THE EFFECT OF INSURANCE COVERAGE ON PREVENTIVE CARE

Despite the growth in health insurance products that differentially cover preventive care and nonpreventive care, little is known about how preventive care utilization responds to targeted changes in coverage. Using administrative data from a large company, this paper examines the implementation of an insurance benefit design which differentially increased the price of nonpreventive care while decreasing the price of prevention. Leveraging a difference‐in‐differences research strategy, we find that preventive care utilization did not increase and even declined due to the differential price change. This evidence indicates a meaningful negative cross‐price effect, suggesting that nonpreventive care and preventive care are complements. (JEL I13, I11)     

HOW HEALTH INSURANCE AFFECTS HEALTH CARE DEMAND—A STRUCTURAL ANALYSIS OF BEHAVIORAL MORAL HAZARD AND ADVERSE SELECTION

Individuals with health insurance use more health care. One reason is that health care is cheaper for the insured. Additionally, having insurance can encourage unhealthy behavior via moral hazard. Previous work studying the effect of health insurance on medical utilization has mostly ignored behavioral changes due to having health insurance, and how that in turn affects medical utilization. This paper investigates the structural causal relationships among health insurance status, health behavior, and medical utilization theoretically and empirically, and separates price effects from behavioral moral hazard effects. Also distinguished are the extensive versus intensive margins of insurance effects on behavior. (JEL C51, I12, D12)     

THE EFFECT OF PROVIDER CONTROL OF BLUE SHIELD PLANS ON HEALTH CARE MARKETS

Blue Shield plans often are granted regulatory advantages by the states in which they operate. Run efficiently, such not-for-profit firms should use these lower costs to eliminate their less advantaged rivals, the commercial insurers. However, these higher-cost commercial providers have been able to offer insurance coverage at prices competitive with the Blues, as evidenced by the fact that Blue plans have, on average, less than 50 percent market share. Similar prices with lower overall costs implies that economic rents are being earned, rents which a not-for-profit firm cannot distribute to owners. In this paper we argue that when there are competing goals among the groups controlling the Blue Shield plans, the different possible "uses" of the regulatory advantage become endogenously determined, necessitating the use of simultaneous equation estimation. Testing this model we find the major effect of doctor-control of Blue Shield plans is to raise doctors' fees while lowering the amount of rents captured by both consumers and administrators.     

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.     

GENDER DIFFERENCES IN THE VALUATION OF EMPLOYER-PROVIDED HEALTH INSURANCE

We present evidence that accurate estimates of the labor-earning/employer-provided health insurance trade-off must account for two different effects: the heterogeneity of jobs and the endogeneity of health insurance. The size of the trade-off depends on employees' contribution to premiums, health-care needs, and valuation of insurance. We use Medical Expenditure Panel Survey data and instrumental variables/two-stage least squares. On average, workers accept about 16.5% to 20% lower earnings in return for insurance, and married women value insurance by about 3.5 percentage points more than married men, explaining about 3% of the gender-earning differentials. Health insurance does not contribute to the unexplained portion of the gender-pay gap. ( JEL J3, J7, I1)     

CONFLICTING VIEWS ON THE EFFECT OF OLD-AGE AND SURVIVORS INSURANCE ON RETIREMENT

The literature explaining the sharp drop in labor force participation of the elderly in recent decades is examined. Several recent studies made by economists outside the Social Security Administration have found the impact of OASI to be much more important than was found by surveys made within the social security system. An examination of census and manpower data lends support to the view that OASI has had an important role in encouraging retirement at earlier ages. The drop in labor force participation among the elderly has impeded government efforts to improve the economic condition of elderly persons.     

THE EFFECT OF THE MEDICAID HOME CARE BENEFIT ONLONG-TERM CARE CHOICES OF THE ELDERLY

This paper analyses the impact of Medicaid home care benefits on the probability of nursing home entry and the use of formal and informal home care by disabled elderly remaining in the community. Using data from the National Long-Term Care Survey, I find evidence that Medicaid home care subsidies reduced the probability of nursing home entry among at-risk elderly using formal home care. Among non-in-stitutionalized persons, the subsidy increased the use of formal home care but led to substitution of informal with formal care for services that were non-medical in nature.     

