Essays in Applied Health Economics: High Deductible Health Plans and Human Capital Development

This dissertation examines two aspects of health and labor economics: high deductible health insurance plans and human capital development. The first chapter, “The Impact of High Deductible Health Insurance Plans on Spending and Enrollee Behavioral Response,” examines the extent to which high deductible health plans (HDHPs) reduce ex post moral hazard. I address two main themes: (1) are HDHPs merely a way to shift costs to individuals or do they prompt a behavioral response through reductions in utilization and spending; and (2) if reductions and savings are realized, which services are being utilized less and to what effect on health outcomes? I find HDHPs lower spending by 16% and reduce utilization as predicted by demand theory. Second, I find reductions in hospital-based medical care spending account for 60% of the savings. Finally, I find evidence of price shopping and discriminatory cutbacks in service utilization and no evidence that these cutbacks impact health outcomes. The second chapter, “Measles Vaccination and Human Capital Development in the United States,” evaluates changes in human capital development after the introduction of the measles vaccine. There were mass vaccination initiatives resulting in universal take-up and near full reductions in incidence rates following the vaccine’s introduction in the United States. I use a difference-in-differences identification strategy, taking advantage of cross-area differences in pre-vaccine measles incidence rates, with the introduction of the vaccine in 1963 as my exogenous policy change. I observe gains in health and education following the introduction of the measles vaccine. Not only do children benefit from not getting the measles, but they also experience a protective effect from the measles vaccine and no longer experience the weakened immune effects from measles that increase their susceptibility to other childhood infectious diseases. These gains in childhood health translate into increased school enrollment of 0.3 percentage points in the short-run and higher earnings of 1 percent in the long run.