the importance of group coverage how tax policy shaped u s health insurance in 1954 the internal revenue service stipulated that employer contributions to the health insurance plans of their employees were to be excluded from employee taxable income today the tax subsidy is major feature of the u s health care market this paper examines the initial effects of the tax subsidy on the demand for health insurance using previously unexamined data from 1953 and 1958 results suggest that the tax subsidy increased the growth of group insurance particularly among union members and employed persons this is a critical effect because group insurance is not only less expensive than individual insurance but it is also easier to obtain and households with access to group health insurance are far more likely to purchase health insurance coverage than those without similar access by increasing access to group insurance the tax subsidy fostered an increase in the purchase of group health insurance by people who may not have purchased individual coverage and generated institutional change as it cemented an employment based system of group health insurance in the united states this abstract was borrowed from another version of this item

does health plan generosity enhance hospital market power we test whether the generosity of employer sponsored health insurance facilitates the exercise of market power by hospitals we construct indices of health plan generosity and the price and volume of hospital services using data from truven marketscan for 601 counties from 2001 to 2007 we use variation in the industry and union status of covered workers within a county over time to identify the causal effects of generosity although ols estimates fail to reject the hypothesis that generosity facilitates the exercise of hospital market power iv estimates show a statistically significant and economically important positive effect of plan generosity on hospital prices in uncompetitive markets but not in competitive markets our results suggest that most of the aggregate effect of hospital market structure on prices found in previous work may be coming from areas with generous plans

claim timing and ex post adverse selection many health care treatments are not urgent and may be delayed if patients so choose because insurance coverage is typically determined by the treatment date individuals may have incentives to strategically delay treatments to minimize out of pocket costs the strategic delay of treatment a particular form of moral hazard can be an important source of subsequent adverse selection in which ex ante identical individuals select insurance coverage based on their differing accumulation of previously delayed treatments this article investigates these forces empirically in the context of the missing market for dental insurance using rich claim level data my analysis reveals that approximately 40 of individuals strategically delay dental treatments when incentivized to do so and this flexibility in delaying treatment can explain why the market for dental insurance has largely unraveled more generally the counterfactual analysis suggests features such as open enrolment periods and contracting on pre existing conditions may be helpful tools in overcoming adverse selection in insurance contexts where the timing of uncertainty is not contractible

it s not just the thought that counts an experimental study on the hidden cost of giving receiving a gift can create an impulse to reciprocate even when doing so may be inefficient and potentially harmful to a third party this paper provides a theoretical framework for a pure gift effect on reciprocity impulses and experimental evidence that such an effect exists that is a gift receiver will favor an actual gift giver over an intended gift giver even if the intended gift giver incurred the same costs and signaled the same intention to give this result contrasts with the predictions of existing theories on social preferences we also show that the pure gift effect is present even when it leads to a less efficient outcome or when the gift is given without the expectation of future returns our findings suggest that when reciprocating a gift becomes socially inefficient it may be more advantageous to guard against gift receiving or to keep donations secret than to try to control the intent to give

does asymmetric information matter in the early insurance market evidence from the auto insurance market in the late 1960s the performance of automobile insurance declined dramatically in japan in spite of rapid growth in the diffusion rate and the premiums were sharply raised several times in order to improve the situation this observation indicates the possible presence of adverse selection death spiral and provides an ideal situation for assessing informational asymmetry using bodily injury liability bil insurance data from 46 japanese prefectures over the period 1966 to 1975 this article tests two hypotheses of adverse selection i high risk drivers were more likely to join the bil insurance market and ii sharp premium increases drove low risk policyholders away various empirical analyses show that there is little evidence for either type of adverse selection we also test whether a risk misperception hypothesis can explain our results and find some evidence that the population density have a significantly positive impact on the demand for bil insurance an earlier version of this artic

health plan choice using a unique panel dataset of health plan choices and personal characteristics of employees at a single firm this paper provides estimates of price elasticities for health insurance plans in a managed competition setting estimated price elasticities are larger in absolute value than most previous estimates and the magnitude of the price elasticity suggests that there is a place for price competition in this market we also find evidence of transition costs in switching health plans for older and less healthy employees such differential responses to price may contribute to adverse selection in this market

finance saving and investment in keynes economics in a very interesting paper on kalecki s and keynes s views on finance saving and investment asimakopulos has recently drawn attention to a similarity between kalecki s and keynes s economics which most economists have tended to overlook 1 not only is there reason to believe that both these authors held investment to be a key element in the determination of economic activity but there is also evidence that they gave a similar treatment of the finance required for an increase in investment besides discussing the latter similarity asimakopulos has criticised both kalecki s and keynes s discussions concerning finance he has in particular questioned the complete independence of saving and investment which he conceives to be assumed by both kalecki and keynes and has concluded that there may be limits related in some way to the propensity to save to the extent to which firms are in a position to increase their rate of investment even if short term credit is available to finance such an increase 2 in relation to this he has argued that contrary to what both kalecki and keynes have assumed finance will be a revolving fund only if the multiplier process subsequent to an increase in investment associated with the provision of finance has been completed two basic assumptions underlie asimakopulos s analysis first it is assumed that savings of an amount equal to ex ante savings must be available to pay the initiating credit and or to replace short term bank loans by long term bonds second and related to the first assumption it is assumed that ex ante savings at any point in time have to increase until they are equal to the new level of investment which requires the com pletion of the multiplier process then and only then the amount of the retired or repaid bank credit will suffice to make credit advances to keep financing the new level of investment asimakopulos therefore conceives of the keynesian claim that there will always be exactly enough saving to take up investment and to release the finance required for the new level of investment as being associated with a confusion between the equality of ex post saving and investment and the conditions for short period equilibrium 3

