nep-hea New Economics Papers
on Health Economics
Issue of 2023‒01‒30
seventeen papers chosen by
Nicolas R. Ziebarth
Cornell University

  1. The Economics of the Public Option: Evidence from Local Pharmaceutical Markets By Juan Pablo Atal; José Ignacio Cuesta; Felipe González; Cristóbal Otero
  2. Fundamentally Reforming the DI System: Evidence from German Notch Cohorts By Bjoern Fischer; Johannes Micha Geyer; Nicolas R. Ziebarth
  3. Selective Exercise of Discretion in Disability Insurance Awards By Pilar Garcia-Gomez; Pierre Koning; Owen O'Donnell
  4. Dynamic Effects of Long-Term Care Insurance on Healthcare Expenditures: Evidence from South Korea By Honsoo Kim; Soojin Kim; Wonshik Kim; Kyung Hoon Yang
  5. Employing the unemployed of Marienthal: Evaluation of a guaranteed job program By Lehner, Lukas; Kasy, Maximilian
  6. Reducing Ordeals through Automatic Enrollment: Evidence from a Health Insurance Exchange By Mark Shepard; Myles Wagner
  7. Performance Pay in Insurance Markets: Evidence from Medicare By Michele Fioretti; Hongming Wang
  8. Health Care Spending Growth Has Slowed: Will the Bend in the Curve Continue? By Sheila D. Smith; Joseph P. Newhouse; Gigi A. Cuckler
  9. The links between catastrophic health expenditures and multidimensional poverty: An instrumental variable analysis in India By Pinilla-Roncancio, M; Amaya-Lara, J. L.; Cedeño-Ocampo, G.; Rodríguez-Lesmes, P; Sepúlveda, C.
  10. Evictions and Psychiatric Treatment By Ashley Bradford; Johanna Catherine Maclean
  11. The Effects of Recreational Marijuana Legalization on Employment and Earnings By Dhaval M. Dave; Yang Liang; Caterina Muratori; Joseph J. Sabia
  12. The Labour Market Returns to Sleep By Joan Costa-Font; Sarah Fleche; Ricardo Pagan
  13. Spatiotemporal Analysis of Health Service Coverage in the Philippines By Ulep, Valerie Gilbert T.; Uy, Jhanna; Puyat, Vicente Alberto R.; Antonio, Victor Andrew A.; Flaminiano, Clarisa Joy A.
  14. Conditional Cash Transfers in Resource-poor Environments: Evidence from the Philippine 4Ps By Yee, Sherryl A.; Abrigo, Michael R.M.; Astilla-Magoncia, Danika; Tam, Zhandra C.
  15. Healthy diets, lifestyle changes and well-being during and after lockdown : longitudinal evidence from the West Midlands By Van Rens, Thijs; Hanson, Petra; Oyebode, Oyinlola; Walasek, Lukasz; Barber, Thomas M; Al-Khudairy, Lena
  16. Close the Gap: Accelerating Post-pandemic Recovery through Social Justice By Domingo, Sonny N.; Ulep, Valerie Gilbert T.; Epetia, Ma. Christina F.
  17. Private transfers, public transfers, and food insecurity during the time of COVID-19: Evidence from Bangladesh By Ahmed, Akhter; Bakhtiar, M. Mehrab; Gilligan, Daniel O.; Hoddinott, John F.; Roy, Shalini

  1. By: Juan Pablo Atal; José Ignacio Cuesta; Felipe González; Cristóbal Otero
    Abstract: We study the effects of competition by state-owned firms, leveraging the decentralized entry of public pharmacies to local markets in Chile. Public pharmacies sell the same drugs at a third of private pharmacy prices, because of stronger upstream bargaining and market power in the private sector, but are of lower quality. Public pharmacies induced market segmentation and price increases in the private sector, which benefited the switchers to the public option but harmed the stayers. The countrywide entry of public pharmacies would reduce yearly consumer drug expenditure by 1.5 percent.
