We use Benford's law to examine the non-random elements of health care costs. We find that as health care expenditures increase, the conformity to the expected distribution of naturally occurring numbers worsens, indicating a tendency towards inefficient treatment. Government insurers follow Benford's law better than private insurers indicating more efficient treatment. Surprisingly, self-insured patients suffer the most from non-clinical cost factors. We suggest that cost saving efforts to reduce non-clinical expenses should be focused on more severe, costly encounters. Doing so focuses cost reduction efforts on less than 10% of encounters that constitute over 70% of dollars spent on health care treatment.

Sickness insurance companies were developed in Spain by doctors and healthcare professionals, remaining outside the interests of general insurance companies. Their management was hardly professional, with limited actuarial techniques and they only accounted for a small percentage of total insurance business premiums. From the 1970s onwards, various factors changed this situation, driving processes of concentration, with numerous takeovers and mergers, first reducing the number of local and regional companies to the benefit of companies of national scope. Subsequently, the growth in demand for this type of coverage sparked the interest of national general insurance companies and multinationals, leading to a restructuring of the sector which has progressively acquired greater weight within the insurance business and become increasingly internationalised. This last stage immersed the health sector in Spain in the great processes of globalisation of the sector, characterised by a financialisation of capital promoted by the bank investment funds. These processes are little known and are the focus of analysis of this paper, with the aim of enabling comparison at international level.

Expansions of Medicaid family planning services have been associated with decreases in pregnancy rates. Access to a broader range of medical, non-family planning services may influence pregnancy rates as well if the increased exposure to medical services spills over to other kinds of behaviour. Using a difference-in-difference approach, I examine the impact of the Affordable Care Act (ACA) Medicaid expansions on the propensity of low-income, single women to become single mothers. Previous expansions of Medicaid family planning services allow us to also investigate the influence of access to other medical services (i.e. non-family planning). I find that although access to contraceptives is associated with a reduction in the propensity of becoming a single mother among adult, low-income women, medical services beyond access to contraceptives can provide additional impacts.

Studies of health care expenditure often exclude explanatory variables measuring wealth, despite the intuitive importance and policy relevance. We use the Household, Income and Labour Dynamics in Australia Survey to assess impacts of income and wealth on health expenditure. We investigate four different dependent variables related to health expenditure and use three main methodological approaches. These approaches include a first difference model and introduction of a lagged dependent variable into a cross-sectional context. The key findings include that wealth tends to be more important than income in identifying variation in health expenditure. This applies for health variables which are not directly linked to means testing, such as spending on health practitioners and for being unable to afford required medical treatment. In contrast, the paper includes no evidence of different impacts of income and wealth on spending on medicines, prescriptions or pharmaceuticals. The results motivate two novel policy innovations. One is the introduction of an asset test for determining rebate eligibility for private health insurance. The second is greater focus on asset testing, rather than income tests, for a wide range of general welfare payments that can be used for health expenditure. Australia's world-leading use of means testing can provide a test case for many countries.

The generalized risk-adjusted cost-effectiveness (GRACE) analysis method modifies standard cost-effectiveness analysis (CEA), the primary method currently used worldwide to value health improvements arising from healthcare interventions. Generalizing standard CEA, GRACE allows for decreasing or even increasing returns to health. Previous presentations of GRACE have relied extensively on Taylor Series expansion methods to specify key model parameters, including those that properly adjust for illness severity and preexisting disability, consequences of uncertain treatment outcomes, and the marginal rate of substitution between life expectancy and health-related quality of life. Standard CEA cannot account for these sources of value or cost in its valuation of medical treatments. However, calculations of GRACE measures based on Taylor Series are approximations, which may be poorly behaved in some contexts. This paper provides a new approach for implementing GRACE, using exact utility functions instead of Taylor Series approximations. While any proper utility function will suffice, we illustrate with three well-known functions: constant relative risk aversion (CRRA) utility; hyperbolic absolute risk aversion (HARA) utility, of which CRRA is a special case; and expo-power (EP) utility, of which constant absolute risk aversion (CARA) is a special case. The analysis then extends from two-period to multiperiod models. We discuss methods to estimate parameters of HARA and EP functions using two different types of data, one from discrete choice experiments and the other from “happiness economics” methods. We conclude with some reflections on how this analysis might affect benefit-cost analysis studies of healthcare interventions.

