Health insurance and lifestyles

This article contributes to the discussion surrounding the existence of ex ante moral hazard and propitious selection in a voluntary private health insurance scenario. Moreover, it provides an estimation of the determinants of lifestyle choices and of private health insurance demand. A multivariate probit is estimated for health insurance demand and lifestyle decisions to take into account the potential endogeneity of these decisions. The results indicate that there is evidence of ex ante moral hazard in deciding to do sports and eating healthy snacks. Hence, no propitious selection has been found for these decisions. Another relevant result shows that there is no individual heterogeneity for the lifestyle choices, except for smoking, and private health insurance choice. Evidence from the results also supports the idea that there are nonobservable variables playing a role in the lifestyle decisions. These results provide some directions for policymakers, such as the promotion of precautionary behaviours and the use of implicit lifestyle drivers to promote healthy choices by people.     

The impact of private hospital insurance on the utilization of hospital care in Australia

We use the Australian National Health Survey to estimate the impact of private hospital insurance on the propensity for hospitalization as a private patient. We account for the potential endogeneity of supplementary private hospital insurance purchases and calculate moral hazard based on a difference-of-means estimator. We decompose the moral hazard estimate into a diversion component that is due to an insurance-induced substitution away from public patient care towards private patient care, and an expansion component that measures a pure insurance-induced increase in the propensity to seek private patient care. Our results suggest that on average, private hospital insurance causes a sizable and significant increase in the likelihood of hospital admission as a private patient. However, there is little evidence of an expansion effect; the treatment effect of private hospital insurance on private patient care is driven almost entirely by the substitution away from public patient care towards private patient care. We discuss the implications for policies that aim to expand supplementary private insurance coverage for the purpose of reducing excess demand on the public healthcare system.     

EXPERIMENTAL WORK ON SUBSIDIES,MORAL HAZARD,AND MARKET POWER IN AGRICULTURAL MARKETS

Laboratory markets are created to capture the important features of agricultural commodity markets. Sellers make production decisions and hold inventories before goods are sold. In a posted‐bid auction environment, price supports create a moral hazard for sellers. Part of the price‐support subsidy is transferred to buyers in the form of lower prices, which are close to those predicted by the buyers' Cournot level. The subsidy program is expensive for this reason. Lump‐sum payments correct the moral hazard problem and are better at transferring income to sellers. However, transfers made at the beginning of each production period cause a decline in production levels. (JEL D44, C92)     

Information Asymmetries and Risk Management in Healthcare Markets: The U.S. Affordable Care Act in Retrospect

This article critically examines the pertinent issues in ex ante and ex post moral hazard in healthcare markets, with the U.S. Affordable Care Act (ACA) as its focal point of inquiry. First, it compares the various types of information asymmetries resulting from the production, allocation, and utilization of health insurance. Second, it reviews the literature on adverse selection, moral hazard, and risk mitigation against which salient ACA reforms are analyzed. In contrasting conventional moral hazard from an alternative theory of welfare maximization, it suggests that healthcare (over)utilization cannot necessarily be considered wasteful, even if it ends up costing insurers more on a short-term basis. Costs and savings attributable to healthcare spending under the ACA will vary between the consumer, insurer, and regulator-subsidizer. Despite the ambiguities surrounding definitions of “health,” the challenge of containing inefficient moral hazard, and encouraging its desirable counterpart, lies in the tradeoffs that arise between consumer access to affordable and quality healthcare and the market competitiveness of health insurers. The new Trump administration will have to address these tradeoffs in repealing and replacing the ACA, particularly in light of escalating insurance premiums and deductibles, narrower provider networks, and technical implementation issues.     

Endogenous Specialisation and Endogenous Principal-agent Relationship

The paper develops a general equilibrium model with endogenous principal-agent relationship within a framework of consumer-producer, economies of specialisation, and transaction costs. It is shown that if transaction efficiency is low, then autarky is chosen as the general equilibrium where no market and principal-agent relationship exists. As transaction efficiency is improved, the equilibrium level of division of labour increases, comparative advantage between ex ante identical individuals emerges from the division of labour, and the number of principal-agent relationships increases. The following features of the model distinguish it from other principal-agent models in the literature. The principal-agent relationships are not only endogenous, but also reciprocal between different specialists. In a general equilibrium environment, choice between pure pricing and contingent pricing is endogenised. In the paper, the implications of endogenous transaction costs caused by moral hazard for the equilibrium extent of the market and related degrees of market integration, production concentration, trade dependence, diversity of economic structure, and productivity are explored. The model predicts two interesting phenomena: a man might work harder for the market with moral hazard than working for himself in the absence of moral hazard; a market with moral hazard might be Pareto superior to autarky with no moral hazard.     