    JEL: D72 H4 I18 L3
    Date: 2022–12
  2. By: Bjoern Fischer; Johannes Micha Geyer; Nicolas R. Ziebarth
    Abstract: We study a fundamental reform of the public Disability Insurance (DI) system in Germany. Effective 2001, cohorts born after 1960 are no longer eligible for “occupational DI.” Occupational DI (ODI) implies benefit eligibility when health shocks prevent employees from working in their previous occupation. For the affected “notch cohorts”, the new DI eligibility rules require work disability in any job. Using administrative data, we first show that the reform significantly reduced the inflow of new DI beneficiaries by more than 30% in the long-run. Next, we validate these findings using representative SOEP household panel data comprised of the entire underlying population. The second part studies interaction effects with the private ODI market. Using representative data, we do not find much evidence that the notch cohorts purchased individual private ODI policies at significantly higher rates to compensate for the reduced generosity of the public DI system. To explain such low take-up, we employ a general equilibrium model featuring the roles of the social safety net, administrative costs, and asymmetric information. These driving forces help explain three stylized facts in the individual experience-rated private market for ODI policies: (1) low private ODI take-up and interaction effects with the public system---despite a high lifecycle work disability risk, (2) strong and positive income and health gradients in private ODI take-up, and (3) inversely related income and health gradients in the lifecycle work disability risk. Simulations illustrate that policy reforms to lower administrative costs have the greatest potential to foster take-up and flatten its income and health gradients.
    JEL: H53 H55 I10 I14 I18 J14 J21 J26
    Date: 2022–12
  3. By: Pilar Garcia-Gomez (Erasmus University Rotterdam); Pierre Koning (Vrije Universiteit Amsterdam); Owen O'Donnell (Erasmus University Rotterdam Author-Name: Carlos Riumallo Herl; Erasmus University Rotterdam)
    Abstract: Variation in assessor stringency in awarding benefits leaves applicants exposed to uninsured risk that could be systematic if discretion were exercised selectively. We test for this using administrative data on applications to the Dutch disability insurance program. We find that discretion is more often exercised in favor of lower-waged applicants. Pre-disability wages drop discontinuously just above disability thresholds for entitlement to partial benefits. Assessors are more likely to discard the highest-paying algorithm-generated job matches that determine earnings capacity and entitlement when evaluating lower-waged applicants. While these applicants benefit on average, they are exposed to greater risk from between assessor variation.
    JEL: D73 H42 H55
    Date: 2022–12–22
  4. By: Honsoo Kim (Hansun Foundation); Soojin Kim (Georgia State University); Wonshik Kim (Georgia State University); Kyung Hoon Yang (University of Wisconsin, La Crosse)
    Abstract: Long-term care expenses pose a large financial risk to the elderly. In 2008, South Korea introduced a public long-term care insurance (LTCI) program for individuals older than 65. We study the dynamic effects of the LTCI on various healthcare expenditures. We find that after the implementation of the LTCI, average prescription drug and outpatient expenditures of the elderly increased. Dynamically, we observe that the growth in these expenditures moderates. We also find suggestive evidence that after the LTCI program, the elderly utilize LTC hospitals, substituting out of inpatient hospital services. These findings underscore the importance of understanding the long-term effects of LTCI on health and healthcare expenditures of the elderly and the need to account for such interactions in policy design.
    Date: 2022–12
  5. By: Lehner, Lukas; Kasy, Maximilian
    Abstract: We evaluate a guaranteed job program that was piloted, starting in October 2020, in the municipality of Gramatneusiedl in Austria. This program provided individually tailored, voluntary jobs to all long-term unemployed residents. Our evaluation is based on three estimation approaches. The first approach uses pairwise matched randomization of participants into waves for program adoption. The second approach uses a pre-registered synthetic control at the municipality level. The third approach compares program participants to observationally similar individuals in control municipalities. These different approaches allow us to separate out direct effects of program participation, anticipation effects of future participation, and municipality-level equilibrium effects. We find strong positive impacts of program participation on participants' economic (employment, income, security) and non-economic wellbeing (social recognition, time structure, social interactions, collective purpose). We do not find effects on physical health, or risk- and time-preferences. At the municipality level, we find a large reduction of long-term unemployment, and a slightly attenuated reduction of total unemployment. Comparing participants to similar individuals in control towns, we obtain estimates that are very close to the estimates from the experimental comparison. There is evidence of positive anticipation effects in terms of subjective wellbeing, status and social inclusion for future program participants, relative to ineligible control-town individuals.