do informal risk sharing networks crowd out public voluntary health insurance evidence from vietnam many governments in low income countries have promoted voluntary health insurance schemes in recent years with the principal aim of improving access to services amongst those working in the informal economy few attempts to understand demand for such schemes exist particularly in light of the importance of informal social security arrangements for many households a model of demand for health insurance is developed reflecting this context and estimated using data from vietnam the results show that informal financial networks may crowd out government promoted health insurance implications for theory and policy are discussed

the role of income and health risk in the choice of health insurance evidence from australia abstract health insurance choice is investigated using individual data from australia where all people faced a common limited set of possible health insurance policies the data cover two separate regimes one in which insurance choice was for a more generous level of coverage and one in which the choice was a more dramatic one between insurance and no insurance coverage in determining health insurance choice the results indicate a major role for income a major role for premium notably in the first regime and a minor role for observed factors related to health risk aside from age and sex

you owe me in many cultures and industries gifts are given in order to influence the recipient often at the expense of a third party examples include business gifts of firms and lobbyists in a series of experiments we show that even without incentive or informational effects small gifts strongly influence the recipient s behavior in favor of the gift giver in particular when a third party bears the cost subjects are well aware that the gift is given to influence their behavior but reciprocate nevertheless withholding the gift triggers a strong negative response these findings are inconsistent with the most prominent models of social preferences we propose an extension of existing theories to capture the observed behavior by endogenizing the reference group to whom social preferences are applied we also show that disclosure and size limits are not effective in reducing the effect of gifts consistent with our model financial incentives ameliorate the effect of the gift but backfire when available but not provided

incentive effects in the demand for health care a bivariate panel count data estimation this paper contributes in three dimensions to the literature on health care demand first it features the first application of a bivariate random effects estimator in a count data setting to permit the efficient estimation of this type of model with panel data second it provides an innovative test of adverse selection and confirms that high risk individuals are more likely to acquire supplemental add on insurance third the estimations yield that in accordance with the theory of moral hazard we observe a much lower frequency of doctor visits among the self employed and among mothers of small children copyright 2002 john wiley sons ltd

equilibrium in competitive insurance markets with ex ante adverse selection and ex post moral hazard abstract existence of pure strategy equilibria is studied in health insurance markets that exhibit both ex ante adverse selection of the rothschild stiglitz wilson type and ex post hidden information moral hazard it is found that ex post moral hazard has two offsetting effects on the existence of equilibrium and that in general it is difficult to say whether an equilibrium is more or less likely to exist numerical simulations and an analytical example confirm that moral hazard may increase the likelihood of equilibrium these results are interpreted as evidence that health maintenance organization hmo markets could be less likely to exhibit stable equilibria than are fee for service insurance markets

monitoring physicians a bargaining model of medical group practice this paper challenges the proposition that large physician owned groups will be inefficient because of failures to control opportunism a bargaining model implies that even large partnerships will make efficient resource and monitoring decisions in addition opportunism has much the same payoff for employees and partners the data show that most large medical practice organizations are physician owned empirical analyses of nine forms of monitoring by large groups generally show no clear link between monitoring and ownership there is one exception physician owned firms tend to base compensation on productivity which may help explain the continued dominance of professional partnerships

the incidence of medicare abstract the medicare program transfers nearly 300 billion annually from taxpayers to beneficiaries this paper considers the incidence of such transfers in the context of a life cycle model with uncertainty about future health care expenditures we find the distributional consequences of the medicare program are roughly neutral in dollar terms households living in high income neighborhoods pay more in taxes but they also receive more in benefits these dollar flows however ignore the insurance value of the medicare system given the incomplete insurance coverage of lower income elderly households prior to the medicare program the money metric benefits to lower income groups exceed the dollar flows suggesting that medicare redistributes more than a simple accounting exercise would suggest

improving takeup of health insurance program a social experiment in france this paper is based on a randomised social experiment conducted in order to understand the low take up rate of a complementary health insurance voucher program for the poorest in france the aide complementaire sante acs we explore two of the main hypotheses put forward to explain low enrolment a lack of information about the program and a voucher amount considered to be too low a sample of eligible individuals living in an urban area in northern france were randomly split into three groups a control group who benefited from the standard level of financial aid a group benefiting from an increase in the value of the voucher and a third group benefiting from the same increase along with an invitation to an information meeting regarding acs we show that the voucher increase has a small but statistically significant effect on acs take up the invitation to the meeting appears to cancel out the positive effect of the voucher increase using an instrumental variable model to control for potential selection bias we find ambiguous evidence of the meeting attendance on acs take up this study confirms the difficulties that are faced in increasing the health insurance coverage of poor populations via subsidy programs

price elasticity and adverse selection in the demand for supplementary health insurance probit regression estimates show the effects of the price of insurance anticipated medical expenditures and other factors on reported decisions about purchasing hypothetically offered supplementary insurance policies the demand estimates can characterize how much supplemental insurance would be purchased under different tax policies affecting health insurance purchases although eliminating the current tax subsidy to insurance is shown to decrease demand the results indicate a substantial demand for supplementary insurance even in the absence of present tax incentives however our results on adverse selection raise concerns about the potential stability of supplemental insurance markets

