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Health Insurance, Medical Care, and Health Outcomes: A Model of Elderly Health Dynamics

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  • Zhou Yang
  • Donna B. Gilleskie
  • Edward C. Norton
Abstract
Prescription drug coverage creates a change in medical care consumption, beyond standard moral hazard, arising both from the differential cost-sharing and the relative effectiveness of different types of care. We model the dynamic supplemental health insurance decisions of Medicare beneficiaries, their medical care demand, and subsequent health outcomes over time. Using parameter estimates obtained with longitudinal individual-level data, we simulate behavior under different drug coverage scenarios. Prescription drug coverage increases drug expenditures by 7 percent to 27 percent over a five-year period. While mortality rates fall slightly, the survivors have poorer health, leading to higher total medical expenditures.

Suggested Citation

  • Zhou Yang & Donna B. Gilleskie & Edward C. Norton, 2009. "Health Insurance, Medical Care, and Health Outcomes: A Model of Elderly Health Dynamics," Journal of Human Resources, University of Wisconsin Press, vol. 44(1).
    • Handle: RePEc:uwp:jhriss:v:44:y:2009:i1:p47-114
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    References listed on IDEAS

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    3. Jan C. van Ours & Jenny Williams, 2011. "Cannabis use and mental health problems," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(7), pages 1137-1156, November.
    4. Michelle Sovinsky & Steven Stern, 2016. "Dynamic modelling of long-term care decisions," Review of Economics of the Household, Springer, vol. 14(2), pages 463-488, June.
    5. Khwaja, Ahmed, 2010. "Estimating willingness to pay for medicare using a dynamic life-cycle model of demand for health insurance," Journal of Econometrics, Elsevier, vol. 156(1), pages 130-147, May.
    6. Williams, Jenny & van Ours, Jan C., 2017. "Early Cannabis Use and School to Work Transition of Young Men," IZA Discussion Papers 10488, Institute of Labor Economics (IZA).
    7. Meghan M. Skira, 2015. "Dynamic Wage And Employment Effects Of Elder Parent Care," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(1), pages 63-93, February.
    8. Morales, Leonardo Fabio & Gordon-Larsen, Penny & Guilkey, David, 2016. "Obesity and health-related decisions: An empirical model of the determinants of weight status across the transition from adolescence to young adulthood," Economics & Human Biology, Elsevier, vol. 23(C), pages 46-62.
    9. Michael Keane & Elena Capatina & Shiko Maruyama, 2018. "Health Shocks and the Evolution of Consumption and Income over the Life-Cycle," Discussion Papers 2018-14, School of Economics, The University of New South Wales.
    10. van Ours, Jan C. & Williams, Jenny, 2012. "The effects of cannabis use on physical and mental health," Journal of Health Economics, Elsevier, vol. 31(4), pages 564-577.
    11. Harris, Matthew & Kohn, Jennifer, 2015. "Reference dependent utility from health and the demand for medical care," MPRA Paper 61926, University Library of Munich, Germany.
    12. Vincenzo Atella & Francesco D'Amico, 2010. "Who is responsible for your health: You, your doctor or new technologies?," CEIS Research Paper 167, Tor Vergata University, CEIS, revised 28 May 2010.
    13. Marcela PARADA‐CONTZEN, 2023. "Gender, family status and health characteristics: Understanding retirement inequalities in the Chilean pension model," International Labour Review, International Labour Organization, vol. 162(2), pages 271-303, June.
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    15. Jenny Williams & Jan C. van Ours, 2020. "Hazardous or not? Cannabis use and early labor market experiences of young men," Health Economics, John Wiley & Sons, Ltd., vol. 29(10), pages 1148-1160, October.
    16. Yiqiu, Wang & Maria, Porter & Songqing, Jin, 2016. "Estimating Effects of Health Insurance Coverage on Medical Service Utilization and Health in Rural China," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235470, Agricultural and Applied Economics Association.
    17. Jiahao Song & Haitao Wu & Hongxing Lan & Dingde Xu & Wei Wang, 2022. "The Influence of Disease Status on Loneliness of the Elderly: Evidence from Rural China," IJERPH, MDPI, vol. 19(5), pages 1-16, March.
    18. Florian Heiss & Daniel McFadden & Joachim Winter, 2009. "Regulation of private health insurance markets: Lessons from enrollment, plan type choice, and adverse selection in Medicare Part D," NBER Working Papers 15392, National Bureau of Economic Research, Inc.
    19. White, Matthew N., 2023. "Self-reported health status and latent health dynamics," Journal of Health Economics, Elsevier, vol. 88(C).
    20. Leonardo Fabio Morales & Penny Gordon-Larsen & David Guilkey, 2014. "Obesity and Health-Related Decisions: An Empirical Model of the Determinants of Weight Status," Borradores de Economia 846, Banco de la Republica de Colombia.
    21. Ai, C & Norton, E & Yang, z, 2011. "Extending Regression Discontinuity Models Beyond the Jump Point," Health, Econometrics and Data Group (HEDG) Working Papers 11/17, HEDG, c/o Department of Economics, University of York.

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