2017 Volume 28 Issue 2 Pages 103-115
"Prevention" for a healthy life has recently received considerable attention in Japan. The Ministry of Health, Labor and Welfare (MHLW) in Japan considers preventive activities as not only a tool for reducing medical cost but also a means to improve productivity and private investments. Especially, MHLW focuses on the prevention of lifestyle-related diseases because these diseases are one of the biggest factors inhibiting healthy life expectancy and raising medical costs.
This paper attempts to measure the preventive efforts against lifestyle-related diseases. This helps in answering a few critical questions. What kinds of factors are crucial to determine the optimal expenditure on prevention and the effect of these factors, and what is the value of preventive activities to maximize our utility? Using a representative agent model as a base, we construct a model where the morbidity of lifestyle-related diseases in old age is a function of the preventive expenditure when this agent is young.
We extend a Lucas tree economy wherein several identical (in terms of preference and income) agents live for two periods (young and old) to a decision model for preventive activities. Agents earn income in each period and divide their income into preventive activities and consumption in young age. We assume that the preventive activities lead to a reduction in the spread of lifestyle-related diseases. Hence, healthy agents can enjoy consumption in old age. However, agents must spend much money on medical costs when they contract lifestylerelated diseases.
Our main results showed that income in young age, medical costs in old age, copayment rate of medical expenses in old age, and marginal effect of the preventive effort to lower morbidity have positive effects on the level of expenditure on prevention. In contrast, income in old age has a negative effect. We also found that if we assume that income in old age would be half of that in young age and copayment rate of medical expenses in old age would be equal to 0.3, the optimal preventive effort in young age is positive only when the marginal effect of preventive care exceeds 0.3.
We provide the following policy implications with regard to the copayment rate of medical expenses. First, an increase in the copayment rate of medical expenses in old age could be justified only if preventive actions undertaken during youth have a significant effect that lowers the morbidity rate in old age. Second, if social consent cannot be obtained on an increase in the copayment rate of medical expenses in old age, the government prefers to employ technical approaches to effective prevention, such as investments in medical research, public awareness campaigns, and improved accessibility to sports facilities that promote preventive behavior during youth.