Liquidity, infinite horizons and macroeconomic fluctuations

This paper develops a computable dynamic general equilibrium model in which corporate demand for liquidity is endogenously determined. In the model, liquidity demand is motivated by moral hazard, as in Holmström and Tirole (J. Politic. Econom. 106 (1998) 1). As a result of incorporating agency cost and endogenously determined liquidity demand, the model can replicate an empirical business cycle fact, the hump-shaped dynamic response of output, which is seldom observed in standard RBC dynamics. Further, in the model the corporate demand for liquidity from a financial intermediary (credit line, for instance) is pro-cyclical, while the degree of liquidity dependence (defined as liquidity demand divided by corporate investment) is counter-cyclical. These business cycle patterns are consistent with a stylized fact empirically verified in the lending view literature.     

Healthcare utilization and costs associated with COPD among SEER-Medicare beneficiaries with NSCLC

Aim: To estimate the healthcare utilization and costs in elderly lung cancer patients with and without pre-existing chronic obstructive pulmonary disease (COPD).

Methods: Using Surveillance, Epidemiology and End Results (SEER)-Medicare data, this study identified patients with lung cancer between 2006–2010, at least 66 years of age, and continuously enrolled in Medicare Parts A and B in the 12 months prior to cancer diagnosis. The diagnosis of pre-existing COPD in lung cancer patients was identified using ICD-9 codes. Healthcare utilization and costs were categorized as inpatient hospitalizations, skilled nursing facility (SNF) use, physician office visits, ER visits, and outpatient encounters for every stage of lung cancer. The adjusted analysis was performed using a generalized linear model for healthcare costs and a negative binomial model for healthcare utilization.

Results: Inpatient admissions in the COPD group increased for each stage of non-small cell lung cancer (NSCLC) compared to the non-COPD group per 100 person-months (Stage I: 14.67 vs 9.49 stays, p?<?.0001; Stage II: 14.13 vs 10.78 stays, p?<?.0001; Stage III: 28.31 vs 18.91 stays, p?<?.0001; Stage IV: 49.5 vs 31.24 stays, p?<?.0001). A similar trend was observed for outpatient visits, with an increase in utilization among the COPD group (Stage I: 1136.04 vs 796 visits, p?<?.0001; Stage II: 1325.12 vs 983.26 visits, p?<?.0001; Stage III: 2025.47 vs 1656.64 visits, p?<?.0001; Stage IV: 2825.73 vs 2422.26 visits, p?<?.0001). Total direct costs per person-month in patients with pre-existing COPD were significantly higher than the non-COPD group across all services ($54,799.16 vs $41,862.91). Outpatient visits represented the largest cost category across all services in both groups, with higher costs among the COPD group ($41,203 vs $31,140.08).

Conclusion: Healthcare utilization and costs among lung cancer patients with pre-existing COPD was ～2–3-times higher than the non-COPD group.     

Moral hazard,insurance claims,and repeated insurance contracts

Abstract The paper develops a simple model of repeated automobile insurance contracts, providing a framework for analyzing changes in aggregate insurance data in periods of changes that affect driver incentives. Experience rating of premiums gives drivers an incentive to exert effort to avoid accidents (ex ante moral hazard), and an incentive to hide accidents (ex post moral hazard). The empirical analysis, using data from the competitive insurance markets in Ontario and Alberta over a period of major legislative changes in Ontario, suggests that much of the recent decline in accidents in Ontario was due to an increased incentive to hide accidents.     

