The Effects of State Medicaid Policies on the Dynamic Savings Patterns of the Elderly

States have considerable flexibility in determining Medicaid policies such as financial eligibility criteria, subsidies for home- and community-based services, and reimbursements rates to skilled nursing facilities, among other things. An understanding of how differences in Medicaid programs across states and time affect the elderlys' demand for Medicaid coverage of long-term care is necessary for evaluating future changes in the Medicaid program structure. We use data from the 1993, 1995, 1998, and 2000 waves of the Asset and Health Dynamics of the Elderly and variation in state Medicaid policies over time to estimate our dynamic framework capturing the sequential asset and gift decisions that determine eligibility for Medicaid. We also model the long-term care decisions of married and single individuals conditional on endogenous insurance coverage and health transitions. To control for the impact of unobserved heterogeneity in all outcomes, the structural equations of the empirical model are estimated jointly, allowing for correlation in the error structure across equations and over time. In this paper we focus on the asset and gifting decisions of the elderly over time. We find that many of the Medicaid policy variables that differ across states have a significant but small effect on the savings decisions of the elderly, with single elderly individuals exhibiting more response than married elderly individuals.

Estimating the Effects of Covariates on Health Expenditures

This paper addresses estimation of an outcome characterized by mass at zero, significant skewness, and heteroscedasticity. Unlike other approaches suggested recently that require retransformations or arbitrary assumptions about error distributions, our estimation strategy uses sequences of conditional probability functions, similar to those used in discrete time hazard rate analyses, to construct a discrete approximation to the density function of the outcome of interest conditional on exogenous explanatory variables. Once the conditional density function has been constructed, we can examine expectations of arbitrary functions of the outcome of interest and evaluate how these expectations vary with observed exogenous covariates. This removes a researcher's reliance on strong and often untested maintained assumptions. We demonstrate the features and precision of the conditional density estimation method through Monte Carlo experiments and an application to health expenditures using the RAND Health Insurance Experiment data. Overall, we find that the approximate conditional density estimator that we propose provides accurate and precise estimates of derivatives of expected outcomes for a wide range of types of explanatory variables. We find that two-part smearing models often used by health economists do not perform well. Our results, both in Monte Carlo experiments and in our real application, also indicate that simple one-part OLS models of level health expenditures can provide more accurate estimates than commonly used two-part models with smearing, provided one uses enough expansion terms in the one-part model to fit the data well.

The Role of Retiree Health Insurance in the Employment Behavior of Older Men

We model the employment and medical care decisions of older men who face health risk. The budget constraint incorporates detailed characteristics of health insurance as well as Social Security and private pensions. A man whose health insurance is tied to continued employment with his current employer faces the risk of large medical expenditures in the event of an adverse health shock if he retires before becoming eligible for Medicare at age 65. A man whose employer provides retiree health insurance or who has access to other health insurance not tied to his employment decision (e.g., from his wife) can retire before age 65 without consequences for his health insurance coverage. We use data from the Health and Retirement Survey to estimate the parameters of the model using structural methods. Simulations based on the estimates imply that changes in health insurance, including access and restrictions to retiree health insurance and Medicare have a modest impact on employment behavior among older males.

The Impact of Employer-Provided Health Insurance on Dynamic Employment Transitions

We estimate the impact of employer-provided health insurance (EPHI) on the job mobility of males over time using a dynamic empirical model that accounts for unobserved heterogeneity. Previous studies of job-lock reach different conclusions about possible distortions in labor mobility stemming from an employment-based health insurance system: a few authors find no evidence of job-lock, while most find reductions in the mobility of insured workers of between 20 and 40%. WE use data from the National Longitudinal Survey of Youth which describes the health insurance an individual holds, as well as whether he is offered insurance by his employer. This additional information allows us to model the latent individual characteristics that are correlated with the offer of EPHI, the acceptance of EPHI, and employment transitions. Our results provide an estimate of job-lock unbiased through correlation with positive job characteristics and individual specific turnover propensity. We find no evidence of job-lock among married males, and produce small estimates of job-lock among unmarried males of between 10 and 15%.

Consumer Demand under Price Uncertainty: Empirical Evidence from the Market for Cigarettes

The goal of this paper is to analyze consumer demand in markets with large price uncertainty. We develop a demand model for goods that are subject to habit formation. We show that consumption plans of forward looking individuals depend not only on preferences and current period prices, but also on individual beliefs about the evolution of future prices. Moreover, a mean preserving spread in the price distribution and, hence, an increase in price uncertainty reduces consumption along the optimal path. With smoking as our application, we test the predictions of our model. We use a unique data set of prices for cigarettes collected by the Bureau of Labor Statistics to characterize price uncertainty and price expectations of individuals. We have also obtained access to the restricted use version of the National Education Longitudinal Study, which provides detailed information on smoking behavior of teenagers in the U.S. Our estimation results suggest that teenagers who live in metropolitan areas with a large amount of cigarette price volatility have, on average, significantly lower levels of cigarette consumption. Moreover, these individuals are less likely to start consuming cigarettes. Our results also provide evidence that young individuals are forward looking. Myopic individuals would not respond to an increase in uncertainty about future prices by reducing consumption.