This article draws on evidence generated in recent deprivation studies conducted by the author and colleagues at the Social Policy Research Centre. After outlining some of the main limitations of poverty line studies, the paper explains how the deprivation approach addresses these weaknesses and illustrates the insights that deprivation studies can provide into the nature of poverty in contemporary Australia. It then compares the results produced by a deprivation approach with those produced using a poverty line – both in terms of what they imply about the extent of the problem and who they suggest is most affected by it. The comparisons demonstrate that the reservations that many hold about poverty research can be overcome and that when this is done, the results become more compelling and thus have the potential to have a greater impact on anti-poverty policy.

In 2017 the Scottish Government passed the Child Poverty (Scotland) Act with the commitment to significantly reduce the relative child poverty rate from the current prevailing level of around 25% to 10% by 2030/31. In response, the government introduced the Scottish Child Payment (SCP) that provides a direct transfer to households at a fixed rate per eligible child – currently £25 per week. In this paper we explore, using a micro to macro modelling approach, the effectiveness of using the SCP to achieve the Scottish child poverty targets. While we find that the ambitious child poverty targets can technically be met solely using the SCP, the necessary payment of £165 per week amounting to a total government cost of £3 billion per year, makes the political and economy-wide barriers significant. A key issue with only using the SCP is the non-linearity in the response to the payment; as the payment increases, the marginal gain in the reduction of child poverty decreases – this is particularly evident after payments of £80 per week. A ‘policy-mix’ option combining the SCP, targeted cash transfers and other policy levels (such as childcare provision) seems the most promising approach to reaching the child poverty targets.

Mutual benefit societies evolved as the major provider for sickness, accident and life insurance in the late nineteenth and early twentieth centuries on both sides of the Atlantic. One of the major problems facing insurers was the risk of adverse selection, i.e. that unhealthy individuals had more incentives than healthy individuals to insure when priced for the average risk. By empirically examining whether longevity among insured individuals in a nationwide mutual health society was different from a matched sample of uninsured individuals, we seek to identify the presence of adverse selection. We find no compelling evidence showing that unhealthy individuals were more likely to insure, or reasons to believe that problems related to adverse selection would have been a major reason for government intervention in the health insurance market in Sweden.

This study examines the role of pawnshops as a risk-coping device in Japan in the early twentieth century, when the poor were very vulnerable to unexpected shocks such as illness. In contrast to European countries, Japanese pawnshops were the primary financial institution for low-income people up to the 1920s. Using data on pawnshop loans for more than 250 municipalities and exploiting the 1918–20 influenza pandemic as a natural experiment, we find that the adverse health shock increased the total amount of loans from pawnshops. This is because those who regularly relied on pawnshops borrowed more money from them than usual, and not because the number of people who used pawnshops increased. Our estimation results indicate that pawnshop loan amounts increased by approximately 7–10 percent due to the pandemic. These findings suggest that pawnshop loans were widely used as a risk-coping strategy.

The State of Washington, as part of a State Innovation Model (SIM) grant, is changing the payment model within state employee health insurance plans. The system is moving away from traditional fee-for-service reimbursement to value-based payment, through insurance design (the creation of accountable care network insurance products) and bundled payment strategies. New plans were rolled out January 2016 (enrollment occurred in late 2015), with the stated goal of getting 80% of state employees covered by plans that contain value-based purchasing within the next 5 years. The goal of payment reform is to improve member experience, member health, and cut costs. However, changing health insurance during employment can directly and indirectly change labor market outcomes. Decreasing costs of insurance could lead people to remain in the state-employment sector longer. However, it could also influence retirement timing, through changing the relative costs of insurance and through improving health.

This paper examines who switches to value-based insurance, where the insurance explicitly decreases premiums without changing out-of-pocket costs. We find that the peak age for switching insurance plans is 35–45, even among the subsample of individuals who would not need to change their usual sources of care. Second, we look at the labor market activity – both leaving the state-employee sector and retiring from state-employment – and find that younger workers with value-based insurance plans are less likely to leave state employment. Further, we find evidence of value-based insurance, available at a reduced cost to both employees and retirees, leads to a shifting downward in the distribution of retirement age. While these findings support the existence of both the price and income effects, the effect sizes are rather small.

