2017, No. 2

Abstracts of Selected Recent NBER Working Papers

WP 22984
A Structural Analysis of the Effects of the Great Recession on Retirement and Working Longer by Members of Two-Earner Households
Alan L. Gustman, Thomas L. Steinmeier, Nahid Tabatabai

This paper uses data from the Health and Retirement Study to estimate a structural model of household retirement and saving. It applies that model to analyze the effects of the Great Recession on the work and retirement of older couples who were both employed full-time at the beginning of the recession. We analyze the effects of job loss, changes in wealth, and changes in expectations. The largest overall effects of the Great Recession are observed for 2009 and 2010. In 2009, an additional 2.5 percent of all 55- to 59-year-old husbands were not working full-time as result of the Great Recession, amounting to a reduction of 3.2 percent in full-time work. In 2010, 2.8 percent of 55- to 59-year-old husbands were not working full-time as a result of the Great Recession, amounting to a 3.8 percent reduction in full-time work. For wives the reductions in full-time work due to the Great Recession were 1.7 percent and 2.2 percent of those who initially held a job, or reductions of full-time work of 2.3 and 3.0 percent respectively. For those 60 to 64, the reductions were 1.2 percent of men and 0.9 percent of women. Having been laid off in the last three years reduces full-time work by 30 percent. There also are lingering effects of layoff on the probability of working longer. Having been laid off three or more years in the past reduces full-time employment in the current year by about 12 percent. This reflects the reduced work incentives for full-time work arising from lower earnings due to the loss of job tenure with a layoff as well as the additional earnings penalty from a layoff. The effect on own work of a spouse having been laid off is much smaller. The reason is that, as found in the estimation of our structural model, having one spouse not working increases the value of leisure for the other. In contrast, when one member of the household loses their job, the value of consumption increases relative to leisure. For recent layoffs, these effects are roughly offsetting. All told, the effects of the Great Recession on retirement seem relatively modest. These findings are consistent with our earlier descriptive analyses.

WP 23044
The Effect of State Medicaid Expansions on Prescription Drug Use: Evidence from the Affordable Care Act
Ausmita Ghosh, Kosali Simon, Benjamin D. Sommers

This study provides a national analysis of how the 2014 Affordable Care Act (ACA) Medicaid expansions have affected aggregate prescription drug utilization. Given the prominent role of prescription medications in the management of chronic conditions, as well as the high prevalence of unmet health care needs in the population newly eligible for Medicaid, the use of prescription drugs represents an important measure of the ACA's policy impact. Prescription drug utilization also provides insights into whether insurance expansions have increased access to physicians, since obtaining these medications requires interaction with a health care provider. We use 2013–15 data from a large, nationally representative, all-payer pharmacy transactions database to examine effects on overall prescription medication utilization as well as effects within specific drug classes. Using a differences-in-differences (DD) regression framework, we find that within the first 15 months of expansion, Medicaid-paid prescription utilization increased by 19 percent in expansion states relative to states that did not expand; this works out to approximately seven additional prescriptions per year per newly enrolled beneficiary. The greatest increases in Medicaid prescriptions occurred among diabetes medications, which increased by 24 percent. Other classes of medication that experienced relatively large increases include contraceptives (22 percent) and cardiovascular drugs (21 percent), while several classes more consistent with acute conditions such as allergies and infections experienced significantly smaller increases. As a placebo test, we examine Medicare-paid prescriptions and find no evidence of a post-ACA effect. Both expansion and non-expansion states followed statistically similar trends in Medicaid prescription utilization in the pre-policy era, offering support for our DD approach. We did not observe reductions in uninsured or privately insured prescriptions, suggesting that increased utilization under Medicaid did not substitute for other forms of payment. Within expansion states, increases in prescription drug utilization were larger in geographical areas with higher uninsured rates prior to the ACA. Finally, we find some suggestive evidence that increases in prescription drug utilization were greater in areas with larger Hispanic and black populations.

WP 23104
Price-Linked Subsidies and Health Insurance Markups
Sonia P. Jaffe, Mark Shepard

Subsidies in many health insurance programs depend on prices set by competing insurers — as prices rise, so do subsidies. We study the economics of these "price-linked" subsidies compared to "fixed" subsidies set independently of market prices. We show that price-linked subsidies weaken price competition, leading to higher markups and subsidy costs for the government. We argue that price-linked subsidies make sense only if (1) there is uncertainty about costs/prices, and (2) optimal subsidies increase as prices rise. We propose two reasons why optimal health insurance subsidies may rise with prices: doing so both in-sures consumers against cost risk and indirectly links subsidies to market-wide shocks affecting the cost of "charity care" used by the uninsured. We evaluate these tradeoffs empirically using a structural model estimated with data from Massachusetts' health insurance exchange. Relative to fixed subsidies, price-linking increases prices by up to 5%, and by 5–10% when we simulate markets with fewer insurers. For levels of cost uncertainty that are reasonable in a mature market, we find that the losses from higher prices outweigh the benefits of price-linking.

