nep-hea New Economics Papers
on Health Economics
Issue of 2018‒10‒01
seventeen papers chosen by
Nicolas R. Ziebarth
Cornell University

  1. Liquidity Constraints and the Value of Insurance By Keith Marzilli Ericson; Justin R. Sydnor
  2. Adverse Selection in Low-Income Health Insurance Markets: Evidence from a RCT in Pakistan By Fischer, Torben; Frölich, Markus; Landmann, Andreas
  3. The Long Term Impacts of Grants on Poverty: 9-year Evidence From Uganda's Youth Opportunities Program By Christopher Blattman; Nathan Fiala; Sebastian Martinez
  4. Has the Growth in "Fast Casual" Mexican Restaurants Impacted Weight Gain? By Giuntella, Osea
  5. The Impact of the Philadelphia Beverage Tax on Prices and Product Availability By John Cawley; David Frisvold; Anna Hill; David Jones
  6. Tobacco Control Policies and Smoking Behavior in Europe: More Than Trends? By Odermatt, Reto; Stutzer, Alois
  7. Non-parametric well-being comparisons By DECANCQ Koen,; NYS Annemie,
  8. Women’s Empowerment and Family Health: Estimating LATE with Mismeasured Treatment By Rossella Calvi; Arthur Lewbel; Denni Tommasi
  9. Uncontrolled diabetes and health care utilisation: a bivariate Latent Markov model approach By Gill, J.;; Li Donni, P.;; Zucchelli, E.;
  10. Medicare Payment to Skilled Nursing Facilities: The Consequences of the Three-Day Rule By Ginger Zhe Jin; Ajin Lee; Susan Feng Lu
  11. Understanding Physician Decision Making: The Case of Depression By Janet M. Currie; W. Bentley MacLeod
  12. Interpregnancy intervals and perinatal and child health in Sweden: a comparison within families and across social groups By Kieron J. Barclay; Anna Baranowska-Rataj; Martin Kolk; Anneli Ivarsson
  13. Healthcare Utilization at Retirement: The Role of the Opportunity Cost of Time By Lucifora, Claudio; Vigani, Daria
  14. The growing American health penalty: International trends in the employment of older workers with poor health By Baumberg Geiger, Ben; Böheim, René; Leoni, Thomas
  15. Heterogeneity in the Relationship between Natural Disasters and Mental Health: A Quantile Approach By Nadezhda V. Baryshnikova; Ngoc T.A. Pham
  16. Transboundary Pollution in Southeast Asia: Welfare and Avoidance Costs in Singapore from the Forest Burning in Indonesia By Tamara L. Sheldon; Chandini Sankaran
  17. Cyclical vs structural effects on health care expenditure trends in OECD countries By Luca Lorenzoni; Jonathan Millar; Franco Sassi; Douglas Sutherland

  1. By: Keith Marzilli Ericson; Justin R. Sydnor
    Abstract: Insurance affects the variability of consumption over time, which is not captured in standard expected utility of wealth models. We develop a consumption-utility model that shows how liquidity constraints and borrowing costs impact the value of insurance. Liquidity constraints generate high insurance demand when premiums are due smoothly, sometimes leading to seemingly dominated choices. Conversely, a risk-averse person may value insurance below its expected value and appear risk loving when premiums are due in a single payment. Moreover, optimal insurance contracts take different forms with liquidity constraints. We show empirical insurance analysis using the standard model can generate misleading counterfactuals and welfare estimates. Finally, we demonstrate the model’s feasibility and importance with an application to evaluating cost-sharing reductions on the health insurance exchanges.
    JEL: D01 D81 G22 I13
    Date: 2018–09
  2. By: Fischer, Torben (University of Mannheim); Frölich, Markus (University of Mannheim); Landmann, Andreas (Paris School of Economics)
    Abstract: We present robust evidence on the presence of adverse selection in hospitalization insurance for low-income households. A large randomized control trial from Pakistan allows us to separate adverse selection from moral hazard, to estimate how selection changes at different points of the demand curve and to test simple measures against adverse selection. The results reveal substantial selection in individual policies, leading to welfare losses and the threat of a market breakdown. Bundling insurance policies at the household or higher levels almost eliminates adverse selection, thus mitigating its welfare consequences and creating the possibility for sustainable insurance supply.
