nep-hea New Economics Papers
on Health Economics
Issue of 2018‒11‒12
sixteen papers chosen by
Nicolas R. Ziebarth
Cornell University

  1. Partial Rating Area Offering in the ACA Marketplaces: Facts, Theory and Evidence By Hanming Fang; Ami Ko
  2. Patient vs. Provider Incentives in Long Term Care By Martin B. Hackmann; R. Vincent Pohl
  3. Inequality in Life Expectancies across Europe By Radim Bohácek; Jesús Bueren; Laura Crespo; Pedro Mira; Josep Pijoan-Mas
  4. Early Determinants of Work Disability in an International Perspective By Axel Börsch-Supan; Tabea Bucher-Koenen; Felizia Hanemann
  5. Ex ante inequality of opportunity in health,Decomposition and distributional analysis of biomarkers By Davillas, A.;; Jones, A.M.;
  6. Does High Cost-Sharing Slow the Long-term Growth Rate of Health Spending? Evidence from the States By Molly Frean; Mark Pauly
  7. Drink, death and driving: do BAC limit reductions improve road safety? By Benjamin Cooper; Markus Gehrsitz; Stuart McIntyre
  8. Estimating the marginal productivity of the English National Health Service from 2003/04 to 2012/13 By James Lomas; Stephen Martin; Karl Claxton
  9. Estimating the Hospital Costs of Inpatient Harms By Priyanka Anand; Keith Kranker; Arnold Y. Chen
  10. The Effects of a Household Income Shock on Infant Health. Evidence from a Welfare Benefits Reform By Janssen, Simon
  11. Health Shocks and the Evolution of Consumption and Income over the Life-Cycle By Michael Keane; Elena Capatina; Shiko Maruyama
  12. Optimal policy design for the sugar tax By Kelly Geyskens; Alexander Grigoriev; Niels Holtrop; Anastasia Nedelko
  13. Longevity and Companionship in an Overlapping-Generations Model By Gylfi Zoega; Marias H. Gestsson
  14. Information Provision and Streamlined Medical Service: Evidence from a Mobile Appointment App By Song, Changcheng; Yang, Nan; Yi, Junjian; Yuan, Ye
  15. Estimating misreporting in condom use and its determinants among sex workers: Evidence from the list randomisation method By Carole Treibich; Aurélia Lépine
  16. Understanding Human Trafficking Using Victim-Level Data By Artadi, Elsa; Björkman Nyqvist, Martina; Kuecken, Maria; La Ferrara, Eliana

  1. By: Hanming Fang; Ami Ko
    Abstract: In the health insurance marketplaces established by the Affordable Care Act (ACA), each state is divided into a set number of geographic ``rating areas." The ACA mandates that an insurer price its health insurance plan uniformly in all counties within the same rating area, conditional on insurees' age and smoking status. However, the ACA does \textit{not} require that an insurer sell its plan in all counties in a rating area. Using the federal marketplace data, we quantify the prevalence of a phenomenon, which we refer to as partial rating area offering, where insurers enter some but not all of the counties in a rating area. To understand why insurers selectively enter a subset of the counties in a rating area, we develop a simple model of insurer competition. The model implies that if common county characteristics, such as the county's risk distribution, market size and provider availability, are the primary drivers for the partial rating area offering phenomenon, then there would be a positive correlation among insurers' entry decisions. In contrast, if the partial rating area offering phenomenon is driven by market segmentation, then there would be a negative correlation. We develop a novel nonparametric correlation test and apply it to the federal marketplace data. We find strong evidence for a positive correlation of insurers' entry decisions, suggesting that common cost factors are the main driver for the partial rating area offering phenomenon. To the extent that it is a concern that many counties now have few insurers, our result suggests that it is important to offer insurers subsidies that are tied to county characteristics.
    JEL: I11 I13 L1
    Date: 2018–10
  2. By: Martin B. Hackmann; R. Vincent Pohl
    Abstract: How do patient and provider incentives affect mode and cost of long-term care? Our analysis of 1 million nursing home stays yields three main insights. First, Medicaid-covered residents prolong their stays instead of transitioning to community-based care due to limited cost-sharing. Second, nursing homes shorten Medicaid stays when capacity binds to admit more profitable out-of-pocket payers. Third, providers react more elastically to financial incentives than patients, so moving to episode-based provider reimbursement is more effective in shortening Medicaid stays than increasing resident cost-sharing. Moreover, we do not find evidence for health improvements due to longer stays for marginal Medicaid beneficiaries.