    JEL: I38 J08 J45
    Date: 2022–12
  6. By: Mark Shepard; Myles Wagner
    Abstract: Incomplete health insurance enrollment is a persistent U.S. challenge despite large subsidies. We ask whether hassles built into enrollment systems matter for insurance take-up and targeting. Studying removal of an auto-enrollment policy, we find that a small hassle – a requirement to actively select a health plan to enroll – reduces take-up by 33%, a major impact equivalent to $470 (57%) higher enrollee premiums. Hassles differentially screen out younger, healthier, and poorer people – groups with both low value and costs of insurance. We show that this value-cost correlation – a standard feature of insurance, where risk drives both – may undermine the classic rationale for ordeals' favorable targeting.
    JEL: D90 I11 I13 I14 I18
    Date: 2022–12
  7. By: Michele Fioretti (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Hongming Wang (Hitotsubashi University)
    Abstract: Public procurement bodies increasingly resort to pay-for-performance contracts to promote efficient spending. We show that firm responses to pay-for-performance can widen the inequality in accessing social services. Focusing on the quality bonus payment initiative in Medicare Advantage, we find that higher quality-rated insurers responded to bonus payments by selecting healthier enrollees with premium differences across counties. Selection is profitable because the quality rating fails to adjust for differences in enrollee health. Selection inflated the bonus payments and shifted the supply of high-rated insurance to the healthiest counties, reducing access to lower-priced, higher-rated insurance in the riskiest counties.
    Keywords: Pay-for-Performance, Medicare Advantage, Risk Selection, Quality Ratings, Health Insurance Access
    Date: 2021–05–01
  8. By: Sheila D. Smith; Joseph P. Newhouse; Gigi A. Cuckler
    Abstract: Over 2009-2019 the seemingly inexorable rise in health care’s share of GDP markedly slowed, both in the US and elsewhere. To address whether this slowdown represents a reduced steady-state growth rate or just a temporary pause we specify and estimate a decomposition of health care spending growth. The post-2009 slowdown was importantly influenced by four factors. Population aging increased health care’s share of GDP, but three other factors more than offset the effect of aging: a temporary income effect stemming from the Great Recession; slowing relative medical price inflation; and a possibly longer lasting slowdown in the nature of technological change to increase the rate of cost-saving innovation. Looking forward, the post-2009 moderation in the role of technological change as a driver of growth, if sustained, implies a reduction of 0.8 percentage points in health care spending growth; a sizeable decline in the context of the 2.0 percentage point differential in growth between health care spending and GDP in the 1970 to 2019 period.
    JEL: I1
    Date: 2022–12
  9. By: Pinilla-Roncancio, M; Amaya-Lara, J. L.; Cedeño-Ocampo, G.; Rodríguez-Lesmes, P; Sepúlveda, C.
    Abstract: The relationship between multidimensional poverty and catastrophic health expenditures has not been studied in detail, specifically how dependent such a connection is according to the specific context. This study aims to determine whether households who face catastrophic health expenditures in India have a higher probability of living in multidimensional poverty, given their socio-economic background and the protection provided by access to health insurance. We explore such a relationship in the case of India, exploiting variation in the development level of its regions and the socio-economic conditions faced conditional on caste. Using data from the Indian Human Development Survey, we exploit longitudinal variation at the household level using a linear probability model. We complement this analysis with an instrumental variable analysis, using a health shock to analyse the causal relationship between facing a shock which increases catastrophic health expenditures and living in multidimensional poverty. The results revealed that households facing catastrophic health expenditures in India have a higher probability of being multidimensionally poor. Such a relationship was only partially mitigated if the household was protected by health insurance, and there were almost no differences according to the caste of the household. Moreover, the relationship was stronger outside South India, especially on the role of health insurance. and place of residence. In the case of the instrumental variable analysis, the results show the same pattern as in the longitudinal model; however, the results are not significant.
