Health Economics

Sindelar, Jody L.

doi: 10.1002/hec.1350pmid: 18348117

Pizer, Steven D.; Frakt, Austin B.; Feldman, Roger

doi: 10.1002/hec.1252pmid: 17557273

The Medicare Modernization Act of 2003 created several new types of private insurance plans within Medicare, starting in 2006. Some of these plan types previously did not exist in the commercial market and there was great uncertainty about their prospects. In this paper, we show that statistical models and historical data from the Medicare Current Beneficiary Survey can be used to predict the experience of new plan types with reasonable accuracy. This lays the foundation for the analysis of program modifications currently under consideration. We predict market share, risk selection, and stability for the most prominent new plan type, the stand‐alone Medicare prescription drug plan (PDP). First, we estimate a model of consumer choice across Medicare insurance plans available in the data. Next, we modify the data to include PDPs and use the model to predict the probability of enrollment for each beneficiary in each plan type. Finally, we calculate mean‐adjusted actual spending by plan type. We predict that adverse selection into PDPs will be substantial, but that enrollment and premiums will be stable. Our predictions correspond well to actual experience in 2006. Copyright © 2007 John Wiley & Sons, Ltd.

Pauly, Mark V.; Nicholson, Sean; Polsky, Daniel; Berger, Marc L.; Sharda, Claire

doi: 10.1002/hec.1266pmid: 17628862

This paper reports on a study of manager perceptions of the cost to employers of on‐the‐job employee illness, sometimes termed ‘presenteeism,’ for various types of jobs. Using methods developed previously, the authors analyzed data from a survey of more than 800 US managers to determine the characteristics of various jobs and the relationship of those characteristics to the manager's view of the cost to the firm of absenteeism and presenteeism. Jobs with characteristics that suggest unusually high cost (relative to wages) were similar in terms of their ‘absenteeism multipliers’ and their ‘presenteeism multipliers.’ Jobs with high values of team production, high requirements for timely output, and high difficulties of substitution for absent or impaired workers had significantly higher indicators of cost for both absenteeism and presenteeism, although substitution was somewhat less important for presenteeism. Copyright © 2007 John Wiley & Sons, Ltd.

Shang, Baoping; Goldman, Dana

doi: 10.1002/hec.1295pmid: 17935199

It is an unresolved issue whether age or (expected) remaining life years better predicts health care expenditures. We first estimate a set of hazard models to predict life expectancy based on individual demographic characteristics and health conditions, and then use regression analyses to compare the predictive power of age and life expectancy in explaining health care expenditures. This paper differs from previous studies in that it uses predicted life expectancy to address the censoring of death; as a result, this paper goes beyond the large health care expenditures at the end of life and the results apply to both deceased and survivors. We find that age has little additional predictive power on health care expenditures after controlling for life expectancy, but the predictive power of life expectancy itself diminishes as health status measures are introduced into the model. These results are not of esoteric interest only for their statistical properties; we show that using life expectancy rather than age results in lower projections of future health care expenditures. This result suggests that increases in longevity might be less costly than models based on the current age profile of spending would predict. Copyright © 2007 John Wiley & Sons, Ltd.

Hennessy, David A.

doi: 10.1002/hec.1270pmid: 17763337

Suppose one could expend effort to prevent probabilistic transition to an adverse state, and also effort to expedite probabilistic transition to a beneficial state. Bearing in mind that the efforts occur in different states, should these efforts substitute or complement? Two appealing arguments are in conflict. If cure effort is costly, then the incentive to prevent should be high in order to avoid future cure effort costs, i.e. efforts are gross substitutes in demand. If prevention effort is costly, then the incentive to cure should be low since recidivism is likely, i.e. efforts complement. In a lifetime present value model, we show that both arguments have merit. We also show that the prevalence of the adverse state can rise with a subsidy on cure effort costs. Copyright © 2007 John Wiley & Sons, Ltd.