    Keywords: adverse selection, health insurance, Pakistan
    JEL: I13 D82 O12
    Date: 2018–08
  3. By: Christopher Blattman; Nathan Fiala; Sebastian Martinez
    Abstract: In 2008, Uganda granted hundreds of small groups $400/person to help members start individual skilled trades. Four years on, an experimental evaluation found grants raised earnings by 38% (Blattman, Fiala, Martinez 2014). We return after 9 years to find these start-up grants acted more as a kick-start than a lift out of poverty. Grantees' investment leveled off; controls eventually increased their incomes through business and casual labor; and so both groups converged in employment, earnings, and consumption. Grants had lasting impacts on assets, skilled work, and possibly child health, but had little effect on mortality, fertility, health or education.
    JEL: C93 D13 J24 O12
    Date: 2018–09
  4. By: Giuntella, Osea (University of Pittsburgh)
    Abstract: The United States is witnessing a boom in fast casual restaurants owing to the recent growth of ethnic restaurants throughout the country. This study examines the effects of proximity to a Mexican restaurant – the dominant type of ethnic fast casual restaurant – on maternal and child health. I match data on the complete residential addresses of all mothers who gave birth in the Miami metropolitan area between 1990 and 2009 to a time series of all establishments (restaurants and stores) selling food and drink. This unique data set allows me to use mother fixed effects and to exploit the variation over time of the food environment to identify the effects on maternal weight gain and childbirth outcomes. The results show that living in proximity to a Mexican restaurant is associated with an 8% lower likelihood of excessive weight gain among US-born mothers. These effects are concentrated in low-income neighborhoods and among members of disadvantaged groups (e.g., low-skilled, young, and African- American individuals). However, the results show no protective effect for foreign-born mothers. Lastly, there is no evidence of significant effects on other maternal outcomes or on various child health metrics at birth.
    Keywords: restaurant proximity, food environment, maternal weight gain
    JEL: I10 J1 R20
    Date: 2018–08
  5. By: John Cawley; David Frisvold; Anna Hill; David Jones
    Abstract: In recent years, numerous cities in the U.S. have enacted taxes on beverages to promote health and raise revenue. This paper examines the impact of Philadelphia’s beverage tax, enacted in 2017, on the prices and availability of taxed beverages and untaxed beverages that may be substitutes for consumers. Using original data we collected in late 2016 and again one year later, we estimate a difference-in-differences regression of the change over time in beverage prices and product availability in stores in Philadelphia relative to stores in nearby counties. We find that, on average, distributors and retailers fully pass the tax through to consumers, but the there is heterogeneity in the pass-through rate among stores. Pass-through is greater among stores in higher-poverty neighborhoods, stores located farther from untaxed stores outside Philadelphia, stores that are independent as opposed to part of national chains, and for individual servings than for larger sizes. We also find a reduction in the availability of taxed beverages and an increase in the availability of untaxed beverages, particularly bottled water, in Philadelphia stores.
    JEL: H22 I18
    Date: 2018–09
  6. By: Odermatt, Reto (University of Basel); Stutzer, Alois (University of Basel)
    Abstract: In many European countries, there is an unmissable trend towards stricter tobacco control policies and a parallel reduction in the prevalence of smoking. The extent to which policies promote this latter trend, however, is less clear. We therefore analyze the staggered introductions of smoking bans and the variation in cigarette taxes over more than twenty years. After taking into account unobserved country- and time-specic eects as well as country-specic trends, we nd no clear evidence that smoking bans are associated with lower levels of smoking. In contrast, higher cigarette prices tend to be negatively related to smoking, in particular for men and people under the age of 30. However, price elasticities are small. Overall, the results suggest that only about one sixth of the decline in the prevalence of smoking in Europe can be explained by our policy variables.
