Abstracts of Selected Recent NBER Working Papers

WP 13775
Yu-Chu Shen, Vivian Wu, Glenn Melnick
The Changing Effect of HMO Market Structure: An Analysis of Penetration, Concentration, and Ownership Between 1994-2005

We analyze the role of three aspects of HMO market structure: HMO penetration, HMO plan concentration, and HMO for-profit share on explaining hospital cost and revenue growth during the HMO expansion period (1994-1999) and backlash period (2004-2005). We find that HMO penetration effects differ over time: a 10 percentage point increase in HMO enrollment leads to 2.5 percent reduction in cost and revenues in the expansion period but only 0.4-1 percent reduction in the backlash period. Furthermore, this HMO backlash ef-fect can be attributed to HMO dis-enrollment as well as the changing nature of HMO product. We find that revenue increases at a slower rate (by about 5 percent) in markets with relatively concentrated HMO markets power and more competitive hospital markets. Finally, increased for-profit HMO presence is associated with smaller cost and revenue growth, and the effect differs between low and high pene-tration markets.

WP 13785
Radha Iyengar, Lindsay Sabik, Cindy Southworth, Sarah Tucker, Cynthia Fraser
50,000 People a Day: The Use of Federally Funded Services for Intimate Partner Violence

Intimate partner violence is a serious and preventable health problem affecting more than 30 million Americans each year. We use an innovative new research design to describe the frequency and correlates of emergency and crisis intervention services provided by do-mestic violence programs using safe, non-invasive collection methods. During the 24-hour survey period, 48,350 individuals used the services of primary purpose domestic violence programs, corresponding to a population rate of 16 per 100,000 people. Of these individu-als, 14,518 required emergency shelter, 7,989 required transitional housing and 25,843 were provided with non-residential services. Seven times more individuals are served by domestic violence programs than are served in emergency rooms in the US on an average day. The results show unmet demand for services provided by domestic violence programs with 10 percent victims (5,183 requests) seeking services at a domestic violence provider unable to be served daily due to resource constraints. Although DV costs $5.8 billion annually, 70% of which is spent on medical costs, the government only spends $126 million annually. Thus greater funding of domestic violence programs is likely to be a cost-effective investment.

WP 13789
Erik Hurst
The Retirement of a Consumption Puzzle

This paper summarizes five facts that have emerged from the recent literature on consumption behavior during retirement. Collectively, the recent literature has shown that there is no puzzle with respect to the spending patterns of most households as they transition into retirement. In particular, the literature has shown that there is substantial heterogeneity in spending changes at retirement across con-sumption categories. The declines in spending during retirement for the average household are limited to the categories of food and work related expenses. Spending in nearly all other categories of non-durable expenditure remains constant or increases. Moreover, even though food spending declines during retirement, actual food intake remains constant. The literature also shows that there is substantial heterogeneity across households in the change in expenditure associated with retirement. Much of this heterogeneity, however, can be explained by households involuntarily retiring due to deteriorating health. Overall, the literature shows that the standard model of lifecycle consumption augmented with home production and uncertain health shocks does well in explaining the consumption patterns of most households as they transition into retirement.

WP 13875
Cathy Bradley, David Neumark, Lisa Shickle, Nicholas Farrell
Differences in Breast Cancer Diagnosis and Treatment: Experiences of Insured and Uninsured Patients in a Safety Net Setting

To explore how well the safety net performs at eliminating differences in diagnosis and treatment of insured and uninsured women with breast cancer, we compared insured and uninsured women treated in a safety net setting. Controlling for socioeconomic characteristics, uninsured women are more likely to be diagnosed with advanced disease, requiring more extensive treatment relative to insured women, and also experience delays in initiating and completing treatment. The findings suggest that, despite the safety net system, uninsured women with breast cancer are likely to require more costly treatment and to have worse outcomes, relative to insured women with breast cancer.

