nep-hea New Economics Papers
on Health Economics
Issue of 2018‒01‒15
sixteen papers chosen by
Yong Yin
SUNY at Buffalo

  1. Cost Sharing in Insurance Coverage for Precision Medicine By Mark V. Pauly
  2. Maternal Depression, Women’s Empowerment, and Parental Investment: Evidence from a Large Randomized Control Trial By Baranov, Victoria; Bhalotra, Sonia R.; Biroli, Pietro; Maselko, Joanna
  3. Severe Air Pollution and School Absences: Longitudinal Data on Expatriates in North China By Liu, Haoming; Salvo, Alberto
  4. Estimating Fixed Effects: Perfect Prediction and Bias in Binary Response Panel Models, with an Application to the Hospital Readmissions Reduction Program By Kunz, Johannes S.; Staub, Kevin E.; Winkelmann, Rainer
  5. Premature deaths, accidental bequests and fairness By FLEURBAEY Marc; LEROUX Marie-Louise; PESTIEAU Pierre; PONTHIERE Gregory; ZUBER Stéphane
  6. Roads and the Spread of AIDS in Africa By Elodie Djemai
  7. Association between literacy and self-rated poor health in 33 high-and upper-middle-income countries By Sujay Kakarmath; Vanessa Denis; Marta Encinas-Martin; Francesca Borgonovi; S. V. Subramanian
  8. Mind the Gap: Revisiting the Concentration Index for Overweight By David (David Patrick) Madden
  9. The Impact of Tobacco-Free School Laws on Student and Staff Smoking Behavior By Bhatt, Rachana; Hinrichs, Peter
  10. Physician Practice Style and Healthcare Costs: Evidence from Emergency Departments By Gautam Gowrisankaran; Keith A. Joiner; Pierre-Thomas Léger
  11. Physical Disability and Labor Market Discrimination : Evidence from a Field Experiment By Charles Bellemare; Marion Goussé; Guy Lacroix; Steeve Marchand
  12. Long-Term Care Insurance: Knowledge Barriers, Risk Perception and Adverse Selection By Martin Boyer; Philippe De Donder; Claude-Denys Fluet; Marie-Louise Leroux; Pierre-Carl Michaud
  13. Schooling and adult health: Can education overcome bad early-life conditions? By Pedro Albarran Pérez; Marisa Hidalgo Hidalgo; Iñigo Iturbe-Ormaetxe Kortajarene
  14. Premature mortality and poverty measurement in an OLG economy By LEFEBVRE Mathieu; PESTIEAU Pierre; PONTHIERE Gregory
  15. Deaths of Despair or Drug Problems? By Christopher J. Ruhm
  16. Infectious Diseases, Human Capital and Economic Growth By Lin Liu; Aditya Goenka

  1. By: Mark V. Pauly
    Abstract: This paper describes current pattern of insurance coverage for precision medicines and, especially, companion diagnostics and explores what coverage would improve efficiency. We find that currently coverage is common for tests and treatments with clinical acceptance used at high volumes but is haphazard across both private insurers and Medicare for precision medicines in general. Analysis of the case of homogenous patient preferences finds that discovery and use of the test that converts an ordinary drug into a precision drug can either increase or decrease total spending, and might call for full or no coverage of test and treatments. Heterogeneity in marginal benefits from testing and treatment can call for partial coverage. Finally, varying threshold levels for diagnostic test results can lead to a demand curve to test and treatment that calls for partial cost sharing. Numerical examples and case studies of several test-treatment combinations illustrate these points.
    JEL: I11 I13 O32
    Date: 2017–12
  2. By: Baranov, Victoria (University of Melbourne); Bhalotra, Sonia R. (University of Essex); Biroli, Pietro (University of Zurich); Maselko, Joanna (University of North Carolina, Chapel Hill)
    Abstract: We evaluate the long-term impact of treating maternal depression on women’s financial empowerment and parenting decisions. We leverage experimental variation induced by a cluster-randomized control trial that provided psychotherapy to perinatally depressed mothers in rural Pakistan. It was one the largest psychotherapy interventions in the world, and the treatment was highly successful at reducing depression. We locate mothers seven years after the end of the intervention to evaluate its long-run effects. We find that the intervention increased women’s financial empowerment, increasing their control over household spending. Additionally, the intervention increased both time- and monetary-intensive parental investments, with increases in investments tending to favor girls.
