Unbiased Analysis of Today's Healthcare Issues
In the mid to late 1990s, there was a large backlash against HMOs due to the perception that the “HMO cares more about saving money than it does about them.” People feared that HMO would drop coverage of services which they valued. In this month’s NBER working paper edition, Yu-Chu Shen (2006) looks answer two…
Life expectancy for low-birthweight babies has increased dramatically in the later half of the 20th century, mostly due to improved medical technology. Prolific use of complex medical equipment and techniques–such as phototherapy, intravenous hyperalimentation, CT scans, etc.–during premature births has increased the average lifetime spending on low-birthdweight babies $39,000 between 1950 and 1990. Is this…
How does one design an optimal insurance policy where physicians and patients are compelled to tell the truth about the medical procedures that were completed? This is the question of Ching-To Albert Ma and Thomas McGuire in their 1997 AER paper. The paper is somewhat technical but I will briefly explain their setup and conclusions,…
In many cases, the government will mandate that employers provide benefits in lieu of having the government provide the benefit themselves. One example is that the U.S. government mandates that firms purchase Worker’s Compensation insurance. Are these mandated benefits a more or less effective form of social insurance than direct government provision? Summers (1989) claims…
‘Adverse selection’ and ‘moral hazard’ are phenomenons which affect any analysis of the insurance market. For instance, Cutler and Zeckhauser (1997) speak of an adverse selection ‘death spiral’ which made untenable the continued offering of a generous health insurance benefit at Harvard University. In their NBER paper, Finkelstein and McGarry (2003) attempt to estimate the effect…
In 1996, the Personal Responsibility and Work Opportunity Act (PRWORA) brought ‘workfare’ into the spotlight. In addition to replacing the old AFDC program with the new TANF (Temporary Aid to Needy Families), the law required welfare recipients to work or to look for work in order to receive benefits. This was not the first time in history…
Is a welfare system a welfare improving? On the one hand, this form of social insurance gives money to those who have come upon rough times, facing low income and unemployment. On the other hand, giving individuals money conditional on not having low income gives these same people an incentive not to work. The field…
One of the major reasons why President Bushâs plan for Health Savings Accounts (HSA) required that participants use high-deductible health plans (HDHP) was to lessen the incidence of moral hazard. When an individual is insured against medical expenses, they are not liable for the full cost of medical services and thus are more prone to…
According to the PhRMA (Pharmaceutical Research and Manufacturers of America) U.S. drug companies spent $39.4 billion on research and development in 2005. Much of this money goes towards the clinical trials necessary for FDA approval. But how much does it cost to bring a drug to market? In order to bring a drug to market,…
Currently the Social Security Disability Insurance (SSDI) program covers almost 8 million Americans. The program is designed to help those who need assistance the most: those who cannot work due to disability. These individuals are entitled to approximately $830 per month. One feature of SSDI is that it has an implicit 100% tax on earnings.…