Health insurance and retirement of married couples

In this study we propose a new explanation for the fact that labor force participation of older married couples is strongly positively correlated, and we develop and estimate a model that allows us to determine its importance. Our explanation is based on the observations that (1) most health insurance is provided by employers until eligibility for Medicare begins at age 65, (2) many individuals are covered by health insurance from the spouse’s employer, and (3) there is substantial variation across employer health insurance plans in coverage for retirees and the spouses of retirees. Descriptive evidence shows that couples who face employment incentives arising from shared health insurance appear to respond strongly to those incentives. We build a dynamic behavioral model of the employment and medical care decisions of older couples. The model places no restrictions on either the degree of complementarity of leisure hours of spouses in utility or the value of health insurance (i.e., risk aversion): these two key aspects of behavior are determined by parameters identified by variation in health risk and health insurance constraints and the behavior of couples in response to these constraints. Estimates of the model therefore allow us to determine the empirical importance of the explanation we propose. Estimates of the model using data from the Health and Retirement Survey indicate that couples have a strong preference for shared leisure and a relatively low degree of risk-aversion. The risk-reducing feature of health insurance does not contribute much to the observed correlation in labor force decisions of spouses

The Cost of Economic Literacy: How Well Does a Literacy-Targeted Principles of Economics Course Prepare Students for Intermediate Theory Courses?

In a typical economics principles course, students encounter a large number of concepts. In a literacy-targeted course, students study a “short list” of concepts that they can use for the rest of their lives. While a literacy-targeted principles course provides better education for non-majors, it may place economic majors at a disadvantage in post-principles courses. In this paper, we test whether students who completed a literacy targeted principles course earned intermediate theory grades as high as students who completed a traditional principles course. Our findings indicate that students who complete a literacy targeted principles course perform no worse in intermediate theory courses than students who complete a traditional principles course

Retiree Health Insurance and the Labor Force Behavior of Older Men in the 1990s

We estimate the impact of employer-provided retiree health insurance on the rate at which men aged 51-62 enter and exit the labor force and switch jobs. The models estimated are an approximation of the employment decision rules implied by a dynamic stochastic model of employment behavior of older individuals. We use data from the Health and Retirement Survey (HRS), which contains more detailed and accurate measures of retiree health insurance than those used in most previous studies. The results show that availability of employer-provided retiree health insurance (EPRHI) increases the rate of exit from employment by two percentage points per year on average if the individual shares the cost of the insurance coverage with the firm, and by six percentage points if the firm pays the entire cost. The impact of EPRHI on the annual rate of labor force exit increases with age, reaching nine percentage points by age 61. These are larger than the effects estimated in previous studies. The accurate and detailed health insurance measures available in the HRS help account for the larger effects found here. Controlling for unobserved heterogeneity, a possibility not accounted for in previous studies, also has a substantial impact on the estimates.

Nurse scientists overcoming challenges to lead transdisciplinary research teams

Increasingly, scientific funding agencies are requiring that researchers move toward an integrated, transdisciplinary team science paradigm. While the barriers to and rewards of conducting this type of research have been discussed in the literature, examples of how nurse investigators have led these teams to reconcile the differences in theoretical, methodological, and/or analytic perspectives that inevitably exist are lacking. In this article, we describe these developmental trajectory challenges through a case study of one transdisciplinary team, focusing on team member characteristics and the leadership tasks associated with successful transdisciplinary science teams in the literature. Specifically, we describe how overcoming these challenges has been essential to examining the complex, and potentially cumulative effects that key intersections between legal, social welfare, and labor market systems may have on the health of disadvantaged women. Finally, we discuss this difficult, but rewarding work within the context of lessons learned and transdisciplinary team research in relation to the future of nursing science

Insurance-induced moral hazard: A dynamic model of within-year medical care decision making under uncertainty

Abstract Insurance-induced moral hazard may lead individuals to overconsume medical care. Many studies estimate this overconsumption using models that aggregate medical care decisions up to the annual level. Using employer-employee matched data from the Medical Expenditure Panel Survey (MEPS), I estimate the effect of moral hazard on medical care expenditure using a dynamic model of within-year medical care consumption that allows for endogenous health transitions, variation in medical care prices, and individual uncertainty within a health insurance year. I then calculate moral hazard effects under a second set of conditions that are consistent with the assumptions of most annual decision-making models. The within-year decision-making model produces a moral hazard effect that is 24% larger than the alternative model. I also provide evidence of heterogeneous moral hazard effects, particularly between insured and uninsured individuals, and discuss related policy implications. The paper concludes with a counterfactual policy simulation that implements the individual mandate provision of the 2010 Patient Protection and Affordable Care Act. I find that full implementation of the individual mandate decreases the percentage of uninsured individuals in the population being analyzed from 11.8% to 6.0% and increases average medical care expenditure 77% among the newly insured. JEL Classification: C61, D81, G22, I12, I1