Volume 20, Issue 1

The primary goal of the federal dependent coverage mandate was to increase health insurance coverage among young adults, the group with the lowest prevalence of health insurance coverage. To understand the full impacts of the federal dependent coverage mandate, it is important to evaluate how the mandate affects labor market activities and time spent away from work among young adults. Using data from the Consumer Population Survey (CPS) and the American Time Use Survey (ATUS) and implementing a difference-in-differences framework, we find: (1) Young adults substitute employer sponsored insurance for dependent coverage, (2) Affected individuals reduce their work time and switch from full- to part-time employment, and (3) The additional time from reduced labor market activity is reallocated towards more time spent on leisure activities, mainly watching television. The effects of the mandate on labor market activities are stronger in later years. Furthermore, we show that young adults do not increase the time they spend on activities that could enhance their human capital such as education and health, which reemphasizes potential unintended consequences of the mandate. These findings suggest that future work is necessary to fully understand the overall welfare effects of the policy.

Cancer mortality declined in Belgium during the period 2004–2012, but there was considerable variation in the rate of decline across cancer sites (breast, lung, etc.). I analyze the effect that pharmaceutical innovation had on cancer mortality in Belgium, by investigating whether the cancer sites that experienced more pharmaceutical innovation had larger subsequent declines in mortality, controlling for changes in cancer incidence. The measures of mortality analyzed – premature (before ages 75 and 65) mortality rates and mean age at death – are not subject to lead-time bias. Premature cancer mortality rates are significantly inversely related to the cumulative number of drugs registered 15–23 years earlier. Since mean utilization of drugs that have been marketed for less than 10 years is less than one fourth as great as mean utilization of drugs that have been marketed for at least a decade, it is not surprising that premature mortality is strongly inversely related only to the cumulative number of drugs that had been registered at least 10 years earlier. Drugs registered during the period 1987–1995 are estimated to have reduced the premature cancer mortality rate in 2012 by 20%. Mean age at death from cancer increased by 1.17 years between 2004 and 2012. The estimates indicate that drugs registered during the period 1987–1995 increased mean age at death from cancer in 2012 by 1.52 years. The estimates also suggest that drugs (chemical substances) within the same class (chemical subgroup) are not “therapeutically equivalent,” i.e. they do not have essentially the same effect in the treatment of a disease or condition. The estimates imply that the drugs registered during 1987–1995 reduced the number of life-years lost to cancer at all ages in 2012 by 41,207. The estimated cost per-life-year gained in 2012 from cancer drugs registered in Belgium during the period 1987–1995 was €1311. This estimate is well below even the lowest estimates from other studies of the value of a life-year saved. The largest reductions in premature mortality occur 15–23 years after drugs are registered, when their utilization increases significantly. This suggests that, if Belgium is to obtain substantial additional reductions in premature cancer mortality in the future (15 or more years from now) at a modest cost, pharmaceutical innovation (registration of new drugs) is needed today.

We study how the announcement by CVS Health, a large US-based pharmacy chain, to stop selling tobacco products affected its share price and that of its close competitors, as well as major tobacco companies. Combining event study and synthetic control methodologies we compare measures of CVS’s stock market valuation with those of a peer group consisting of large publicly listed firms that are part of Standard & Poor’s S&P 500 stock market index. CVS’s announcement is associated with a short-term decrease in its share price, whereas close competitors have benefitted from CVS’ decision. We also find a negative share price effect for Altria, the largest US domestic tobacco firm. Overall our findings are consistent with markets expecting consumers to shift from CVS to alternative outlets in the short-run, and interpreting CVS’ decision to drop tobacco products as signal that other firms may follow suit.