nep-hea New Economics Papers
on Health Economics
Issue of 2005‒09‒29
24 papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Obesity and the Incidence of Chronic Diseases: a Seemingly Unrelated Probit Approach By Joan Costa-Fonta and Joan Gil
  2. Public Health Expenditure and Spatial Interactions in a Decentralized National Health System By Joan Costa-Font and Jordi Pons-Novell
  3. Pairwise Kidney Exchange By Alvin E. Roth; Tayfun Sönmez; M. Utku Ünver
  4. Curing Sinus Headaches and Tying Law: An Empirical Analysis of Bundling Decongestants and Pain Relievers By David S. Evans; Michael Salinger
  5. Race and Ethnic Inequality in Health and Health Care in Colombia By Raquel Bernal; Mauricio Cárdenas
  6. Mapping Health Care Innovation: Tracing Walls & Ceilings By Hertog,Friso,den; Groen,Marjan; Weehuizen,Rifka
  7. Managed care and the safety net: More pain for the uninsured? By Mas, Nuria
  8. Socioeconomic determinants of smoking in contemporary Russia By Arzhenovsky Sergey
  9. Multiple imputation of time series: an application to the construction of historical price indexes By Fernando TUSELL PALMER
  10. Searching for the most suitable tool to measure satisfaction with healthcare: the importance of patient discontent By Rafael Serrano-del-Rosal; Esperanza Vera-Toscano; Victoria Ateca-Amestoy
  11. Health insurance and tax policy By Karsten Jeske; Sagiri Kitao
  12. No smoking at the slot machines: the effects of smoke-free laws on gaming revenues By Michael R. Pakko
  13. The Effects of Smoking Ban Regulations on Individual Smoking Rates By Roger Wilkins; David Black; Hielke Buddelmeyer
  14. Preliminary analysis of claims data to understand relationship between disease patterns and quality of care and its implications for health insurance in India By Bhat Ramesh; Rajagopal Srikanth
  15. Insurance and Innovation in Health Care Markets By Darius Lakdawalla; Neeraj Sood
  16. Disability Risk and the Value of Disability Insurance By Amitabh Chandra; Andrew A. Samwick
  17. What Did Medicare Do (And Was It Worth It)? By Amy Finkelstein; Robin McKnight
  18. The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare By Amy Finkelstein
  19. Death and Development By Peter Lorentzen; John McMillan; Romain Wacziarg
  20. The Obesity Epidemic in Europe By Anna Sanz De Galdeano
  21. Risk Equalisation and Competition in the Irish Health Insurance Market. By Sean Barrett;
  22. The Kerry-Bush Health Care Proposals: A Characterization and Comparison of their Impacts on Connecticut (Technical Appendix) By Stan McMillen; Kathryn Parr; Xiumei Song; Brian Baird
  23. Drug innovation, prices and health By Vicente Ortún; Jaume Puig; María Callejón
  24. Drug Utilization Studies and Data Registries in Primary Care. By Beatriz González López-Valcárcel; Anselmo López Cabañas; Antonio Cabeza Mora; José Antonio Díaz Berenguer; Vicente Ortún; Fayna Álamo Santana

  1. By: Joan Costa-Fonta and Joan Gil (Universitat de Barcelona)
    Abstract: Western societies can reduce avoidable mortality and morbidity by better understanding the relationship between obesity and chronic disease. This paper examines the joint determinants of obesity and of heart disease, diabetes, hypertension, and elevated cholesterol. It analyzes a broadly representative Spanish dataset, the 1999 Survey on Disabilities, Impairments and Health Status, using a health production theoretical framework together with a seemingly unrelated probit model approach that controls for unobserved heterogeneity and endogeneity. Its findings provide suggestive evidence of a positive and significant, although specification-dependent, association between obesity and the prevalence of chronic illness.
    Keywords: Obesity; Health production; Body Mass Index; Chronic illness; Diabetes; Hypertension; High cholesterol; Cardiovascular disease
    JEL: I12 I18 I19
    Date: 2005
  2. By: Joan Costa-Font and Jordi Pons-Novell (Universitat de Barcelona)
    Abstract: One of the limitations of cross-country health expenditure analysis refers to the fact that the financing, the internal organization and political restraints of health care decision-making are country-specific and heterogeneous. Yet, a potential solution is to examine the influence of such effects in those countries that have undertaken decentralization processes. In such a setting, it is possible to examine potential expenditure spillovers across the geography of a country as well as the influence of the political ideology of regional incumbents on public health expenditure. This paper examines the determinants of public health expenditure within Spanish region-states (Autonomous Communities, ACs), most of them subject to similar financing structures although exhibiting significant heterogeneity as a result of the increasing decentralization, region-specific political factors along with different use of health care inputs, economic dimension and spatial interactions.
