Volume 10, Issue 2

The impact of aging on healthcare expenditure (HCE) has been at the center of a prolonged debate. This paper purports to shed light on several issues of this debate by presenting new evidence on the "red herring" hypothesis advanced by Zweifel, Felder and Meier (1999). This hypothesis amounts to distinguishing a mortality from a morbidity component in healthcare expenditure (HCE) and claiming that failure to make this distinction results in excessive estimates of future growth of HCE. A re-estimation based on a much larger data set is performed, using the refined econometric methodology. The main contribution is consistency, however. Rather than treating the mortality component as a residual in forecasting, its dynamics are analyzed in the same detail as that of the morbidity component when predicting the impact of population aging on the future growth of HCE. For the case of Switzerland, it finds this impact to be relatively small regardless of whether or not the mortality component is accounted for, thus qualifying the "red herring" hypothesis.

In an attempt to improve the nation's health, many U.S. policy makers have or are considering imposing taxes on the fat in food. Dairy products constitute a large portion of at home fat consumption of particularly harmful types of fat, and nearly all U.S. households consume these products. We estimate a demand system for dairy products, which we use to simulate substitution effects among dairy products and the welfare impacts of fat taxes on various consumer groups. We find that even a 10 percent ad valorem tax on the percentage of fat would reduce fat consumption by less than a percentage point. Given that the demand for most dairy products is inelastic, a fat tax is an effective means to raise revenue. However, these fat taxes are unattractive because they are extremely regressive, and the elderly and poor suffer much greater welfare losses from the taxes than do younger and richer consumers.

In an effort to balance their budgets many states are considering reducing eligibility for Medicaid. Using variation in state policies, this paper models the effect of more stringent eligibility criteria for Medicaid on the insurance status and the use of antiretroviral therapy (HAART) for people living with HIV, a group heavily dependent on Medicaid. Using nationally representative data from the mid-1990's, we find that stricter eligibility thresholds for Medicaid raise uninsurance rates and reduce the use of antiretroviral therapy among HIV+ patients, especially for those who are disabled. These stricter eligibility thresholds in turn adversely affect the survival prospects of HIV+ patients by lowering the rate of HAART use. Our estimates suggest approximately 13,000 lives could have been saved if all states had adopted the eligibility thresholds of California. We do not find any evidence of a "crowding out" effect of public insurance on private coverage among these patients.

Many U.S. employers have recently adopted less generous prescription drug benefits. In addition, in 2006 the U.S. began to offer prescription drug insurance to approximately 42 million Medicare beneficiaries. We used data on individual health insurance claims and benefit data from 1997 to 2003 to study how changes in consumers’ co-payments for prescription drugs affect use of and expenditure on prescription drugs, inpatient care, and outpatient care. We analyzed the effects both in the year of the co-payment change and in the year following the change. Our results show that increases in prescription drug prices reduce both use of and spending on prescription drugs. They also show that consumers substitute the use of outpatient care for prescription drug use and that about 35% of the expenditure reductions on prescription drugs are offset by increases in other spending.

This paper studies the impact of antiretroviral therapies (ARVs) on HIV testing and risky sexual behavior. I use data collected in San Francisco among a high-risk population from 1994 to 2002. The evidence supports the hypothesis of a causal link between the introduction of ARVs in late 1996 and the sharp increase in risky sexual behavior that ensued. Further, following ARVs, testers take more risks while non-testers take fewer risks. The proportion of testers remains stable, which was ambiguous a priori. To the extent that ARVs may induce changes in the composition of the testing and non-testing groups, such effects do not seem to affect the results.

This study examines past patterns and projects future prevalence rates of obesity and severe obesity among US adults. Trends in body mass index (BMI), overweight (BMI?25), obesity (BMI?30), class 2 obesity (BMI?35), class 3 obesity (BMI?40) and class 4 obesity (BMI?45) of 20-74 year olds are obtained using data from the first National Health Examination Survey and the National Health and Nutrition Examination Surveys. Quantile regression methods are then used to forecast future prevalence rates through 2020. By that year, 77.6% of men are predicted to be overweight and 40.2% obese, with class 2, 3 and 4 obesity prevalence rates projected at 16.4%, 6.3% and 3.1%. The corresponding forecasts for women are 71.1%, 43.3%, 25.3%, 12.8% and 5.6%. The large growth predicted for severe obesity represents a major public health challenge, given the accompanying high medical expenditures and elevated risk of mortality and morbidity. Combating severe obesity is likely to require strategies targeting the particularly large weight gains of the heaviest individuals.

With falling prices of antiretroviral drugs in countries like India, there has been an increasing awareness that antiretroviral therapy can be made available and accessible to a large number of HIV-positive individuals. Prices, however, still remain high enough to keep ART out of reach of a majority of affected individuals in India. This study analyses the demand for antiretroviral therapy (ART) using a contingent valuation approach, by estimating the willingness to pay for ART among a sample of HIV positive individuals in India. The study finds a very high willingness to be on ART, but substantially lower willingness to pay for it. To cover 70 percent of patients would require the price to be around Rs. 500 per month. Economic status generally and of females in particular have a positive relationship with the willingness to pay for drugs, whereas being a female exerts a downward pressure on the demand for ART.

While the fraction of obese people is not as large in Europe as in the United States, obesity is becoming an important issue in Europe as well. Using comparable data from the Survey of Health, Aging and Retirement in Europe (SHARE) and the Health and Retirement Study in the U.S. (HRS), we analyze the correlates of obesity in the population ages 50 and above, focusing on measures of energy intake and expenditure as well as socio-economic status. We find that obesity rates differ substantially on both sides of the Atlantic and across European countries, with most of the difference coming from the right tail of the weight distribution. The well-known SES gradient in the prevalence of obesity differs across countries and cannot be fully explained by the variation in food expenditure or physical activity. Obesity is associated with lack of physical activity, calorie intake, time spent on cooking, and time and money spent on eating at home and away from home, but some of these associations vary across countries. More research is needed to analyze why this is the case.