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E M P L O Y E E B E N E F I T S , C O M P E N S A T I O N
& P E N S I O N L A W
Vol. 7, No. 3: February 9, 2006
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Publisher: Employment, Labor, Compensation & Pension Law Journals
a division of
Social Science Electronic Publishing, Inc. (SSEP)
and Social Science Research Network (SSRN)
Editor: PAMELA J. PERUN
Urban Institute
Copyright: SSEP, Inc. 2006. All rights reserved.
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Topic of This Issue:
Healthcare
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T A B L E of C O N T E N T S
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WORKING PAPERS
"Household Demand for Health Insurance: Price and Spouse's
Coverage"
MARJORIE HONIG
Hunter College, City University of New York -
Department of Economics
IRENA DUSHI
Hunter College
"Risk-Sharing in Retiree Medical Benefits"
ANNA M. RAPPAPORT
Anna Rappaport Consulting
"What Did Medicare Do (and Was It Worth It)?"
AMY FINKELSTEIN
National Bureau of Economic Research (NBER)
Massachusetts Institute of Technology (MIT)
Department of Economics
ROBIN MCKNIGHT
University of Oregon
Department of Economics
National Bureau of Economic Research (NBER)
"The Aggregate Effects of Health Insurance: Evidence from the
Introduction of Medicare"
AMY FINKELSTEIN
National Bureau of Economic Research (NBER)
Massachusetts Institute of Technology (MIT)
Department of Economics
"Information and Drug Prices: Evidence from the Medicare Discount
Drug Card Program"
EMIN DINLERSOZ
University of Houston
HAN LI
University of Houston
ROGER SHERMAN
University of Houston
Department of Economics
RUBEN HERNANDEZ-MURILLO
Federal Reserve Bank of St. Louis, Research
Division
NEW and FORTHCOMING ARTICLES
"The Role of State Legislation in Consumer-Driven Health Care"
American Journal of Law and Medicine, Vol. 31, pp. 395-418,
2005
TIMOTHY STOLTZFUS JOST
Washington and Lee University
School of Law
MARK A. HALL
Wake Forest University
School of Law
"The Medicare Drug Benefit: A Prescription for Confusion"
NAELA Journal, Vol. 1, No. 2, pp. 167-186, 2005
RICHARD L. KAPLAN
University of Illinois College of Law
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W O R K I N G P A P E R Abstracts
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"Household Demand for Health Insurance: Price and Spouse's
Coverage"
BY: MARJORIE HONIG
Hunter College, City University of New York -
Department of Economics
IRENA DUSHI
Hunter College
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=801787
Date: April 2005
Contact: MARJORIE HONIG
Email: Mailto:Marjorie.Honig@hunter.cuny.edu
Postal: Hunter College, City University of New York - Department of
Economics
695 Park Avenue
New York, NY 10021 UNITED STATES
Phone: 212-772-5397
Fax: 212-772-5398
Co-Auth: IRENA DUSHI
Email: Mailto:irenad1@gmail.com
Postal: Hunter College
Research Department
60 East 86th Street
New York, NY 10028 UNITED STATES
ABSTRACT:
Demand for employment-based insurance is typically treated as an
individual rather than a household decision. Dual-earner
households are now the modal U.S. married household, however,
and most firms offer family coverage as an option available to
employees. Findings from a model estimating married workers'
take-up of their own insurance with their own and their spouses'
offers indicate that both own price and potential coverage under
spouses' plans are important determinants of take-up. We find
evidence of selection into jobs offering insurance among wives
but not husbands. Findings also suggest that dual-earners are
not aware of the potential wage/benefit trade-off. Data are from
the 1996 panel of SIPP.
JEL Classification: I10, J32, J12, J15
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"Risk-Sharing in Retiree Medical Benefits"
BY: ANNA M. RAPPAPORT
Anna Rappaport Consulting
Paper ID: PRC Working Paper Series
Date: 2005
Contact: ANNA M. RAPPAPORT
Email: Mailto:anna@annarappaport.com
Postal: Anna Rappaport Consulting
10 S. Wacker Dr.
Chicago, IL 60606 UNITED STATES
ABSTRACT:
Retiree medical care expenditures in the United States are
growing at a rapid rate, while and the retired portion of the
population is increasing. This puts pressure on government and
employer programs providing retiree health care coverage.
Retirees also face increasing challenges in gaining access to
affordable coverage, particularly before eligibility for
Medicare. In this chapter we assess prospects for US retiree
health coverage and the challenges, risks, and roles of
employers, Medicare, and retirees in providing and financing it.