    Keywords: health expenditure, devolution, political ideology, political competition and spatial interactions
    JEL: I18 I38 H73
    Date: 2005
  3. By: Alvin E. Roth (Harvard University); Tayfun Sönmez (Boston College); M. Utku Ünver (Koç University)
    Abstract: In connection with an earlier paper on the exchange of live donor kidneys (Roth, Sönmez, and Ünver 2004) the authors entered into discussions with New England transplant surgeons and their colleagues in the transplant community, aimed at implementing a Kidney Exchange program. In the course of those discussions it became clear that a likely first step will be to implement pairwise exchanges, between just two patient-donor pairs, as these are logistically simpler than exchanges involving more than two pairs. Furthermore, the experience of these surgeons suggests to them that patient and surgeon preferences over kidneys should be 0-1, i.e. that patients and surgeons should be indifferent among kidneys from healthy donors whose kidneys are compatible with the patient. This is because, in the United States, transplants of compatible live kidneys have about equal graft survival probabilities, regardless of the closeness of tissue types between patient and donor (unless there is a rare perfect match). In the present paper we show that, although the pairwise constraint eliminates some potential exchanges, there is a wide class of constrained-efficient mechanisms that are strategy-proof when patient- donor pairs and surgeons have 0-1 preferences. This class of mechanisms includes deterministic mechanisms that would accomodate the kinds of priority setting that organ banks currently use for the allocation of cadaver organs, as well as stochastic mechanisms that allow considerations of distributive justice to be addressed.
    Keywords: pairwise exchanges, transplants
    JEL: C78 D63 I10
    Date: 2004–08–04
  4. By: David S. Evans; Michael Salinger
    Abstract: We apply and extend the cost-based approach to bundling and tying under competition developed in Evans and Salinger (2004) to over-the-counter pain relievers and cold medicines. We document that consumers pay much less for tablets with multiple ingredients than they would if they bought tablets with each ingredient separately. We then decompose the sources of these savings into marginal cost savings and a component that reflects fixed costs of product offerings. The analysis both documents substantial economies of bundling and illustrates the sort of cost analysis that is necessary for understanding tying.
    JEL: L11
    Date: 2005
  5. By: Raquel Bernal; Mauricio Cárdenas
    Abstract: Abstract: In this paper we explore race and ethnic health inequalities in Colombia. We first characterize the situation of Afro-Colombians and indigenous populations in Colombia. Second, we document racial/ethnic disparities in health outcomes and access to health care using data from the Living Standards Survey and the evaluation of the Familias en Acción program. Third, we set up a statistical model that allows us to test whether some of the health inequalities that are observed still remain after controlling for a wide range of individual and household observed characteristics, including access to health care. The results indicate that most racial and ethnic disparities in health and access to health care disappear once we control for socioeconomic characteristics of individuals, employment status and characteristics of the job and geographic location among other things. Based on these findings we make some specific policy recommendations aimed at improving the status of racial minorities in Colombia.
    Keywords: Salud
    JEL: H11
    Date: 2005–01–03
  6. By: Hertog,Friso,den; Groen,Marjan; Weehuizen,Rifka (MERIT)
    Abstract: Health care is in need of innovation on many strands. Patient-centered care appears to be the key to the realization of the main objectives: service quality, cost reduction, access, patient satisfaction and the quality of working life. Innovation, and more precisely, the diffusion and implementation of new methods, new techniques and new processes and systems appears to be a difficult task. Consequently, there is a strong need for knowledge about innovation processes in health care and the drivers and barriers affecting these efforts. This paper presents a framework for mapping innovation processes in health care services. The framework consists of two axes: (1) the horizontal axis of the health care process and the inter-functional walls which can complicate innovation efforts, and (2) the vertical axis of the echelons of power, which often create ceilings too impermeable to permit effective learning and decision making. The study is based on the experiences gathered in Publin, a running research network supported by the Fifth Framework Program and Innoflex, which ended in 2003.