    Keywords: Smoking bans; cigarette taxes; smoking behavior; tobacco control policies
    JEL: D12 H31 I18 K32
    Date: 2018–09–12
  7. By: DECANCQ Koen, (University of Antwerp, KU Leuven and CORE); NYS Annemie, (University of Antwerp)
    Abstract: We study the problem of making interpersonal well-being comparisons when individuals have heterogeneous possibly incomplete preferences. We present a robust also incomplete criterion for well-being comparisons that states that one individual is better o than another one if the intersection between the extended upper contour set of the better off individual and the extended lower contour set of the worse off individual is empty. We implement the criterion in the consumption-health space using an online survey with 2,260 respondents in the United States to investigate how incomplete the resulting interpersonal well-being comparison is. To chart the contour sets of the respondents, we propose a new adaptive bisectional dichotomous choice (ABDC) procedure that is based on a limited number of dichotomous choices and some mild non-parametric assumptions on the preferences. While the ABDC procedure does not reject that the preferences of a large majority of the respondents satisfy these non-parametric assumptions, it has sufficient power to reject several standard parametric assumptions such as linearity or Cobb-Douglas preferences for an overwhelming number of respondents. Finally, we find that about one fifth of all pairs of respondents can be ranked in a robust way with the proposed criterion. A more complete version of the criterion is able to rank more than half of the pairs.
    Keywords: Interpersonal well-being comparisons, preferences, non-parametric
    JEL: D63 D71
    Date: 2018–08–21
  8. By: Rossella Calvi (Rice University); Arthur Lewbel (Boston College); Denni Tommasi (ECARES, Université Libre de Bruxelles)
    Abstract: We study the causal effect of women’s empowerment on family health in India. We define treatment as a woman having primary control over household resources and use changes in inheritance laws as an instrument. Due to measurement difficulties and sharing of goods, treatment cannot be directly observed and must be estimated using a structural model. Treatment mismeasurement may therefore arise from model misspecification and estimation errors. We provide a new estimation method, MR-LATE, that can consistently estimate local average treatment effects when treatment is mismeasured. We find that women’s control of substantial household resources improves their and their children’s health.
    Keywords: causality, LATE, structural model, collective model, resource shares, bargaining power, health
    JEL: D13 D11 D12 C31 I32
    Date: 2018–05–30
  9. By: Gill, J.;; Li Donni, P.;; Zucchelli, E.;
    Abstract: While uncontrolled diabetes (UD) or poor glycaemic control is a widespread condition with potentially life-threatening consequences, there is sparse evidence of its effects on health care utilisation. We model the propensities to consume health care and UD by employing an innovative bivariate Latent Markov model which allows for dynamic unobserved heterogeneity, movements between latent states and the endogeneity of UD. We estimate the effects of UD on primary and secondary health care consumption using a panel dataset of rich administrative records from Spain and measure UD using a biomarker. We find that UD does not have a statistically significant effect on health care use. Furthermore, individuals appear to move across latent classes and increase their propensities to poor glycaemic control and health care use over time. Our results suggest that by ignoring time-varying unobserved heterogeneity and the endogeneity of UD, the effects of UD on health care utilisation might be overestimated and this could lead to biased findings. Our approach reveals heterogeneity in behaviour beyond standard groupings of frequent versus infrequent users of health care services. We argue that this dynamic latent Markov approach could be used more widely to model the determinants of health care use.
    Keywords: diabetes; health care utilisation; unobserved heterogeneity; Latent Markov model;
    JEL: C35 I10 I12
    Date: 2018–09
  10. By: Ginger Zhe Jin; Ajin Lee; Susan Feng Lu
    Abstract: Medicare does not pay for a skilled nursing facility (SNF) unless a fee-for-service patient has stayed in the hospital for at least three days. Discharges after the three-day cutoff consistently result in more transfers to SNFs. Using the three-day rule as an instrument, we find that SNF discharges decrease hospital readmission for patients with comorbidities. However, for knee and hip replacement patients, we find significant increases in readmission. This perverse effect is more severe when local SNFs have lower quality. Back-of-the-envelope calculations suggest that the three-day rule may have generated extra Medicare payments to SNFs by $100-447 million per year.
