Health Economics TMI Lecture

7/29/2019 Health Economics TMI Lecture

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HEALTH ECONOMICSTHE MANAGEMENT INSTITUTE | ROANOKE COLLEGE


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Dr. Alice Louis

Associate Profe

John S. Shanno(August 2013)

Senior Analyst,

@RnningEcono

http://therunn

http://rnningec

CREDEN
http://therunningeconomist.blogspot.com/http://rnningeconomist.tumblr.com/http://rnningeconomist.tumblr.com/http://therunningeconomist.blogspot.com/


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COURSE OUTLINE

Health

Health and the economy

Health and the employer


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HEALTHHOW ARE WE DOING?


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HEALTH: OUTLINE

Definitions

Health

Health economics

Health policy

Health and health care in the US (over time/cross country)

US mortality, morbidity, behavior, access, utilization, expenditures

OECD data (application)

How do economists model health?


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DEFINITIONS

Health is a state of complete physical, mental and social well-being and not

the absence of disease or infirmity. WHO (1948)

Health economics is the application of economic theory, models and empiritechniques to the analysis of decision-making by individuals,health care providers and governments with respect to health and health car

Kenneth Arrow. (1963).Uncertainty and the welfare economics of medical care.American Economic Review, p. 941-73.

READshort article on Arrows contributions

Health policy refers to decisions, plans, and actions that are undertaken to aspecific health care goals within a society. An explicit health policy can achievseveral things: it defines a vision for the future which in turn helps to establitargets and points of reference for the short and medium term. It outlines prand the expected roles of different groups; and it builds consensus and inforpeople. WHO

SAMPLEI, SAMPLEII
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2585899/pdf/15042237.pdfhttp://www.healthypeople.gov/2020/about/default.aspxhttp://www.cdc.gov/http://www.cdc.gov/http://www.healthypeople.gov/2020/about/default.aspxhttp://www.ncbi.nlm.nih.gov/pmc/articles/PMC2585899/pdf/15042237.pdf


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HEALTH AND HEALTH CARE IN THE US

Women live longer

than menBlack males lowest

Hispanics livelonger than whitesand blacks

Heart disease = top

killer in USAlzheimers killingmore people overtime

More unintentionalinjuries for males

Heart disease most

prevalent in oldergroups and risingover time

More commonamongst men


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Most common

amongst youngadult men

Declining incidenceover time

Growth in incidence

over timeOverweight beingreplaced by obese

More commonamong males

Declining

prevalence amongstyouth

Declining incidenceas obesity increases(substitution effect)


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Private coveragedeclined over therecession

# of uninsuredincreased

# of Medicaidrecipients increased

Significant usage,particularly older

Increased despiterecession

Greater rate ofincrease amongstmales

Wide range ofphysician supply

Considerable ruralproblem (access) insouth/west

Concentration innorth


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Private andMedicareexpenditures rising

Medicaid jumped inrecession

OOP less than halfof private

Hospitals are themost expensivepoint of care

Rx expendituresconsiderably lessthanhospital/physician

The most poor areleast likely to havehealth insurance

61% of Hispanicsliving below thepoverty line areuninsured ($23,550)


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HEALTH AND HEALTH CARE ABROAD

US spends more on health care as % of GDP than othercountries (~18%)

Next countries are ~12% of GDP

Lowest = Mexico, Estonia, Turkey (~6%)

US amongst the lowest (with Mexico and Chile) ~47%

Several countries over 80% (including Norway and UK)

Average is ~72%


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HEALTH AND HEALTH CARE ABROAD

LE in Japan, Switzerland, Spain live > 82 years

US LE ~79 years

Lowest are Turkey and Hungary ~74 years

US has greatest incidence of obesity (close to 30%)

Korea has lowest of reported countries (


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HOW DO ECONOMISTS MODEL HEALTH?

Health production functions

(Grossman) Output (LE, infant mortality, obesity,

heart disease)

Inputs (gender, income, race, age,medical care)

Marginal product of each input(compare relative sizes)

Compare impact of obesity share andincome on LE or heart disease

Compare impact of insurance status onhealth outcomes
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=vbjL5ZtuK1LHYM&tbnid=E96RB0iuo8JotM:&ved=0CAUQjRw&url=http://www.emeraldinsight.com/journals.htm?articleid=1906238&show=html&ei=DnVUUZCED-rq0gHQjoHoAw&bvm=bv.44442042,d.dmg&psig=AFQjCNFZB9CXselRKjPtrTUaoKzXQa4JOA&ust=1364575736315187


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HOW DO ECONOMISTS MODEL HEALTH?DETERMINANTS OF HEALTH

Medical care

Education

Income

Lifestyle

Environment

5 groups, each with a topic

Take 5 minutes and then share your

groups thoughts and ideas

Is there anything else that you think

should be on the list?


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BREAK (5 MIN.)WORD FOR THE BREAK

SCAMBLER: ONE WHO DROPS IN UNINVITED AT DINNER TIME IN THE HOPE OF GETTI


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HEALTH AND THE ECONOMYWHAT IS THE RELATIONSHIP BETWEEN HEALTH AND ECONOMIC GROWT


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HEALTH AND THE ECONOMY: OUTLINE

How do we measure the size of the economy?

Relationship between GDP and health

Maximize GDP (output) or happiness/wellbeing?


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HEALTH AND THE ECONOMY: HOW DO WEMEASURE THE SIZE OF THE ECONOMY?

http://research
http://research.stlouisfed.org/fred2/http://research.stlouisfed.org/fred2/


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HEALTH AND THE ECONOMY: RELATIONSHIPBETWEEN GDP AND HEALTH

GDP growth

Income

Employment

Goodhealth

Health insurance

Healthy food?

