Contributions published at Applied Microeconomics (Peter Zweifel)

This contribution purports to come up with reform proposals that promise to improve the benefit-cost ratio in health from the point of view of taxpayers and (potential) patients. It starts by noting that a high and increasing share of health care expenditure in the GDP does not per se indicate a need for reform. Rather, the guiding idea is that decisions in the health care sector should be tied more closely to the preferences of consumers, who must obtain more ways to express their willingness-to-pay. The 10 proposals are directed to health insurers, physicians and medical associations, hospital management, and policy makers proper. Moreover, initial steps for implementing them are sketched, such as abolishing the division of lines in the regulation of (private) insurance, freeing health insurers from any-willing-provider clauses, refraining from imposing uniform nationwide fee schedules, and directly subsidizing poor consumers for buying health insurance rather than institutions such as hospitals and homes for long-term care.

This study applies conjoint analysis (CA) to estimate the marginal willingness-to-pay (MWTP) of elderly individuals for a reduction of the risk of fracture of the femur. The good in question are hypothetical hip protectors which lower the risk of a fracture by different amounts. Other attributes are ease of handling, wearing comfort, and out-of-pocket cost. Thus, the novelty of the present work lies in its letting risk reduction be traded off against several attributes. In 500 face-to-face interviews, pensioners stated whether or not they would buy the product. Results suggest that MWTP for wearing comfort exceeds that for risk reduction. Indeed, willingness to pay for the product as a whole is negative, indicating that it should not be included as a mandatory benefit in health insurance.

This article's point of departure is that the individual has to manage three stochastic assets, namely health, wealth, and wisdom (skills), which tend to be positively correlated. It shows that the unexpected components of insurance payments should be negatively correlated for minimizing total asset volatility. The empirical finding is that in the United States, Japan, and Germany, the lines of social insurance contribute less to diversification than do those of private insurance. The article concludes with suggestions for new, umbrella-type insurance contracts that in the future should help individuals in the efficient management of their assets.

This paper studies the relationship between health care expenditure (HCE) and age, using longitudinal rather than cross-sectional data. The econometric analysis of HCE in the last eight quarters of life of individuals who died during the period 1983-1992 indicates that HCE depends on remaining lifetime but not on calendar age, at least beyond 65+. The positive relationship between age and HCE observed in cross-sectional data may be caused by the simple fact that at age 80, for example, there are many more individuals living in their last 2 years than at age 65. The limited impact of age on HCE suggests that population ageing may contribute much less to future growth of the health care sector than claimed by most observers.

Garnishment of wage as a way for creditors to enforce payment by unwilling or insolvent debtors, while very common in Germany and Switzerland, is not very successful. Based on a dynamic model of debtor behaviour, this paper explores two alternatives of reform. One is to reduce the rate of garnishment, which at present amounts to 100 percent of the wage income exceeding a defined subsistence level, thus probably destroying incentives to work. According to model simulations, reducing the rate of garnishment is likely to result in an increase of labour supply but a decrease of garnishment revenue per period. Second, the introduction of a debt release as it exists in the United States would have an ambiguous effect on labour supply. While providing debtors with a fresh start, it would result a partial loss for creditors. A Pareto improvement thus does not seem to be possible. When taxpayers as an involved third party are taken into account, however, a potential Pareto improvement appears attainable through debt release.

Attachment of wage as a way for creditors to enforce payment by unwilling or insolvent debtors is not very successful in several countries. Based on a dynamic model of debtor behaviour, this paper explores two alternatives of reform. One is to reduce the rate of attachment, which at present amounts to 100 percent of the wage income exceeding the subsistence level, thus probably destroying incentives to work. According to model simulations, reducing the attachment rate is likely to result in an increase of labour supply but a decrease of attachment revenue per period. Second, the introduction of a debt release would have an ambiguous effect on labour supply. While resulting in a partial loss for creditors, it would permit debtors to get out of debt. A Pareto improvement thus does not seem to be possible. When taking the taxpayers as an involved third party into account, however, a potential Pareto improvement appears attainable.

Die vorliegende Untersuchung wurde ermöglicht durch das vom Bundesamt für Energiewirtschaft finanzierte Projekt „Auswirkungen einer grenzkostenorientierten Tarifrevision auf die Elektrizitätsnachfrage“. Wir danken dem Bundesamt für Energiewirtschaft, dem Bundesamt für Statistik sowie den Elektrizitätswerken der Städte Zürich, Bern und Basel für die tatkräftige Unterstützung des Projekts.

The point of departure for this contribution is a problem common to all Western healthcare systems, namely the deficiency of their basic building block, the physician-patient relationship. This deficiency opens up a market for complementary agents in healthcare, ranging from medical associations to the central government. While Germany has traditionally put the emphasis on medical associations as the dominant complementary agent (DCA), it is shifting towards the central government. Switzerland, on the other hand, traditionally has relied on the cantonal governments and is now moving towards competing (quasi-) private health insurers that would function as DCAs. Thus, managed care, which is a means through which to reshape the physician-patient relationship, is used quite differently in the 2 countries, with differing expected outcomes and different consequences for the pharmaceutical industry.

The purpose of this contribution is to investigate why private insurance of the risk of long-term care (LTC) has known little market success in major industrialized countries, even among the relatively well-to-do. Using a principal-agent framework, it shows that the purchase of LTC insurance by the parent (the principal) is likely to diminish the amount of LTC provided by the major caregivers; namely children earning a comparatively low wage in the labor market. Anticipating this moral hazard effect, the parent is predicted to renounce the purchase of LTC coverage in many cases. This finding throws serious doubts on the welfare effects of recent moves to introduce compulsory social LTC insurance, as, for example, in Germany.

Reviews the book `Health Benefits at Work. An Economic and Political Analysis of Employment-Based Health Insurance,' by Mark V. Pauly.

Comments on the article `How US Antirust Can Go Astray: The Brand Name Prescription Drug Litigation,' by F.M. Scherer. Discussion of the issue of patent protection; Uniform monopoly price; Summary of price differentiation between groups of consumers.

The growing demand for long-term care (LTC) causes the relationship between children and their parents to gain increased importance for society. Parents may create incentives for children to provide LTC through bequests, or they may purchase LTC insurance. While these instruments have been analyzed separately in the literature, this article shows that optimal LTC insurance must be small in the presence of bequests. Thus, the failure of private LTC insurance to diffuse into middle-class households may be explained by the fact that the bequest instrument is fully available to the current generation of parents, who for the first time since 1914 are in a position to bequeath an intact stock of capital in major industrialized countries.

This study starts from the observation that today's Western trading nations are exposed to multiple risks of energy supplies, eg simultaneous shortage of oil and gas supplies. To cope with these risks, both oil and gas can be stockpiled. Adopting the viewpoint of a policy maker who aims at minimizing the expected cost of security of supply, optimal simultaneous adjustments of oil and gas stocks to exogenous changes such as an increase in the probability of supply disruption are derived. Against this benchmark, one-dimensional rules such as ‘oil reserves for 90 days’ turn out to be not only suboptimal but also to suggest adjustments exacerbating suboptimality.

This paper purports to analyze a hospital's adoption of both product and process innovation as a quantal choice. The impacts of this decision on physicians, while depending on institutions that differ between the US and continental Europe, are shown to feed back to the hospital, influencing the profitability of the innovation. Recent changes of hospital finance give rise to testable comparative predictions in both institutional settings.