post keynesian economics towards coherence this paper provides a comprehensive survey of post keynesian economics it argues that post keynesian economics has passed through the important initial stage of mounting a concerted critique of mainstream economics the focus however is on the stage reflected in current post keynesian research which the paper argues is concerned with elaborating a distinctive coherent approach that takes precedence over critique several traditions upon which post keynesian economics relies are identified institutionalism is proposed as an additional contributing tradition a novel aspect of the paper it is recognized however that more research is necessary to complete the post keynesian approach c 1996 academic press limited copyright 1996 by oxford university press

bankruptcy as implicit health insurance this paper examines the implicit health insurance that households receive from the ability to declare bankruptcy exploiting multiple sources of variation in asset exemption law i show that uninsured households with a greater financial cost of bankruptcy make higher out of pocket medical payments conditional on the amount of care received in turn i find that households with greater wealth at risk are more likely to hold health insurance the implicit insurance from bankruptcy distorts the insurance coverage decision using a microsimulation model i calculate that the optimal pigovian penalties are three quarters as large as the average penalties under the affordable care act

informal groups and health insurance take up evidence from a field experiment summary this paper presents the results of 20 randomized experiments aimed at understanding the low take up of in patient health insurance observed in developing countries take up does not increase when participants receive information about the product or an assistance to register or small subsidies of 2 10 or 30 take up does not increase when the same information is provided by local respected community leaders when participants are offered an in kind gift a chicken if they register when participants are offered the possibility to contribute lower and more frequent payments or the possibility to pay by cellphone a full subsidy generates a mere 45 take up with no retention after one year in contrast to these low take up rates presenting the same information without any subsidies to existing informal groups raises take up to 12 still 7 after one year as well as trust and knowledge of the product social networks play a major role in the adoption of health insurance this paper provides a cost effective way to increase take up of health insurance while subsidies are found to be largely ineffective at raising take up in the long run

impact of varying medigap insurance coverage on the use of medical services of the elderly a recursive model is estimated for the demand for medigap insurance coverage and for expected total medical care expenditures it is found that higher levels of coverage are associated with increased expenditures through higher probabilities of incurring a medical expense and increased levels of expenditures those with poor health had a smaller likelihood of having insurance than those with better health status contrary to the notion of adverse selection however those in poor health status who obtained health insurance tended to purchase more insurance coverage than those with better health status consistent with adverse selection non whites were at a disadvantage in terms of the probability of having medigap insurance and expected medical expenditures

health insurance and retirement of married couples summary most health insurance in the usa is provided by employers until eligibility for public health insurance medicare begins at age 65 retiring before 65 exposes workers who lack retiree health insurance coverage to the risk of catastrophic medical expenditure we solve and estimate a dynamic model of the employment behavior of older married couples that includes risky medical expenditure and health insurance parameter estimates imply that the risk reducing feature of health insurance can account for about half of the observed association between retiree health insurance and employment for married men but can account for only one tenth of the much larger observed association for married women policy simulations imply very small effects on employment of changing the age of eligibility for medicare from 65 to 67 copyright 2006 john wiley sons ltd

medical savings accounts microsimulation results from a model with adverse selection this paper examines medical savings accounts combined with high deductible catastrophic health plans msa chps exploring the possible consequences of making tax preferred msa chps available to the entire employment related health insurance market the paper uses microsimulation methods to examine the equilibrium effects of msa chps on health care and non health care expenditures tax revenues insurance premiums and exposure to risk if msa chps are offered alongside comprehensive plans biased msa chp enrollment can lead to premium spirals that drive out comprehensive coverage our estimates also raise concerns about equity insofar as those who stand to lose the most tend to be poorer and in families with infant children

the determinants of mortality mortality rates have fallen dramatically over time starting in a few countries in the 18th century and continuing to fall today in just the past century life expectancy has increased by over 30 years at the same time mortality rates remain much higher in poor countries with a difference in life expectancy between rich and poor countries of also about 30 years this difference persists despite the remarkable progress in health improvement in the last half century at least until the hiv aids pandemic in both the time series and the cross section data there is a strong correlation between income per capita and mortality rates a correlation that also exists within countries where richer better educated people live longer we review the determinants of these patterns over history over countries and across groups within countries while there is no consensus about the causal mechanisms we tentatively identify the application of scientific advance and technical progress some of which is induced by income and facilitated by education as the ultimate determinant of health such an explanation allows a consistent interpretation of the historical cross country and within country evidence we downplay direct causal mechanisms running from income to health

much ado about two reconsidering retransformation and the two part model in health econometrics in health economics applications involving outcomes y and covariates x it is often the case that the central inferential problems of interest involve e y x and its associated partial effects or elasticities many such outcomes have two fundamental statistical properties y 0 and the outcome y 0 is observed with sufficient frequency that the zeros cannot be ignored econometrically this paper 1 describes circumstances where the standard two part model with homoskedastic retransformation will fail to provide consistent inferences about important policy parameters and 2 demonstrates some alternative approaches that are likely to prove helpful in applications

