compare results for the current treatment of flavors to results for the alternative bans. We find that the recently denied FDA ban would result in increased choice of combustible cigarettes, the most harmful alternative. However, a ban on menthol in combustibles would result in the greatest reduction in smoking of combustibles. Our results are timely and policy-relevant, suggesting which flavor bans are likely to be most effective in protecting public health.
    JEL: C35 I12 I18
    Date: 2017–09
  12. By: Nicholas Bloom; Renata Lemos; Raffaella Sadun; John Van Reenen
    Abstract: We investigate the link between hospital performance and managerial education by collecting a large database of management practices and skills in hospitals across nine countries. We find that hospitals that are closer to universities offering both medical education and business education have higher management quality, more MBA trained managers and lower mortality rates. This is true compared to the distance to universities that offer only business or medical education (or neither). We argue that supplying joint MBA-healthcare courses may be a channel through which universities increase medical business skills and raise clinical performance.
    JEL: I18 L32 M20 M5
    Date: 2017–09
  13. By: Chenggang Wang (Department of Economics, University of Hawaii); Huixia Wang (Hunan University, School of Economics and Trade); Timothy J. Halliday (University of Hawaii at Manoa, Department of Economics, University of Hawaii Economic Research Organization, IZA)
    Abstract: We estimate the impact of the Great Recession of 2007-2009 on health outcomes in the United States. We show that a one percentage point increase in the unemployment rate resulted in a 7.8-8.8 percent increase in reports of poor health. In addition, mental health was adversely impacted. These effects were concentrated among those with strong labor force attachments. Whites, the less educated, and women were the most impacted demographic groups.
    Keywords: Great Recession, Health Behaviors, Health Outcomes, Inequality
    JEL: I0 I12 I14
    Date: 2017–10
  14. By: Akay, Alpaslan (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Ralsmark, Hilda (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We investigate the effect of relative concerns with respect to income on the quantity and quality of sleep using a long panel dataset on the sleep behavior of people in Germany. We find that relative income has a substantial negative effect on number of hours of sleep on weekdays and overall satisfaction with sleep, i.e., sleep quality, whereas absolute income has no particular effect on sleep behavior. The findings are robust to several specification checks, including measures of relative concerns, reference group, income inequality, and local price differences. The paper also investigates the importance of the potential channels including working hours, time-use activities, and physical and mental health to explain how relative concerns relate to sleep behavior. The results reveal that while all of these channels partially contribute to the effect, it appears to be mainly driven by physical and mental health and overall and financial well-being/stress. We also use a subjective well-being valuation approach to calculate the monetary value of sleep lost due to income comparisons. The total cost is as high as about 2.6 billion euro/year (1.8% of the overall monetary value of sleep and 1.3% of total health expenditures) among the working-age population in Germany.
    Keywords: Relative Income; Sleeping Satisfaction; Hours of Sleep
    JEL: C35 C90 D60
    Date: 2017–10
  15. By: Kemptner, Daniel; Haan, Peter; Lüthen, Holger
    Abstract: We use social security records to document heterogeneity in life expectancy by lifetime earnings and we analyze how this longevity gap has evolved over cohorts. We provide evidence that the earnings-related longevity gap is increasing over cohorts in West Germany. Further, we propose a decomposition to disentangle the role of increasing earnings inequality over cohorts and the effect of changes in the earnings gradient. Finally, we study the distributional implications for the pension system.
    JEL: H55 I14 J11
    Date: 2017
  16. By: Maria Cesira Urzi Brancati (European Commission - JRC); Csaba Kucsera (National University of Public Service, Hungary); Gianluca Misuraca (European Commission - JRC)
    Abstract: This issue of JRC Insights presents results from the analysis of initiatives and case studies on ICT-enabled social innovations promoting social investment in the field of Active and Healthy Ageing (AHA) conducted as part of the JRC-led IESI research, in collaboration with DG Employment, Social Affairs and Inclusion. It highlights how over 70% of the initiatives in the field of AHA promote social investment by supporting the modernisation of social protection systems as well as by supporting investment in people throughout their lives. It also reveals that AHA initiatives are frequently characterised by radical innovation potential and higher integration at the service level, often combining funding, administrative and service delivery systems. Finally, the article illustrates how ICTs drive the organizational transformation of service delivery, by reducing overlaps and strengthening integration among service providers. In addition, they increase efficiency and reduce costs by improve targeting and personalisation of services.
    Keywords: active and healthy ageing, long-term care, social care, ICT-enabled social innovation
    JEL: I10 L31 L32
    Date: 2017–09
  17. By: David McDaid (London School of Economics); Emily Hewlett (OECD); A-La Park (London School of Economics)
    Abstract: The health, social and economic consequences of poor mental health are substantial. More attention is focusing now on the development of actions to promote better mental health and wellbeing and prevent mental ill-health. This paper provides an overview of the development of approaches to promoting mental wellbeing and preventing mental ill-health in OECD countries, together with an assessment of what is known on their effectiveness and cost effectiveness. The paper finds that there is a sound and quite extensive evidence base for effective and cost effective actions which can promote mental wellbeing and prevent mental ill-health. However, the existence of actions and programmes in mental health promotion and prevention is uneven both between countries, and across different points of the life course. Many countries could stand to scale-up their promotion and prevention efforts in the mental health field, and further efforts are particularly needed to introduce interventions targeted at unemployed and older populations.
    JEL: I10 I12
    Date: 2017–10–10
  18. By: Mehmet Kutluay (Institute for Environmental Studies, Vrije Universiteit, Amsterdam; Tinbergen Institute, Amsterdam/Rotterdam); Roy Brouwer (Department of Economics and The Water Institute, University of Waterloo, Canada; Institute for Environmental Studies, Vrije Universiteit, Amsterdam); Richard S. J. Tol (Institution Department of Economics, University of Sussex; Institute for Environmental Studies, Vrije Universiteit, Amsterdam; Department of Spatial Economics, Vrije Universiteit, Amsterdam; Tinbergen Institute, Amsterdam; CESifo, Munich)
    Abstract: Willingness to pay (WTP) for malaria pills, in light of new risk information and probability weighting, is estimated via a discrete choice experiment (CE). A lottery played prior to the CE yields individual-level probability weighting parameters through Bayesian inference. Over-reaction to new malaria risk information is found as marginal WTP for malaria protection increases by 20-33%. The probability weighting parameter helps to explain the observed variation in malaria valuation, while over or under-weighting of probabilities is found to be correlated with malaria knowledge and experience. This is independent of whether or not the information treatment is received. Over-reaction to new information uncovers potential biases, possibly from simply reminding people about being sick, in placing a monetary value on avoiding uncertain public health risks.
    Keywords: probability weighting, malaria, valuation, information shock, Bayesian inference
    JEL: D83 D90 I12 I18
    Date: 2017–10
  19. By: Fujii, Tomoki (School of Economics, Singapore Management University)
    Abstract: We study the differential impacts of public and private sources of health spending on health outcomes using a triple difference approach. We find that private health spending has on average a higher health-promoting effect than public health spending. This result is robust with respect to the choice of outcome measure and covariates in the regression and driven primarily by the countries with ineffective governments. Once we restrict our sample to countries with effective governments, private health spending is no better than public health spending for improving the health outcome.
    Keywords: Child mortality rate; Life expectancy at birth; Health spending; Government effectiveness; Triple difference
    JEL: I10 I15 I18
    Date: 2017–09–20

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