Frakt, Austin B.; Pizer, Steven D.

doi: 10.1002/hec.1303pmid: 17935198

Stand‐alone outpatient prescription drug plans (PDPs), introduced in January 2006, have become the most popular source for coverage of outpatient prescription drugs under Medicare relative to other available Medicare plan types (e.g. Medicare Advantage drug plans). Using county‐level enrollment figures from the Centers for Medicare & Medicaid Services linked to other public sources, we study attribute substitution in beneficiary decision‐making with respect to PDP enrollment. To do so, we relate county‐level PDP market share to county‐level political support for the administration implementing the new benefit (the Bush Administration), controlling for socio‐demographic and market characteristics. We find statistically significant evidence that greater support for the Bush administration is associated with increased PDP market share. Copyright © 2007 John Wiley & Sons, Ltd.

Liu, Liqun; Rettenmaier, Andrew J.; Saving, Thomas R.

doi: 10.1002/hec.1309pmid: 17990284

We use a simple lifetime utility maximization model to study the problem of medical resource allocation. This model leads to a welfare specification with a QALY (quality‐adjusted life‐year) component that captures an individual's preferences over both life expectancy and health status. The goal of medical cost‐effectiveness analysis (CEA) is characterized as maximizing the QALY measure for a given total medical expenditure. We show that the CEA with such a goal has a longevity bias: the CEA‐based division of a given total medical expenditure between extending life and improving health gives the former a larger share than is called for by welfare maximization. Copyright © 2007 John Wiley & Sons, Ltd.

Morrisey, Michael A.; Cawley, John

doi: 10.1002/hec.1314pmid: 17990286

This paper reports the results of a Fall 2005 survey of US health economists, the first in over 18 years. Where appropriate, the results are compared with the earlier findings of Feldman and Morrisey (J. Health Politics Policy Law 1990; 15(3):627–646). The paper describes the demographics and training of health economists. It also describes how employers view the substitutability between a Ph.D. in economics and a Ph.D. in health services research, which is a key question because self‐identified health economists increasingly include health services researchers trained in schools of public health or medicine. This study also reports the expectations of various, employers of health economists regarding external grant and contract support. It also reports health economists' perceptions of the processes that allocate resources and recognition: promotion review, journal refereeing, and grant review. Copyright © 2007 John Wiley & Sons, Ltd.

Quast, Troy; Sappington, David E. M.; Shenkman, Elizabeth

doi: 10.1002/hec.1264pmid: 17620287

A growing fraction of Medicaid participants are enrolled in managed care organizations (MCOs). MCOs contract with primary care physicians (PCPs) to provide health‐care services to Medicaid enrollees. The PCPs are generally compensated either via fee‐for‐service (FFS) or via capitated arrangements. This paper investigates whether the quality of care that Medicaid enrollees receive varies with the means by which PCPs are compensated. Using data for all Medicaid MCO enrollees in a large state, we find that enrollees in MCOs that pay their PCPs exclusively via FFS arrangements are more likely to receive services for which the PCPs receive additional compensation. These enrollees also are less likely to receive services for which the PCPs do not receive additional compensation. These findings suggest that financial incentives may influence the behavior of PCPs in Medicaid MCOs, and thus the quality of the health care received by Medicaid participants enrolled in MCOs. Copyright © 2007 John Wiley & Sons, Ltd.

Nelson, Jon P.; Young, Douglas J.

doi: 10.1002/hec.1273pmid: 17705334

In this paper, we study the effects of youth readership, price of advertisements, and audience size on alcohol advertising in 35 major magazines. The regressions also account for readership demographics (adult reader age, income, gender, race), magazine characteristics (newsstand sales, number of annual issues), and type of beverage (beer, wine, spirits). Using count data models, the results indicate significant effects for price, audience size, and adult demographics, but fail to support claims that alcohol advertisers target adolescent readers. Copyright © 2007 John Wiley & Sons, Ltd.