Health Economics TMI Lecture
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Transcript of 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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HEALTH AND HEALTH CARE IN THE US
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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HEALTH AND HEALTH CARE IN THE US
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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HEALTH AND HEALTH CARE IN THE US
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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HEALTH AND THE ECONOMY: RELATIONSHIPBETWEEN GDP AND HEALTH
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HEALTH AND THE ECONOMY: RELATIONSHIPBETWEEN GDP AND HEALTH
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HEALTH AND THE ECONOMY: RELATIONSHIPBETWEEN GDP AND HEALTH
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/