nep-hea New Economics Papers
on Health Economics
Issue of 2005‒07‒25
three papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Biased selection within the social health insurance market in Colombia By Ramón Castaño; Andrés Zambrano
  2. It takes three to tango: Soft budget constraint and cream skimming in the hospital care market By Levaggi, Rosella; Montefiori, Marcello
  3. An institutional sociology perspective of the adaptation of activity based costing by spanish health By SCOTT DOUGLAS ERIKSEN

  1. By: Ramón Castaño; Andrés Zambrano
    Abstract: Reducing the impact of insurance market failures with regulations such as community-rated premiums, standardized benefit packages and open enrolment, yield limited impact because they create room for selection bias. The Colombian social health insurance system started a market approach in 1993 on the expectation to improve performance of preexisting monopolistic insurance funds by exposing them to competition by new entrants. It is hypothesized that market failures would lead to biased selection favoring new entrants. Two household surveys are analyzed using Self-reported health status and the presence of chronic conditions as indicators of prospective risk of enrolees. Biased selection is found to take place, leading to adverse selection among incumbents, and favorable selection among new entrants. This pattern is observed in 1997 and worsens in 2003. Although the two incumbents analyzed are public organizations, and their size dropped substantially between these two years, fiscal implications in terms of government bailouts are analyzed.
    Keywords: Social Health Insurance
    JEL: I11
    Date: 2005–05–01
  2. By: Levaggi, Rosella; Montefiori, Marcello
    Abstract: Cream skimming is an illegal behaviour that consists in choosing to treat patients according to their ability to recover. It arises from the use of prospective payment schemes in an asymmetry of information framework. In this context in fact the provider can observe some relevant information (freely or at a cost) before making its effort which will then be used to its own advantage. The paper studies the scope for these types of behaviour in a mixed market for hospital care where the hospitals do not share the same objectives. We show that in this context cream skimming is made possible by the presence of two important elements: the public hospital prefers to treat high severity patients and the regulator is unable to enforce hard budget constraint rules. The paper adds an important dimension to the study of cream skimming as proposed by the traditional literature where asymmetry of information alone is considered the cause of this market failure. In our context, in fact, cream skimming arises mainly from a regulatory failure.
    JEL: I11 I18 D82
    Date: 2005–07
  3. By: SCOTT DOUGLAS ERIKSEN (Instituto de Empresa)
    Abstract: Per institutional sociology hospitals will respond to external environmental pressures and adopt Activity-Based-Costing (ABC). This theory overemphasizes conformity and failures to consider the advantages of organizational non-conformance. A conflict of interests between physicians and management leads to physician resistance of accepting ABC. This paper investigates the Spanish government´s response to this resistance by creating new public foundation hospitals, and involves a case study of foundation hospital Alcorcón. Population ecology is offered as an explanation for the emergence of new entities as a result of inert existing entities resistance to reform.
    Keywords: ABC implementation, Activity Based Costing, Institutional sociology, Population ecology
    Date: 2004–12

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