    JEL: H51 H75 I11 I13 I18 J14
    Date: 2018–10
  3. By: Radim Bohácek (GERGE-EI); Jesús Bueren (European University Institute); Laura Crespo (Banco de España); Pedro Mira (CEMFI, Centro de Estudios Monetarios y Financieros); Josep Pijoan-Mas (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: We use harmonized household panel data from 10 European countries (SHARE) plus US (HRS) and England (ELSA) to provide novel and comparable measurements of education and gender differences in life expectancy and disability-free life expectancy, as well as in the underlying multi-state life tables. Common across countries we find significant interactions between socio-economic status and gender: (a) the education advantage in life expectancy is larger for males, (b) the female advantage in life expectancy is larger among the low educated, (c) education reduces disability years and this added advantage is larger for females, and (d) females suffer more disability years but this disadvantage is hardly present for the high educated. Common across countries we also find that the education advantage in disability years is due to better health transitions by the highly-educated, and that the female disadvantage in disability years is due to better survival in ill-health by females. Looking at the differences across countries, we find that inequalities are largest in Eastern Europe, lowest in Scandinavia, and that the education gradient in life expectancy for males correlates positively with income inequality and negatively with public health spending across countries.
    Keywords: Life expectancy, healthy life expectancy, education gradient, gender gap.
    JEL: I14 I24 J14 J16
    Date: 2018–09
  4. By: Axel Börsch-Supan; Tabea Bucher-Koenen; Felizia Hanemann
    Abstract: This paper studies the interrelated roles of health and welfare state policies in the decision to take up disability insurance (DI) benefits due to work disability (WD), defined as the (partial) inability to engage in gainful employment due to physical or mental illness. We exploit the large international variation of health, self-reported WD and the uptake of DI benefits in the US and Europe using a harmonized data set with life history information assembled from the Survey of Health Ageing and Retirement in Europe (SHARE), the English Longitudinal Study on Ageing (ELSA) and the Health and Retirement Study (HRS). Particular attention is given to the role of life-time health and other life-time experiences in explaining WD and DI uptake later in life. We find that while our large set of health measures explains a substantial share of the within-country variation in WD and DI, this is not the case for the variation across countries. Rather, most of the variation between countries is explained by differences in DI policies.
    JEL: H55 J21 J26
    Date: 2018–10
  5. By: Davillas, A.;; Jones, A.M.;
    Abstract: We use a set of biomarkers to measure inequality of opportunity (IOp) in health in the UK. Applying a direct ex ante IOp approach, we find that inequalities in health attributed to circumstances account for a non-trivial part of the total health variation. For example, observed circumstances account for 20% of the total inequalities in our composite measure of multi-system health risk, allostatic load. Shapley decompositions show that apart from age and gender, education and childhood socioeconomic status are sources of IOp. We propose an extension to the decomposition of ex ante IOp to complement the mean-based approach, analysing the contribution of circumstances across the quantiles of the biomarker distributions. This shows that,for most of the biomarkers, the percentage contribution of socioeconomic circumstances, relative to differences attributable to age and gender, increases towards the right tail of the biomarker distribution, where health risks are more pronounced.
    Keywords: equality of opportunity; biomarkers; Shapley decomposition; Oaxaca decomposition; unconditional quantile regression;
    JEL: C1 D63 I12 I14
    Date: 2018–10
  6. By: Molly Frean; Mark Pauly
    Abstract: Multiple studies have shown that high-deductible health plans lower spending levels, however, less is known about whether such plans have an effect on spending growth. We begin with a model of the relationship between levels of insurance coverage and both spending levels and spending growth, highlighting the role of new technology adoption in the latter. Next, we leverage cross-sectional variation in private deductibles across states (and over time) to estimate whether areas with relatively higher deductibles experience lower spending growth. We use publicly available data from the Centers for Medicare and Medicaid Services and the Agency for Healthcare Research and Quality from 2002-2016, a period during which deductibles among privately insured employees more than tripled in magnitude and real spending growth exceeded 40%. Consistent with prior empirical work, we find that current period spending growth is significantly lower in states with higher deductible levels but non-responsive to changes in such levels over time. We observe these relationships in models of both private and total spending (including that on behalf of publicly insured and uninsured individuals), suggestive of potential spillovers. Future work should explore the role of other plan benefit characteristics in explaining spending growth and mechanisms underlying any observed effects.