a semi parametric model for asymmetric information in health plan markets i introduction there are two potential sources of asymmetric information that induce market failure in the health plan market the first adverse selection is analyzed by rothschild and stiglitz 1976 in their study individuals are exogenously assigned one of two possible illness probabilities only the individuals know their true illness probability under these conditions low risk consumers underinsure in environments where equilibrium exists adverse selection also occurs when plans can observe characteristics that affect risk but cannot adjust premiums to reflect these risks this type of adverse selection is discussed by cutler and reeber 1998 here plan premiums are constrained to be the same across all policyholders and therefore one cannot risk adjust on observable variables such as age or previous medical history similar to the first type of adverse selection the low and high risk policyholders sort themselves into different plans or plans attempt to cream skim by adjusting reimbursements that are more favorable to the profitable low risk policyholders death spirals can occur where the low risk consumers leave the more generous plans causing premiums of these plans to grow which in turn induces more members to leave these plans as the premiums grow more individuals leave the generous plan until it is no longer viable the second source of information asymmetry comes from the individual s choice of preventive effort much recent publicity has shown how individuals can reduce their probability of illnesses or accidents choices of eating drinking exercising smoking unprotected sexual activity driving behavior recreational drug use and sunscreen use are a few items from the long lists of decisions that affect the probability of illness health insurers cannot contract policyholders to exert a certain level of preventive effort because there is no mechanism to observe these efforts auto insurers can contract indirectly for effort by accessing public driving records and charging premium surcharges for traffic violations there are no counterpart records for health plans arnott and stiglitz 1988 and pauly 1974 discuss the welfare effects when preventive effort can reduce illness probabilities but the level of these efforts cannot be monitored and therefore cannot be written into a contract when this condition occurs full insurance is no longer feasible because no effort would be exerted under full insurance because health plans are not compensating individuals for the cost savings that come from preventive effort the individual s choice of effort is usually less than optimal therefore we call this information asymmetry moral hazard this moral hazard results in underinsurance for the entire population stewart 1994 looks at an economy where both adverse selection and moral hazard are present he finds that the welfare losses coming from both sources are subadditive i e the total welfare loss is less than the sum of the losses coming from both yet when both moral hazard and adverse selection are present the economy is still worse off by having both sources of asymmetric information instead of one of them in most of his simulations the low risk types substitute preventive effort for income protection although this is not a theoretically proven result his study shows that it is difficult to derive general results on the misallocation of effort and risk sharing when both sources are present because these misallocations depend on the individual s willingness to substitute the income savings from effort for the income protection that comes from insurance setting good health care policy requires knowing about the presence of these informational asymmetries unfortunately to date there is no consensus about the presence of informational asymmetries that come from either adverse selection or preventive effort most studies have attempted to determine only if adverse selection is present while ignoring the possible existence of preventive effort

health insurance tradeoffs revisited abstract in two recent papers journal of health economics 18 2 141 152 journal of health economics 18 6 811 824 nyman raised some questions about the welfare calculations and conclusions in our earlier paper manning and marquis health insurance the tradeoff between risk pooling and moral hazard vol 15 1996 this note discusses the erroneous criticisms in his papers first although we estimated a marshallian demand curve our calculations are based on compensating variations that incorporate the gains from risk pooling second our estimates of second best insurance plans indicate that some cost sharing is optimal in contradiction to his assertion that our results raise questions about the desirability of insurance coverage the comment also deals with other issues raised by nyman

disaggregation of the demand for hospital care textabstractin this article we want to confront some of the results of the theoretical literature on aggregation with the empirical consequences of aggregation in the context of the analysis of demand for hospital care there has been an evolution in the estimation of hospital demand functions from macro to micro studies which has resulted in diverging findings most studies of aggregate demand at the regional level estimated extremely large effects of hospital bed supply whereas studies based on individual data typically found health status to have a dominant influence on hospital utilization very often comparison of these studies is difficult because different data sources and model specifications have been used in this article we will estimate the same demand functions on both the macro and micro level using one data base in order to facilitate comparison for this purpose we use data on some 230 000 individuals who are insured with a private health insurance company in the netherlands the empirical analysis presented in section iv is preceded by a discussion of the peculiarities of hospital demand functions section ii and by a theoretical examination of the consequences of aggregation section iii

physician payments under health care reform abstract this study examines the impact of major health insurance reform on payments made in the health care sector we study the prices of services paid to physicians in the privately insured market during the massachusetts health care reform the reform increased the number of insured individuals as well as introduced an online marketplace where insurers compete we estimate that over the reform period physician payments increased at least 11 percentage points relative to control areas payment increases began around the time legislation passed the house and senate the period in which their was a high probability of the bill eventually becoming law this result is consistent with fixed duration payment contracts being negotiated in anticipation of future demand and competition

incremental universalism for the united states the states move first astandard health policy joke goes like this health policy expert x dies and goes to heaven god himself greets x and the lord says that the health expert can ask one question before entering heaven the health expert asks will we ever have universal health insurance coverage in the united states god answers yes but not in my lifetime this joke summarizes the prospects that policy experts have typically seen for universal health insurance coverage in the united states for senior policymakers this perspective reflects past battle scars most recently with the clinton administration s proposed health security act in 1994 there has been no serious national attempt at universal coverage since that time in the run up to the november 2008 election the tone of the discussion shifted politicians running for office at the national level talked freely about spending tens of billions of dollars on expanding health insurance coverage but perhaps the most intriguing practical developments occurred at the state level most notable has been the health reform plan enacted by massachusetts in april 2006 this sweeping bill altered insurance markets subsidized insurance coverage for a large swath of the population introduced a new health insurance purchasing mechanism the connector and mandated insurance coverage for almost all citizens the massachusetts experience has led to similar proposals in a number of states including a major but ultimately failed effort in california this new wave of health care proposals and laws is marked by what i call

making inferences from controlled income maintenance experiments nationally this paper addresses a question whose answer is essential for interpreting the results of such experiments if an experiment of limited duration is conducted under ideal conditions what can be inferred from the experimental results about behavior in a world where nit is adopted permanently by ideal conditions we mean that a individuals or households 2 in the experiment are conventional utility maximizers given the structure of the experiment and b the experiment is sufficiently well designed to permit the differential responses of individuals to be identified 3 the

