Essays in Health Economics

Abstract

Why does health care spending look like a luxury good in the time series, but a necessity in the cross section? In this thesis, I try to shed light on this question from a macroeconomist’s perspective in three separate essays. The first essay has an in-depth look at this question by examining the data from the Medical Expenditure Panel Surveys and identifying health care expenditures and health care utilization among different income groups and age groups over the past two decades. In the second essay, I propose a theoretical framework that can potentially account for the two patterns of health care spending in the time series and cross section. A novel quantitative method is then used to quantify this framework. The quantified model is then used to compare different health care policy reforms—such as Medicare for all and Medicaid expansion. In the last essay, a different approach is used to estimate the relation between different measures of health outcome and health spending, using RAND Health Insurance Experiment data, just to confirm the claims laid out in the second essay via a different route.