Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Chapter 3, Problem 3E
To determine
Check whether the statement is true or false.
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Indicate whether the statement is true or false, and justify your answer.In the Grossman model, the marginal efficiency of investment in health care declines as health improves.
One of the most robust, fundamental “facts” of health economics is the SES and health gradient. a) Define the SES and health gradient. b) Give three ways in which the SES and health gradient is robust. c) Provide evidence that some of the gradient is correlational (i.e., give a potential confounder) and evidence that the gradient is in fact causal. d) i. Give an interpretation of Figure 1 below in layperson terms. ii. What pattern do you see for men vs women? iii. “The education and mortality gradient does not depend on healthcare spending or whether the country has universal healthcare.” Use Figure 1 to support or refute this claim.
Indicate whether the statement is true or false, and justify your answer.In the framework of the Grossman model, an individual’s level of health is completely controlled by her actions. Thus, in any given period, an individual is unconstrained in her choice of health status.
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- Suppose that in the fictional country ASU in 2012, a mandate was passed where everyone between the ages of 23-25 will receive health insurance at a discounted rate, while individuals aged 27-29 were not impacted by this policy. You, a researcher, want to study the effect of offering discounted health insurance coverage on the use of mental health services. You have data on the average number of visits for these two age groups over time. Using the information in the table below, a quick difference-in-difference calculation suggests that the mandate led to Time Periods Age group Avg. Avg. Number of Number of visits visits Pre-2012. Post-2012 23 to 25 2.3 27 to 29 2.5 approximately 0.3 more visits. approximately 0.7 more visits. approximately 0.4 fewer visits. approximately 0.7 fewer visits. approximately 0.3 fewer visits. 020202 337 SUCHARY 3.0 2.9 P 1302 126 70 5572 25 20120822 2012 Carrow_forwardConsider that you want to apply the difference-in-differences approach to evaluate the Health Insurance Subsidy Program (HISP). In this scenario, you have two rounds of data on two groups of households: one group that enrolled in the program, and another that did not. You know that you cannot compare the average health expenditures of the two groups because of selection bias, thus you decide to compare change in health expenditures as follows: Table 7.2 Evaluating HISP: Difference-in-Differences Comparison of Means After Before (baseline) (follow-up) Difference Enrolled 7.84 14.49 -6.65 Nonenrolled 22.30 20.79 1.51 Difference DD = -6.65 – 1.51 = -8.16 Note: The table presents mean household health expenditures (in dollars) for enrolled and nonenrolled households, before and after the introduction of HISP. How should you interpret this difference ($USD -8.16)? What are the basic assumptions required to accept this result from difference-in-differences?arrow_forwardOne major premise of the Rothschild–Stiglitz model is that there is a perfectly competitive market for health insurance. Suppose instead that the market is not perfectly competitive, and in fact competitor firms have a hard time entering the market. Could a pooling equilibrium occur in this case? What is it about competition that prevents pooling in the Rothschild–Stiglitz model? No formal proof is necessary, but do make your reasoning clear. Evaluate the following statement: competition in health insurance markets is harmful.arrow_forward
- One major premise of the Rothschild-Stiglitz (RS) model is that there is a perfectly competitive market for health insurance. Suppose instead that the market is not perfectly competitive, and in fact competitor firms have a hard time entering the market. Could a pooling equilibrium occur in this case? What is it about competition that prevents pooling in the RS model? No formal proof is necessary, but do make your reasoning clear. Evaluate the following statement: competition in health insurance markets is harmful.arrow_forwardIn the framework of the Grossman model, suppose there is an increase in the return in alternate non-health market investments. Draw what happens to the MEC curve and the optimal level of health. Explain intuitively why this might be the case in reality.arrow_forwardThe following is the abstract from the paper, "The Impact of Health Insurance on Preventive Care and Health Behaviors: Evidence from the First Two Years of the ACA Medicaid Expansions," by Simon, Soni, Cawley (2017). The U.S. population receives suboptimal levels of preventive care and has a high prevalence of risky health behaviors. One goal of the Affordable Care Act (ACA) was to increase preventive care and improve health behaviors by expanding access to health insurance. This paper estimates how the ACA-facilitated state-level expansions of Medicaid in 2014 affected these outcomes. Using data from the Behavioral Risk Factor Surveillance System, and a difference-in-differences model that compares states that did and did not expand Medicaid, we examine the impact of the expansions on preventive care (e.g., dental visits, immunizations, mammograms, cancer screenings), risky health behaviors (e.g., smoking, heavy drinking, lack of exercise, obesity), and self-assessed health. We find…arrow_forward
- [A] High-income Canadians tend to choose a higher desired health stock, even though they can afford more healthcare goods. Using the Grossman model, explain why this is the case. Use an appropriate graph to support your answer. [B] Suppose the funding agency switches both physicians' and hospitals' prospective payment to a system of retrospective payment, i.e., from salary to fee-for-service for physicians, and from global budget payment to activity-based funding for hospitals. Clearly explain each of these terms and how these changes will impact the utilization of physician and hospital services.arrow_forwardHow can the New York sick leave law impact the use of emergency rooms? Reference the Grossman model for guidance.arrow_forwardIn the early 2000s, the state of Massachusetts in the U.S. implemented a health reform aimed at enrolling people without health insurance into an insurance plan. The reform required people without health insurance (at least those who could afford it) to buy insurance, and put in place penalties on those who nevertheless chose not to buy insurance. Below is the abstract of a recent National Bureau of Economic Research working paper entitled “Health Reform, Health Insurance, and Selection: Estimating Selection into Health Insurance Using the Massachusetts Health Reform” by Martin Hackmann, Jonathan Kolstad, and Amanda Kowalski. The authors conducted a study of the effects of the Massachusetts reform. They write: We implement an empirical test for selection into health insurance using changes in coverage induced by the introduction of mandated health insurance in Massachusetts. Our test examines changes in the cost of the newly insured relative to those who were insured prior to the…arrow_forward
- Indicate whether the statement is true or false, and justify your answer. In the Grossman model, optimal health status declines with age.arrow_forwardIn what sense is the individual considered a “producer” of health in the Grossman model?arrow_forwardWhich of the following is NOT a defining characteristic of the Beveridge model? a. universal, public health insurance b. community rating c. publicly provided health carearrow_forward
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