Do the age profiles of health care expenditure really steepen over time? New evidence from Swiss cantons

The red herring hypothesis contends that the high health care expenditure in old age is caused by proximity to death rather than calendar age. Dissenters point to longitudinal data and claim that health care expenditure age profiles tend to steepen over time. The present paper tests the steepening claim for Swiss health insurance, covering the time period 1997 to 2006 and 25 cantons. It analyzes the cantonal health care expenditure profile of men and women, taking into account differences in the mortality rates. The study covers seven components of health care, including long-term care. By and large, no evidence is found for relevant steepening effects of age profiles for either total, or the components, of health care expenditure. --Ageing,health care expenditure,end-of-life expenditure

Dealing with Excessive Off-label Drug Use: Liability vs. Patent Prolongation

The US and the EU recently introduced regulation to curb the extent of risky off-label drug use. It offers manufacturers a prolongation of patent protection or exclusivity if they invest in pediatric clinical tests. This paper shows that a reinforcement of physician liability for off-label use may be the preferred instrument for achieving dynamic efficiency. The liability threat reduces the demand for off-label use, giving manufacturers an appropriate incentive to invest in extended approval. By contrast, patent prolongation does not affect physicians' prescription decisions and increases the likelihood of investments in cases where the induced additional benefit falls short of testing costs.Off-label use, patent protection, exclusivity, liability

Higher-Order Risk Preferences – Consequences for Test and Treatment Thresholds and Optimal Cutoffs

Higher-order risk attitudes include risk aversion, prudence, and temperance. This paper analyzes the effects of such preferences on medical test and treatment decisions, represented either by test and treatment thresholds or – if the test characteristics are endogenous – by the optimal cutoff value for testing. For a risk-averse decision maker, treatment is a risk reducing strategy since it prevents the low health outcome that forgoing treatment yields in the sick state. As compared to risk neutrality, risk aversion thus reduces both the test and the treatment threshold and decreases the optimal cutoff. Prudence is relevant if a comorbidity risk applies in the sick state. It leads to even lower thresholds and a lower optimal cutoff. Finally, temperance plays a role if the comorbidity risk is left-skewed. It lowers the thresholds and the optimal cutoff even further. These findings suggest that diagnostics in low prevalence settings (e.g. screening) are considered more beneficial when higher-order risk preferences are taken into account.Medical decision making; diagnostic risk; test and treatment thresholds; optimal cutoff; risk aversion; prudence

The Dead-Anyway Effect Revis(it)ed

In the expected-utility theory of the monetary value of a statistical life, the so-called "dead-anyway" effect discovered by Pratt and Zeckhauser (1996) asserts that an individuals' willingness to pay (WTP) for small reductions in mortality risk increases with the initial level of risk. Their reasoning is based on differences in the marginal utility of wealth between the two states of nature: life and death. However, this explanation is based on the absence of markets for contingent claims, i.e. annuities and life insurance. This paper reexamines the "dead-anyway" effect and establishes two main results: first, for a risk-averse individual without a bequest motive, marginal WTP for survival does increase with the level of risk but when insurance markets are perfect, this occurs for a different reason than given by Pratt and Zeckhauser. Secondly, when the individual has a bequest motive and is endowed with a sufficient amount of non-inheritable capital, the effect of initial risk on WTP for survival is reversed: the higher initial risk the lower the value of a statistical life.Value of life, expected utility, willingness to pay, insurance markets

The Dead-anyway Effect Revis(it)ed

In the expected-utility theory of the monetary value of a statistical life, the so-called “dead-anyway” effect discovered by Pratt and Zeckhauser (1996) asserts that an individuals' willingness to pay (WTP) for small reductions in mortality risk increases with the initial level of risk. Their reasoning is based on differences in the marginal utility of wealth between the two states of nature: life and death. However, this explanation is based on the absence of markets for contingent claims, i.e. annuities and life insurance. This paper reexamines the “dead-anyway” effect and establishes two main results: first, for a risk-averse individual without a bequest motive, marginal WTP for survival does increase with the level of risk but when insurance markets are perfect, this occurs for a different reason than given by Pratt and Zeckhauser. Secondly, when the individual has a bequest motive and is endowed with a sufficient amount of non-inheritable wealth, the effect of initial risk on WTP for survival is reversed: the higher initial risk the lower the value of a statistical life.value of life, expected utility, willingness to pay, insurance markets

Life Expectancy and Health Care Expenditures: A New Calculation for Germany Using the Costs of Dying