shifted deductibles for high risks more effective in reducing moral hazard than traditional deductibles in health insurance a traditional deductible i e with a deductible range 0 d is in theory not effective in reducing moral hazard for individuals who know ex ante that their expenditures will exceed the deductible amount d e g those with a chronic disease to increase the effectiveness this paper proposes to shift the deductible range to si si d with starting point si depending on relevant risk characteristics of individual i in an empirical illustration we assume the optimal shift to be such that the variance in out of pocket expenditures is maximized results indicate that for the 10 percent highest risks in our data the optimal starting point of a 1000 deductible is to be found far beyond 1200 which corresponds with a deductible range of 1200 2200 or further we conclude that compared to traditional deductibles shifted deductibles with a risk adjusted starting point lower out of pocket expenditures and may further reduce moral hazard

estimating price elasticities of convalescent care programmes this study is the first to estimate price elasticities of demand for convalescent care programmes in 1997 the german legislature more than doubled the daily co payments for the publicly insured from 6t o 13 the measure caused the overall demand for convalescent care treatments to fall by 20 to 25 i estimate the price elasticity for medical rehabilitation programmes aimed at preventing work disability to be about 0 3 whereas the elasticity for medical rehabilitation programmes for recovery from accidents at work lies around 0 5 the demand for preventive treatment at health spas is elastic and less than 1 how does the demand for medical care change when prices change since the early days of the profession of health economics the question of the price elasticity for health services has been central joseph p newhouse one of the founders of the field of health economics has published more than 100 articles alone on health care demand newhouse was also the leader of the rand group that designed and directed the famous rand health insurance experiment that focused on the impact of costsharing on the demand for medical care not only newhouse but also many other economists have devoted a great deal of attention to this topic

the rand health insurance experiment three decades later we re present and re examine the analysis from the famous rand health insurance experiment from the 1970s on the impact of consumer cost sharing in health insurance on medical spending we begin by summarizing the experiment and its core findings in a manner that would be standard in the current age we then examine potential threats to the validity of a causal interpretation of the experimental treatment effects stemming from different study participation and differential reporting of outcomes across treatment arms finally we re consider the famous rand estimate that the elasticity of medical spending with respect to its out of pocket price is 0 2 emphasizing the challenges associated with summarizing the experimental treatment effects from non linear health insurance contracts using a single price elasticity

health insurance and the demand for medical care evidence from a randomized experiment we estimate how cost sharing the portion of the bill the patient pays affects the demand for medical services the data come from a randomized experiment a catastrophic insurance plan reduces expenditures 31 percent relative to zero out of pocket price the price elasticity is approximately 0 2 we reject the hypothesis that less favorable coverage of outpatient services increases total expenditure for example by deterring preventive care or inducing hospitalization

patient cost sharing in low income populations economie theory suggests that a natural tool to control medical costs is increased consumer cost sharing for medical care while such cost sharing reduces full insurance wherein patients are indifferent between falling sick or remaining healthy a greater reliance on coinsurance and copayments can in theory stem patient and provider incentives to engage

estimating demand elasticities using nonlinear pricing abstract nonlinear pricing is prevalent in industries such as health care public utilities and telecommunications however this pricing scheme introduces bias into estimating elasticities for welfare analysis or policy changes i develop a local elasticity estimation method that uses nonlinear price schedules to isolate consumers expenditure choices from selection and simultaneity biases this method improves over previous approaches by using commonly available observational data and requiring only a single general monotonicity assumption using claims level data on health insurance with two nonlinearities i am able to measure two separate elasticities and find that elasticity declines from 0 26 to 0 09 by the second nonlinearity these estimates are then used to calculate moral hazard deadweight loss this method enables estimation of many policies with nonlinear pricing which previous tools could not address

adverse selection moral hazard and wealth effects in the medigap insurance market using data from a longitudinal study of the recently retired we attempt to separate the moral hazard effect of medicare supplementary medigap insurance on health care expenditures from the adverse selection effect of poor health on medigap coverage we find evidence of adverse selection but its magnitude is unlikely to create serious efficiency problems taking adverse selection into account reduces the estimate of the moral hazard effect in addition we find a strong positive wealth effect on the demand for supplementary insurance

socioeconomic inequality of access to healthcare does choice explain the gradient equity of access is a key policy objective in publicly funded healthcare systems however observed inequalities of access by socioeconomic status may result from differences in patients choices using data on non emergency coronary revascularisation procedures in the english national health service we found substantive differences in waiting times within public hospitals between patients with different socioeconomic status up to 35 difference or 43 days between the most and least deprived population quintile groups using selection models with differential distances as identification variables we estimated that only up to 12 of these waiting time inequalities can be attributed to patients choices of hospital and type of treatment heart bypass versus stent residual inequality after allowing for choice was economically significant patients in the least deprived quintile group benefited from shorter waiting times and the associated health benefits were worth up to 850 per person

malpractice law and health care reform optimal liability policy in an era of managed care abstract because fee for service health insurance insulates providers from the costs of treatment decisions it may lead to defensive medicine precautionary treatment with minimal expected medical benefit administered out of fear of legal liability by giving providers higher powered incentives managed care may affect optimal liability policy among elderly medicare beneficiaries with heart disease in 1984 1994 we find that liability reducing tort reforms reduce defensive practices in areas with high and low managed care enrollment but that managed care and liability reform are substitutes we consider some implications of these results for the current debate over the appropriateness of extending malpractice liability to managed care organizations

