Disease‐Specific Moral Hazard and Optimal Health Insurance Design for Physician Services

This article analyzes disease‐specific moral hazard effects in the demand for physician office visits and explores whether optimal insurance for physician services should be designed to have disease‐specific cost sharing. Generalized method of moments is implemented to address the endogeneity of private health insurance, and the nonnegativity and the discreteness of physician services use. The results indicate that the moral hazard effect varies considerably across disease‐specific specialist care. The strongest moral hazard (for no‐condition related specialist visits) is almost twice the moral hazard effect of the weakest (for chronic condition related specialist visits). Although the findings indicate some variation in the moral hazard effect across disease‐specific general practitioner visits, the variation is less considerable. The main policy implication is that optimal insurance for physician services should be designed to have differential cost sharing based on disease status rather than to have uniform cost sharing.     

The Metabolic Syndrome and All-Cause Mortality in an Insured Lives Population

Abstract

Metabolic syndrome and its association with mortality have not been studied in insured lives populations. The Swiss Re Study evaluated metabolic syndrome prevalence and associated mortality from all causes and circulatory disease in a cohort of 35,470 predominantly healthy individuals, aged 18–83 years, who were issued life insurance policies between 1986 and 1997. Metabolic syndrome was defined using the National Cholesterol Education Program (NCEP) Expert Panel Adult Treatment Panel (ATP) III guidelines. The NCEP obesity criteria were modified with a prediction equation using body mass index, gender, and age substituted for waist circumference. Adjustments also were made for nonfasting triglyceride and blood glucose values. Risk ratios for policyholders identified with metabolic syndrome were 1.16 (P = .156) for mortality from all causes and 1.45 (P = .080) for mortality from circulatory disease compared with individuals without the syndrome. Risk was proportional to the number of components, or score, of the metabolic syndrome present. Risk ratios for metabolic syndrome score were 1.14 (P < .001) for mortality from all causes and 1.38 (P < .001) for mortality from circulatory disease compared with individuals without metabolic syndrome factors. In both all-cause and circulatory death models, relative risk was highest for the blood pressure risk factor. Based on a modified NCEP definition, increased mortality risk is associated with metabolic syndrome in an insured lives cohort and has life insurance mortality pricing implications.     

Spatial statistical modelling of insurance risk: a spatial epidemiological approach to car insurance

Spatial models, such as the Besag, York and Mollie (BYM) model, have long been used in epidemiology and disease mapping. A common research question in these subjects is modelling the number of disease events per region; here the BYM models provides a holistic framework for both covariates and dependencies between regions. We use these tools to assess the relative insurance risk associated with the policyholders geographical location. A Bayesian modelling approach is presented and an elastic net is used to reduce the large number of possible geographic covariates. The final inference is performed using Integrated Nested Laplace Approximation. The model is applied to car insurance data from If P&C Insurance together with spatially referenced covariate data of high resolution, provided by Insightone. The entire analysis is performed using freely available R-packages. Including spatial dependence when modelling the number of claims significantly improves on the result obtained using ordinary generalised linear models. However, the support for adding a spatial component to the model for claims cost is weaker.     

The Long-Run Economic Costs of AIDS: A Model with an Application to South Africa

Primarily a disease of young adults, AIDS imposes economic coststhat could be devastatingly high in the long run by underminingthe transmission of human capital—the main driver of long-runeconomic growth—across generations. AIDS makes it harderfor victims’ children to obtain an education and deprivesthem of the love, nurturing, and life skills that parents provide.These children will in turn find it difficult to educate theirchildren, and so on. An overlapping generations model is usedto show that an otherwise growing economy could decline to alow-level subsistence equilibrium if hit with an AIDS-type increasein premature adult mortality. Calibrating the model for SouthAfrica, where the HIV prevalence rate is over 20 percent, simulationsreveal that the economy could shrink to half its current sizein about four generations in the absence of intervention. Programsto combat the disease and to support needy families could avertsuch a collapse, but they imply a fiscal burden of about 4 percentof GDP.     

The Baumol Diseases and the Korean Economy

ABSTRACT

This article examines the Baumol effect and the consequences of unbalanced growth across Korean industries. The results demonstrate that the Baumol effect exists, but it is qualitatively different from existing literature. Although Baumol’s cost disease is significant, it is weak. Certain attributes of the Korean economy such as heavy reliance on exports and compressed growth seem to be responsible. Weak cost disease leads to a weak growth disease: the aggregate productivity growth does not monotonically decline over time. Productivity growth has led to the deindustrialization of employment. The value holds effective after controlling the growth of international trade.     

