2013 Theses Doctoral

Three Essays on Health Economics

Kim, Hyuncheol

This dissertation consists of three essays on health economics. The first chapter evaluates the impacts of and behavioral responses to cost-sharing in population-based public cancer screening using Korea's National Cancer Screening Program (NCSP), which provides free stomach and breast cancer screenings to those below the insurance contribution cutoff. Free cancer screening substantially increases the cancer screening take up rate, yielding more cancer detections. Nevertheless, the program was unsuccessful along other key dimensions. First, the initial increase in cancer detections was quickly crowded out by the decrease in cancer detections through other channels, such as private screening and diagnostic testing. Second, those who were induced to take up cancer screening by the cash incentive (compliers) were relatively healthy. These compliers' baseline cancer prevalence is as high as those who take up screening regardless of the availability of free cancer screening (always takers). Those who do not undergo screening regardless of the availability of free cancer screening (never takers) had the highest cancer mortalities, and thus stood to benefit the most from the screening they did not receive. Taken together, free public cancer screening has a limited impact on cancer- and all-cause mortalities. This analysis demonstrates that even when take up is significantly responsive, population based cancer screening can be ineffective due to the behavioral responses to cancer screening such as crowd out and self-selection. More broadly, my study suggests that the impact of health programs, even when they display large participation responses, crucially depend upon the potential behavioral responses of the agents involved. The second chapter provides empirical evidence on the impacts of government reimbursement of long-term care. We apply a regression discontinuity design using administrative data from South Korea to estimate the impact of subsidies for formal home and institutional care on informal care use and medical expenditures. These subsidies lead to increases in formal long-term care utilization, even accounting for crowd out of private spending. Our main finding is that the benefits of home and facility care are heterogeneous across physical function level and therefore setting policy accordingly has the potential to dramatically reduce medical expenses. We also find that formal long-term care is not a strong substitute for informal long-term care at the extensive margin. Specifically, among individuals who are partially dependent for some activities of daily living (ADLs), we find that increased use of formal home care has no impact on the use of informal care at the extensive margin or on medical expenses. Among individuals who are partially dependent for several ADLs, we find that increased use of institutional care leads to reductions in informal care and medical expenses. From a policy perspective, these results suggest that publicly financed long-term care may have limited impact among the more able, and that home care may be both more cost effective and beneficial than institutional care for the least able. The third chapter provides empirical evidence on both outcomes and potential mechanisms resulting from information obtained from health screening. We apply a regression discontinuity design using administrative data from South Korea to estimate the impact of different classifications of overall health that vary discontinuously with blood sugar level. We find that "disease suspected" classification leads to increase clinic visit for the secondary examinations and future screening take-ups, and decrease of outpatient days and medical expenditure, however few impacts on health outcomes such as future blood sugar level and mortality. We also find that the responsiveness to the classifications among the highest income quintiles is lower than among the other quintiles, consistent with more educated individuals incorporating information directly from the blood sugar measure itself.