value for money vote buying and politician accountability abstract the prevalence of vote buying is widely identified as a cause of poor governance in the developing world potential mechanisms for this relationship include the selection of lower quality politicians and the reduced accountability experienced by politicians once elected in this paper we present the first experimental evidence in support of the second channel of reduced accountability using data from laboratory experiments conducted in the u s and kenya we find that vote payments reduce voters willingness to hold politicians accountable holding fixed politician identity voters who receive payments are less willing to punish the politician for rent seeking and this reduction in punishment is larger in magnitude when payments are widely targeted unsurprisingly the politician then engages in a higher level of rent seeking a simple model of multi faceted social preferences encompassing reciprocity and inequality aversion is consistent with these findings

projecting long term medical spending growth we present a dynamic general equilibrium model of the u s economy and the medical sector in which the adoption of new medical treatments is endogenous and the demand for medical services is conditional on the state of technology we use this model to prepare 75 year medical spending forecasts and a projection of the medicare actuarial balance and we compare our results to those obtained from a method that has been used by government actuaries our baseline forecast predicts slower health spending growth in the long run and a lower medicare actuarial deficit relative to the previous projection methodology

public policy and health insurance choices of the elderly evidence from the medicare buy in program this study provides evidence on health insurance decisions of senior citizens nearly all senior citizens have health insurance coverage through medicare but poor seniors may also qualify for medicaid that fills many gaps in medicare coverage since 1987 the medicaid program has expanded eligibility using the sipp i find that medicaid eligibility increased from 8 7 in 1987 to 12 4 in 1995 for every 100 elderly who became eligible approximately 50 took up medicaid but more than 30 dropped private coverage resulting in crowd out of 60 crowd out came from individuals dropping privately purchased health insurance rather than dropping employer provided retiree health insurance the roles of asset tests health status and the panel structure of the sipp are also explored i find that a major strength of the sipp is in its point in time asset information for determining medicaid eligibility while the changing income and demographic information over the course of the 2 year panel adds little insight beyond cross sectional data 2000 elsevier science s a all rights reserved

an econometric model of health care utilization and health insurance in switzerland abstract this paper presents a preliminary econometric analysis on how different alternative plans affect the utilization of health care services in switzerland the data come from the 1992 1993 swiss health survey shs we briefly describe some institutional aspects of the swiss health system which prevailed at the time of the shs with particular emphasis on health insurance plans and payment system of providers we estimate a simultaneous two equation model containing latent variables in order to compare the probability of having at least one inpatient stay given that the insured has used some medical treatment for those who have purchased only a basic insurance plan and those who have purchased a supplemental insurance

persistence in medicare reimbursements and personal medical accounts this study uses the continuous medicare history sample cmhs a longitudinal sample of medicare beneficiaries from 1974 to 1997 to identify persistence in medicare reimbursements consistent estimates of medicare reimbursement persistence are obtained using a dynamic panel tobit model lagged reimbursements are statistically significant in explaining a beneficiary s current year reimbursements yet their effect is moderate in magnitude an additional dollar of medicare spending in the previous year gives rise to 0 19 in spending in the current year for those who have positive expenditures and the effect ranges between 0 16 and 0 25 past spending patterns for up to 5 years are also used to evaluate the out of sample prediction capabilities of a multi equation cross sectional model simulated spending patterns for several cohorts are derived and compared to actual spending the simulated spending distributions are used to study the feasibility of establishing retirement health accounts for medicare patients

price elasticity of expenditure across health care services policymakers in countries around the world are faced with rising health care costs and are debating ways to reform health care to reduce expenditures estimates of price elasticity of expenditure are a key component for predicting expenditures under alternative policies using unique individual level data compiled from administrative records from the chilean private health insurance market i estimate the price elasticity of expenditures across a variety of health care services i find elasticities that range between zero for the most acute service appendectomy and 2 08 for the most elective psychologist visit moreover the results show that at least one third of the elasticity is explained by the number of visits the rest is explained by the intensity of each visit finally i find that high income individuals are five times more price sensitive than low income individuals and that older individuals are less price sensitive than young individuals

demand for medical care by the elderly a finite mixture approach summary in this article we develop a finite mixture negative binomial count model that accommodates unobserved heterogeneity in an intuitive and analytically tractable manner this model the standard negative binomial model and its hurdle extension are estimated for six measures of medical care demand by the elderly using a sample from the 1987 national medical expenditure survey the finite mixture model is preferred overall by statistical model selection criteria two points of support adequately describe the distribution of the unobserved heterogeneity suggesting two latent populations the healthy and the ill whose fitted distributions diaer substantially from each other 1997 by john wiley sons ltd

estimating welfare in insurance markets using variation in prices we provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection we then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance such variation together with quantity data allows us to estimate the demand for insurance the same variation together with cost data allows us to estimate how insurers costs vary as market participants endogenously respond to price the slope of this estimated cost curve provides a direct test for both the existence and the nature of selection and the combination of demand and cost curves can be used to estimate welfare we illustrate our approach by applying it to data on employerprovided health insurance from one specific company we detect adverse selection but estimate that the quantitative welfare implications associated with inefficient pricing in our particular application are small in both absolute and relative terms

