nep-hea New Economics Papers
on Health Economics
Issue of 2019‒01‒07
nine papers chosen by
Nicolas R. Ziebarth
Cornell University

  1. Patient vs. Provider Incentives in Long-Term Care By Martin Benjamin Hackmann; R. Vincent Pohl
  2. From pain patient to junkie: An economic theory of painkiller consumption and its impact on wellbeing and longevity By Strulik, Holger
  3. The Effects of Medicare Advantage on Opioid Use By Laurence C. Baker; Kate Bundorf; Daniel Kessler
  4. Military Training Exercises, Pollution, and their Consequences for Health By Gustavo J. Bobonis; Mark Stabile; Leonardo Tovar
  5. Health Care Expenditures, Financial Stability, and Participation in the Supplemental Nutrition Assistance Program (SNAP) By Yunhee Chang; Jinhee Kim; Swarn Chatterjee
  6. Hospital Competition in the National Health Service: Evidence from a Patient Choice Reform By Brekke, Kurt R.; Canta, Chiara; Straume, Odd Rune; Siciliani, Luigi
  7. How Does Delayed Retirement Affect Mortality and Health? By Alice Zulkarnain; Matthew S. Rutledge
  8. Learning Intensity Effects in Students’ Mental and Physical Health – Evidence from a Large Scale Natural Experiment in Germany By Sarah Hofmann; Andrea Mühlenweg
  9. Consumption, Investment, and Healthcare with Aging By Paolo Guasoni; Yu-Jui Huang