    Keywords: parenting, early life, empowerment, women’s labor supply, maternal depression, mental health, child development, randomized controlled trial, Pakistan
    JEL: I15 I30 O15
    Date: 2017–11
  3. By: Liu, Haoming (National University of Singapore); Salvo, Alberto (National University of Singapore)
    Abstract: Little is known about how children of high-income expatriate families, often from rich nations, adapt to temporary residence in a severely polluted city of the developing world. We use a six-year panel of 6,500 students at three international schools in a major city in north China to estimate how fluctuation in ambient PM2.5 over the preceding fortnight impacts daily absences. Our preferred estimates are based on the exclusion restriction that absences respond to atmospheric ventilation such as thermal inversions only through ventilation's effect on particle levels. A large and rare 100 to 200 μg/m3 shift in average PM2.5 in the prior week raises the incidence of absences by 1 percentage point, about one-quarter of the sample mean. We find stronger responses for US/Canada nationals than among Chinese nationals, and among students who generally miss school the most. Overall responses are mod-est compared to the effect on absences from more moderate in-sample variation in pollution estimated for the US using aggregate data. Using school absence patterns as a window into short-run health and behavior, our study suggests that high-income families find ways to adapt, likely by moving life indoors, even if temporary residence in north China comes at the expense of long-term health.
    Keywords: environmental valuation, environmental damage, environmental health, atmospheric ventilation, thermal inversions, heterogeneous effects, longitudinal study, acute exposure, PM2.5, particulate matter, air pollution, school absences, avoidance behavior, distributed lags, instrumental variables
    JEL: I18 J24 Q51
    Date: 2017–11
  4. By: Kunz, Johannes S. (Monash University); Staub, Kevin E. (University of Melbourne); Winkelmann, Rainer (University of Zurich)
    Abstract: The maximum likelihood estimator for the regression coefficients, β, in a panel binary response model with fixed effects can be severely biased if N is large and T is small, a consequence of the incidental parameters problem. This has led to the development of conditional maximum likelihood estimators and, more recently, to estimators that remove the O(T–1) bias in β^. We add to this literature in two important ways. First, we focus on estimation of the fixed effects proper, as these have become increasingly important in applied work. Second, we build on a bias-reduction approach originally developed by Kosmidis and Firth (2009) for cross-section data, and show that in contrast to other proposals, the new estimator ensures finiteness of the fixed effects even in the absence of within-unit variation in the outcome. Results from a simulation study document favourable small sample properties. In an application to hospital data on patient readmission rates under the 2010 Affordable Care Act, we find that hospital fixed effects are strongly correlated across different treatment categories and on average higher for privately owned hospitals.
    Keywords: perfect prediction, bias reduction, penalised likelihood, logit, probit, Affordable Care Act
    JEL: C23 C25 I18
    Date: 2017–11
  5. By: FLEURBAEY Marc (Princeton University); LEROUX Marie-Louise (Université du Québec à Montréal); PESTIEAU Pierre (Université de Liège and CORE); PONTHIERE Gregory (Université Paris East); ZUBER Stéphane (CNRS and Paris School of Economics)
    Abstract: While little agreement exists regarding the taxation of bequests in general, there is a widely held view that accidental bequests should be subject to a confiscatory tax. We propose to reexamine the optimal taxation of accidental bequests in an economy wh
    Keywords: mortality, accidental bequests, optimal taxation, egalitarianism, OLG models.