Perceptions of predictive testing for those at risk of developing a chronic inflammatory disease: a meta-synthesis of qualitative studies*

Background: The availability of tests to predict the risk of developing chronic diseases is increasing. The identification of individuals at high risk of disease can trigger early intervention to reduce the risk of disease and its severity. In order for predictive tests to be accepted and used by those at risk, there is a need to understand people’s perceptions of predictive testing. Method: A meta-synthesis of qualitative research that explored patient and public perceptions of predictive testing for chronic inflammatory diseases was conducted. Studies were coded by researchers and patient research partners, and then organised into common themes associated with the acceptability or use of predictive testing. Results: Perceived barriers to predictive testing were identified, including a concern about a lack of confidentiality around the use of risk information; a lack of motivation for change; poor communication of information; and a possible impact on emotional well-being. In order to reduce these barriers, the literature shows that a patient-centred approach is required at each stage of the testing process. This includes the consideration of individual needs, such as accessibility and building motivation for change; readily available and easy to understand pre and post-test information; support for patients on how to deal with the implications of their results; and the development of condition specific lifestyle intervention programmes to facilitate sustainable lifestyle changes. Conclusion: Patients and members of the public had some concerns about predictive testing; however, a number of strategies to reduce barriers and increase acceptability are available. Further research is required to inform the development of a resource that supports the individual to make an informed decision about whether to engage in a predictive test, what test results mean, and how to access post-test support.     

A new parametric model for converting excess mortality from clinical studies to insured population

We propose a new parametric model – the generalized excess mortality (GEM) model – for converting excess mortality from clinical to insured population. The GEM model has been formulated as a generalization of the excess death rate (EDR) model in terms of a single adjustment parameter (m) that accounts for a partial elimination of a clinical study’s EDR due to the underwriting selection process. The suggested value of the parameter m depends only on the ratio of the impairment’s prevalence rate in the insured population to that in the clinical population. The model’s development has been implemented in two phases: the design phase and the validation phase. In the design phase, the data from the National Health and Nutrition Examination Survey I pertaining to three broad impairments (diabetes, coronary artery disease, and asthma) have been used. As a result, the following equation for the parameter m has been proposed: m_k?=?(P_i,k/P_c,k)ⁿ, where P_i,k, P_c,k are the prevalence rates of impairment k under study in the insured and the clinical populations, respectively, and n a single universal parameter with its value best approximated as n?=?0.5 (95% confidence interval 0.5–0.6). In the validation phase, several independent clinical studies of three other impairments (Crohn’s disease, epilepsy, and chronic obstructive pulmonary disease) were used. As it has been demonstrated in the validation phase, for a number of impairments, the GEM model can provide a better fit for observed insured population mortality than either one of the conventional EDR or mortality ratio models.     

Adult Polycystic Kidney Disease and Critical Illness Insurance

Abstract

Adult polycystic kidney disease (APKD) is a single-gene autosomal dominant genetic disorder leading to end-stage renal disease (ESRD, meaning kidney failure). It is associated with mutations in at least two genes, APKD1 and APKD2, but diagnosis is mostly by ultrasonography. We propose a model for critical illness (CI) insurance and estimate rates of onset of ESRD from APKD using two studies. Other events leading to claims under CI policies are included in the model, which we use to study (a) extra premiums under CI policies if the presence of an APKD mutation is known, and (b) the possible costs arising from adverse selection if this information is unavailable to insurers. The extra premiums are typically very high, but because APKD is rare, the possible cost of adverse selection is low. However, APKD is just one of a significant number of single-gene disorders, and this benign conclusion cannot be assumed to apply to all genetic disorders taken together. Moreover, ignoring known genetic risks in underwriting sets a precedent that could have unintended consequences for the underwriting of nongenetic risks of similar magnitude.     

Tradeoffs of foreign assistance for the weakest-link global public goods

Weakest-link global public goods, such as international security, communicable disease prevention or illegal trafficking control, create a strong incentive for rich countries to unilaterally compensate for insufficient supplies of the ‘weakest-link’ inputs by poor countries. We analyze how foreign assistance affects the donor and recipient countries, accounting for discontinuities and non-monotonicities originating from switches between structurally different equilibrium profiles. We show that voluntary foreign assistance improves provision of the public good and also welfare, but makes the donor country worse off for the medium level of income inequality. Unless inequality is large or small, a rich country may benefit from a commitment to the absence of assistance.     

C-reactive protein--a screening test for coronary disease?

