Estimating willingness to pay for medicare using a dynamic life-cycle model of demand for health insurance

Medicare is the largest health insurance program in the US. This paper uses a dynamic random utility model of demand for health insurance in a life-cycle human capital framework with endogenous production of health to calculate the individual willingness to pay (WTP) for Medicare. The model accounts for the feature that the demand for health insurance is derived through the demand for health, which is jointly determined with the production of health over the life-cycle. The WTP measure incorporates the effects of Medicare insurance on aggregate consumption through effects on medical expenditures and mortality, and consumption utility of health. The model is estimated using panel data from the Health and Retirement Study. The average WTP or change in lifetime expected utility resulting from delaying the age of eligibility to 67 is found to be $ 24,947 in 1991 dollars ($ 39,435 in 2008 dollars). However, there is considerable variation in the WTP, e.g., in 1991 dollars the WTP of individuals who have less than a high school education and are white is $ 28,347 ($ 44,810 in 2008 dollars), while the WTP of those with at least a college degree and who are neither white nor black is $ 15,584 ($ 24,635 in 2008 dollars). More generally, the less educated have a higher WTP to avoid a policy change that delays availability of Medicare benefits. Additional model simulations imply that the primary benefits of Medicare are insurance against medical expenditures with relatively smaller benefits in terms of improved health status and longevity. Medicare also leads to large increases in medical utilization due to deferring of medical care prior to eligibility.     

我国医疗保险制度存在的问题及对策研究

我国新医改方案推行3年来,用最短的时间编织了世界最大全民医保网,但还存在着社会医疗保障供给与老百姓的医疗保障需求之间差距较大;社会医疗保险的责任范围较小;老百姓的医疗费用负担较重;医疗机构改革滞后等问题。为切实满足人民群众的健康需求,应在建立所有公民都享受全国平均水平的医疗保障体系,有效的实现社会公平和每个公民的健康保障权;本着"最基本的筹资水平、最基本的医疗服务"的理念,建立符合社会主义初级阶段的医疗保险费用筹措制度;在基本医疗的界定和选择上,采用国际上成本效果的评价方法和思想理念;建立行业管理、统筹规划的医疗保险管理体制,促进现代医疗市场的发育和完善;发挥政府、市场两个主体的作用,把商业保险作为对医疗保险的有效补充等方面扎实推进工作。     

A model of Social Security Disability Insurance using matched SIPP/Administrative data

We study Disability Insurance (DI) application behavior in the US using matched SIPP and administrative data over 1989–1995. Certain state-contingent earnings projections and eligibility probabilities are central to the analysis. We find evidence for a small work disincentive effect of DI that seems to be restricted to a subset of the DI beneficiaries, including low earning groups such as blue collar workers and those subject to economic dislocation. Processing time, Medicare value, unemployment, private health insurance, and health shocks are some of the major factors that affect application propensity. The behavioral response of female workers to various parameters of the DI program is found to be quite different from that of males.     

Medical professionals and health care fraud: Do they aid or check abuse?

This paper examines the role of health care professionals in combating health care fraud. It is not overall clear whether the share of the health professionals help control abuse. Using data across U.S. states, our econometric results show that greater employment of nurses consistently reduced health fraud, whereas more physicians did not have a significant impact. Further, more urbanized states and states with a greater proportion of the elderly experienced greater health scams. Identity thefts facilitated health care fraud, whereas different dimensions of health insurance (including the share of the population with Medicare, managed care, and no insurance) and hospital occupancy rates did not matter.     

The role of asset testing in public health insurance reform

Starting slowly with the 1996 Welfare Reform Act and culminating in the 2010 Affordable Care Act, means-tested public health insurance eligibility expanded to include adults in low-income families regardless of their asset holdings. This paper quantifies the effects of these eligibility expansions within the context of the 2010 Affordable Care Act. I construct a dynamic stochastic general equilibrium model with indivisible labor supply expanded to include an endogenous household choice of health insurance coverage and calibrate it to U.S. data. I establish that changes in the distribution of labor and welfare associated with removal of asset testing are driven by exit of high productivity and high wealth households from the labor market. I then expand my analysis to the 2010 Affordable Care Act to demonstrate that removal of asset testing is critical to the obtained results even when combined with other provisions of the Act. Finally, I find that a simple asset test for eligibility of health insurance transfers undoes the distortion to the household labor supply decision among high productivity types. These results are robust to the introduction of employer premium contributions, an independent health insurance market, and idiosyncratic shocks to eligibility for employment-based health insurance.     

CPI revision provides more accuracy in the medical care services component.