    JEL: D63 D64 D91 H31 J10
    Date: 2017–12–01
  6. By: Elodie Djemai (PSL, Université Paris-Dauphine, LEDa, UMR DIAL)
    Abstract: We use GIS and HIV data from ve African countries to estimate the e ect of road proximity on HIV infection. We nd a negative e ect of the distance to the nearest paved road on the probability of being infected with HIV: a one standard-deviation rise in the distance (approximately 2.3 kilometers) reduces the probability of infection by 0.34-2.3 percentage points. Using slope as an instrument for road distance continues to produce a negative and signi cant estimated coecient. Alternative instrumental variables include historical routes and hypothetical lines connecting major cities as of 1890-1900. However this relationship may also re ect selection and reverse causality in individual choice of location, and we extensively discuss the role of migration. While the number of lifetime sexual partners is signi cantly in uenced by the presence of roads, in recent years the e ect of road distance in access to protection has disappeared.
    Keywords: HIV/AIDS epidemic, infrastructure, geography, risk-taking, Sub-Saharan Africa
    JEL: I10 R23 C21
    Date: 2017–12
  7. By: Sujay Kakarmath (Harvard T.H. Chan School of Public Health); Vanessa Denis (OECD); Marta Encinas-Martin (OECD); Francesca Borgonovi (OECD); S. V. Subramanian (Harvard T.H. Chan School of Public Health)
    Abstract: We assess the relationship between general literacy skills and health status by analysing data from the Programme for the International Assessment of Adult Competencies (PIAAC), an international survey of about 250 000 adults aged 16-65 years conducted by the Organisation for Economic Co-operation and Development (OECD) from 2011-15 in 33 countries/national sub-regions. Across countries, there seems to be a strong and consistent association between general literacy proficiency and self-rated poor health, independent of prior socio-economic status and income. General literacy proficiency also appears to be a mediator of the association between self-education and self-rated poor health. While the literacy-health association is robust over time, it varies in magnitude across countries. It is strongest for those with a tertiary or higher degree and does not appear to exist among young adults (ages 25 to 34 years). Future studies are required to understand the contextual factors that modify the general literacy proficiency-health association.
    Date: 2018–01–11
  8. By: David (David Patrick) Madden
    Abstract: Much analysis of the socioeconomic gradient of overweight/obesity has involved the calculation of concentration indices for the incidence of these conditions. However this analysis ignores the severity of the conditions, in particular whether there is a gradient to how far are people above the relevant thresholds. Calculation of the concentration index for severity based measures for a dataset for Ireland reveals a much stronger gradient than for the incidence based measures. It is recommended that analysis of severity should always accompany analysis of the incidence of overweight/obesity.
    Keywords: Overweight; Obesity; Socioeconomic gradient; Concentration index
    JEL: I14 I32
    Date: 2017–10
  9. By: Bhatt, Rachana (Board of Regents of the University System of Georgia); Hinrichs, Peter (Federal Reserve Bank of Cleveland)
    Abstract: A number of US states have enacted bans on tobacco use by students, staff, and visitors anywhere on the grounds of public elementary and secondary schools statewide. These laws are intended to reduce tobacco use, reduce exposure to secondhand smoke, reinforce anti-tobacco curricula taught in schools, and prevent children from viewing their teachers and fellow students using tobacco products. We examine the impact that the laws have on the smoking behavior of students, teachers, and other school staff by estimating difference-in-differences models that exploit the time variation in adoption of the laws across states. We generally find that these laws do not impact smoking behavior, although we do find some evidence suggesting a possible effect on nonteaching school staff.
