Essays in the Economics of Health, Risk, and Behavior

The first chapter examines consumer choices of health insurance contracts. An important innovation in health insurance design is a high-deductible health plan paired with a health savings account (HSA). These contracts aim to control costs by linking insurance coverage with tax incentives for saving, but their rules are highly complex. How consumers perceive the features of these contracts may dampen any cost reduction and produce unintended welfare effects by distorting plan choices. Using a novel administrative dataset linking health insurance choices, medical claims, and saving in HSAs and 401(k)s from a large U.S. health insurer, I develop and estimate a model that integrates HSA saving with deductible choices. I estimate over two-thirds of the marginal HSA dollar is allocated to reduce the deductible, which counteracts the contract\u27s cost-control incentives and leads consumers to choose different insurance plans than they would without an HSA. In this setting, using HSA contributions to offset higher deductibles produced no reduction in health care costs. Several counterfactual analyses quantify the welfare implications of using the HSA to finance current costs on moral hazard, plan enrollment and premiums, and the consumption smoothing benefits from insurance. Health insurance contracts that require sophisticated consumer decision-making may work well in theory, but may be less effective and lead to unintended consequences in practice. The second chapter investigates how status affects health by comparing mortality between Gold and Silver medalists in Olympic Track and Field. Contrary to conventional wisdom, winners die over two years earlier than losers. Analysis of individual Census records of each athlete and his parents suggests that income is the key mechanism: losers pursued higher-paying occupations than winners after the Olympics, while parental earnings in childhood were similar. An athlete’s performance relative to expectations plays an auxiliary role, but is much less important than income. The results suggest that how people respond to pivotal life events can produce long-lasting consequences for health

Plan Selection in Medicare Part D: Evidence from administrative Data

We study the Medicare Part D prescription drug insurance program as a bellwether for designs of private, non-mandatory health insurance markets, focusing on the ability of consumers to evaluate and optimize their choices of plans. Our analysis of administrative data on medical claims in Medicare Part D suggests that less than 10 percent of individuals enroll in plans that are ex post optimal with respect to total cost (premiums and co-payments). Relative to the benchmark of a static decision rule, similar to the Plan Finder provided by the Medicare administration, that conditions next year’s plan choice only on the drugs consumed in the current year, enrollees lost on average about $300 per year. These numbers are hard to reconcile with decision costs alone; it appears that unless a sizeable fraction of consumers value plan features other than cost, they are not optimizing effectively

Overpaying and Undersaving? Correlated Mistakes in Retirement Saving and Health Insurance Choices

Not everyone makes wise financial choices. A large body of research documents behavior inconsistent with well-informed consumers maximizing their expected utility of consumption. It remains unknown, however, whether such behavior is correlated across domains. This paper uses two novel datasets to test whether the quality of health insurance and retirement saving decisions are correlated. Using administrative panel data from a large employer, we find that people who overpay for health insurance by choosing a dominated plan are more likely to forego employer matching funds for retirement saving. One-third of employees overpay for health insurance each year by $1,700 and simultaneously make no voluntary retirement contributions. Over just a few years, these choices result in lost savings equal to 4% of the median net worth of families at retirement. The losses are highest for employees with lower salaries, lower educational attainment, and for women. We find this positive correlation in choice quality across domains generalizes to other settings using a survey linked to administrative data on retirement accounts from 10 employers. This finding suggests consumers could reallocate funds from health insurance to retirement saving without sacrificing consumption. We find empirical support for several mechanisms explaining choice quality and consider implications for policy design to improve household economic security