sticker shocks using vat changes to estimate upper level elasticities of substitution we estimate the upper level elasticity of substitution between goods and services of a nested aggregate ces preference specification we show how this elasticity can be derived from the long run response of the relative price of a good to a change in its vat rate we estimate this elasticity using new data on changes in vat rates across 74 goods and services for 25 european union countries from 1996 through 2015 depending on the level of aggregation we find a vat pass through rate between 0 4 and 0 7 this implies an upper level elasticity of 3 at the lowest level of aggregation with 74 categories and 1 cobb douglas preferences at a high level of aggregation that distinguishes 10 categories of goods and services

bribery behavioral drivers of distorted decisions we experimentally investigate behavioral drivers of bribery focusing on the role of self interest reciprocity and moral costs associated with distorting judgment in our laboratory experiment two participants compete for a prize a referee picks the winner participants can bribe the referee when the referee can keep only the winner s bribe bribes distort her judgment when the referee keeps the bribes regardless of the winner bribes no longer influence her decision an experiment in an indian market confirms these results these findings imply that our participants are influenced by bribes out of self interest and not because of a desire to reciprocate further evidence shows that self interest guides decisions to a greater extent when referees have scope for avoiding the moral costs associated with distorting judgment as a result limiting referees ability to form self serving evaluations can significantly reduce the effectiveness of bribes less

rational behavior in the presence of coverage ceilings and deductibles consumers of health care services with insurance plan features such as deductibles copayments and coverage ceilings in which the price of health care depends upon expenditures accumulated during a single year should rationally anticipate the impact of current consumption decisions on the price of health care later in the year we show that in the absence of wealth effects and risk aversion a utility maximizing consumer should base current consumption decisions on the expected end of year price of health care in a specific model with risk aversion and lumpy consumption decisions we show that the expected end of year price remains close to the true shadow price of health carefor plausible insurance plan and demand parameters we use this result in an econometric model of the demand for ambulatory mental health services

some reflections on keynes s finance motive for the demand for money this essay offers a fresh interpretation of keynes s finance motive some competing interpretations are assessed which it is argued are inconsistent with the conceptual framework of keynes s monetary analysis the finance motive is interpreted as an intrinsically dynamic conception which displays important aspects of keynes s monetary thought not brought out in the current macroeconomic paradigm the essay attempts to show that liquidity preference theory should be understood in a dynamic context as a theory of financial intermediation 1995 academic press limited

more on the economic efficiency of mixed public private insurance abstract blomqvist and johansson 1996 criticize my results regarding besley s besley 1989 analysis of public catastrophic coverage they concede that my analysis was correct under the assumptions i made but they argue that a more general model than besley or i used might yield different results unfortunately blomqvist and johansson s analysis of the more general case is flawed whereas they claim to have provided a more general argument against the sort of public intervention besley proposed they have unwittingly discovered an example in which his original conjecture holds

is health care a luxury the debate revisited with new evidence from emerging economies abstractthis paper studies the long run relationship between health care expenditure and income using a panel data set of emerging economies over the period 1995 2012 the results show that expenditure on health care and income are non stationary and cointegrated after controlling for cross sectional dependence and unobserved heterogeneity among different countries we find that the income elasticity of health care is less than 1 indicating that health care is a necessity and not a luxury government expenditure and out of pocket expenditure turn out to be important determinants of health care expenditure among non monetary factors results show that old age dependency and female education seem to have significant bearings on health care expenditures policy recommendations suggest that government should increase spending on health care in emerging economies since higher incomes may not automatically translate into higher health care spending by the people of these countries

the aggregate effects of health insurance evidence from the introduction of medicare this paper investigates the effects of market wide changes in health insurance by examining the single largest change in health insurance coverage in american history the introduction of medicare in 1965 i estimate that the impact of medicare on hospital spending is over six times larger than what the evidence from individual level changes in health insurance would have predicted this disproportionately larger effect may arise if market wide changes in demand alter the incentives of hospitals to incur the fixed costs of entering the market or of adopting new practice styles i present some evidence of these types of effects a back of the envelope calculation based on the estimated impact of medicare suggests that the overall spread of health insurance between 1950 and 1990 may be able to explain about half of the increase in real per capita health spending over this time period

the utilization of outpatient medical services in japan we estimate the price elasticity of demand for outpatient care in japan we use a nationally representative microdata set consisting of nearly 440 000 japanese patients using time between outpatient visits as a demand measure we estimate a cox proportional hazards model to calculate price effects with predicted probabilities we simulate yearly utilization and obtain elasticity estimates for most diagnostic categories we obtain inelastic downward sloping demand curves with price elasticities from 0 12 to 0 54 for the anomalous category we cannot reject a zero slope the elasticity estimates for japan are similar to u s estimates despite institutional differences

tax policy and the demand for health insurance estimates of the price and income elasticities of demand for health insurance are derived from econometric estimates of the parameters of a discrete choice model of health insurance demand using data from a survey of plan choices among a sample of federal government employees the estimated income elasticity 0 01 is similar to most previous estimates the estimated price elasticity 0 16 is in absolute value much less than the earlier previous estimates and somewhat less than the more recent previous estimates possible causes of these differences in price elasticity estimates are discussed

optimal reimbursement health insurance and the theory of ramsey taxation this paper explores the trade off between risk sharing and the incentives to consume increased medical care inherent in reimbursement insurance the results for the theory of reimbursement insurance are compared with those on ramsey taxation it is shown that there is a close formal analogy and interpretations are given

health insurance the tradeoff between risk pooling and moral hazard choosing optimal health insurance coverage involves a trade off between the gain from risk reduction and the deadweight loss from moral hazard this paper examines this trade off empirically by estimating both the demand for health insurance and the demand for health services it relies on data from a randomized controlled trial of cost sharing s effects on the use of health services and on the health status for a general non elderly population