    Keywords: smoking; tobacco; smoke-free laws;
    JEL: I10 I20
    Date: 2017–12–21
  10. By: Gautam Gowrisankaran; Keith A. Joiner; Pierre-Thomas Léger
    Abstract: We examine the variation across emergency department (ED) physicians in their resource use and health outcomes, and the relationship between ED resource use and future healthcare costs and outcomes. Our data record the initial treating hospital, ED physician, ED billed expenditures, and all interactions with the provincial health system within the subsequent 90 days for EDs in Montreal, Canada. Physicians in Montreal rotate across shifts between simple and difficult cases, implying a quasi-random assignment of patients to physicians conditional on the choice of ED. We consider three medical conditions that present frequently in the ED and for which mistreatment can result in dramatic consequences: angina, appendicitis, and transient ischemic attacks. To control for variation across physicians in their diagnostic acumen, for each condition, our sample consists of patients with a broader set of symptoms and signs that could be indicative of the condition. We regress measures of healthcare costs on indicators for the hospital and ED physician separately by condition. We then evaluate the correlations between different measures of skill and resource use. We find strong positive correlations of physician resource use and skills across the three conditions. However, physicians with costly practice styles are often associated with worse outcomes, in terms of more ED revisits and more hospitalizations. One exception is that for patients in the angina sample, ED physicians with more spending have fewer hospitalizations. Comparisons of physician effects for the base and broader sets of conditions show that both diagnosis and disposition skills are important.
    JEL: I12
    Date: 2017–12
  11. By: Charles Bellemare; Marion Goussé; Guy Lacroix; Steeve Marchand
    Abstract: We investigate the determinants and extent of labor market discrimination toward people with acute physical disabilities (wheelchair users) using data from a large scale field experiment conducted in the province of Quebec (Canada). Applications (cover letters and CVs) were randomly sent to 1477 private firms operating in two urban regions (Montréal and Québec City) advertising open positions requiring various skill levels. The applications were randomly generated to cover a broad spectrum of potential determinants of discrimination (gender, skill level, work history, workplace adjustment costs, etc.). We find that average callback rates of disabled and non-disabled applicants is 14.4% and 31%, respectively, yielding a differential callback rate of 46%. We also investigate whether the differential may result from accessibility constraints related to the physical infrastructures where firms are located (poor and access to an elevator, availability of wheelchair, etc.). The latter are found to have no explanatory power. In addition, applications which explicitly mention that the candidate is eligible to a government subsidy to cover the cost of workplace adaptations and assistive technology do not yield higher callback rates.
    Keywords: Discrimination, Disabilities
    JEL: J71 J68
    Date: 2017
  12. By: Martin Boyer; Philippe De Donder; Claude-Denys Fluet; Marie-Louise Leroux; Pierre-Carl Michaud
    Abstract: We conduct a stated-choice experiment where respondents are asked to rate various insurance products aimed to protect against financial risks associated with long-term care needs. Using exogenous variation in prices from the survey design, and objective risks computed from a dynamic microsimulation model, these stated-choice probabilities are used to predict market equilibrium for long-term care insurance using the framework developped by Einav et al. (2010). We investigate in turn causes for the low observed take-up of long-term care insurance in Canada despite substantial residual out-of-pocket financial risk. We first find that awareness and knowledge of the product is low in the population: 44% of respondents who do not have long-term care insurance were never offered this type of insurance while overall 31% report no knowledge of the product. Although we finnd evidence of adverse selection, results suggest it plays a minimal role in limiting take-up. On the demand side, once respondents have been made aware of the risks, we finnd that demand remains low, in part because of misperceptions of risk, lack of bequest motive and home ownership which may act as a substitute.
    Keywords: Long-term care insurance, adverse selection, stated-preference, Health, Insurance
    Date: 2017
  13. By: Pedro Albarran Pérez (Dpto. Fundamentos del Análisis Económico); Marisa Hidalgo Hidalgo (Universidad de Alicante); Iñigo Iturbe-Ormaetxe Kortajarene (Universidad de Alicante)
    Abstract: We provide new evidence on the causal effect of schooling on self-reported health and focus on its possible heterogeneous impact. We use data from the 2005 and 2011 cross sections of EU-SILC, exploiting quasi-experimental evidence from schooling reforms in 16 European countries that extend the period of compulsory schooling. Our estimation strategy uses the number of years of compulsory education as an instrument for education levels. We find that reforms affect positively the schooling level only for those individuals from low-educated families. The education level is a strong determinant of adult self-perceived health: one additional year of schooling raises the probability of reporting good health by about seven percentage points. However, this effect is not homogeneous. On the contrary, the effect concentrates on individuals who were raised in relatively well-off families. Our interpretation is that we identify the effect of an exogenous variation in education that occurs in the adolescent years, when it may be too late to have a significant impact on individuals with a poor family background.
