Life cycle responses to health insurance status

Effect of age-related premium readjustment on health insurance cancellation in Brazil: Regression discontinuity approach

Age is one of the most relevant observable risk attributes in determining the value of health insurance premiums. Empirical evidence indicates that the cost of health insurance is the leading cause of contract switching, which can compromise access to healthcare services and potentially result in treatment discontinuities. Using data from a Health Maintenance Organization in the Southern region of Brazil, we examined the effect of health plan price readjustment resulting from changes in the beneficiary's age group on disenrollment or switches to a more limited coverage plan. The estimates were obtained using the method of regression discontinuity. The main findings indicate that for age group transitions at 59 years old, the price readjustment effect led to an increase in contract cancellations and switching to cheaper plans. These findings highlight that an important consequence of the difference in premium sensitivity among age groups is that the exit of individuals from the health insurance sector is selective in age. The results of this paper can support policymaking to improve access to health insurance.

Accounting for the Rise of Health Spending and Longevity

We estimate a stochastic life-cycle model of endogenous health spending, asset accumulation and retirement to investigate the causes behind the increase in health spending and longevity in the U.S. over the period 1965-2005. Accounting for changes over time in taxes, transfers, Social Security, income, health insurance, smoking and obesity, and technological progress, we estimate that technological progress is responsible for half of the increase in life expectancy over the period. Substantial growth in health spending over the period is largely the result of growth in economic resources and the generosity of health insurance, with a modest role for medical technological progress. The growth in spending does not come from changes in a single source, but sources jointly interacted to increase spending: complementarity effects explain up to 26.3% of the increase in health spending. Overall, for those born in 1940, the combined changes in resources and health insurance that occurred over the period are valued at 35.7% of lifetime consumption.

Valuing pain using the subjective well-being method

Chronic pain clearly lowers utility, but valuing the reduction in utility is empirically challenging. Here, we use improvements over prior applications of the subjective well-being method to estimate the implied trade-off between pain and income using four waves of the Health and Retirement Study (2008-2014), a nationally representative survey on individuals age 50 and older. We model income with a flexible functional form, allowing the trade-off between pain and income to vary across income groups. We control for individual fixed effects in the life-satisfaction equations and instrument for income in some models. We find values for avoiding pain ranging between 56-145 USD per day. These results are lower than previously reported and suggest that the higher previous estimates may be heavily affected by the highest income level and confounded by endogeneity in the income variable. As expected, we find that the value of pain relief increases with pain severity.

Closing down the shop: Optimal health and wealth dynamics near the end of life

Near the end of life, health declines, mortality risk increases, and curative care is replaced by uninsured long-term care, accelerating the fall in wealth. Whereas standard explanations emphasize inevitable aging processes, we propose a complementary closing down the shop justification where agents' decisions affect their health and the timing of death. Despite preferring to live, individuals optimally deplete their health and wealth towards levels associated with high death risk and gradual indifference between life and death. Reinstating exogenous aging processes reinforces the relevance of closing down. Using Health and Retirement Study-Consumption and Activities Mail Survey data for elders, a structural estimation of the closed-form decisions identifies, tests, and confirms the relevance of closing down.