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TU economics professor investigates U.S. health care reform plans

	Professor Juergen Jung

Towson, Md. (October 13, 2010): Juergen Jung, assistant professor in the Department of Economics, was recently awarded nearly $67,000 from the Agency for Healthcare Research and Quality for his project, “Health Care Financing over the Life Cycle: A Quantitative Macroeconomic Analysis of U.S. Health Care Reform Plans." Jung described his project as “[a] look at the macroeconomic effects of the Obama health care reform. We look at alternative ways to finance this reform and also conduct welfare analysis which allows us to identify groups that will and will not benefit from the reform.”

Two of the major issues in the U.S. health care system are the low health insurance coverage rates and the high costs of health care that threaten the solvency of American households and government. Many economists and policymakers call for a comprehensive reform. However, current research in health economics, which relies mainly on microeconomic and econometric models, falls short of providing a framework suitable for analyzing the macroeconomic consequences of comprehensive health care reforms. The research proposes a new approach to address these issues using macroeconomic modeling techniques.

Jung will integrate the Grossman model of health capital (Grossman (1972a)) into a large scale stochastic life cycle macroeconomic model. The model is built on the micro foundations of optimal individual decision making and integrates the demand for health care and health insurance. In order to make the model more convincing, extensive data analysis is provided using the Medical Expenditure Panel Survey (MEPS) to demonstrate that the model is able to generate realistic health spending patterns and insurance take-up ratios over the life-cycle. In addition, the model accounts for important institutional details of the U.S. health care and health insurance sector and is therefore ideal to analyze the effects of various health care reform ideas, including its fiscal and macroeconomic impacts on welfare and growth. Specifically, three health care reform ideas will be analyzed: health savings accounts; universal health insurance vouchers; and the recent Obama health care reform. The project focuses on whether these reform ideas are able to lower total U.S. health care spending and the number of individuals without health insurance. 

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