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Austin Frakt, The Incidental Economist: Reading List

Incidental Economist Reading List
by Austin Frakt, November 25, 2011

Geographic Variation: A View From the Hospital Sector, by Rachel Mosher Henke, William D. Marder, Bernard S. Friedman and Herbert S. Wong  (Medical Care Research and Review)

Efforts to characterize geographic variation in health care utilization and spending have focused on patterns observed with Medicare data. The authors analyzed the Healthcare Cost and Utilization Project national all-payer data for inpatient stays to assess variation in hospitalizations by age groups and, consequently, to understand how utilization of the Medicare population may differ from the population of other payers. The authors found that the correlation between inpatient discharges and costs per capita for the Medicare-eligible population over 65 and younger age groups increased from moderate to strong with age. These findings suggest examining Medicare inpatient data alone may provide a useful but not comprehensive understanding how hospital utilization and costs vary for the total population.

Implementing Small Group Health Insurance Reform: The HEALTHpact Plan of Rhode Island, by Edward Alan Miller, Amal N. Trivedi, Sylvia Kuo and Vincent Mor (Medical Care Research and Review)

This study analyzes administrative impediments to enrollment in HEALTHpact, a high-deductible plan with premiums capped at 10% of the average Rhode Island wage. HEALTHpactincludes an opportunity for enrollees to reduce their deductibles from $5,000 ($10,000 for a family) to $750 ($1,500 for a family) if they engage in prespecified wellness behaviors. A stakeholder panel was convened to develop guidelines for insurers, which, in turn, were required to develop products satisfying those guidelines. Implementation was examined using stakeholder interviews and archival documents. Results indicate that since no funds were allocated for education and monitoring, there was little opportunity to promote “bottom up” demand or to oversee insurers. They also indicate that both insurers and brokers adopted strategies that inhibited take-up. Providing the resources necessary for effective government oversight and outreach will be critical to small group market reform nationally. So too will be promoting broker and insurer buy-in.

Does price reveal poor-quality drugs? Evidence from 17 countries, by Roger Bate, Ginger Zhe Jin, Aparna Mathur (JHE)

Focusing on 8 drug types on the WHO-approved medicine list, we constructed an original dataset of 899 drug samples from 17 low- and median-income countries and tested them for visual appearance, disintegration, and analyzed their ingredients by chromatography and spectrometry. Fifteen percent of the samples fail at least one test and can be considered substandard. After controlling for local factors, we find that failing drugs are priced 13.6–18.7% lower than non-failing drugs but the signaling effect of price is far from complete, especially for non-innovator brands. The look of the pharmacy, as assessed by our covert shoppers, is weakly correlated with the results of quality tests. These findings suggest that consumers are likely to suspect low quality from market price, non-innovator brand and the look of the pharmacy, but none of these signals can perfectly identify substandard and counterfeit drugs.

Rising educational gradients in mortality: The role of behavioral risk factors, by David M. Cutler, Fabian Lange, Ellen Meara, Seth Richards-Shubik, Christopher J. Ruhm (JHE)

The long-standing inverse relationship between education and mortality strengthened substantially at the end of the 20th century. This paper examines the reasons for this increase. We show that behavioral risk factors are not of primary importance. Smoking declined more for the better educated, but not enough to explain the trend. Obesity rose at similar rates across education groups, and control of blood pressure and cholesterol increased fairly uniformly as well. Rather, our results show that the mortality returns to risk factors, and conditional on risk factors, the return to education, have grown over time.

Premium subsidies and social health insurance: Substitutes or complements?, by Mathias Kifmann, Kerstin Roeder (JHE)

Premium subsidies have been advocated as an alternative to social health insurance. These subsidies are paid if expenditure on health insurance exceeds a given share of income. In this paper, we examine whether this approach is superior to social health insurance from a welfare perspective. We show that the results crucially depend on the correlation of health and productivity. For a positive correlation, we find that combining premium subsidies with social health insurance is the optimal policy.

The Impact of the Macroeconomy on Health Insurance Coverage: Evidence from the Great Recession, by John Cawley, Asako S. Moriya and Kosali I. Simon (National Bureau of Economic Research)

This paper investigates the impact of the macroeconomy on the health insurance coverage of Americans. We examine panel data from the Survey of Income and Program Participation (SIPP) for 2004-2010, a period that includes the Great Recession of 2007-09. We find that a one percentage point increase in the state unemployment rate is associated with a 1.67 percentage point (2.12%) reduction in the probability that men have health insurance; this effect is strongest among college-educated, white, and older (50-64 year old) men. For women and children, the unemployment rate was not significantly correlated with the probability of health insurance coverage through any source. When one examines the source of coverage, it becomes apparent that a one percentage point increase in the unemployment rate is associated with a 1.37 percentage point (4.69%) higher probability that a child is covered by public health insurance. Based on the point estimates in this paper, we estimate that 9.3 million adult Americans, the vast majority of whom were men, lost health insurance due to a higher unemployment rate alone during the 2007-09 recession. This is roughly nine times more than lost health insurance during the previous (2001) recession. We conclude with a discussion of how components of recent health care reform may influence these relationships in the future.

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