    Keywords: Catastrophic Health Expenditures;Multidimensional Poverty; India; Instrumental Variables
    JEL: D14 I3 I15
    Date: 2022–12–12
  10. By: Ashley Bradford; Johanna Catherine Maclean
    Abstract: Stable housing is critical for health, employment, education, and other social outcomes. Evictions reflect a form of housing instability that is experienced by millions of Americans each year. Inadequately treated psychiatric disorders have the potential to influence evictions in several ways. For example, these disorders may impede labor market performance and thus the ability to pay rent, or increase the likelihood of risky and/or nuisance behaviors that can lead to a lease violation. We estimate the effect of local access to psychiatric treatment on eviction rates. We combine data on the number of psychiatric treatment centers that offer outpatient and residential care within a county with eviction rates in a two-way fixed-effects framework. Our findings imply that ten additional psychiatric treatment centers in a county lead to a reduction of 2.1% in the eviction rate.
    JEL: I1 R0
    Date: 2022–12
  11. By: Dhaval M. Dave; Yang Liang; Caterina Muratori; Joseph J. Sabia
    Abstract: Despite nearly 70 percent of the American public supporting legalization of recreational marijuana, opponents argue that increased marijuana use may diminish motivation, impede cognitive function, and harm health, each of which could adversely affect adults’ economic wellbeing. This study is the first to explore the impacts of recreational marijuana laws (RMLs) on employment and wages. Difference-in-differences estimates show little evidence that RMLs adversely affect labor market outcomes among most working-age individuals. Rather, our estimates show that RML adoption is associated with an increase in agricultural employment, consistent with the opening of a new licit market. A causal interpretation of our findings is supported by (1) event-study analyses using dynamic difference-in-differences estimates designed to expunge bias due to heterogeneous and dynamic treatment effects, and (2) alternative policy estimates generated using a synthetic control design.
    JEL: H71 I12
    Date: 2022–12
  12. By: Joan Costa-Font (LSE - London School of Economics and Political Science, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics, CESifo - Center for Economic Studies and Ifo for Economic Research - CESifo Group Munich); Sarah Fleche (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne, CEP - LSE - Centre for Economic Performance - LSE - London School of Economics and Political Science, LSE - London School of Economics and Political Science, CNRS - Centre National de la Recherche Scientifique); Ricardo Pagan (University of Málaga)
    Abstract: The proportion of people sleeping less than the daily-recommended hours has increased. Yet, we know little about the labour market returns to sleep. We use longitudinal data from Germany and exploit exogenous variation in sleep duration induced by time and local variations in sunset time. We find that a 1-hour increase in weekly sleep increases employment by 1.6 percentage points and weekly earnings by 3.4%. Most of this earnings effect comes from productivity improvements, while the number of working hours decreases with sleep time. We identify one mechanism driving these effects, namely the better mental health workers experience from sleeping more hours.
    Keywords: sleep, employment, productivity, mental health, sunset times
    Date: 2022–11
  13. By: Ulep, Valerie Gilbert T.; Uy, Jhanna; Puyat, Vicente Alberto R.; Antonio, Victor Andrew A.; Flaminiano, Clarisa Joy A.
    Abstract: In this study, a spatiotemporal analysis of trends and disparities in health service coverage indicators was conducted using PhilHealth data on insurance claims, membership, and accredited facilities merged with auxiliary datasets from the Department of Health and Philippine Statistics Authority. The results emphasize clear disparities in population coverage, facility coverage, service coverage, and financial protection across different subpopulations. Comments to this paper are welcome within 60 days from the date of posting. Email
    Keywords: universal health care;health service coverage;spatiotemporal analysis;PhilHealth;equity