There is strong interest in both developing and developed countries toward expanding health insurance coverage. How should the benefits, and costs, of expanded coverage be measured? While the value of reducing the financial risks that result from insurance coverage have long been recognized, there has been less attention in how best to measure such benefits. In this paper, we first provide a framework for assessing the financial value from health insurance. We focus on three distinct potential benefits: Pooling the risk of unexpected medical expenditures between healthy and sick households, redistributing resources from high- to low-income recipients and smoothing consumption over time. We then use this theoretical framework and an illustrative example to provide practical guidelines for benefit-cost analysis in capturing the full benefits (and costs) of expanding health insurance coverage. We conclude by considering other potential financial effects of broad insurance coverage, such as the ability to consolidate purchases and thus lower input prices.

We investigated labor force and health outcomes in cities experiencing fiscal difficulties to assess how those difficulties might impact their employees. We matched 23 cities with bond downgrades and 31 cities with stable bond ratings to sampling units in the Medical Expenditure Panel Survey. Starting the year before the downgrade and for the four subsequent years, the rate of separation from local public employment fell in the cities with downgrades relative to the comparison group. Self-reported health may have worsened, but there were no statistically significant effects on health care use or spending.

This paper explores a notional defined contribution (NDC) approach aimed at helping pensioners to cope with the cost of long-term care (LTC). It develops the necessary technicalities to fully integrate an LTC benefit, graded according to the annuitant's degree of disability, into a generic NDC retirement framework with a minimum pension benefit for both contingencies. It also discusses the policy implications of various issues that should be taken into account before any decision is made to put the model into practice. Finally, to enable policymakers to better understand how the proposal would function, the paper includes a realistic numerical example.

Measuring direct and indirect effects of extending health insurance coverage in developing countries is a key issue for health system development and for attaining universal health coverage. This paper investigates the role played by health insurance in the relationship between parental morbidity and child work decisions. We use a propensity score matching technique combined with hurdle models, using data from Rwanda. The results show that parental health shocks have a substantial influence on child work when households do not have health insurance. Depending on the gender of the sick parent, there is a substitution effect not only between the parent and the child on the labor market, but also between the time the child spends on different work activities. Altogether, results reveal that health insurance protects children against child work in the presence of parental health shocks.

All consumer groups with specific preferences must feel free to easily switch insurer in order to discipline insurers to be responsive to consumers’ heterogeneous preferences. This paper provides insight into the switching behaviour of low-risks (i.e. young or healthy consumers) and high-risks (i.e. elderly or unhealthy consumers) in the Netherlands in the period 2009–2012. We analysed: (1) administrative data with objective health status information (i.e. medically diagnosed diseases and pharmaceutical use) and information on health care expenses of nearly the entire Dutch population (n=15.3 million individuals) and (2) three-year sample data (n=1152 individuals). Our findings indicate that switching rates strongly decrease with age. For example, in 2009, consumers aged 25–44 switched 10 times more than consumers aged 75 or older. Another finding is that switching rates decrease as the predicted health care expenses increase. Although healthy consumers switch twice as much as unhealthy consumers, this difference becomes much smaller after adjusting for age. We conclude that our findings can be explained by higher perceived switching costs by elderly consumers than by young consumers. Consequently, insurers have low incentives to act as quality-conscious purchasers of care for the elderly consumers. Therefore, strategies should be developed to increase the choice of insurer of elderly consumers.

We investigate the determinants of interest in reverse mortgages (RM) for a sample of Italian homeowners and find that the majority of individuals belonging to categories identified, on the basis of economic analysis, as the main potential beneficiaries (i.e., women, elderly and ‘house rich–cash poor’ individuals) are, in fact, less likely to express an interest. When allowing for individual characteristics, we find that most results remain robust and notice that risk aversion and negative expectations on one's standard of living after retirement predict higher interest in the product. These results suggest that RM is perceived not so much as an ordinary instrument to achieve a better standard of living, but rather as a remedy against poor consumption.