Three essays in health economics

This dissertation consists of three studies in the field of health economics. The first chapter studies the market situation of the U.S. nursing home industry. It uses the most recent data available from the Annual Survey of Nursing Homes conducted in Wisconsin. In this study, we derive theoretical predictions from an optimization problem of a representative nursing home under various assumptions. We introduce a new measure, a home's bed-utilization rate, in our empirical strategy and find evidence of excess demand from Medicaid patients in Wisconsin. A positive relationship between Medicaid payment rates and private-pay prices is found in homes with high bed utilization. Additionally, we find strong adverse effects of higher reimbursement rates on quality measures. These findings prove there is an excess demand from Medicaid patients in Wisconsin. This conclusion has direct implications for the quality of care that a nursing home provides for its patients.

The second study takes advantage of the "natural experiment" features of the major health care reform in Thailand in 2002 in order to estimate the price elasticity of health care demand among Thai citizens. We use the difference-in-difference technique to capture the pure effect of the reform on the health care utilization behavior of those who were directly affected by the reform. In order to capture any secular trend in health care utilization, we use data from a group of people who were not affected by the reform. We find that the reduction in health care price immediately induced those who lacked health insurance coverage to increase their visits to a public health care facility, although similar trends were not found a few years after the reform. The estimated change in visits is used to calculate the price elasticity of demand, which falls in the range of -1.36 to -0.58.

The last study examines the relationship between risky behaviors among Americans aged 50-65 and their health insurance coverage. Despite the fact that moral hazard behaviors are predicted by economic theory, the study finds that health insurance has no significant effect on certain risky behaviors such as smoking. Surprisingly, we find a significantly positive relationship between health insurance coverage and healthy behaviors such as exercising regularly. This finding reflects the importance of health insurance companies in providing its customers with more health information that could encourage health-oriented attitudes.