Social Insurance and Redistribution with Moral Hazard and Adverse Selection*

Rochet (1991) showed that with distortionary income taxes, social insurance is a desirable redistributive device when risk and ability are negatively correlated. This finding is re‐examined when ex post moral hazard and adverse selection are included, and under different informational assumptions. Individuals can take actions influencing the size of the loss in the event of accident (or ill health). Social insurance can be supplemented by private insurance, but private insurance markets are affected by both adverse selection and moral hazard. We study how equity and efficiency considerations should be traded off in choosing the optimal coverage of social insurance when those features are introduced. The case for social insurance is strongest when the government is well informed about household productivity.     

医疗保险会引发事前道德风险吗?理论分析与经验证据

医疗保险在增加医疗服务可及性的同时,也可能导致被保险人降低其在出险前防范疾病风险的投入,从而导致经济学理论中的"事前道德风险"(ex-ante moral hazard)。本文利用2000—2009中国健康与营养调查(CHNS)数据,采用基准模型、工具变量模型和一阶差分模型,首次全面考察了新型农村合作医疗中的事前道德风险问题。结果表明,在控制参保行为的内生性后,新农合的参与显著改变了个体的生活方式,提高了其吸烟、饮酒、久坐、摄入高热量食物等不健康行为的倾向,并引致体重超重概率的增加。在此基础上,我们对新农合及配套制度的改革提供了政策建议。     

Reciprocal deposits and incremental bank risk

Even after controlling for other observable factors, reciprocal deposits are associated with higher bank risk as measured by the probability of failure and the Z-score. These results are consistent with the moral hazard hypothesis and reject the risk substitution hypothesis.     

The Impact of Price Regulation on the Cost of Capital

This paper investigates how price regulation under moral hazard can affect a regulated firm's cost of capital. We consider stylized versions of the two most typical regulatory frameworks that have been applied in the most recent decades by regulators: Price Cap and Cost of Service. We show that there is a trade‐off between lower operational costs and a higher cost of capital under Price Cap regulation and higher operational costs and a lower cost of capital under Cost of Service regulation. As a result, when the extent of moral hazard is not significant, Price Cap regulation generates lower welfare than does Cost of Service regulation.     

The labour market impact of body weight in China: a semiparametric analysis

While a positive wage effect of Body Mass Index (BMI) is widely observed in low-income developing countries, a negative wage effect of BMI is often observed in high-income developed countries. To fill the gap between these previous findings, we investigate the relationship between body weight and wages in transition economies. We focus on China, whose rapid economic growth of the 1990s was followed by a rapid increase in overweight and obesity while still experiencing significant food insecurity and underweight. we first use several parametric regression strategies to obtain a consistent estimate of the wage effects of weight. Second, we adopt a semiparametric partially linear model that allows for endogeneity of weight. Parametric regressions provide mixed results, and the sign and magnitude of their estimates are sensitive to the choice of samples and regression strategies. Semiparametric estimates provide evidence of a wage penalty for very heavy and thin persons among both men and women. The wage penalty is more significant among men than among women. Semiparametric results also indicate that parametric estimates can overstate and misrepresent the wage effects of weight for healthy weight persons due to their restrictive functional form assumptions.     

An econometric analysis of cognitive impairment and healthcare utilization in the ageing population

The ageing population is a major concern for policy makers, with the ever-increasing strains placed on health budgets. One overlooked area of research is the impact that cognitive impairment (an early marker of potential dementia onset) has on the healthcare utilization of an ageing population. Based on the theoretical micro-economic foundations of healthcare demand, we study the relationship between cognitive functioning and impairment, measured by word recall and changes thereof, and healthcare utilization among over 50s in nine European countries. The contribution of this article is to produce estimates for cognitive functioning and impairment, as opposed to full dementia, in the context of healthcare utilization.

We apply regression models to healthcare utilization data from Waves 1, 2 and 4 of the Survey of Health, Ageing and Retirement in Europe and find that recalling one additional word is associated with a reduction in visits to a medical doctor of 0.32, per year (p<0.01). Even after controlling for self-assessed health, this association is strong at just over 0.1 visits – this is the additional impact, over and above the average number of visits for similar individuals without cognitive impairment.     