This revision, as in the past, enabled the Bureau to update medical care service expenditure weights in the CPI, including a more complete allocation of health insurance premiums. Instead of keeping the portion of premiums that go to benefits under health insurance, the expenditure weight for each benefit category has been added to the appropriate out-of-pocket expense. The unpublished health insurance item represents only the retained earnings portion of premiums paid by households. The specific item categories included in medical care services have also been updated and expanded. A study conducted during the developmental phase of the revision indicated that the Bureau should expand the eligible priced rates for physicians in the CPI to include not only the "self-pay" rate, but also other categories of payment as well. Another study indicated that the direct pricing of health insurance is not feasible because of the difficulty of factoring out from premium changes the effect of utilization levels and modified coverage. In pricing medical care service items, as with other item categories in the CPI, BLS attempts to exclude from price movement the effect of quality changes. However, some quality changes are difficult to assess or are not readily identified, for example, a change in the ratio of nurses to patients, and such changes may be reflected as part of the price change movement in the CPI.     

Hospital efficiency and equity in health care delivery: A study based in China

Hospital efficiency and equity in health care delivery are two enduring research topics. Yet little research has been done to examine the relationship between them. This paper studies the impact of hospital efficiency on equity in health care delivery based on a proprietary dataset of hospital characteristics and 630,000 inpatient records from 149 public hospitals in a representative Chinese city. To measure the hospitals' efficiencies, this study takes the hospitals' operational features and case-mix indexes into account, and computes the efficiency levels using data envelopment analysis with bootstrapping. Through regressions that control for a variety of the patients’ personal characteristics (e.g., age, disease, residence, hospital visit frequency), this study shows that the gap between hospitalization expenses of urban and rural inpatients in more efficient hospitals is smaller than those in less efficient hospitals. Thus efficiency enhances equity in expenditure between urban and rural patients. But the dwindling urban-rural gap in expenditure is achieved by raising the spending of rural patients, thereby undermining their access to health care. This pattern is more conspicuous in large and sophisticated high-tier hospitals. Further analysis shows that hospital efficiency impacts equity of health care delivery by inducing different lengths of stay and uncovered parts of total expenditure for urban and rural groups. The findings imply that an efficiency-oriented health care policy may lead to social benefit loss.     

Health insurance loss: the case of the displaced worker.

Upon termination, most displaced workers lose employer-financed health insurance along with their jobs; data for 1983-84 suggest that such workers ran a high risk of remaining uninsured for extended periods, even after new employment was secured.     

Indicators for planning of health services: assessing impacts of social and health care factors on population health.

Community health planning requires identification of the level of access to care and factors which affect the differentials in use of health services. In formulating strategies or alternatives for planning, some assessment of the current level or patterns of health services must be made. It is this element of the planning process that is addressed in this paper. In this study sixty-five specifically designated areas (medical market areas) in the Province of Quebec, Canada were selected. The analysis was performed using data obtained from a large scale study of physicians' responses to the introduction of universal medical care insurance in Quebec. Our analysis offered an opportunity to observe the impact of Medicare on access to care for those thought to be underserved.     

Unemployment as a Factor in Early Retirement Decisions

Abstract . Is retiring early a way for older workers to cope with the stigma and discouragement of unemployment? A regression analysis using the National Longitudinal Survey sample of American men age 52–64 in 1973 shows that weeks of previous unemployment is significantly related to early retirement for both Black and White males. This relationship holds when controlling for social security and pension eligibility, assets, health limitations, family responsibilities, occupation, changes in the unemployment rate and urban residence. The results suggest that social policy concerning retirement prior to age 65 should take into account the important role of unemployment in pushing workers out of the labor force into early retirement.     

Health insurance reform: The impact of a Medicare buy-in

The steady-state general equilibrium and welfare consequences of a Medicare buy-in program, optional for those aged 55–64, is evaluated in a calibrated life-cycle economy with incomplete markets. Incomplete markets and adverse selection create a potential welfare improving role for health insurance reform. We find that adverse selection eliminates any market for a Medicare buy-in if it is offered as an unsubsidized option to individual private health insurance. The subsidy needed to bring the number of uninsured to less than 5 percent of the target population could be financed by an increase in the labor income tax rate of just 0.03–0.18 percent depending on how the program is implemented.     

The impact of Medigap insurance on out-of-pocket health expenditures by older Americans over the 1980s

This study presents a comparative analysis of out-of-pocket health expenditures over the 1980s by older Americans with and without Medigap (supplemental) insurance. The objective is to analyze changes during the 1980s in the pattern of health expenditures and in the financing of those health expenditures by households age 65 and over. Two-stage regression analysis shows that health goods and services are normal goods. Out-of-pocket health expenditures, excluding insurance premiums, are higher for those with Medigap insurance, which may be explained by the market failures of moral hazard and adverse selection.     

The demand for deductibles in private health insurance: A probit model with sample selection

In this paper we analyse the decision to prefer a health insurance with a deductible to one with complete coverage. We focus on health, medical consumption, and on socio-economic characteristics like age, income, education and family size. The analysis is based on a sample of 8000 privately insured families; about 60 percent of them did not wish to have a health insurance policy with a deductible. A corrective method for sample selectivity, analogous to Heckman's (1979) method, has been applied in probit analysis; the estimation results are compared with the maximum-likelihood estimates. Health, medical consumption and income are found to have a significant influence on the decision with respect to the type of insurance. Our results give an indication of the degree of adverse selection that may take place if health insurance policies are offered with the option to take a deductible in exchange of a premium reduction.     