  1. By: Martin Benjamin 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.
    Keywords: long-term care, nursing homes, patient incentives, provider incentives, cost-sharing, episode-based reimbursement, medicaid
    JEL: H51 H75 I11 I13 I18 J14
    Date: 2018
  2. By: Strulik, Holger
    Abstract: In this paper, I propose a life cycle model of painkiller consumption that combines the theory of health deficit accumulation with the theory of addiction. Chronic pain is conceptualized as a persistent negative shock to lifetime utility that can be treated by pain relief medication. Some individuals treated with opioid pain relievers develop addiction, which increases their demand for opioids and reduces their welfare and life expectancy through side effects and potential overdose. Nevertheless, individuals prefer opioid treatment if they fail to understand how it causes addiction. Once individuals are unintentionally addicted and access to prescription opioids is discontinued, consumption shifts to illicit opioids (like heroin). I calibrate the model for a benchmark American and investigate the comparative dynamics of alternative drug characteristics, pain intensities, and ages of onsets of pain and their implications for welfare and life expectancy. I also discuss treatment of addiction and the use of opioids in palliative care.
    Keywords: pain,pain relief,addiction,opioid epidemic,health deficits,life expectancy,illicit drugs
    JEL: D91 I10 I12
    Date: 2018
  3. By: Laurence C. Baker; Kate Bundorf; Daniel Kessler
    Abstract: Despite a vast literature on the determinants of prescription opioid use, the role of health insurance plans has received little attention. We study how the form of Medicare beneficiaries’ drug coverage affects the volume of opioids they consume. We find that enrollment in Medicare Advantage, which integrates drug coverage with other medical benefits, significantly reduces beneficiaries’ likelihood of filling an opioid prescription, as compared to enrollment in a stand-alone drug plan. Approximately half of this effect was due to fewer fills from prescribers who write a very large number of opioid prescriptions.
    JEL: I11 I13
    Date: 2018–12
  4. By: Gustavo J. Bobonis; Mark Stabile; Leonardo Tovar
    Abstract: Militaries around the world perform training exercises in preparation for war. We study the relationship between in utero exposure to military exercises (bombing) and early-life health outcomes, combining data on naval bombing exercises in Vieques, Puerto Rico, and the universe of births from 1990-2003. Using a differences-in-differences design, we find that the sudden end of bombing practices is associated with a 56-79 percent decrease in the incidence of congenital anomalies and an overall improvement in a neonatal health outcomes index of 0.07σ. The evidence is generally consistent with the channel of environmental pollution; increases in arsenic levels in waters surrounding the live impact area.
    Keywords: Infant health; military activity; environmental pollution; maternal stress
    JEL: I15 I14 O1
    Date: 2018–12–17
  5. By: Yunhee Chang; Jinhee Kim; Swarn Chatterjee
    Abstract: This paper examines the association between household healthcare expenses and participation in the Supplemental Nutrition Assistance Program (SNAP) when moderated by factors associated with financial stability of households. Using a large longitudinal panel encompassing eight years, this study finds that an inter-temporal increase in out-of-pocket medical expenses increased the likelihood of household SNAP participation in the current period. Financially stable households with precautionary financial assets to cover at least 6 months worth of household expenses were significantly less likely to participate in SNAP. The low income households who recently experienced an increase in out of pocket medical expenses but had adequate precautionary savings were less likely than similar households who did not have precautionary savings to participate in SNAP. Implications for economists, policy makers, and household finance professionals are discussed.
    Date: 2018–11
  6. By: Brekke, Kurt R. (Dept. of Economics, Norwegian School of Economics and Business Administration); Canta, Chiara (Toulouse Business School); Straume, Odd Rune (University of Bergen, Department of Economics and University of Minho, Department of Economics/NIPE); Siciliani, Luigi (University of York)
    Abstract: We study the impact of exposing hospitals in a National Health Service (NHS) to non-price competition by exploiting a patient choice reform in Norway in 2001. The reform facilitates a difference-in-difference research design due to geographical variation in the scope for competition. Using rich administrative data covering the universe of NHS hospital admissions from 1998 to 2005, we find that hospitals in more competitive areas have a sharper reduction in AMI mortality, readmissions, and length of stay than hospitals in less competitive areas. These results indicate that competition improves patient health outcomes and hospital cost efficiency, even in the Norwegian NHS with large distances, low fixed treatment prices, and mainly public hospitals.
    Keywords: Patient Choice; Hospital Competition; Quality; Cost-efficiency
    JEL: I11 I18 L13
    Date: 2018–12–06
  7. By: Alice Zulkarnain; Matthew S. Rutledge
    Abstract: Older Americans have been retiring later for a number of reasons, including jobs that are becoming less physically demanding, the shift from defined benefit to defined contribution pensions, and changes in Social Security’s incentives. What are the implications of working longer for workers’ mortality and health? Answering this question is complicated, because work and health are jointly determined – healthy people with lower mortality tend to work longer. Previous studies looking at the causal effect of work on mortality and health have found mixed results and have tended to focus on the effects of early retirement, not delayed retirement. A simple assumption would be that the relationship between them is symmetric. But it is unclear that that assumption is correct – after all, people who decide to keep working are likely a healthier group than those who stop early. This paper uses administrative data from the Netherlands and exploits policy variation designed to delay retirement to explore the links between work and health outcomes.
    Date: 2018–10
  8. By: Sarah Hofmann (WifOR Darmstadt); Andrea Mühlenweg (WifOR Darmstadt)
    Abstract: In this study, we analyze health effects of a recent education reform in Germany exposing students to increased schooling intensity. The reform shortened the higher secondary education track by one year. As the overall curriculum required for graduation was held constant, this led to an increase in instruction hours in the remaining school years. The reform has been introduced at different points in time across federal states, providing us with a difference-in-difference setup for analysis. Based on data from the German SocioEconomic Panel Study (SOEP), our results imply that the reform significantly reduced adolescents’ self-rated mental health status. The overall effect on the mental component summary score (MCS) is about a quarter of a standard deviation. Examining MCS subdimensions, we find detrimental effects of the reform on vitality and on emotional balance. We also observe significant impacts on self-assessed general physical health.
    Keywords: Adolescent health, schooling intensity, school reform, natural experiment
    JEL: J24 I14
  9. By: Paolo Guasoni; Yu-Jui Huang
    Abstract: This paper solves the problem of optimal dynamic consumption, investment, and healthcare spending with isoelastic utility, when natural mortality grows exponentially to reflect Gompertz' law and investment opportunities are constant. Healthcare slows the natural growth of mortality, indirectly increasing utility from consumption through longer lifetimes. Optimal consumption and healthcare imply an endogenous mortality law that is asymptotically exponential in the old-age limit, with lower growth rate than natural mortality. Healthcare spending steadily increases with age, both in absolute terms and relative to total spending. The optimal stochastic control problem reduces to a nonlinear ordinary differential equation with a unique solution, which has an explicit expression in the old-age limit. The main results are obtained through a novel version of Perron's method.
    Date: 2019–01

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