    JEL: I11 I13
    Date: 2018–10
  7. By: Benjamin Cooper (Department of Economics, University of Strathclyde); Markus Gehrsitz (Department of Economics, University of Strathclyde); Stuart McIntyre (Department of Economics, University of Strathclyde)
    Abstract: This study exploits a natural experiment in Scotland where the legal blood alcohol content (BAC) limit was reduced from 0.8mg to 0.5mg per 100ml of blood while staying constant in all other parts of the UK. Using a difference{in{differences design, we find that this change in the BAC level had no impact on either traffic accident or fatality rates
    Keywords: Road traffic fatalities, traffic accidents, diference-in-differences, blood alcohol
    JEL: I12 I18 K42
    Date: 2018–09
  8. By: James Lomas (Centre for Health Economics, University of York, York, UK); Stephen Martin (Department of Economics and Related Studies, University of York, York, UK); Karl Claxton (Centre for Health Economics, University of York, York, UK)
    Abstract: Estimates of the marginal productivity of the health sector are required for a wide range of resource allocation decisions. Founding these estimates on robust empirical analysis can inform these decisions and improve allocative efficiency as a result. This paper estimates the marginal productivity of the English NHS for a ten year period between 2003/04 and 2012/13. Data on expenditure and mortality by programme budget categories from this period are used in conjunction with socio-economic and demographic variables from the censuses from 2001 and 2011, as part of an econometric strategy that employs an established instrumental variable approach that is subjected to a number of sensitivity analyses. The results of the econometric analysis, along with additional data on burden of disease, are used to generate an estimate of marginal productivity. This paper finds that the point estimates of the amount of resources, in nominal terms, to produce an additional unit of health benefit has ranged from £5,000 to £15,000 per quality-adjusted life year between 2003/04 and 2012/13. These results are discussed in the context of the existing literature, and the potential policy implications for decisions about resource allocation are explored.
    Keywords: productivity; econometric modelling; programme budgeting; health opportunity costs; allocative efficiency
    Date: 2018–10
  9. By: Priyanka Anand; Keith Kranker; Arnold Y. Chen
    Abstract: The authors analysis represents rigorous estimates of the hospital costs of a variety of inpatient harms; these should be of interest to health care administrators and policy makers to identify areas for cost savings to the health care system.
    Keywords: acute inpatient care, health care costs, inpatient harm, quality of care, readmissions
    JEL: I
  10. By: Janssen, Simon
    Abstract: We investigate the effect of a large welfare benefits cut on child health. Our identification strategy exploits a policy reform of the German welfare system that reduced benefits for families with infants by about 30 percent of their previous household income. The empirical analysis relies on novel and unique register data that includes detailed information about hospitalization, doctor visits, and pharmacy use for about 45, 000 children who were born before or after the reform. Although children from welfare families are on average less healthy than children from non-welfare families, the welfare cut had no additional negative impact on child health.
    Keywords: Childhood Health,Socioeconomic Status,Household Income
    JEL: I14 J13
    Date: 2018
  11. By: Michael Keane (School of Economics, UNSW Business School, UNSW Sydney); Elena Capatina (Research School of Economics, Austrlian National University); Shiko Maruyama (Economics Discipline Group, UTS Business School, University of Technology Sydney)
    Abstract: This paper studies the effects of health on earnings dynamics and on consumption inequality over the life-cycle. We build and calibrate a life-cycle model with idiosyncratic health, earnings and survival risk where individuals make labor supply and asset accumulation decisions, adding two novel features. First, we model health as a complex multi-dimensional concept. We differentiate between functional health and underlying health risk, temporary vs. persistent health shocks, and predictable vs. unpredictable shocks. Second, we study the interactions between health and human capital accumulation (learning-by-doing). These features are important in allowing the model to capture the degree to which, and the pathways through which, health impacts earnings and consumption patterns. They are also very important in estimating the value of health insurance and social insurance. A key finding is that health shocks account for roughly half of the growth in offer wage inequality over the life cycle. Eliminating health shocks leads to a 5.5% decline in the variance of the present value of earnings across all individuals.