Want More Value From Prescription Drugs? We Need to Let Prices Rise and Fall

The high price of some cancer drugs has recently come under attack by the medical profession. We examine the reasons behind the pricing strategies of cancer drugs. On the one hand, prices should reflect value and research demonstrates that the health benefits from novel cancer drugs have been enormous in terms of additional years of life patients can now enjoy. This provides some justification for the high price tag of these drugs. On the other hand, drug pricing is also a product of a hidebound reimbursement system that does a poor job in letting prices adjust to new information about value. Regulators set thresholds for cost-effectiveness, which establishes not only a price ceiling but also a price floor. Manufacturers often price drugs high at launch in efforts to recoup their initial investment, but a more efficient system would allow prices to both rise and fall over time. Removing distortions in the reimbursement system is crucial to ensuring continued success in saving lives

Universal health coverage from multiple perspectives: a synthesis of conceptual literature and global debates

Background: There is an emerging global consensus on the importance of universal health coverage (UHC), but no unanimity on the conceptual definition and scope of UHC, whether UHC is achievable or not, how to move towards it, common indicators for measuring its progress, and its long-term sustainability. This has resulted in various interpretations of the concept, emanating from different disciplinary perspectives. This paper discusses the various dimensions of UHC emerging from these interpretations and argues for the need to pay attention to the complex interactions across the various components of a health system in the pursuit of UHC as a legal human rights issue. Discussion: The literature presents UHC as a multi-dimensional concept, operationalized in terms of universal population coverage, universal financial protection, and universal access to quality health care, anchored on the basis of health care as an international legal obligation grounded in international human rights laws. As a legal concept, UHC implies the existence of a legal framework that mandates national governments to provide health care to all residents while compelling the international community to support poor nations in implementing this right. As a humanitarian social concept, UHC aims at achieving universal population coverage by enrolling all residents into health-related social security systems and securing equitable entitlements to the benefits from the health system for all. As a health economics concept, UHC guarantees financial protection by providing a shield against the catastrophic and impoverishing consequences of out-of-pocket expenditure, through the implementation of pooled prepaid financing systems. As a public health concept, UHC has attracted several controversies regarding which services should be covered: comprehensive services vs. minimum basic package, and priority disease-specific interventions vs. primary health care. Summary: As a multi-dimensional concept, grounded in international human rights laws, the move towards UHC in LMICs requires all states to effectively recognize the right to health in their national constitutions. It also requires a human rights-focused integrated approach to health service delivery that recognizes the health system as a complex phenomenon with interlinked functional units whose effective interaction are essential to reach the equilibrium called UHC

Economic Transition and Health Care Reform

Economic Transition and Health Care Reform: The Experience of Europe and Central AsiaTransition economies;Economic models;Economic reforms;Government expenditures;Statistics;primary care, health systems, health insurance, public health, fee-for-service, health care, health expenditure, social health insurance, health care systems, hospital beds, health economics, care systems, public health spending, health spending, health policy, health care systems in transition, health system, health reforms, health expenditure per capita, informal payments, health systems in transition, health sector, cost sharing, health policies, health care reform, inpatient care, public spending, health care spending, public expenditure, health system performance, health planning, health services, health care services, health expenditures, hospital care, hospital admissions, moral hazard, health financing, level of health spending, health reform, national health, health outcomes, health system reform, health care expenditures, payments for health care, hospital capacity, hospital sector, financing health care, private spending, outpatient visits per capita, health ? insurance, health insurance contributions, health care financing, public health care, health care costs, health providers, health data, fee-for-service payment, health care system, hospital system, health care providers, fee-for-service basis, primary health care, national health expenditures, impacts on health, pocket payments, life expectancy, insurance contributions, primary care doctors, health care reforms, social health ? insurance, insurance plan, managed care, primary care physician, hospital budgets, financing of health care, international health care, expenditure on health, healthcare system, public expenditure on health, health system goals, determinants of health, administrative costs, pocket payments by households, government health expenditures, quality of care, private health services, social health insurance schemes, insurance funds, capitation payment, health insurance schemes, medical expenditures, health plans, delivery of health care, risk adjustment, public providers, financial incentives, health facilities, access to services, health care provider, block grants, economics of health, delivery system, hospital services, comparisons of health expenditure, national health insurance, risk sharing, infant mortality