Unbiased Analysis of Today's Healthcare Issues
A paper by Kowalski, Congdon and Showalter (2009) examines how state health insurance regulations affect the price of health insurance. The four regulations are the following: Community rating regulations limit premium differences across policies. The most stringent form requires insurers to offer the same premium to every individual, regardless of age, gender, or health status.…
Episodes of care are defined as the bundle of medical treatments used to treat an illness over a specified time period. Because all treatments are bundled together, these episodes have been thought to provide a superior unit of analysis in pay-for-performance (P4P) systems. In fact, Oxford Health Plan pioneered episode payment in the 1990s. [Later,…
A Health Reform Bill passed in the House despite declining support among the American people. The Kaiser Family Foundation has a nice summary of what is included in the bill. Today, I will review who wins and who loses from different aspects of the bill. Individual Mandate. Winners: High cost individuals. Premiums (may) decline if…
Most economists begin to learn about health insurance market with the classic models developed by Rothschild and Stiglitz. In these models, individual risk and characteristics are measured along a single dimension. Insurance contracts pay a lump sum amount in the case of a loss. In the real world of health insurance, however, things are more…
Today we will discuss how the tax code affects health care. Tax exemption of employer-provided health insurance. “In 1943, the Internal Revenue Service (ruled) that employees could exclude the value of employer-paid health insurance premiums from their taxable income. In 1954, Congress excluded by statute the value of employer-purchase health insurance from gross income.” To…
Currently there are about 45 million uninsured individuals in the United States. The Urban Institute predicts would happen to the number of individuals uninsured under the following of reforms. Expand Medicaid to individuals with incomes up to 133 percent of the federal poverty line (FPL): 17 million uninsured would receive insurance Provide subsidies to individuals…
“…individuals who carry the [Huntington Disease] genetic mutation are up to 5 times as likely as the general population to own long-term care insurance…relatively limited increases in genetic information may threaten the viability of private long-term care insurance.” Oster et al. (2009) “Genetic Adverse Selection: Evidence from Long-Term Care Insurance and Huntington Disease” NBER Working…
The lobbying group America’s Health Insurance Plans (AHIP) is touting a study by PriceWaterhouseCoopers showing that health reform would increase premiums significantly. The findings claim that insurance premiums would rise between “26 percent between 2009 and 2013 under the current system and by 40 percent during this same period” if these four health reform provisions…
Adverse Selection. The firm wants to attract healthy individuals at all ages. Gym membership may be observable, but it is difficult to observe frequency of gym visits. By advertising at 24-hour Fitness, Kaiser Permanente’s ads have the strongest effect on those who go to the gym most frequently. If fitness enthusiasts decide to enroll at…
Why do people change health plans? Of course, the most obvious reasons are moving, changing jobs, or qualifying for Medicare. However, some people change health plans even when they remain in the same job. Why is this? A working paper by Cutler, Lincoln and Zeckhauser (2009) give the following explanations: Adverse selection, the movement of…