causality and interdependence in pasinetti s works and in the modern classical approach the formal representation of economic theories normally takes the form of a model that is a system of equations which connect the endogenous variables with the values of the parameters which are taken as given sometimes it is possible to identify one or more equations which are able to determine a subset of endogenous variables priorly and independently of the other equations and of the value taken by the remaining variables of the system the first group of equations and variables are thus said to determine causally the remaining variables in pasinetti s works this notion of causality has often been emphasized as a formal property having the burden to convey some deep economic meaning in this work we will go through those pasinetti s works where this notion of causality plays a central role with the purpose to contextualize it within the econometric debate of the sixties to enucleate its economic meaning and to show its connections with other fields of the modern classical approach

the effect of medicare part d on pharmaceutical prices and utilization prescription drug expenditures represent the most rapidly growing component of health care spending increasing from 5 percent of health care spending in 1980 to more than 10 percent by 2005 centers for medicare and medicaid services cms 2007a further almost 60 percent of all prescriptions in the united states are filled for beneficiaries of medicare medicaid and other government programs rapid innovation in new pharmaceuticals has contributed substantially to quality of life and longevity in the us frank lichtenberg 1996 these facts combined indicate that government procurement schemes are critical both in determining government expenditure on pharmaceuticals and in stimulating innovation of new treatments in this paper we show that the institutions and mechanisms used by the government to pur chase prescription drugs can strongly affect market outcomes by institutions we have in mind large buyer groups structured incentives for patients to consume certain products and the devel opment and use of formularies a formulary is a mechanism that allows a buyer to identify a therapeutically similar treatment as a viable substitute for a patented treatment and to create price competition due to the ability to substitute away from the more expensive product when bargaining with the seller of a patented product the ability to shift demand to a substitute drug is a powerful negotiating tool our paper provides evidence for what we consider a surprising outcome in the case of the new prescription drug program for medicare enrollees moving consumers from cash paying status to membership in an insured group lowers optimal prices for branded prescription drugs below what they otherwise would be this is surprising because the standard effect of insurance is to create inelastic demand and therefore elicit higher prices from a seller with market power duggan and scott morton 2006 however the insurers that we study bundle insurance with a formulary and other mechanisms to create elastic demand an individual consumer typically does not know which drugs are acceptable therapeutic substitutes the consumer s physician typi cally has poor knowledge of prices especially negotiated prices and any one consumer is too small a share of demand to negotiate with a pharmaceutical company a prescription drug plan can potentially surmount all three hurdles our evidence leads us to conclude that the formulary and other mechanisms perform the spe cial role of allowing buyers to move market share among drugs with patent protection thereby raising cross price elasticities and lowering purchase prices or reducing price increases for branded drugs this result contrasts with the common intuition that an uninsured consumer

the normative economics of health care finance and provision whereas in many countries the crisis in medical care has been seen in terms of excess spending on health services in the uk it has been seen at least by most of those who manage and work in the nhs as a crisis of underfunding this has come about as the result of the government s successful attempts to restrain the rate of growth of real spending on the nhs which in turn reflects the government s belief that its principal effective weapon against what it perceives to be inefficiency in the nhs is to challenge management itself reformed and to some extent liberated by systematic financial squeezes the same concern has given rise to a host of proposals for reform of the nhs most of which involve a much greater role for private insurance private finance of other kinds such as out of pocket payments and private provision of health care itself

a comparison of alternative models for the demand for medical care we have tested alternative models of the demand for medical care using experimental data the estimated response of demand to insurance plan is sensitive to the model used we therefore use a split sample analysis and find that a model that more closely approximates distributional assumptions and uses a nonparametric retransformation factor performs better in terms of mean squared forecast error simpler models are inferior either because they are not robust to outliers e g anova anocova or because they are inconsistent when strong distributional assumptions are violated e g a two parameter box cox transformation

optimal departures from marginal cost pricing focuses on departures from marginal cost pricing optimal allocation or resources level of tax revenue that will be collected by the government theorems developed for resource allocation ebsco

health care is an individual necessity and a national luxury applying multilevel decision models to the analysis of health care expenditures health care is neither a necessity or a luxury it is both since the income elasticity varies with the level of analysis with insurance individual income elasticities are typically near zero while national health expenditure elasticities are commonly greater than 1 0 the debate over whether health care is or is not a luxury good arises primarily from the failure to specify levels of analysis clearly so as to distinguish variation within groups from variation between groups apparently contradictory empirical results are shown to be consistent with a simple nested multilevel model of health care spending

demand for medigap insurance by the elderly a micro simulation analysis in this paper a micro simulation model is developed to explain and estimate the optimum medigap insurance coverage for elderly with different levels of insurance premium subsidy the medigap risk exposure is estimated from the 1977 national medical care expenditure utilization survey utilizing the gamma distribution the theory of expected utility maximization is assumed and the model for health insurance demand is operationalized for hypothetical parameters for risk aversion the price elasticity of demand the loading fee and the subsidy with the risk aversion parameter at 0 0005 the price elasticity of medical care demand at 0 5 loading costs at 9 without any subsidy the optimal medigap coinsurance rate is 0 78 and with a premium subsidy of 60 the co insurance rate falls to 12 the hypothetical price elasticity of demand for medigap insurance is estimated to be between 0 44 and 1 02 more than half of the increase in medical expenditure resulting from an increase in premium subsidy from