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Health Economics. (Bureau News).

The NBER's Program on Health Economics met in Cambridge on March 14. Program Director Michael Grossman organized the meeting, at which these papers were discussed:

David E. Bloom, NBER and Harvard University, and David Canning and Jaypee Sevilla, Harvard University, "Health, Worker Productivity, and Economic Growth".

Jay Bhattacharya, NBER and Stanford University, and Darius Lakdawalla, NBER and RAND, "Time-Consistency and Addiction:

An Empirical Test"

Avi Dor, NBER and Case Western Reserve University, and William Encinosa, Agency for Health Care Research and Quality, "Cost-Sharing and Non-Compliance with Prescription Drugs"

Robert Kaestner, NBER and University of Illinois, Chicago; Ted Joyce and Sanders Korenman, NBER and Baruch College; and Stanley Henshaw, Alan Guttmacher Institute, "Changes in Births and Abortions Following Welfare Reform"

Nancy E. Reichman, Columbia University; Hope Corman, NBER and Rider University; and Kelly Noonan, Rider University, "Effects of Child Health on Parents' Relationship Status"

Anthony T. Lo Sasso, Northwestern University, and Thomas C. Buchmueiler, NBER and University of California, Irvine, "The Effect of the State Children's Health Insurance Program on Health Insurance Coverage" (NBER Working Paper No. 9405)

Microeconomic analyses typically suggest that worker health makes an important contribution to productivity and wages. Weil (2001) uses estimates of the individual-level relationship between health and wages to calibrate an aggregate production function and suggests that differences in health are roughly as important as differences in education in explaining cross-country differences in gross domestic product per worker. Bloom, Canning, and Sevilla directly estimate the effect of health on worker productivity using cross-country macroeconomic data. They find a positive and significant effect. In addition, the estimated effect of health on aggregate output is consistent with the size of the effect found in microeconomic studies.

In the past, many economists have treated smokers and addicts as rational, time-consistent utility-maximizers. In recent years, that view has come under attack by those who argue that smokers and other addicts exhibit time-inconsistency and problems of self-control. This conflict is significant, but intractable, because these two theories have very similar positive implications but wildly different normative ones. However, while the positive implications are qualitatively similar, they differ quantitatively. Bhattacharya and Lakdawalla use this fact and ask which model better fits the actual lifetime decision making patterns of smokers. Using repeated cross-sectional data from the National Health Interview Surveys, they estimate structural models of rational addiction and time-inconsistency. Their results reveal surprisingly little evidence in favor of time-inconsistency.

Compliance with anti-diabetic medications is crucial to reducing complications such as blindness, amputations, heart disease, and stroke among diabetics. Dor and Encinosa examine compliance within 90 days after the completion of anti-diabetic drug prescriptions. About a third of the population never complies, a third always complies, and the remaining third partially complies. The authors find that the drug coinsurance rate has the effect of reducing compliance, after they control for chronic conditions, number of previous refills, and demographic characteristics. An increase from 20 percent to 75 percent coinsurance results in the share of those who never comply increasing by 27 percent and reduces the share of fully compliant persons by almost 11 percent. An increase in the copayment from $6 to $10 results in a 13 percent increase in the share of non-compliant persons, and a nearly 11 percent reducdon in the share of fully compliant persons. This same increase in copayment would reduce annual drug costs nat ionally by $177 million, simply by increasing non-compliance. But, this increase in non-compliance also would increase the rate of diabetic complications, resuking in an additional $433.5 million in costs annually.

Joyce, Kaestner, Korenman, and Heushaw analyze the association between state and federal welfare reform and births and abortions. State reform consists of a series of waivers from rules governing the Aid to Families with Dependent Children (AFDC) prior to the Welfare Reform Act (PRWORA). The authors also examine the association between implementation of Temporary Assistance to Needy Families (TANF), the program that replaced AFDC following PRWORA, and births and abortions. They then look more closely at one aspect of reform, the family cap, and its association with reproductive choices. In order to carry out these analyses, they collected and analyzed individual abortion records from 21 states, the largest compilation of such data ever attempted. There is some evidence of an increase in abortion associated with TANE Among blacks, abortions rise after TANF among older women, but there is no decline in births. There is also a rise in the abortion ratio among black women with two or more live births in states wi th family caps. Overall, there is at best only a modest change in births and abortions associated with TANF.

Reichman, Corman, and Noonan use data from the national longitudinal Fragile Families and Child Wellbeing Study of mostly unwed parents to estimate how poor child health affects one potential human resource available to that child: the presence of a father. The authors look at whether parents are living in the same household one year after the child's birth and also, more generally, at how their relationships changed along a continuum (married, cohabiting, romantically involved, friends, or not involved) during the same one-year period. Since it may not be easy to characterize poor child health as a random event, the authors account for the potential endogeneity of child health in their models. They find that having an infant in poor health reduces the likelihood that parents will live together and increases the likelihood that they will become less committed to their relationship.

LoSasso and Buchmueller present the first national estimates of the effects of the SCHIP expansions on insurance coverage. Using CPS data on insurance coverage during the years 1996 through 2000, they find that SCHIP had a small, but statistically significant positive effect on insurance coverage. Between 4 percent and 10 percent of children who meet income eligibility standards for the new program gained public insurance. These estimates indicate that states were more successful in enrolling children in SCHIP than they were with prior Medicaid expansions focused on children just above the poverty line. Crowd-out of private health insurance was in line with estimates for the Medicaid expansions of the early 1990s, between 18 percent and 50 percent.
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Title Annotation:summary of papers discussed at March 14, 2003 Program on Health Economics meeting; includes overview of NBER Working Paper No. 9405
Publication:NBER Reporter
Geographic Code:1USA
Date:Mar 22, 2003
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