nep-hea New Economics Papers
on Health Economics
Issue of 2005‒07‒03
eight papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Public and Private Expenditures on Health in a Growth Model By Bhattacharya, Joydeep; Qiao, Xue
  2. On the Foundation of Guidelines for Health Economic Evaluation By Hans Keiding
  3. Generic Scrip Share and the Price of Brand-Name Drugs: The Role of the Consumer By John A. Rizzo; Richard Zeckhauser
  4. Prenatal Drug Use and the Production of Infant Health By Kelly Noonan; Nancy E. Reichaman; Hope Corman; Dhaval Dave
  5. Firms' Demand for Employment-Based Mental Health Benefits By Judith Shinogle; David Salkever
  6. Health Insurance Reform and HMO Penetration in the Small Group Market By Thomas C. Buchmueller
  7. Accounting for the Effect of Health on Economic Growth By David N. Weil
  8. Early Academis Science and the Birth of Industrial Research Laboratories in the U.S. Pharmaceutical Industry By Megan MacGarvie; Jeffrey L. Furman

  1. By: Bhattacharya, Joydeep; Qiao, Xue
    Abstract: This paper introduces endogenous longevity risk in an otherwise standard overlapping generations model with capital. In the model, an agent may increase the length of her old age by incurring investments in her own health funded from her wage income. Such private health investments are more "productive" if accompanied by complementary tax-financed public health programs. The public input in private longevity is socially desirable; yet its presence may expose the economy to aggregate chaotic fluctuations.
    JEL: E0
    Date: 2005–06–28
  2. By: Hans Keiding (Institute of Economics, University of Copenhagen)
    Abstract: In recent years, there has been increased interest in setting up guidelines for carrying out cost-effectiveness analysis of medical interventions, and some such guidelines have indeed been established. In the paper, we present a model of information retrievement and use in which we can study the role of guidelines. The main result, which is a version of the well-known theorem of Blackwell (1948), shows that in cases where there are sufficiently many decisions to be made on the basis of the information obtained, there can be no objective ranking of methods, except the trivial one stating that more information is better than less. The consequence is that guidelines, and the very detailed version known as the reference case approach, may have administrative advantages but can be harmful when considered as an aid towards better decisions.
    Keywords: cost-effectiveness; guidelines; Blackwell’s theorem
    JEL: I19 D81
    Date: 2005–05
  3. By: John A. Rizzo; Richard Zeckhauser
    Abstract: Generic drug utilization has risen dramatically, from 19% of scrips in 1984 to 47% in 2001, thus bringing significant direct dollar savings. Generic drug use may also yield indirect savings if it lowers the average price of those brand-name drugs that are still purchased. Prior work indicates - and we confirm - that generic competition does not induce brand-name producers to lower prices. However, consumer choices between generic and brand-name drugs could affect the average price of those brand-name drugs that are purchased. We use nationally representative panel data on drug utilization and costs for the years 1996-2001 to examine how the share of an individual's prescriptions filled by generics affects his average out-of-pocket cost for brand-name drugs. Our principal finding is that a higher generic scrip share lowers average brand-name prices to consumers, presumably because consumers are more likely to substitute generics when the price gap is great. This effect is substantial: a 10% increase in the consumer's generic scrip share is associated with a 15.6% decline in the average price he pays for brand-name drugs.
    JEL: I11 D12 D40
    Date: 2005–06
  4. By: Kelly Noonan; Nancy E. Reichaman; Hope Corman; Dhaval Dave
    Abstract: We estimate the effect of illicit drug use during pregnancy on low birth weight. We use data from a national longitudinal study of urban parents that includes post-partum interviews with mothers, hospital medical record data on the mother and newborn, extensive demographic information on both parents, and information about the city where the mother resides. We address the potential endogeneity of prenatal drug use and present estimates using alternative measures of prenatal illicit drug use. Depending on how drug use is measured, we find deleterious effects of illicit drug use on low birth weight that range from 3 to 5 percentage points.
    JEL: I12
    Date: 2005–06
  5. By: Judith Shinogle; David Salkever
    Abstract: Employment-based health insurance is the main source of health coverage for the non-elderly. Few previous studies have examined the factors that impact employer decision-making in selecting the coverage to offer to their employees and none have examined generosity of mental health coverage. This paper uses cross-sectional data from a survey of medium to large firms, including information on employee characteristics, to examine the empirical determinants of mental health coverage choices. We find that the firm's demand for mental health coverage is strongly influenced by employee characteristics. We also find that certain state and local policy interventions directed at enhancing access to mental health care have impacts on coverage decisions. Specifically, public provision of mental health lowers mental health coverage generosity and parity legislation increases mental health generosity. Future research with panel data is warranted to examine the causal effects of these policies.
    JEL: I1
    Date: 2005–06
  6. By: Thomas C. Buchmueller
    Abstract: We use data from several national employer surveys conducted between the late 1980s and the mid-1990s to investigate the effect of state-level underwriting reforms on HMO penetration in the small-group health insurance market. We identify reform effects by exploiting cross-state variation in the timing and content of reform legislation and by using mid-sized and large employers, which were not affected by the legislation, as within-state control groups. While it is difficult to disentangle the effect of state reforms from other factors affecting HMO penetration in the small group markets, the results suggest a positive relationship between insurance market regulations and HMO penetration.
    JEL: I10
    Date: 2005–06
  7. By: David N. Weil
    Abstract: I use microeconomic estimates of the effect of health on individual outcomes to construct macroeconomic estimates of the proximate effect of health on GDP per capita. I use a variety of methods to construct estimates of the return to health, which I combine with cross-country and historical data on several health indicators including height, adult survival, and age at menarche. My preferred estimate of the share of cross-country variance in log income per worker explained by variation in health is 22.6%, roughly the same as the share accounted for by human capital from education, and larger than the share accounted for by physical capital. I present alternative estimates ranging between 9.5% and 29.5%. My preferred estimate of the reduction in world income variance that would result from eliminating health variations among countries is 36.6%.
    JEL: I1 O1 O4
    Date: 2005–07
  8. By: Megan MacGarvie; Jeffrey L. Furman
    Abstract: The establishment and growth of industrial research laboratories is one of the key organizational innovations affecting technological progress in the United States in the 20th century. In this paper, we investigate the rise of industrial research laboratories in the U.S. pharmaceutical industry between 1927 and 1946. Our evidence suggests that institutional factors, namely the presence of universities dedicated to research, played a significant role in the establishment and diffusion of private pharmaceutical research laboratories. Specifically, we document that the growth of industrial pharmaceutical laboratories between 1927 and 1946 is positively and significantly correlated with the extent of local university research, after controlling for other observable factors likely to influence the geographic distribution of industrial research. We supplement our core results with case histories illustrative of early university-industry interaction and an examination of the determinants of university-industry research cooperation. Our qualitative historical evidence and analyses of the birth of chemical engineering programs suggest that industry also played a role in influencing university research agendas. We correct for feedback effects from industry to universities using instrumental variables. Overall, our analyses suggest that while the presence of industrial facilities helped shape the direction of university research programs, there was a significant, positive, and causal effect running from university research to the growth of pharmaceutical research laboratories in the first half of the twentieth century in the United States.
    JEL: O32 N00
    Date: 2005–07

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