WP 13881
Sherry Glied
Health Care Financing, Efficiency, and Equity

This paper examines the efficiency and equity implications of alternative health care system financing strategies. Using data across the OECD, I find that almost all financing choices are compatible with efficiency in the delivery of health care, and that there has been no con-sistent and systematic relationship between financing and cost containment. Using data on expenditures and life expectancy by income quintile from the Canadian health care system, I find that universal, publicly-funded health insurance is modestly redistributive. Putting $1 of tax funds into the public health insurance system effectively channels between $0.23 and $0.26 toward the lowest income quintile peo-ple, and about $0.50 to the bottom two income quintiles. Finally, a review of the literature across the OECD suggests that the progressiv-ity of financing of the health insurance system has limited implications for overall income inequality, particularly over time.

WP 13917
Mark Duggan, Fiona Scott Morton
The Effect of Medicare Part D on Pharmaceutical Prices and Utilitization

On January 1, 2006, the federal government began providing insurance coverage for Medicare recipients' prescription drug expenditures through a new program known as Medicare Part D. Rather than setting pharmaceutical prices itself, the government contracted with private insurance plans to provide this coverage. Enrollment in Part D was voluntary, with each Medicare recipient allowed to choose from one of the private insurers with a contract to offer coverage in her geographic region. This paper evaluates the effect of this program on the price and utilization of pharmaceutical treatments. Theoretically, it is ambiguous whether the expansion in insurance coverage would increase or reduce pharmaceutical prices. Insurance-induced reductions in demand elasticities would predict an increase in pharmaceutical firms' op-timal prices. However, Part D plans could potentially negotiate price discounts through their ability to influence the market share of specific treatments. Using data on product-specific prices and quantities sold in each year in the U.S., our findings indicate that Part D substantially lowered the average price and increased the total utilization of prescription drugs by Medicare recipients. Our results further suggest that the magnitude of these average effects varies across drugs as predicted by economic theory.

WP 13979
John Geanakoplos, Stephen Zeldes
Reforming Social Security with Progressive Personal Accounts

The heated debate about how to reform Social Security has come to a standstill because the view of most Democrats (that Social Se-curity must be a defined benefits plan similar in spirit to the current system) seems irreconcilable with the proposals supported by many Republicans (to create a defined contribution system of personal accounts holding marketed assets). We describe a system of "progres-sive personal accounts" that preserves the core goals of both parties, and that is self-balancing on an ongoing basis. Progressive per-sonal accounts have two critical features: (1) accruals into the personal accounts would be exclusively in a new kind of derivative security (which we call a PAAW for Personal Annuitized Average Wage security) that pays its owner one inflation-corrected dollar during every year of life after his statutory retirement date, multiplied by the economy wide average wage at the retirement date and (2) households would buy their new PAAWs each year with their social security contributions, augmented or reduced by a government match that would add to contributions from households with low lifetime incomes by taking from households with high lifetime incomes. PAAWS define benefits and achieve risk sharing across generations, as Democrats would like, yet can be held in personal accounts with market valua-tions, as Republicans propose.

WP 13987
Janet Currie
Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development

There are many possible pathways between parental education, income, and health, and between child health and education, but only some of them have been explored in the literature. This essay focuses on links between parental socioeconomic status (as measured by education, income, occupation, or in some cases area of residence) and child health, and between child health and adult education or income. Specifically, I ask two questions: What is the evidence regarding whether parental socioeconomic status affects child health? And, what is the evidence relating child health to future educational and labor market outcomes? I show that there is now strong evidence of both links, suggesting that health could play a role in the intergenerational transmission of economic status.

WP 14010
Tomas Phillipson, Richard Posner
Is the Obesity Epidemic a Public Health Problem? A Decade of Research on the Economics of Obesity

The world-wide and ongoing rise in obesity has generated enormous popular interest and policy concern in developing countries, where it is rapidly becoming the major public health problem facing such nations. As a consequence, there has been a rapidly growing field of economic analysis of the causes and consequences of this phenomenon. This paper discusses some of the central themes of this dec-ade long research program, aiming at synthesizing the different strands of the literature, and to point to future research that seems par-ticularly productive.



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