WP 23107
Direct and Spillover Effects of Middle School Vaccination Requirements
Christopher S. Carpenter, Emily C. Lawler

We study the direct and spillover effects of state requirements that middle school youths obtain a tetanus, diphtheria, and pertussis (Tdap) booster prior to middle school entry. These mandates increased vaccine take-up by 29 percent and reduced pertussis (whooping cough) incidence in the population by a much larger 53 percent due to herd immunity effects. We also document cross-vaccine spillovers: the mandates increased adolescent vaccination for meningococcal disease and human papillomavirus (which is responsible for 98 percent of cervical cancers) by 8–34 percent, with particularly large effects for children from low-SES households.

WP 23139
Did Medicaid Expansion Reduce Medical Divorce?
David Slusky, Donna Ginther

Prior to the Affordable Care Act, many state Medicaid eligibility rules had maximum asset levels. This was a problem when one member of a couple was diagnosed with a degenerative disease requiring expensive care. Draining the couple's assets so that the sick individual could qualify for Medicaid would leave no resources for the retirement of the other member; thus divorce and separating assets was often the only option. The ACA's Medicaid expansion removed all asset tests. Using a difference-in-differences approach on states that did and did not expand Medicaid, we find that the expansion decreased the prevalence of divorce by 5.6% among those 50-64, strongly suggesting that it reduced medical divorce.

WP 23171
With a Little Help from My Friends: The Effects of Naloxone Access and Good Samaritan Laws on Opioid-Related Deaths
Daniel I. Rees, Joseph J. Sabia, Laura M. Argys, Joshua Latshaw, Dhaval Dave

In an effort to address the opioid epidemic, a majority of states have recently passed some version of a Naloxone Access Law (NAL) and/or a Good Samaritan Law (GSL). NALs allow lay persons to administer naloxone, which temporarily counteracts the effects of an opioid overdose; GSLs provide immunity from prosecution for drug possession to anyone who seeks medical assistance in the event of a drug overdose. This study is the first to examine the effect of these laws on opioid-related deaths. Using data from the National Vital Statistics System multiple cause-of-death mortality files for the period 1999–2014, we find that the adoption of a NAL is associated with a 9 to 11 percent reduction in opioid-related deaths. The estimated effect of GLSs on opioid-related deaths is of comparable magnitude, but not statistically significant at conventional levels. Finally, we find that neither NALs nor GSLs increase the recreational use of prescription painkillers.

WP 23192
Macroeconomic Conditions and Opioid Abuse
Alex Hollingsworth, Christopher J. Ruhm, Kosali Simon

We examine how deaths and emergency department (ED) visits related to use of opioid analgesics (opioids) and other drugs vary with macroeconomic conditions. As the county unemployment rate increases by one percentage point, the opioid death rate per 100,000 rises by 0.19 (3.6%) and the opioid overdose ED visit rate per 100,000 increases by 0.95 (7.0%). Macroeconomic shocks also increase the overall drug death rate, but this increase is driven by rising opioid deaths. Our findings hold when performing a state-level analysis, rather than county-level; are primarily driven by adverse events among whites; and are stable across time periods.

WP 23218
School Lunch Quality and Academic Performance
Michael L. Anderson, Justin Gallagher, Elizabeth Ramirez Ritchie

Improving the nutritional content of public school meals is a topic of intense policy interest. A main motivation is the health of school children, and, in particular, the rising childhood obesity rate. Medical and nutrition literature has long argued that a healthy diet can have a second important impact: improved cognitive function. In this paper, we test whether offering healthier lunches affects student achievement as measured by test scores. Our sample includes all California (CA) public schools over a five-year period. We estimate difference-in-difference style regressions using variation that takes advantage of frequent lunch vendor contract turnover. Students at schools that contract with a healthy school lunch vendor score higher on CA state achievement tests, with larger test score increases for students who are eligible for reduced-price or free school lunches. We do not find any evidence that healthier school lunches lead to a decrease in obesity rates.

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