nep-hea New Economics Papers
on Health Economics
Issue of 2019‒10‒07
fifteen papers chosen by
Nicolas R. Ziebarth
Cornell University

  1. The Two Margin Problem in Insurance Markets By Michael Geruso; Timothy J. Layton; Grace McCormack; Mark Shepard
  2. Does Medicare Coverage Improve Cancer Detection and Mortality Outcomes? By Rebecca Mary Myerson; Reginald Tucker-Seeley; Dana Goldman; Darius N. Lakdawalla
  3. Direct and Indirect Effects Based on Changes-in-Changes By Martin Huber; Mark Schelker; Anthony Strittmatter
  4. Who Cares When You Close Down? The Effects of Primary Care Practice Closures on Patients By Tamara Bischof; Boris Kaiser
  5. Holding Hospitals Accountable? Evidence on the Effectiveness of Minimum Charity Care Provision Laws By Michah W. Rothbart; Nara Yoon
  6. The Effect of Freedom of Choice on Health System Responsiveness. Evidence from Spain By Fernández-Pérez, A.;; Jiménez-Rubio, D.;; Robone, S.;
  7. A latent class approach to inequity in health using biomarker data By Carrieri, V.;; Davillas, A.;; Jones, A.M.;
  8. Older people health and access to healthcare. A retrospective look at inequality dynamics over the past decade By Dino Rizzi; Carlo Simionato; Francesca Zantomio
  9. Endogenous Health Groups and Heterogeneous Dynamics of the Elderly By Dante Amengual; Jesus Bueren; Julio Crego
  10. BMI Mobility and Obesity Transitions Among Children in Ireland By David (David Patrick) Madden
  11. Taxes on Unhealthy Food and Externalities in the Parental Choice of Children's Diet By Zarko Kalamov; Marco Runkel
  12. Usage-Based Vehicle Insurance: Driving Style Factors of Accident Probability and Severity By Konstantin Korishchenko; Ivan Stankevich; Nikolay Pilnik; Daria Marchenko
  13. Risk preferences in response to earthquake risk: Property value and insurance By Song Shi; Michael Naylor
  14. Experimental long-term effects of early-childhood and school-age exposure to a conditional cash transfer program By Teresa Molina Millán; Karen Macours; John A. Maluccio; Luis Tejerina
  15. The development of nations conditions the disease space By Garas, Antonios; Guthmuller, Sophie; Lapatinas, Athanasios

  1. By: Michael Geruso; Timothy J. Layton; Grace McCormack; Mark Shepard
    Abstract: Insurance markets often feature consumer sorting along both an extensive margin (whether to buy) and an intensive margin (which plan to buy). We present a new graphical theoretical framework that extends the workhorse model to incorporate both selection margins simultaneously. A key insight from our framework is that policies aimed at addressing one margin of selection often involve an economically meaningful trade-off on the other margin in terms of prices, enrollment, and welfare. For example, while a larger penalty for opting to remain uninsured reduces the uninsurance rate, it also tends to lead to unraveling of generous coverage because the newly insured are healthier and sort into less generous plans, driving down the relative prices of those plans. While risk adjustment transfers shift enrollment from lower- to higher-generosity plans, they also sometimes increase the uninsurance rate by raising the prices of less generous plans, which are the entry points into the market. We illustrate these trade-offs in an empirical sufficient statistics approach that is tightly linked to the graphical framework. Using data from Massachusetts, we show that in many policy environments these trade-offs can be empirically meaningful and can cause these policies to have unexpected consequences for overall social welfare.
    JEL: D82 G22 H51 I1 I13
    Date: 2019–09
  2. By: Rebecca Mary Myerson; Reginald Tucker-Seeley; Dana Goldman; Darius N. Lakdawalla
    Abstract: Medicare is the largest government insurance program in the United States, providing coverage for over 60 million people in 2018. This paper analyzes the effects of Medicare insurance on health for a group of people in urgent need of medical care – people with cancer. We used a regression discontinuity design to assess impacts of near-universal Medicare insurance at age 65 on cancer detection and outcomes, using population-based cancer registries and vital statistics data. Our analysis focused on the three tumor sites with recommended screening before and after age 65: breast, colorectal, and lung cancer. At age 65, cancer detection increased by 72 per 100,000 population among women and 33 per 100,000 population among men; cancer mortality also decreased by 9 per 100,000 population for women but did not significantly change for men. In a placebo check, we found no comparable changes at age 65 in Canada. This study provides the first evidence to our knowledge that near-universal access to Medicare at age 65 is associated with improvements in population-level cancer mortality, and provides new evidence on the differences in the impact of health insurance by gender.