We discuss both traditional approaches to retiree health
benefits, where the employer assumes most risk, and new defined
contribution approaches, where significant risk is shifted to
the retiree. We also review government benefits for retirees
including new Medicare prescription drug benefits. We model
future retiree health care costs and opportunities to save
before retiring, highlighting public policy obstacles and issues
for employer-provided retiree health benefits.
______________________________
"What Did Medicare Do (and Was It Worth It)?"
BY: AMY FINKELSTEIN
National Bureau of Economic Research (NBER)
Massachusetts Institute of Technology (MIT)
Department of Economics
ROBIN MCKNIGHT
University of Oregon
Department of Economics
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=804255
Paper ID: NBER Working Paper No. W11609
Date: September 2005
Contact: AMY FINKELSTEIN
Email: Mailto:afinkels@nber.org
Postal: National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138 UNITED STATES
Co-Auth: ROBIN MCKNIGHT
Email: Mailto:robinm@uoregon.edu
Postal: University of Oregon
Department of Economics
Eugene, OR 97403 UNITED STATES
ABSTRACT:
We study the impact of the introduction of one of the major
pillars of the social insurance system in the United States: the
introduction of Medicare in 1965. Our results suggest that, in
its first 10 years, the establishment of universal health
insurance for the elderly had no discernible impact on their
mortality. However, we find that the introduction of Medicare
was associated with a substantial reduction in the elderly's
exposure to out of pocket medical expenditure risk.
Specifically, we estimate that Medicare's introduction is
associated with a forty percent decline in out of pocket
spending for the top quartile of the out of pocket spending
distribution. A stylized expected utility framework suggests
that the welfare gains from such reductions in risk exposure
alone may be sufficient to cover between half and three-quarters
of the costs of the Medicare program. These findings underscore
the importance of considering the direct insurance benefits from
public health insurance programs, in addition to any indirect
benefits from an effect on health.
JEL Classification: H51, I11, I18
______________________________
"The Aggregate Effects of Health Insurance: Evidence from the
Introduction of Medicare"
BY: AMY FINKELSTEIN
National Bureau of Economic Research (NBER)
Massachusetts Institute of Technology (MIT)
Department of Economics
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=807608
Paper ID: NBER Working Paper No. W11619
Date: September 2005
Contact: AMY FINKELSTEIN
Email: Mailto:afinkels@nber.org
Postal: National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138 UNITED STATES
ABSTRACT:
This paper investigates the effects of market-wide changes in
health insurance by examining the single largest change in
health insurance coverage in American history: the introduction
of Medicare in 1965. I estimate that the impact of Medicare on
hospital spending is substantially larger than what the existing
evidence from individual-level changes in health insurance would
have predicted. Consistent with a disproportionately larger
impact of aggregate changes in health insurance, the evidence
suggests that the introduction of Medicare altered the practice
of medicine. For example, I find that the introduction of
Medicare is associated with an increase in the rate of adoption
of then - new medical technologies. A back of the envelope
calculation based on the estimated impact of Medicare suggests
that the overall spread of health insurance between 1950 and
1990 may be able to explain at least forty percent of the
increase in real per capita health spending over this time
period.
JEL Classification: H51, I11, I18
______________________________
"Information and Drug Prices: Evidence from the Medicare Discount
Drug Card Program"
BY: EMIN DINLERSOZ
University of Houston
HAN LI
University of Houston
ROGER SHERMAN
University of Houston
Department of Economics
RUBEN HERNANDEZ-MURILLO
Federal Reserve Bank of St. Louis, Research
Division
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=869449
Date: November 2005
Contact: EMIN DINLERSOZ
Email: Mailto:Edinlers@mail.uh.edu
Postal: University of Houston
Houston, TX 77204 UNITED STATES
Phone: 713-743-3839
Fax: 713-743-3798
Co-Auth: HAN LI
Email: Mailto:han.li@mail.uh.edu
Postal: University of Houston
Houston, TX 77204 UNITED STATES
Co-Auth: ROGER SHERMAN
Email: Mailto:rsherman@uh.edu
Postal: University of Houston
Department of Economics
Houston, TX 77204-5882 UNITED STATES
Co-Auth: RUBEN HERNANDEZ-MURILLO
Email: Mailto:ruben.hernandez@stls.frb.org
Postal: Federal Reserve Bank of St. Louis, Research Division
411 Locust St
St. Louis, MO 63011 UNITED STATES
ABSTRACT:
In early 2004, the U.S. Government initiated the Medicare
Discount Drug Card Program, under which a large amount of
pharmacy-level price data pertaining to over 800 drugs has been
released weekly on the Medicare Web site continuously between
May 29, 2004 and October 2005. This extensive information
release was intended to facilitate access to prices that are
offered by drug card sponsors to Medicare eligible, with the
hope of promoting competition among sponsors. This paper
utilizes a large sample of pharmacy level drug price data
collected from the Medicare website for several weeks to answer
the following questions: i) Did the program generate significant
dispersion in prices across drug cards, across pharmacies, or
across geography? ii) Did the dispersion and the average of
prices change over time? iii) Are the observed patterns
consistent with theories of consumer search and improved access
to information? iv) Did the program had the intended effects of
promoting competition between drug card sponsors? v) How are the
observed effects related to the design and the institutional
environment of the program? vi) What are the broader
implications of the findings for the role of public information
policy in the functioning of markets?