C-reactive protein (CRP) is one of a number of substances termed "acute phase reactants," biologic substances that appear in the circulation when an active inflammatory process occurs. Although traditionally used to monitor or detect major infectious or inflammatory conditions, elevations of CRP levels within the conventional range of "normals" has been intensively studied as a marker for coronary disease and risk of future coronary events. Sensitive assays that can be performed on a high-volume, commercial basis are now available. CRP appears to be a valuable marker for the prediction of future events in individuals who have known coronary artery disease. CRP has been proposed as a coronary disease-screening test for healthy individuals; however, available data suggest that use of CRP in this context may be premature. This paper reviews published research concerning CRP and the prediction of cardiovascular and total mortality risk, then outlines the current "state of the art" for the application of CRP to the risk assessment process.     

An Option-Based Operational Risk Management Model for Pandemics

Abstract

In this paper we employ the theory of real option pricing to address problems in the area of operational risk management. We develop a two-stage model to help firms determine the optimal suspension-reactivation triggers in the events of pandemics. In the first stage, we propose a regime-dependent epidemic model to simulate the spread of the virus, depending on whether the firm is active or inactive. In the second stage, we view the reactivation decision as a call option and the suspension decision as a put option, and use dynamic programming methods to obtain the optimal switching thresholds. Our method can be regarded as a quantitative implementation of the CDC’s instructions for pandemic preparation. We find that when they take the uncertainty of disease transmission into consideration, firms are more conservative about the decisions of suspension and reactivation. We also find that when firms incur switching costs, the suspension threshold increases with costs, whereas the reactivation threshold decreases with costs. By adopting disease control policies, firms can increase their values in both regimes.     

Clinical implications of proteinuria

Proteinuria has long been considered a marker for renal disease. New observations are suggesting that proteinuria is also a risk factor for other outcomes as well, such as cardiac events and stroke. This article will review a recommended strategy for proteinuria detection and the associations of proteinuria with the progression of renal disease and cardiovascular disease. It will also review the significance of the development of proteinuria in the elderly population and discuss other common causes of proteinuria apart from those secondary to diabetes and hypertension.     

Mortality in rheumatoid disease

This paper provides an overview of rheumatoid disease from the perspective of its impact on mortality. The term, rheumatoid arthritis, may promote the misconception that this disease is relatively trivial and easily managed; therefore, "rheumatoid disease" is preferred. Numerous long-term studies in many settings have established that significant excess mortality is associated with rheumatoid disease, and that this excess mortality is related to cardiovascular disease deaths. Inflammation in rheumatoid and cardiovascular diseases shares the same biologic mechanisms. Severity of extraarticular disease, decline in functional level, and level of inflammatory activity are associated with increased risk of mortality. Detection and measurement of novel inflammatory biomarkers may provide tools to assess prognosis and to monitor therapy. Close attention to the management of traditional cardiovascular risk factors is essential in these patients. Whether disease modifying antirheumatic drug (DMARD) therapy will reduce all-cause and cardiovascular disease mortality in rheumatoid disease is the subject of ongoing studies.     

Screening potential elderly preferred markers: exploratory analysis of Cardiovascular Health Study (CHS) data

The Cardiovascular Health Study (CHS) analyzes risk factors for coronary heart disease and stroke in people age 65 and older. Since CHS is designed to comprehensively study cardiovascular risk factors in an elderly population, it provides a unique opportunity to study the association of risk factors with mortality, as well as morbidity risk. With the growth of the elderly as population and life insurance market segments, the need to more precisely stratify mortality within a standard risk group of the elderly has grown as well. This exploratory analysis assesses medical factors that could be used to improve mortality risk stratification within a "standard" mortality population, using the CHS public use data set. Participants with a personal history of cardiovascular disease, diabetes, or major electrocardiographic abnormalities were excluded from the analysis in order to mimic a standard life insurance selection process. Then, Cox proportional hazards regression was used to study 10 medical risk factors. This model suggested that forced vital capacity >80% predicted, serum creatinine <1.5 mg/dL (133 mcmol/L), hemoglobin >11 g/dL (110 g/L), and serum albumin >3.5 mg/L (35 mmol/ L) are significantly associated (p = 0.05) with favorable mortality. C-reactive protein <1 mg/L is associated with favorable mortality at borderline significance levels (p = 0.09). On the other hand, a family history of cardiovascular disease (MI and/or stroke) and low BMI (<26 kg/m2) are associated with unfavorable mortality in the analysis. Total to HDL cholesterol ratio of <6, presence of supine systolic blood pressure < or = 140 mmHg, and the presence of minor rest electrocardiographic findings were not statistically significant factors in the multivariate model. Further assessment of the predictive value of the "significant" medical factors identified is required in insured lives.     