HEALTH CARE INFLATION AND ITS IMPLICATIONS FOR MONETARY POLICY

Motivated by recent findings on the cyclical movement of both health and health spending, we construct a general equilibrium model that distinguishes health care demand from the demand for other goods. Using this model, we are able to generate inflation dynamics and cyclicality of health that match the US data. When the model is subjected to an expansionary monetary policy shock, it yields different output and inflation responses compared with a two‐sector model with homogeneous demand. We show that the trade‐off between leisure and health spending plays an important role in model dynamics. The model further predicts different degrees of inflation stabilization across sectors when a shift in the monetary policy occurs. (JEL E52, E31, E32, I10)     

HEALTH CARE REFORM IN THE UNITED STATES: IMPLICATIONS FOR TRAINING AND PRACTICE IN MARRIAGE AND FAMILY THERAPY

Americans are spending 12-14% of their income on health care, and costs are rising about 11-12% per year. These increases are fueled by many social problems and are not limited strictly to health matters. Many alternatives have been examined to limit the rapidly increasing costs. The long-term results of these efforts are likely to be a reduction in health care benefits for many and the continued development of a two-tier system of health care. This article addresses the place of mental health care in general and marriage and family therapy in particular in the emerging system. Suggestions for training and practice for the new health care system are given.     

MONOPOLY, MONOPSONY AND CONTESTABILITY IN HEALTH INSURANCE: A STUDY OF BLUE CROSS PLANS

As dominant sellers of health insurance and buyers of health services, Blue Cross and Blue Shield have potential monopoly and monopsony power. The credible threat of entry resulting from the increased competitiveness of these markets in the 1980s may have produced competitive outcomes—reduced prices, improved quality and efficient cost structures—even in a concentrated market. We find the plans used economies of scale and monopsony power to reduce administrative costs, provide payments and consumer premiums. Our findings suggest that steps to enhance the contestability of health markets may be a better response than regulation.     

MANDATORY RETIREMENT AS A CLAUSE IN AN EMPLOYMENT INSURANCE CONTRACT

This paper postulates the existence of an "employment insurance contract" in which firms insure the employment of workers, at a predetermined wage, against potential, age related declines in productivity. To limit its liability the firm establishes an age limit to its promise ––– the mandatory retirement age. It is demonstrated that Pareto-efficient contracts exist which involve mandatory retirement at a specific age. The existence of these contracts, including mandatory retirement, increases workers' life-time utility and encourages the accumulation of human capital. Empirical results are consistent with the predictions of the model.     

THE EFFECT OF SELECTIVE INS MONITORING STRATEGIES ON THE INDUSTRIAL EMPLOYMENT CHOICE AND EARNINGS OF RECENT IMMIGRANTS

One effect of 1986's immigration reform was to make INS inspection of firms more costly relative to other industries. In response, we suggest, the INS refocused its enforcement efforts toward industries with a higher concentration of illegals per establishment, especially manufacturing. We test this hypotheses and model the effects of a selective monitoring strategy on the employment choice and wages of illegal workers. We find evidence of selective monitoring by the INS and that this policy has redistributed illegal workers from closely to weakly monitored industries. Specifically, we find a shift from the higher-paying manufacturing sector to the agricultural.     

LABOR MARKET EFFECTS OF EMPLOYER-PROVIDED HEALTH INSURANCE

This is an experimental study in economics of mandated benefits. Most individuals who have health insurance in the United States obtain it through their employer. Some states require employers to provide insurance to certain types of workers. We used an experimental laboratory to investigate possible effects of alternative health insurance regulations on the competitive labor market performance. We found that mandating the insurance for all workers creates labor market distortions, whereas mandating the insurance only for full-time workers leads to a higher coverage than under no mandate, an increased number of part-time workers, but does not necessarily lower market efficiency. ( JEL C92, I18, J2)     

THE IMPACT OF A PUBLIC OPTION IN THE U.S. HEALTH INSURANCE MARKET

We develop a game‐theoretical framework to examine the implications of the introduction of a nonprofit “public option” in the U.S. health insurance market. In this model, heterogeneous consumers have to choose between two competing insurance plans. One plan is offered by a profit‐maximizing private insurer; the other by social‐welfare‐maximizing public option. In equilibrium, the distinct objectives of the two insurers induce adverse selection in consumer choice: the public option covers the less healthy consumers, yielding the more profitable segment of market to the private insurer. However, our empirical results suggest that both insurers will capture significant parts of the health insurance market. (JEL I11, L10, L21, L32)     

EFFICIENCY IN EMPLOYMENT BASED HEALTH INSURANCE: THE POTENTIAL FOR SUPRA-MARGINAL COST PRICING

Currently, the majority if privately insured individuals in the U.S. are insured through their employers. This has significant implications for competition and the ability qf a "competitive" insurance industry to assure marginal-cost pricing. The central barrier to competition arises when employers restrict their employees' ability to select among insurance carriers. Several models 4 insurer proft maximization are explored which demonstrate that supra-marginal cost pricing is likely to persist euen when the insurance market appears "cornpetitiue."