Happy?

Poor health

Stress

Increased

costsAs an economy grows, whathappens to the health

behaviors and outcomes of

the population?

As an economy moves into

recession, what happens tothe health behaviors and

outcomes of the

population?


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We assess quantitatively the effect of exogenous health improvements on output per capita. Our

simulation model allows for a direct effect of health on worker productivity, as well as indirect eff

that run through schooling, the size and age-structure of the population, capital accumulation, an

crowding of fixed natural resources. The model is parameterized using a combination of microeco

estimates, data on demographics, disease burdens, and natural resource income in developing

countries, and standard components of quantitative macroeconomic theory. We consider both ch

in general health, proxied by improvements in life expectancy, and changes in the prevalence of tw

particular diseases: malaria and tuberculosis.

We find that the effects of health improvements on income per capita are substantially lower tha

those that are often quoted by policy-makers, and may not emerge at all for three decades or mo

after the initial improvement in health. The results suggest that proponents of efforts to improve

in developing countries should rely on humanitarian rather than economic arguments.

Published: When Does Improving Health Raise GDP?, Quamrul H. Ashraf, Ashley Lester, David N. Weil, in NBER Macroeconomics Annual 2008

23 (2009), University of Chicago Press

What about cross country comparisons?
http://www.nber.org/chapters/c7278http://www.nber.org/books/acem08-1http://www.nber.org/books/acem08-1http://www.nber.org/books/acem08-1http://www.nber.org/books/acem08-1http://www.nber.org/chapters/c7278


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HEALTH AND THE ECONOMY: MAXIMIZE GDP OHEALTH/HAPPINESS/WELLBEING?

"measure everything [...] except that

which makes life worthwhile RobertF. Kennedy

Criticisms of GDP and an indicator

Alternative measures

Gross national happiness

Better life index

HOW WOULD YOU SET THE WEIGHTS?

GROUP WORK: Answer these que

@RnningEconomist OK, there'sstrong relationship between GDhappiness? Does this mean govshould aim to aim to maximize (Justin Wolfers)

@justinwolfers @RnningEconoPeople in rich countries are hapthan those in poor. Does that mbuying more things makes us h
http://www.oecdbetterlifeindex.org/http://www.oecdbetterlifeindex.org/


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HEALTH AND THE ECONOMY: MAXIMIZE GDP OHEALTH/HAPPINESS/WELLBEING?

HEALTH (LE)

INCOME
http://filipspagnoli.files.wordpress.com/2008/08/life-expectancy-and-gdp-per-capita-correlation.jpghttp://filipspagnoli.files.wordpress.com/2008/08/life-expectancy-and-gdp-per-capita-correlation.jpg


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HEALTH AND THE EMPLOYERWHY IS HEALTH AND HEALTH CARE IMPORTANT FOR EMPLOYERS?


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HEALTH AND THE EMPLOYER: OUTLINE

Benefits of healthy workers

Workplace wellness programs

Costs of health care


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HEALTH AND THE EMPLOYER:BENEFITS OF HEALTHY WORKERS

ProductivityA

P

CostsInsurance

Workers compensation

Environment

J

M

R

Firms aim to maximize profit

= Benef

to the

firm

Also benefits for the employee


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HEALTH AND THE EMPLOYER:BENEFITS OF HEALTHY WORKERS

Obese employees experience higher levels of absenteeism due to illness thanormal weight employees

Normal-weight men miss an average of 3.0 days each year due to illness or in

In comparison, overweight and obese men (BMI 25-35), miss approximately work days per year than normal-weight men, a 56% increase in missed days

Normal-weight women miss an average of 3.4 days each year due to illness o

In comparison, overweight women miss 3.9 days, a 15% increase in missed dobese women (BMI greater than 30) miss 5.2 days, a 53% increase in missedand women with a BMI of 40 or higher miss 8.2 days, a 141% increase in misdays, almost one week more of missed work each year than normal-weight w


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HEALTH AND THE EMPLOYER: WORKPLACEWELLNESS PROGRAMS

Duke University A workplace health program at Duke University has dedicated efforts to assist

employees in controlling high blood pressure and cholesterol and hasdemonstrated a positive return on investment for its blood pressure ($1.21 to$1.00) and cholesterol programs ($3.39 to $1.00)

Johnson & Johnson Johnson & Johnsons Health and Wellness Program has demonstrated a long

term impact on controlling health care costs (medical costs decreased byapproximately $225 per participating employee per year during a four yearstudy) through its policy, environmental, and education components foraddressing risks that lead to high blood pressure and cholesterol


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Get into groucrucial compoworkplace we

~10 minutes

WHATCOMPOSHOULINCLUDWELLN

PROGR


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Assessmen

Implementat

1. Multilevel Lead


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Creating a culture

persistent, and pe

levelsfrom the C

the people who ha

descriptions.

2. Alignment

A wellness program

extension of a firm

Dont forget that a

3. Scope, Relevanc

Wellness program

engaging, and just

employees wont p

4. Accessibility

Aim to make low-

True on-site integr

convenience matt

5. Partnerships

Active, ongoing coexternal partners,

provide a program

components and m

enhancements.

6. Communication

Wellness is not jus

How you deliver it

Sensitivity, creativ

the cornerstones.


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HEALTH AND THE EMPLOYER: WORKPLACEWELLNESS PROGRAMS


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THANK YOU FOR YOUR TIMEFEEL FREE TO CONTACT ME

THE POWERPOINT WILL BE POSTED ONHTTP://THERUNNINGECONOMIST.BLOGSPOT.COM
http://therunningeconomist.blogspot.com/http://therunningeconomist.blogspot.com/

Health Economics TMI Lecture

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