    JEL: I13 I18 I28
    Date: 2019–09
  3. By: Martin Huber; Mark Schelker; Anthony Strittmatter
    Abstract: We propose a novel approach for causal mediation analysis based on changes-in-changes assumptions restricting unobserved heterogeneity over time. This allows disentangling the causal effect of a binary treatment on a continuous outcome into an indirect effect operating through a binary intermediate variable (called mediator) and a direct effect running via other causal mechanisms. We identify average and quantile direct and indirect effects for various subgroups under the condition that the outcome is monotonic in the unobserved heterogeneity and that the distribution of the latter does not change over time conditional on the treatment and the mediator. We also provide a simulation study and an empirical application to the Jobs II programme.
    Keywords: direct effects, indirect effects, mediation analysis, changes-in-changes, causal mechanisms, treatment effects
    JEL: C21
    Date: 2019
  4. By: Tamara Bischof; Boris Kaiser
    Abstract: This paper investigates the consequences that patients face when their regular primary care provider closes down her practice, typically due to retirement. We estimate the causal impact of closures on patients’ utilization patterns, medical expenditures, hospitalizations, and health plan choice. Employing a difference-in-difference framework, we find that patients who experience a discontinuity of care persistently adjust their utilization pattern by shifting visits away from ambulatory primary care providers (-12%) towards specialist care (+10%), and hospital outpatient facilities (+5%). The magnitude of these effects depends considerably on the local availability of primary care. We also observe that patients with chronic conditions shift their utilization more strongly towards other providers. Our results have potential implications for health policy in at least two dimensions: practice closures may lead to an inefficient use of healthcare services and deteriorate access to primary care, particularly in regions where the supply of primary care doctors is low.
    Keywords: Continuity of Care; Healthcare Utilization; Healthcare Expenditures; Primary Care; General Practitioners
    JEL: D12 I11 I12 I31
    Date: 2019–09
  5. By: Michah W. Rothbart (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Nara Yoon (Maxwell School, Syracuse University, 215 Eggers Hall, Syracuse, NY 13244)
    Abstract: What can governments do to encourage nonprofit hospitals to provide greater benefits to their communities? Recent efforts by the federal and state governments seek to hold hospitals accountable for community health, in part by incentivizing charity care provision. Laws that set benchmarks for charity care spending are increasingly used, but their efficacy is uncertain. In this study, we examine the extent to which Illinois’ minimum charity care provision (MCCP) law increases nonprofit hospital charity care. Importantly, we differentiate between responses for hospitals required to provide minimal charitable spending (nonprofits) and those that are not (for-profit and public). We use detailed panel (2009-2015) data from Illinois' Annual Hospital Questionnaire and county-level data from the American Community Survey. We exploit a discrete change in charitable care requirements for nonprofit hospitals to identify the effect of the MCCP law on charity care, controlling for hospital characteristics, county demographics, and year and county (or hospital) fixed effects. Employing a differences-in-differences model, we find no evidence that the MCCP law increases charity care on average. Instead, we find some evidence that the law’s effects vary by how much charity care hospitals provided previously – charity care increases for those providing lower levels at baseline, narrowing the gap in charity care provision with those that provide high levels at baseline. The results suggest that setting low benchmarks does not create sufficient incentives for nonprofit hospitals to provide greater charity care on average, but instead may narrow the gap between high and low charity care hospitals.
    Keywords: Minimum Charity Provision Laws, Nonprofit Hospitals, Charity Care
    JEL: I18 I11 H71
    Date: 2019–09
  6. By: Fernández-Pérez, A.;; Jiménez-Rubio, D.;; Robone, S.;
    Abstract: Public policies fostering the freedom of choice in the healthcare sector are becoming increasingly usual in Europe in order to boost patient empowerment and improving health system responsiveness. However, there is limited evidence regarding the effects of freedom of choice policies. The goal of this study is to contribute to this literature by analysing the impact of the implementation of the Single Health Area in the Spanish region of Madrid in 2009. This reform allowed citizens to freely choose among any General Practitioner and Specialist of any health centre of the region. We focus on studying the effect on the health services responsiveness -as defined by the World Health Organization - drawing on cross-section microdata from the Spanish Healthcare Barometer for 2002-2016 and making use of the synthetic control estimation techniques. The findings show that the reform caused a strong positive impact on the Prompt Attention domain in specialised care. By contrast, the reform caused a drop in the responsiveness with Communication and Dignity domains in primary care. The results of this paper could provide policy-makers with empirical evidence about the impact of the freedom of choice policies on the quality of care provided by the health services.