    JEL: D8 H51 I13 I18
    Date: 2018–09
  11. By: Janet M. Currie; W. Bentley MacLeod
    Abstract: Faulty physician decision making has been blamed for everything from medical errors to excessive procedure use and wasteful spending. Yet medical treatment is often complex, requiring a sequence of decisions that may involve trade offs between selecting the choice with the highest expected value or selecting a choice with higher possible payoffs. We show that the best choice depends on a physician’s diagnostic skill so that the optimal treatment can vary even for identical patients. Bringing the model to patient claims data for depression, we show that doctors who experiment more with drug choice achieve better patient outcomes, except when physician decisions violate professional guidelines for drug choice.
    JEL: I1 I12 J24
    Date: 2018–08
  12. By: Kieron J. Barclay (Max Planck Institute for Demographic Research, Rostock, Germany); Anna Baranowska-Rataj; Martin Kolk; Anneli Ivarsson
    Abstract: Until recently a large body of research conducted in high-income countries had shown that children born after an especially short or especially long birth interval are at an elevated risk of preterm birth, low birth weight, being small for gestational age, as well as other poor perinatal outcomes. However, a handful of recent studies that have adjusted for shared family background more effectively have cast doubt on that conclusion. We use Swedish population data on cohorts born 1981-2010 and sibling fixed effects models to examine whether the length of the birth interval preceding the index person has an impact on the risk of preterm birth, low birth weight, and hospitalization during childhood. We additionally present for the first time for this particular research question analyses stratified by salient social characteristics such as maternal educational level, and maternal country of birth. Overall, we find few effects of birth intervals on our outcomes except for very short birth intervals. Short interpregnancy intervals (<7 months) and very long intervals (>60 months) increase the probability of low birth weight and preterm birth. We also find that longer intervals (>42 months) decrease the probability of hospitalization during the first year of life, but interpregnancy intervals greater than 30 months increase the probability of hospitalization between ages 1-3. We find few differences in the patterns by maternal educational level, or by maternal country of origin after stratifying by the mother’s highest attained education. The results from this study contribute to the ongoing debate about whether the length of interpregnancy intervals matter for perinatal and child health in high-income countries.
    Keywords: Sweden, interpregnancy interval, siblings
    JEL: J1 Z0
    Date: 2018–09
  13. By: Lucifora, Claudio (Università Cattolica del Sacro Cuore); Vigani, Daria (Università Cattolica del Sacro Cuore)
    Abstract: We investigate the causal impact of retirement on healthcare utilization using SHARE data for 10 European countries. We show that the number of doctor's visits and the probability of visiting a doctor more than four times a year (our measures of healthcare utilization) increase after retirement. The increase in healthcare utilization is found to depend mainly on the years spent in retirement, suggesting that adjustment may take time. We find evidence of heterogeneous effects by gender and across different patterns of time use prior to retirement (i.e., working long hours, and combined work and out-of-work activities). Overall, the empirical findings suggest that the increase in healthcare utilization is consistent with the decrease in the opportunity cost of time faced by individuals when they retire.
    Keywords: retirement, health, healthcare utilization
    JEL: J26 I10 C26
    Date: 2018–08
  14. By: Baumberg Geiger, Ben; Böheim, René; Leoni, Thomas
    Abstract: Many countries have reduced the generosity of disability benefits while making them more activating - yet few studies have examined how employment rates have subsequently changed. We present estimates of how the employment rates of older workers with poor health in 13 high-income countries changed between 2004-7 and 2012-15 using HRS/SHARE/ELSA data. We find that those in poor health in the USA have experienced a unique deterioration: they have not only seen a widening gap to the employment rates of those with good health, but their employment rates fell per se. We find only for Sweden (and possibly England) signs that the health employment gap shrank. We then examine possible explanations for the development in the USA: we find no evidence it links to labour market trends, but possible links to the USA's lack of disability benefit reform - which should be considered alongside the wider challenges of our findings for policymakers.