    Date: 2022
  14. By: Yee, Sherryl A.; Abrigo, Michael R.M.; Astilla-Magoncia, Danika; Tam, Zhandra C.
    Abstract: This study provides new evidence of the heterogeneous impact of the Philippines’ conditional cash transfer (CCT) program designed to improve human capital investments among children from poor households. Using a regression discontinuity design, the moderation analysis shows that the distance to and quality of education and health facilities matter in child schooling and vaccination behaviors. Conditional cash transfers provide some, but incomplete, protective effects against the adverse influence of suboptimal facility conditions on these child outcomes. The study also documents no crowding out effects from some elective affirmative actions directed toward CCT beneficiaries. Comments to this paper are welcome within 60 days from the date of posting. Email
    Keywords: conditional cash transfer;4Ps;education;health;impact evaluation
    Date: 2022
  15. By: Van Rens, Thijs (Department of Economics, University of Warwick); Hanson, Petra (Endocrinology and Metabolism, University of Warwick); Oyebode, Oyinlola (Queen Mary University of London); Walasek, Lukasz (Department of Psychology, University of Warwick); Barber, Thomas M (Endocrinology and Metabolism, University Hospital Coventry and Warwickshire); Al-Khudairy, Lena (University of Warwick)
    Abstract: Lockdowns’ to control the spread of COVID-19 in the UK affected many aspects of life and may have adversely affected diets. We aimed to examine (1) the effect of lockdowns on fruit and vegetable consumption, as a proxy for healthy diets more generally, and on weight and well-being, (2) whether any subgroup was particularly affected and (3) the barriers and facilitators to a healthy diet in lockdown. We find no evidence for decreased fruit and vegetable consumption during lockdown compared with afterwards. If anything, consumption increased by half a portion daily among women, particularly among those who normally have a long commute. This finding, combined with a significant increase in physical activity, suggests that behaviours were healthier during lockdown, consistent with higher self-reported health. However, well-being deteriorated markedly, and participants reported being heavier during the lockdown as well. Our qualitative data suggest that an abundance of resources (more time) supported higher fruit and vegetable consumption during lockdown, despite increased access issues. Our results may assuage concerns that lockdowns adversely affected diets. They may point to the impact of commuting on diet, particularly for women. We add longitudinal evidence to a growing body of literature on the adverse effect of lockdown on mental health.
    Date: 2023
  16. By: Domingo, Sonny N.; Ulep, Valerie Gilbert T.; Epetia, Ma. Christina F.
    Abstract: Socioeconomic disparities run deep in the Philippines, but the COVID-19 pandemic further exacerbated these inequities. Globally, there is a renewed sense of urgency to break these inequities and place social justice at the front and center of the post-COVID recovery. Social justice is about redressing power imbalances, assuring the protection of equal access to liberties, rights, and opportunities, and distributing the benefits, risks, and costs among peoples across generations. This paper examined the disproportionate impacts of the COVID-19 pandemic in the following sectors: health, labor and education, and environment, as well as the deep-seated structural and systems challenges that could explain these disparities. Avenues for insightful discourses and genuine reforms are needed to address concerns on human capital development and social protection and environment resilience and climate change. Comments to this paper are welcome within 60 days from the date of posting. Email
    Keywords: social justice;inequality;COVID-19;social protection;labor;education;health;environment;resilience
    Date: 2022
  17. By: Ahmed, Akhter; Bakhtiar, M. Mehrab; Gilligan, Daniel O.; Hoddinott, John F.; Roy, Shalini
    Abstract: In the aftermath of the COVID-19 pandemic, interest has grown in what kinds of assistance protect household food security during shocks. We study rural and urban Bangladesh from 2018-19 to late 2021, assessing how pre-pandemic access to social safety net programs and private remittances relate to household food insecurity during the pandemic. Using longitudinal data and estimating differences-in-differences models with household fixed effects, we find that pre-pandemic access to social protection is associated with significant reductions in food insecurity in all rounds collected during the pandemic, particularly in our urban sample. However, pre-pandemic access to remittances shows no similar protective effect.
    Keywords: BANGLADESH, SOUTH ASIA, ASIA, food insecurity, Coronavirus, coronavirus disease, Coronavirinae, COVID-19, rural areas, urban areas, social safety nets, social protection, remittances, private transfers, public transfers
    Date: 2022

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