Some people believe that the impact of population ageing on future health care ex-penditures will be quite moderate due to the high costs of dying. If not age per se but proximity to death determines the bulk of expenditures, a shift in the mortality risk to higher ages will not affect lifetime health care expenditures as death occurs only once in every life. We attempt to take this effect into account when we calculate the demographic impact on health care expenditures in Germany. From a Swiss data set we derive age-expenditure profiles for both genders, separately for persons in their last four years of life and for survivors, which we apply to the projections of the age structure and mortality rates for the German population between 2002 and 2050 as published by the Statistische Bundesamt. We calculate that at constant prices per-capita health expenditures of Social Health Insurance would rise from EUR 2,596 in 2002 to between EUR 2,959 and EUR 3,102 in 2050 when only the age structure of the population changes and everything else remains constant at the present level, and to EUR 5,485 with a technology-driven exogenous cost increase of one per cent per annum. A "naïve" projection based only on the age distribution of health care expenditures, but not distinguishing between survivors and decedents, yields values of EUR 3,217 and EUR 5,688 for 2050, respectively. Thus, the error of excluding the "costs of dying" effect is small compared with the error of under-estimating the financial consequences of expanding medical technology.

Do Red Herrings Swim in Circles? – Controlling for the Endogeneity of Time to Death

Studies on the effect of ageing on health care expenditures (HCE) have revealed the importance of controlling for time-to-death (TTD). These studies, however, are subject to possible endogeneity if HCE influences remaining life expectancy.This paper introduces a ten year observational period on monthly HCE, socioeconomic characteristics, and survivor status to first predict TTD and then uses predicted values of TTD as an instrument in the regression for HCE.While exogeneity of TTD has to be rejected, core results concerning the role of TTD rather than age as a determinant of HCE (the “red herring” hypothesis) are confirmed.Health care expenditure, proximity to death, ageing, “red herring” hypothesis

Air–water low patterns of hydraulic jumps on uniform beds macroroughness

Hydraulic jumps are characterized by strong flow turbulence, flow aeration, and three-dimensional flow motions. Whereas comprehensive research into hydraulic jumps on smooth bed has improved the understanding of flow aeration and turbulence, limited research has been done of hydraulic jumps on rough beds. Herein novel experiments were conducted in hydraulic jumps on uniformly-distributed bed macroroughness. Both air-water flow patterns and basic air-water flow properties were investigated. The hydraulic jumps on the rough bed exhibited some remarkable differences compared with smooth bed jumps including some preaeration of the flow upstream of the jump, an upwards shift of the jump roller and a clear water-flow region underneath the jump. Air-water flow measurements were conducted with a phase-detection probe, showing similar distributions of air-water flow properties for the rough and smooth bed jumps. Comparative analyses highlighted some distinctive effects of the bed roughness including an upwards shift of the hydraulic jump and an increase in bubble count rate and void fractions in the region close to the jump toe. In the second half of the hydraulic jumps, the rough bed led to a clear-water region with large-scale vortices which were advected downstream. The present study highlighted the potential that improved and nonstandard invert designs may have for flow manipulations and design enhancements

Simple design criterion for residual energy on embankment dam stepped spillways

The stepped spillway design is associated with significant flow resistance and associated energy dissipation on the steps, yielding smaller, more economical downstream dissipation structures. A number of design guidelines were developed for steep stepped spillways typical of concrete gravity dams. The focus of this study is on embankment stepped spillways. A large set of air-water flow data is compared with reanalyzed data sets to provide a simple unifying design approach for the residual energy at the stepped chute's downstream end and to highlight the uncertainties involved. The results provided some simple design criteria in terms of the dimensionless residual energy of stepped chutes with flat steps. It is believed that a stepped design with a 1V:2.5H slope (θ = 21.8°) might be optimum in terms of energy dissipation performances. The Darcy-Weisbach friction factors were close for all stepped data ranging between 0.1 ≤ f ≤ 0.4

Effects of step pool porosity upon flow aeration and energy dissipation on pooled stepped spillways

The hydraulics of stepped spillways with flat steps has been studied for the last three decades, including for embankment dam slopes, but studies of alternative stepped designs are limited. In this study, a pooled stepped spillway was investigated in a relatively large-size facility, and three different pool wall porosities were tested. The flow patterns, the macro- and microscopic air-water flow properties, and the energy dissipation performances were recorded; the results were compared with the flat stepped spillway design for the same chute slope (=26.6 degrees). The investigations highlighted a close agreement between air-water flow properties on the configurations in terms of void fraction, turbulence levels, bubble count rate, and chord sizes. The interfacial velocity distributions showed larger interfacial velocity on the pooled step configurations of approximately 5-10% linked with a reduced flow depth. On the porous pooled stepped spillways, the interfacial velocities within the cavity highlighted the flow through the pores and the reduction in cavity recirculation. The porous pooled weir reduced the form drag, and the residual energy was approximately 1.5-2times larger on the porous pooled stepped chute with Po=31% and approximately 1.3times larger on the porous steps with Po=5% compared with the flat stepped chute. The flat step design appeared to be the most advantageous in terms of flow stability and energy dissipation performance