    Keywords: disability benefits, older workers, poor health, HRS; SHARE; ELSA data
    Date: 2018–09
  15. By: Nadezhda V. Baryshnikova (School of Economics, University of Adelaide); Ngoc T.A. Pham (School of Architecture and Built Environment, University of Adelaide.)
    Abstract: Mental health has been recently declared a global priority by the World Bank and World Health Organization. This article investigates the existence of heterogeneous effects of experiencing natural disasters on mental health. Using population representative longitudinal data from Australia, we find that home owners generally show a reduction in mental health score after a disaster. While the average effect for those that do not own a home is zero, surprisingly, the quantile treatment panel approach reveals the existence of a strong effect that varies from negative to positive across the distribution of mental health. The results suggest that policies targeted at homeowners and the lowest mental health non-owners (rather than only at the economically poorest) would help mitigate mental health consequences attributable to natural disaster exposure.
    Keywords: quantile treatment effects, mental health, disasters, home owners, panel data
    JEL: C21 C23 I31 Q54 R2
    Date: 2018–08
  16. By: Tamara L. Sheldon (University of South Carolina); Chandini Sankaran (Boston College)
    Abstract: Forest burning in Indonesia results in severe episodes of “seasonal haze” in neighboring Singapore. We offer the first causal analysis of the transboundary health effects of the Indonesian forest burning. Using a two-stage approach and instrumenting for air pollution with satellite fire data, we estimate the impacts of the Indonesian fires on Singaporean polyclinic attendances for acute upper respiratory tract infections and acute conjunctivitis. We also estimate the change in electricity demand in Singapore attributable to the fires, finding that demand increases as people respond to haze episodes by staying indoors. We estimate partial health and avoidance costs of US$333 million from January 2010 to June 2016. Our estimates suggest avoidance behavior is significant, accounting for over three quarters of our estimate.
    Keywords: air pollution; health; avoidance behavior; externalities; forestry
    JEL: D62 I1 Q23 Q51 Q53
    Date: 2016–12–05
  17. By: Luca Lorenzoni; Jonathan Millar; Franco Sassi; Douglas Sutherland
    Abstract: Health care expenditure per person, after accounting for changes in overall price levels, began to slow in many OECD countries in the early-to-mid 2000s, well before the economic and fiscal crisis. Using available estimates from the OECD’s System of Health Accounts (SHA) database, we explore common trends in health care expenditure since 1996 in a set of 22 OECD countries. We assess the extent to which the trends observed are the results of cyclical economic influences, and the respective contributions of changes in relative prices, health care volumes and coverage to the slowdown in health care expenditure growth. Our analysis suggests that cyclical factors may account for a little less than one half of the estimated slowdown in health care spending since the crisis, suggesting that structural changes have contributed to the trends. Before the crisis the slowdown in health care expenditure growth was accounted for by health care prices growing less than general prices and a reduction in care volumes, whereas the latter accounts for most of the steeper deceleration after the crisis. Although both privately and publically financed health care expenditure grew at a reduced pace during the study period, the sharp post-crisis deceleration happened mostly in the public component. When examined by function, the slowdown in publicly-financed expenditure has been largest in curative and rehabilitative care (particularly after the crisis) and in medical goods (especially pharmaceuticals), whereas the deceleration in the privately financed component is largely in medical goods (including pharmaceuticals). We conclude that structural changes in publicly financed health care have constrained the growth of care volumes (especially) and prices leading to a marked reduction in health care expenditure growth rates, beyond what could be expected based on cyclical economic fluctuations. We examine a range of government policies enacted in a selection of OECD countries that likely contributed to the structural changes observed in our analysis.
    Keywords: government expenditures, Health, prices
    JEL: C23 H51 I18
    Date: 2018–09–17

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