    Keywords: health system responsiveness; synthetic control method; freedom of choice
    Date: 2019–10
  7. By: Carrieri, V.;; Davillas, A.;; Jones, A.M.;
    Abstract: We develop an empirical approach to analyse, measure and decompose Inequality of Opportunity (IOp) in health, based on a latent class model. This addresses some of the limitations that affect earlier work in this literature concerning the definition of types, such as partial observability, the ad hoc selection of circumstances, the curse of dimensionality and unobserved type-specific heterogeneity that may lead to either upwardly or downwardly biased estimates of IOp. We apply the latent class approach to measure IOp in allostatic load, a composite measure of our biomarker data. Using data from Understanding Society (UKHLS), we find that a latent class model with three latent types best fits the data and that these types differ in terms of their observed circumstances. Decomposition analysis shows that about two-thirds of the total inequality in allostatic load can be attributed to the direct and indirect contribution of circumstances.
    Keywords: equality of opportunity; health equity; biomarkers; finite mixture models; latent class models; decomposition analysis
    JEL: C1 D63 I12 I14
    Date: 2019–10
  8. By: Dino Rizzi (Department of Economics, University Of Venice Cà Foscari); Carlo Simionato (Consiglio Regionale del Veneto); Francesca Zantomio (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The past decade of austerity measures has severely hit Public Healthcare provision in Italy, entailing significant reductions in per-capita expenditure, particularly in Regions put under ‘Healthcare Budget Recovery Plans’, mostly in the South of the country. Building on data on individuals aged 50 or older drawn from the Survey of Health, Ageing and Retirement in Europe, we compute time- and area-specific Concentration and Horizontal Inequity indexes, to assess the evolution of inequity in older people health and healthcare access (i.e. GP contacts and specialists’ visits) across Italian macro-areas since the Great Recession onset. Results show that in the North, while health has been improving on average, income-related inequality in health has increased; in the South, while on average health has not improved, the concentration of bad health among the income-poor has decreased. Sizeable inequity in access to specialists’ visits emerges throughout the country, and generally worsened since before the crisis onset. Evidence overall suggests that in the South, along the crisis, under worsened income conditions and Public Healthcare budget cuts, poorer older individuals might have substituted specialised care with increased family doctors’ visits.
    Keywords: Health, healthcare, inequity, concentration indexes, Great Recession
    JEL: I13 I14 I18
    Date: 2019
  9. By: Dante Amengual (CEMFI); Jesus Bueren (European University Institute); Julio Crego (Tilburg University)
    Abstract: We propose a novel methodology to classify individuals into groups of health and characterize their transition across these groups as they age. We use MCMC techniques to estimate a panel Markov switching model that exploits information from both the crosssectional and time series dimensions. Using the Health and Retirement Study, we identify four clearly differentiated and persistent health groups, depending on individual’s physical and mental disabilities, with heterogeneous transitions across gender and education. Our classification outperforms existing measures of health used in the literature at explaining entry in nursing homes, home health care, out-of-pocket medical expenses and mortality.
    Date: 2019
  10. By: David (David Patrick) Madden
    Abstract: This paper examines mobility and changes in Body Mass Index (BMI) for a sample of Irish children across three waves of the longitudinal Growing Up in Ireland dataset. Particular attention is paid to transitions across the key BMI thresholds of overweight and obesity. Analysis is carried out by gender and by maternal education. In general, the degree of mobility appears to be relatively limited although it is greater than for the mothers of the children over the same time period. There is relatively little variation by gender and maternal education apart from some indication of less mobility out of obesity for girls.
