The Weight of the Median Voter Ageing on Public Debt by Ernest Dautovic :: SSRN

February 1, 2017

This paper studies empirically the relation proposed by Brennan (2012) between an ageing society and the preference for financing public expenditures with debt issuance vis-à-vis income taxation. We collect data on the ageing of the median voter for a cross-country sample of advanced economies and OECD members where ageing of society is relatively sever and the political process is more democratic and economic institutions are subject to electorate scrutiny. The sample period covers a relatively long period of 30 years, from 1980 to 2010. Then we estimate the correlation between the median electorate age with public debt after controlling for country fixed effects and other determinants of public debt drawn from economic and political theory.

Within country estimates confirm the insight of Brennan (2012) and the preferred specification indicate that a one year ageing of the electorate may lead to an increase of public debt GDP ratio by 3.52 percent. Over a ten years horizon the average voter age increases by 1.39 years in our sample, suggesting an average increase in the stock of public debt of 4.89 percentage points in ten years.

Source: The Weight of the Median Voter Ageing on Public Debt by Ernest Dautovic :: SSRN


Greying the Budget: Ageing and Preferences Over Public Policies by Luiz R. de Mello, Simone Schotte, Erwin R. Tiongson, Hernan Winkler :: SSRN

February 1, 2017

This paper looks at how individual attitudes towards the allocation of government spending change along the life cycle. As individuals age and re‐evaluate the benefits and costs of government programs, such as education, healthcare and old‐age pensions, they also influence the level and composition of government spending. Using the Life in Transition Survey II for 34 countries of Europe and Central Asia, we find that older individuals are less likely to support hikes in government outlays on education and more likely to support increases in spending on pensions. These results are very similar across countries, and they do not change when using alternative model specifications, estimation methods and data sources. To our knowledge, this the first paper to provide evidence of the “grey peril” effect for a large group of developed, middle‐income and low‐income economies. Our findings are consistent with a body of literature arguing that conflict across generations over the allocation of government expenditure may intensify in ageing economies.

Source: Greying the Budget: Ageing and Preferences Over Public Policies by Luiz R. de Mello, Simone Schotte, Erwin R. Tiongson, Hernan Winkler :: SSRN


Early death after discharge from emergency departments: analysis of national US insurance claims data | The BMJ

February 1, 2017

In this national analysis, we found that over 10 000 Medicare beneficiaries each year died within seven days after being discharged from emergency departments, despite mean age of 69 and no obvious life limiting illnesses. For context, these deaths accounted for 1.7% of all non-hospice deaths in the Medicare fee for service population annually

Source: Early death after discharge from emergency departments: analysis of national US insurance claims data | The BMJ


Fiscal Stabilization and the Credibility of the U.S. Budget Sequestration Spending Austerity by Ruiyang Hu, Carlos E.J.M. Zarazaga :: SSRN

January 21, 2017

Fiscal imbalances predating the Great Recession but aggravated by it prompted the U.S. Congress to enact in 2011 legislation that, in the absence of other measures, would trigger two years later a so-called “budget sequestration” procedure that implied reducing government discretionary spending to unprecedented low levels over the following decade. For that reason, economic agents may not have expected this “fiscal stabilization measure of last resort” to be sustainable when it was put into effect in 2013 as scheduled. This is exactly the issue this paper set out to explore, on the grounds that sizing up the expectations that economic agents had about the budget sequestration can provide powerful insights on how fiscal stabilization is likely to proceed in the U.S., going forward. The paper makes inferences about the credibility enjoyed by the budget sequestration with an adapted version of the Business Cycle Accounting approach, originally developed for other purposes.

The main finding is that the evidence favors a scenario in which spending cuts are half the size of those actually implied by the sequester. The paper takes this result as an indication that the U.S. is unlikely to address its unresolved fiscal imbalances with just spending austerity, an interpretation consistent with existing literature that traces the seemingly anomalous behavior of economic variables during the Great Recession and its aftermath to alternative fiscal stabilization mechanisms.

Source: Fiscal Stabilization and the Credibility of the U.S. Budget Sequestration Spending Austerity by Ruiyang Hu, Carlos E.J.M. Zarazaga :: SSRN


Medicaid’s Data Gets an Internet-Era Makeover – The New York Times

January 10, 2017

Jini Kim’s relationship with Medicaid is business and personal.

Her San Francisco start-up, Nuna, while working with the federal government, has built a cloud-computing database of the nation’s 74 million Medicaid patients and their treatment.Medicaid, which provides health care to low-income people, is administered state by state.

Extracting, cleaning and curating the information from so many disparate and dated computer systems was an extraordinary achievement, health and technology specialists say. This new collection of data could inform the coming debate on Medicaid spending.


Reducing Medical Spending of the Publicly Insured: The Case for a Cash-Out Option by Svetlana Pashchenko, Ponpoje Porapakkarm :: SSRN

January 7, 2017

It is well-recognized that individuals’ spending on medical care is not entirely necessary but is to some extent discretionary. However, the composition of medical spending into necessary and discretionary parts is not (perfectly) observable. In this paper, we study ways to improve upon existing public health insurance policies using a framework where both the discretionary and necessary components of medical spending are explicitly modeled. We start by constructing a simple theoretical framework in the spirit of Mirrlees (1971) in which only total medical spending is observable, but not its division into discretionary and non-discretionary parts. We show that individuals with low consumption of medical care should be rewarded with high consumption of regular goods. Next, we construct a rich structural life-cycle model and evaluate the quantitative impact of this type of policy with application to public health insurance. The success of each policy is measured by benchmarking it against the full information case in which the division of medical spending into discretionary and non-discretionary components is observable. We show that the best results are achieved by introducing an option to substitute public health insurance with cash transfers. This is because this policy creates a trade-off between regular and medical consumption, which is the main mechanism behind our theoretical results.

Source: Reducing Medical Spending of the Publicly Insured: The Case for a Cash-Out Option by Svetlana Pashchenko, Ponpoje Porapakkarm :: SSRN


Enrollee Choices after Their Health Plans are Terminated: Default Effects versus Persistent Preferences by Anna Sinaiko, Richard J. Zeckhauser :: SSRN

January 5, 2017

Behavioral economic research has established that defaults, one form of nudge, powerfully influence choices. In most policy contexts, all individuals receive the same nudge. We present a model that analyzes the optimal universal nudge when individuals differ in their preferences, different individuals should make different choices, and there is a cost to resist a nudge. Our empirical focus is on terminated choosers, individuals whose prior choice becomes no longer available. Specifically, we examine the power of defaults for individuals who had enrolled in Medicare Advantage with drug coverage and had their plans discountinued. Should these terminated choosers fail to actively choose another Medicare Advantage plan, they are automatically defaulted into fee-for-service Medicare absent drug coverage. Overall, the rate of transition for TCs to FFS Medicare is low, implying that original preferences and status quo bias overpowered the default. Black TCs were more susceptible to the default than non-blacks. Increasing numbers of Americans are choosing plans in health insurance exchange settings such as Medicare, the Affordable Care Act (ACA), and private exchanges. Plan exits and large numbers of TCs are inevitable, along with other forms of turmoil. Any guidance and defaults provided for TCs should attend to their past revealed preferences.

Source: Enrollee Choices after Their Health Plans are Terminated: Default Effects versus Persistent Preferences by Anna Sinaiko, Richard J. Zeckhauser :: SSRN