On the Anthropological Study of Economies: A Comment

This paper deals with the moral justification behind policy positions. Squeezed between the inevitability of having a welfare ideology and the mantra of value-neutrality (depoliticization), neoclassical policy economists tend to disguise their normative positions on policy matters as common sense. This attitude is particularly pronounced in what I will call "the rhetoric of worthiness," whereby the neoclassical approach justifies its advocacy that certain people should not be helped. This normative position is disguised by a vocabulary (e.g., moral hazard) claimed to be politically neutral. The present paper criticizes this neoclassical mode of policy evaluation in favor of a more socially conscious and innovative policy approach.     

Economic burden and healthcare utilization associated with castration-resistant prostate cancer in a commercial and Medicare Advantage US patient population

Objective: Prostate cancer is a leading cause of cancer death in men in the US. Castration-resistant prostate cancer (CRPC) is an advanced form of the disease and has a poor prognosis and limited treatment options. The objective of this study was to identify patients with CRPC from a medical claims database, and determine the prostate cancer-related economic burden and healthcare utilization of these patients.

Methods: This was a retrospective study using claims and enrollment information from a large US database linkable to laboratory data. Male patients aged 40 or older who were diagnosed with prostate cancer and received surgical or medical castration between July 1, 2001 and December 1, 2007 were considered for study inclusion. Patients with CRPC were initially identified based on at least two increases in prostrate-specific antigen (PSA) values. Due to the small number of patients with available PSA results data, logistic regression modeling using characteristics of patients with known CRPC was used to identify a larger set of patients with likely CRPC. Per-patient per-month healthcare utilization and costs were determined using medical and pharmacy claims data.

Results: The final sample of patients with likely CRPC as determined by regression modeling included 349 patients with known CRPC identified from the database on the basis of PSA results and an additional 2391 with likely CRPC. Within this final sample of 2740 CRPC patients, there was a per-patient per-month average of 1.43 prostate cancer-related ambulatory visits, 0.04 prostate cancer-related inpatient stays, and 0.01 prostate cancer-related ER visits. Average per-patient per-month prostate cancer-related costs were $1152 (SD = $2073) for ambulatory visits, $559 (SD = $2383) for inpatient stays, $72 (SD = $229) for pharmacy costs, and $1 (SD = $14) for ER visits. Total per-patient per-month prostate cancer-related costs were on average $1799 (SD = $3505), and these costs comprised about half of the all-cause healthcare costs for these patients.

Conclusions: CRPC is a costly disease, with ambulatory visits and inpatient care accounting for a substantial proportion of the economic burden. Limitations related to the use of retrospective claims data should be considered when interpreting these results.     

The economic burden of switching targeted disease-modifying anti-rheumatic drugs among rheumatoid arthritis patients

Aims: To estimate real world healthcare costs and resource utilization of rheumatoid arthritis (RA) patients associated with targeted disease modifying anti-rheumatic drugs (tDMARD) switching in general and switching to abatacept specifically.

Materials and methods: RA patients initiating a tDMARD were identified in IMS PharMetrics Plus health insurance claims data (2010–2016), and outcomes measured included monthly healthcare costs per patient (all-cause, RA-related) and resource utilization (inpatient stays, outpatient visits, emergency department [ED] visits). Generalized linear models were used to assess (i) average monthly costs per patient associated with tDMARD switching, and (ii) among switchers only, costs of switching to abatacept vs tumor necrosis factor inhibitors (TNFi) or other non-TNFi. Negative binomial regressions were used to determine incident rate ratios of resource utilization associated with switching to abatacept.

Results: Among 11,856 RA patients who initiated a tDMARD, 2,708 switched tDMARDs once and 814 switched twice (to a third tDMARD). Adjusted average monthly costs were higher among patients who switched to a second tDMARD vs non-switchers (all-cause: $4,785 vs $3,491, p?p?p?p?=?.021), and numerically lower all-cause costs ($4,444 vs $4,741, p?=?0.188). Switchers to TNFi relative to abatacept had more frequent inpatient stays after switch (incidence rate ratio (IRR) = 1.85, p?=?.031), and numerically higher ED visits (IRR = 1.32, p?=?.093). Outpatient visits were less frequent for TNFi switchers (IRR = 0.83, p?Limitations and conclusions: Switching to another tDMARD was associated with higher healthcare costs. Switching to abatacept, however, was associated with lower RA-related costs, fewer inpatient stays, but more frequent outpatient visits compared to switching to a TNFi.