JEL Classification: L11, L13, L50, D43, D83, I11, I18
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N E W and F O R T H C O M I N G Articles
_________________________________________________________________
"The Role of State Legislation in Consumer-Driven Health Care"
American Journal of Law and Medicine, Vol. 31, pp. 395-418,
2005
BY: TIMOTHY STOLTZFUS JOST
Washington and Lee University
School of Law
MARK A. HALL
Wake Forest University
School of Law
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=853084
Paper ID: Washington & Lee Legal Studies Paper No. 2005-24; Wake
Forest Univ. Legal Studies Paper No. 05-24
Contact: TIMOTHY STOLTZFUS JOST
Email: Mailto:JOSTT@WLU.EDU
Postal: Washington and Lee University
School of Law
Lexington, VA 24450 UNITED STATES
Phone: 540-458-8510
Fax: 540-458-8488
Co-Auth: MARK A. HALL
Email: Mailto:mhall@law.wfu.edu
Postal: Wake Forest University
School of Law
P.O. Box 7206
Winston-Salem, NC 27109 UNITED STATES
ABSTRACT:
The Consumer-directed health care movement has recently been
given a major boost by section 223 of the Medicare Modernization
Act, which provides federal income tax subsidies for health
savings accounts coupled with high deductible health plans. The
federal tax subsidy, however, will only be available in states
whose program of insurance regulation permits high deductible
health plans to exist. The MMA represents, therefore, a new
approach to federalism in health insurance - offering tax
incentives for states to change their approach to insurance
regulation rather than preempting state regulation or imposing
federal regulation. To date the states have generally responded
positively to the federal inducement by adapting their
regulations to the federal model. We question, however, whether
the states are fully considering the new challenges to insurance
regulation raised by consumer-driven health care. This article,
based on interviews with state regulators, insurance company
representatives, and other experts, attempts to ask the
questions that states must answer in deciding how to regulate
this new form of health care finance.
______________________________
"The Medicare Drug Benefit: A Prescription for Confusion"
NAELA Journal, Vol. 1, No. 2, pp. 167-186, 2005
BY: RICHARD L. KAPLAN
University of Illinois College of Law
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=871249
Paper ID: U Illinois Law & Economics Research Paper No. LE06-02;
Illinois Public Law Research Paper No. 05-20
Contact: RICHARD L. KAPLAN
Email: Mailto:RKAPLAN@LAW.UIUC.EDU
Postal: University of Illinois College of Law
504 E. Pennsylvania Avenue
Champaign, IL 61820 UNITED STATES
Phone: (217) 333-2499
Fax: (217) 244-1478
ABSTRACT:
This article examines the Medicare Part D prescription drug
benefit that became effective on January 1, 2006. The article
begins by setting forth the political development of this
benefit and explaining the constraints that were imposed by the
ill-fated attempt in 1988 to add prescription medications to
Medicare's coverage. The article then examines the key
components of the Medicare drug benefit, including its unique
coverage gap known popularly as the "doughnut hole," and
illustrates how beneficiaries will fare depending upon their
level of annual drug expenditures. After considering the
program's penalty for delayed enrollment, the article analyzes
the perplexing decisions that Medicare Part D presents for
Medicare beneficiaries who have drug coverage from former
employers, medigap insurance policies, or managed care plans.
The article concludes with some perspective about the
uncertainties faced by older Americans as they contemplate what
their drug regimens might entail in the future.