    Keywords: Health, Income Risk, Precautionary Saving, Health Insurance, Welfare
    JEL: D91 E21 I14 I31
    Date: 2018–05
  12. By: Kelly Geyskens; Alexander Grigoriev; Niels Holtrop; Anastasia Nedelko
    Abstract: Healthy nutrition promotions and regulations have long been regarded as a tool for increasing social welfare. One of the avenues taken in the past decade is sugar consumption regulation by introducing a sugar tax. Such a tax increases the price of extensive sugar containment in products such as soft drinks. In this article we consider a typical problem of optimal regulatory policy design, where the task is to determine the sugar tax rate maximizing the social welfare. We model the problem as a sequential game represented by the three-level mathematical program. On the upper level, the government decides upon the tax rate. On the middle level, producers decide on the product pricing. On the lower level, consumers decide upon their preferences towards the products. While the general problem is computationally intractable, the problem with a few product types is polynomially solvable, even for an arbitrary number of heterogeneous consumers. This paper presents a simple, intuitive and easily implementable framework for computing optimal sugar tax in a market with a few products. This resembles the reality as the soft drinks, for instance, are typically categorized in either regular or no-sugar drinks, e.g. Coca-Cola and Coca-Cola Zero. We illustrate the algorithm using an example based on the real data and draw conclusions for a specific local market.
    Date: 2018–10
  13. By: Gylfi Zoega (University of Iceland; Birkbeck, University of London); Marias H. Gestsson (University of Iceland)
    Abstract: We derive a golden rule for the level of life-extending health care when the utility of the old depends not only their level of consumption but also on the number of old people alive. While previous work has emphasized the negative pecuniary externality from longevity, we derive the effect of the positive non-pecuniary externality of being able to consume with other members of one’s cohort.
    Keywords: Longevity, health care expenditures, companionship.
    JEL: E6 E2 I1
    Date: 2018–11
  14. By: Song, Changcheng (National University of Singapore); Yang, Nan (National University of Singapore); Yi, Junjian (National University of Singapore); Yuan, Ye (National University of Singapore)
    Abstract: We examine the launch of a mobile outpatient appointment app in China to study the effect of information provision and a streamlined appointment process on hospital operations and the alignment of healthcare supply and demand. Using a longitudinal dataset on hospital operations and a difference-in-differences model, we document that the app increases completed hospital consultations by 9.5%, through boosting registrations by 4.8% and reducing appointment cancellations by 3.4%. The app improves queuing efficiency in overcrowded hospitals and draws demand for underutilized ones. Supported by additional evidence from a subset of patients' electronic medical records, we also find that the app directs patients to the hospital and department more suitable to their medical conditions and to less busy days, resulting in a better match between patient demand and hospital service.
    Keywords: healthcare information technology, information provision, hospital operations, patient sorting, patient choices
    JEL: I11 I12 I18
    Date: 2018–09
  15. By: Carole Treibich (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Aurélia Lépine (LSHTM - London School of Hygiene and Tropical Medicine)
    Abstract: Social desirability bias, which is the tendency to under-report socially undesirable health behaviours, significantly distorts information on sensitive behaviours gained from self-reports. We designed a list randomisation method to indirectly elicit condom use among female sex workers and tested it among 651 female sex workers in Senegal, a country where sex workers face high social stigma and where the AIDS epidemic is mainly concentrated among this population. Based on our list randomisation, we found that the condom use rate in the last sexual intercourse with a client was 78%, which is significantly lower than the 97% obtained when asked directly in the survey. When estimating condom use among the subgroups, we found that female sex workers who are at a higher risk of infection are less likely to use condoms.
    Keywords: Senegal,list randomisation,condom use,female sex workers
    Date: 2018
  16. By: Artadi, Elsa; Björkman Nyqvist, Martina; Kuecken, Maria; La Ferrara, Eliana
    Abstract: Quantitative research on human trafficking is scant due to lack of data. This study makes use of a unique survey we collected on former victims of trafficking and vulnerable women and girls in the Philippines. We start by exploring the correlates of trafficking and show that household composition (in particular the presence of older sisters) and plausibly exogenous measures of health and economic shocks predict the likelihood of being tracked. We then study the effects of trafficking on victims' intertemporal and risk preferences using entropy balancing. We find that trafficking victims are not differentially patient, but they are more risk-loving. Our novel data and findings are pertinent to the design of policies intending to prevent trafficking and reintegrate victims.
    Keywords: child labor; human trafficking; Philippines; prostitution
    JEL: D13 D80 J47
    Date: 2018–10

This nep-hea issue is ©2018 by Nicolas R. Ziebarth. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.