Nonalcoholic fatty liver disease (NAFLD): a comprehensive review

Nonalcoholic fatty liver disease (NAFLD) is defined as fatty infiltration of the liver exceeding 5% to 10% by weight. It is a spectrum of disorders ranging from simple fatty liver (steatosis without liver injury), nonalcoholic steatohepatitis (steatosis with inflammation), and fibrosis/cirrhosis that resembles alcohol-induced liver disease but which develops in individuals who are not heavy drinkers. NAFLD is likely the most common cause of chronic liver disease in many countries. NAFLD may also potentiate liver damage induced by other agents, such as alcohol, industrial toxins and hepatatrophic viruses. The lack of specific and sensitive noninvasive tests for NAFLD limits reliable detection of the disease. It is often diagnosed on a presumptive basis when liver enzyme elevations are noted in overweight or obese individuals without identifiable etiology for liver disease, or when imaging studies suggest hepatic steatosis. NAFLD is now considered to be a component of the insulin resistance syndrome (metabolic syndrome X). Controversy exists relative to optimal recognition, diagnosis and management of these conditions, and treatment recommendations are evolving.     

Frequent premature ventricular contractions

Premature ventricular contractions (PVCs) are considered normal in many circumstances but can act as markers to other cardiac disease such as cardiomyopathy and ischemic heart disease. This case is presented to illustrate frequent PVCs as a marker for serious heart disease.     

Sri Lanka: Futures beyond conflict

Not so long ago, Sri Lanka was stereotypically portrayed as a stable, model democracy inhabited by friendly and fun-loving natives; a place in the sun reserved for enjoyment; an oasis in the so called (poverty and disease ridden) ‘Third World’; a virtual paradise for tourists and natives alike. In reality, Sri Lanka has seen the burgeoning of revolutionary struggles and nationalist fervour, from putschist attempts to capture state power to liberation and self-determination. The author argues that it is the model of parliamentary democracy that is largely responsible for the ethnic violence and bloodshed on this island. It ensured the rise of the post-colonial political élite who then ensured that all the hegemonic tendencies of colonialism were preserved and entrenched. It is imperative for shaping viable futures for Sri Lanka that a new ethics and moral code of good governance—which includes transparency in government and politics—is initiated.     

Life Expectancy in 2040: What Do Clinical Experts Expect?

We use expert clinical and public health opinion to estimate likely changes in the prevention and treatment of important disease conditions and how they will affect future life expectancy. Focus groups were held including clinical and public health faculty with expertise in the six leading causes of death in the United States. Mortality rates and life tables for 2040 were derived by sex and age. Life expectancy at age 20 and 65 was compared to figures published by the Social Security Administration and to estimates from the Lee-Carter method. There was agreement among all three approaches that life expectancy at age 20 will increase by approximately one year per decade for females and males between now and 2040. According to the clinical experts, 70% of the improvement in life expectancy will occur in cardiovascular disease and cancer, while in the last 30 years most of the improvement has occurred in cardiovascular disease. Expert opinion suggests that most of the increase in life expectancy will be attributable to the already achieved reduction in smoking rates, especially for women.     

Recurrent PSA after prostatectomy for prostate cancer: implications of PSA doubling time

After radical prostatectomy for prostate cancer, men frequently develop detectable levels of prostate specific antigen (PSA). A slow rate of increase, as characterized by the PSA doubling time (PSADT) is the principal marker for a favorable prognosis. Data and results presented in 2 recent clinical articles studying cohorts of men with clinical stage T1/T2 prostate cancer are reviewed and used to develop mortality analyses. Life-table analysis shows a mortality ratio of 257% at 5 years for Gleason score < 8, PSA recurrence > 2 years after surgery for clinical stage T1/T2 disease, and PSA doubling time (PSADT) > 10 months. Markov modeling using transition probabilities derived from the clinical articles to develop a life table analysis yields a mortality ratio of 145% at 10 years for similar patients.     

Working with monsters: counting the costs of workplace psychopaths and other toxic employees

We explore the role of ‘Workplace Monsters’ in the global burden of disease, including the $US1.15 trillion annual cost of depressive and anxiety disorders. We propose the productivity drain created by these individuals is a wicked problem, integrating several disciplines to position workplace monsters as significant corporate governance issues for organisations. Our discussion covers Monster prevalence, impacts on fellow workers and estimates of the costs incurred to business. We classify Monsters as ‘appreciating liabilities’ and call for future research to develop means of accounting for their inherent organisational costs in an effort to prompt action to address their destructive impacts.