    Keywords: Obesity; Mobility; Transitions
    JEL: I12 I14 I39
    Date: 2019–09
  11. By: Zarko Kalamov; Marco Runkel
    Abstract: This paper addresses the question whether taxes on unhealthy food are suitable for internalizing intergenerational externalities inflicted by parents when they decide on their children’s diet. Within an OLG model with an imperfectly altruistic parent, the optimal steady state tax rate on unhealthy food is strictly positive. However, it is only second best since it not only reduces food consumption of the child but also distorts the parent's food consumption. Surprisingly, the optimal tax may under- or overinternalize the marginal damage.
    Keywords: obesity, fat tax, altruism
    JEL: D11 D62 H21 I12
    Date: 2019
  12. By: Konstantin Korishchenko; Ivan Stankevich; Nikolay Pilnik; Daria Marchenko
    Abstract: The paper introduces an approach to telematics devices data application in automotive insurance. We conduct a comparative analysis of different types of devices that collect information on vehicle utilization and driving style of its driver, describe advantages and disadvantages of these devices and indicate the most efficient from the insurer point of view. The possible formats of telematics data are described and methods of their processing to a format convenient for modelling are proposed. We also introduce an approach to classify the accidents strength. Using all the available information, we estimate accident probability models for different types of accidents and identify an optimal set of factors for each of the models. We assess the quality of resulting models using both in-sample and out-of-sample estimates.
    Date: 2019–10
  13. By: Song Shi; Michael Naylor
    Abstract: It is well established that individuals tend not to be very good at utilizing all available information when making decisions involving rare risks. It is also widely accepted that individuals tend to underinsure against low-probability, high-loss events relative to high-probability, low-loss events. The dynamics aspects of changes in rare event risk preference for property value and insurance has, however, not been studied. We use the 2010/11 Canterbury earthquakes to confirm that some households underestimate earthquake risk prior to earthquake experience, and substantially re-evaluate those risk perceptions after a quake. We show that these changes are complex, and time dynamic. We further use a novel risk proxy based on smoking rates to show that uniform disaster insurance premiums reduce information clarity and encourage households to make sub-optimal property location choices, which contradict their risk preferences, thus causing ex-ante subjective risk perception to depart from underlying objective risk.
    Keywords: Christchurch earthquake; Insurance; Property Value; seismic risk
    JEL: R3
    Date: 2019–01–01
  14. By: Teresa Molina Millán; Karen Macours; John A. Maluccio; Luis Tejerina
    Abstract: Numerous evaluations of conditional cash transfer (CCT) programs show positive short-term impacts, but there is only limited evidence on whether these benefits translate into sustained longer-term gains. This paper uses the municipal-level randomized assignment of a CCT program implemented for five years in Honduras to estimate long-term effects 13 years after the program began. We estimate intent-to-treat effects using individual-level data from the population census, which allows assignment of individuals to their municipality of birth, thereby circumventing migration selection concerns. For the non-indigenous, we find positive and robust impacts on educational outcomes for cohorts of a very wide age range. These include increases of more than 50 percent for secondary school completion rates and the probability of reaching university studies for those exposed at school-going ages. They also include substantive gains for grades attained and current enrollment for others exposed during early childhood, raising the possibility of further gains going forward. Educational gains are, however, more limited for the indigenous. Finally, exposure to the CCT increased the probability of international migration for young men, from 3 to 7 percentage points, also stronger for the non-indigenous. Both early childhood exposure to the nutrition and health components of the CCT as well as exposure during school-going ages to the educational components led to sustained increases in human capital.
    Keywords: Conditional cash transfers (CCTs), Early childhood, Education, Migration
    Date: 2019
  15. By: Garas, Antonios (ETH Zurich); Guthmuller, Sophie (European Commission -- JRC); Lapatinas, Athanasios (European Commission -- JRC)
    Abstract: Using the economic complexity methodology on data for disease prevalence in 195 countries during the period of 1990-2016, we propose two new metrics for quantifying the relatedness between diseases, or the ‘disease space’ of countries. With these metrics, we analyze the geography of diseases and empirically investigate the effect of economic development on the health complexity of countries. We show that a higher income per capita increases the complexity of countries’ diseases. Furthermore, we build a disease-level index that links a disease to the average level of GDP per capita of the countries for which they have a relative disease disadvantage. With this index, we highlight the link between economic development and the complexity of diseases and illustrate, at the disease-level, how increases in income per capita are associated with more complex diseases.
    Keywords: health complexity; disease complexity; economic development
    JEL: C33 I15
    Date: 2019–09

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