The Politics of Municipal Employment Policy: A Comparative Study of U.S. Cities

A bstract . Municipal employment policy has been partially ignored in urban research , perhaps because of the implicit assumption that employment policy parallels expenditure and taxation policy. However, a strong relationship is found between municipal employment levels and the specified socioeconomic environment. Relationships between that environment and employment policy deviate considerably from expenditure policy. Expenditure policy analysis suggests hypotheses, but does not accurately predict the relative strength of association. Although expenditure policy is more directly related to municipal economic environment, public employment policy is related to the sociopolitical environment.     

Part-Time Employment of Married Women in the U.S.A

A bstract . The rapid growth since 1970, and especially in the 1980s, of part-time and temporary employment was attributed to the transition of the economy from manufacturing to service production and to labor demand side factors. Since part-timers are predominantly women and the majority of the female labor force are married women, the association between the female labor force participation rate and the part-time employment of married women across the 48 continental states of America in 1980 are explored. The empirical study supports the positive association between the two variables, but fails to support the role of the service sector in explaining part-time employment of married women across the states of America.     

Health insurance and savings over the life cycle—a semiparametric smooth coefficient estimation

Individuals save for future uncertain health care expenses. This is less efficient than pooling health risk through insurance. The provision of comprehensive health insurance may raise welfare by providing the missing market to smooth out consumption through the life cycle. We employ a semiparametric smooth coefficient model to examine the effects of the introduction of the National Health Insurance in Taiwan in 1995 on savings and consumption over the life cycle. The idea is to estimate the coefficients of health insurance which vary with age. Our results suggest that younger households are more sensitive to the risk reductions, and that they demonstrate a greater response in the reduction of their precautionary saving. Copyright © 2004 John Wiley & Sons, Ltd.     

FLEXIBLE RETIREMENT

Flexible retirement – that is, the opportunity to choose one's own personal retirement age – is a hedge against pension risk and provides insurance to workers facing health or productivity shocks. Flexible retirement and flexible pension schemes are in practice closely linked because of imperfect capital markets and institutional restrictions. I discuss three necessary conditions to provide insurance through flexible retirement. First, it should be possible to adjust the pension starting date at limited cost. This condition is gradually being fulfilled, as many countries are moving toward more actuarially neutral pension schemes. Second, individuals should be willing to adjust their labor supply in case of a wealth shock. This condition seems largely fulfilled, although the available empirical evidence suggests that the ‘standard retirement age’ is at least as important as the income effect. Third, the labor market should be able to deal with flexible individual retirement decisions. This condition is gaining importance, but has not yet received much attention in the literature. Institutions often hamper employment past the ‘standard retirement age’. Moreover, the hiring rates of older workers are low and their unemployment duration is high. Institutional reforms facilitating flexible retirement opportunities are desirable from an insurance perspective.     

Estimating Health Demand for an Aging Population: A Flexible and Robust Bayesian Joint Model

We analyse two frequently used measures of the demand for health—hospital visits and out‐of‐pocket health care expenditure—which have been analysed separately in the existing literature. Given that these two measures of health demand are highly likely to be closely correlated, we propose a framework to jointly model hospital visits and out‐of‐pocket medical expenditure, which allows for the presence of nonlinear effects of covariates using splines to capture the effects of aging on health demand. The findings from our empirical analysis of the US Health and Retirement Survey indicate that the demand for health varies with age. © 2015 The Authors. Journal of Applied Econometrics published by John Wiley & Sons Ltd.     

Dynamic asset allocation when bequests are luxury goods

Luxury bequests impart systematic effects of age to an investor's optimal allocation: the expected percentage allocation to equities rises throughout retirement. When bequests are luxuries the marginal utility of bequests declines more slowly than the marginal utility of consumption. This is essentially lower risk aversion. As a retiree approaches death, her expected remaining lifetime utility is increasingly composed of bequest utility, and thus generates progressively lower risk aversion. A retiree responds by increasingly favoring the higher-return risky asset. Compared to standard preferences, luxury bequests elevate a retiree's average exposure to the risky asset, but the difference is small in early retirement.     

The Relationship between Unemployment Benefits and Re‐employment Probabilities: Evidence from Spain*

We provide the first Spanish evidence about the effects on re‐employment probabilities of variations in benefit levels and time‐to‐exhaustion. Increases in unemployment insurance (UI) benefit levels had a small disincentive effect on the re‐employment hazard on average. Around this average, there were larger disincentive effects for men with elapsed durations between 4 and 18 months, whereas for men unemployed longer than 18 months, or for men resident in the south, the effect was negligible. Re‐employment hazards increased when UI exhaustion was imminent, but the change was small. Extensions to unemployment assistance eligibility in 1989 for men aged 45+ years lowered re‐employment probabilities.