    Keywords: Schooling reforms, compulsory education, health outcomes, EU-SILC
    JEL: I1 I2 I3 J6
    Date: 2017–12
  14. By: LEFEBVRE Mathieu (Université de Strasbourg); PESTIEAU Pierre (Université de Liège and CORE); PONTHIERE Gregory (Université Paris Est)
    Abstract: Following Kanbur and Mukherjee (2007), a solution to the “missing poor” problem (i.e. selection bias in poverty measures due to income-differentiated mortality) consists in computing hypothetical poverty rates while assigning a fictitious income to the prematurely dead. However, in a dynamic general equilibrium economy, doing “as if” the prematurely dead were still alive is likely to affect wages, output and capital accumulation, with an uncertain effect on poverty. We develop a 3-period OLG model with income-differentiated mortality, and compare actual poverty rates with hypothetical poverty rates that would have prevailed if everyone faced the survival conditions of the top income class. Including the prematurely dead has an ambiguous impact on poverty, since it affects income distribution through capital dilution, composition effets and horizon effects. Our results are illustrated by quantifying the impact of income-differentiated mortality on poverty measures for France (1820-2010).
    Keywords: income-differentiated mortality, poverty measures, missing poor, OLG models, capital accumulation
    JEL: E13 E21 I32
    Date: 2017–05–09
  15. By: Christopher J. Ruhm
    Abstract: The United States is in the midst of a fatal drug epidemic. This study uses data from the Multiple Cause of Death Files to examine the extent to which increases in county-level drug mortality rates from 1999-2015 are due to “deaths of despair”, measured here by deterioration in medium-run economic conditions, or if they instead are more likely to reflect changes in the “drug environment” in ways that present differential risks to population subgroups. A primary finding is that counties experiencing relative economic decline did experience higher growth in drug mortality than those with more robust growth, but the relationship is weak and mostly explained by confounding factors. In the preferred estimates, changes in economic conditions account for less than one-tenth of the rise in drug and opioid-involved mortality rates. The contribution of economic factors is even less when accounting for plausible selection on unobservables, with even a small amount of remaining confounding factors being sufficient to entirely eliminate the relationship. These results suggest that the “deaths of despair” framing, while provocative, is unlikely to explain the main sources of the fatal drug epidemic and that efforts to improve economic conditions in distressed locations, while desirable for other reasons, are not likely to yield significant reductions in drug mortality. Conversely, the risk of drug deaths varies systematically over time across population subgroups in ways that are consistent with an important role for the public health environment related to the availability and cost of drugs. Put succinctly, the fatal overdose epidemic is likely to primarily reflect drug problems rather than deaths of despair.
    JEL: E32 I12 I18 J11
    Date: 2018–01
  16. By: Lin Liu (University of Liverpool); Aditya Goenka (University of Birmingham)
    Abstract: This paper investigates the joint determination of the transmission of infectious diseases, human capital accumulation and economic growth. We develop an economic epidemiological model by incorporating SIS epidemiological model into an endogenous growth model with human capital accumulation. Households choose how much to invest in human and physical capital, as well as in controlling the risk of infection. If an individual is infected, he is incapacitated and can neither work nor accumulate human capital. There are multiple balanced growth paths where the endogenous prevalence of the disease determines whether human capital is accumulated or not, i.e. whether there is sustained economic growth or a poverty trap. In the decentralized economy households fail to internalize the externality associated with controlling diseases. We further characterize the optimal solution and the subsidy that will decentralize it. With the optimal public health policy, economies are more likely to take off or grow at a higher rate. We show that there can be underinvestment in preventive health expenditures, and perversely for countries that are most afflicted with diseases and in a poverty trap, the optimal subsidy is lower than for growing economies. The poor health conditions are not only the result of tighter budget constraints, but more importantly the lack of incentives for investing in health capital.
    Date: 2017

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