    Keywords: economics of technology ;
    Date: 2005
  7. By: Mas, Nuria (IESE Business School)
    Abstract: The introduction of managed care has dramatically changed the US health care market. However, most of the literature has focused on analyzing the performance of managed care relative to other types of health insurance, while research focusing on its impact on the uninsured has been minimal. This paper contributes to fill this gap and analyses the impact of managed care on access to care and quality of care for the uninsured. We expand Frank and Salkever's (1991) model to analyze hospitals' decision to provide charity care and use a probit model to test the results empirically. We find that managed care has negatively affected both aspects of the uninsured's health, by increasing the probability of closure of the safety net hospitals and the services most used by the uninsured, and by negatively affecting the quality of government hospitals. Therefore the impact of managed care goes beyond its effect on its enrollees and on efficiency. In fact, by increasing price competition and reducing hospital revenues, managed care penetration has affected the overall health care market. These results have important policy implications. With the introduction of managed care, the health gap between socioeconomic groups will widen and more public subsidies will be needed in order to guarantee the provision of basic health care to the growing uninsured population. The results also bring a new perspective on managed care. Its impact on American health should be analyzed beyond its efficiency implications and more research should be done into its effects on the overall health care market.
    Keywords: managed care; health insurance; uninsured; health economics; safety net;
    Date: 2005–07–12
  8. By: Arzhenovsky Sergey
    Abstract: Factors impacting the initiation and termination of smoking, using Cox's proportional hazard model as the econometric tool, on the basis of RLMS and Goskomstat data on tobacco prices, are being investigated in this paper. The model to explain the amount of consumed cigarettes and the composite model with dependence between quitting and tobacco consumption are constructed. It is shown that the price for cigarettes remains the key factor for the beginning and quitting of smoking; the asymmetric influence of price by sorts of cigarettes is being revealed. The addictive character of cigarettes consumption has been confirmed. Gender and age peculiarities of tobacco products consumption have been revealed, especially for teenagers. Opportunities to reduce smoking have been found out through propagation of a healthy way of life.
    Keywords: Russia, duration analysis, smoking, hazard model, consumption habits, amount of cigarettes smoked
    JEL: C41 D12 I12
    Date: 2005–09–13
  9. By: Fernando TUSELL PALMER (Facultad de CC.EE. y Empresariales, Unviersidad del País Vasco.)
    Abstract: Time series in many areas of application, and notably in the social sciences, are frequently incomplete. This is particularly annoying when we need to have complete data, for instance to compute indexes as a weighted average of values from a number of time series; whenever a single datum is absent, the index cannot be computed. This paper proposes to deal with such situations by creating multiple completed trajectories, drawing on state space modelling of time series, the simulation smoother and multiple imputation ideas.
    Keywords: multiple imputation;time series analysis; Kalman smooth
    JEL: C22 C43
    Date: 2005–09–23
  10. By: Rafael Serrano-del-Rosal; Esperanza Vera-Toscano; Victoria Ateca-Amestoy
    Abstract: User´s satisfaction is an important tool to evaluate the performance of healthcare services. This paper aims to provide the most suitable measure of quality assessment that can help policy-makers in the design and implementation of programs oriented to successfully increase healthcare satisfaction. In doing so, a comparative study is proposed to simultaneously study the effects of individual and market characteristics on two alternative measures of user’s quality assessment, namely: (1) level of confidence with the service provided (5-point Likert scale response), and (2) whether or not you would recommend the service to a friend or relative (dichotomous response). Results indicate that there seems to be an invariant relationship between the two alternative variables and the latent and unobserved variable on users’ global satisfaction opinion or service quality assessment. However, when considering the different dimensions of the service provided, there is a different ranking on the relevance of these dimensions, with the relative importance for the 5 points variable being more equilibrated than the binary choice one. This observation has important implications for health policy management. It is suggested that the dichotomous response is a better tool to highlighting areas of patient discontent.
    Keywords: Patient satisfaction, determinants, dimensions, health policy management.
    Date: 2005
  11. By: Karsten Jeske; Sagiri Kitao
    Abstract: The U.S. tax policy on health insurance favors only those offered a group insurance through their employers. This policy is highly regressive since the subsidy takes the form of deductions from the progressive tax system. The paper investigates alternatives to the current policy. We find that the complete removal of the subsidy results in a significant reduction in the insurance coverage and serious welfare deterioration. However, eliminating regressiveness in the group insurance subsidy and extending benefits to the private insurance market improve welfare and raise the coverage. Our work is the first in highlighting the importance of studying health policy in a general equilibrium framework with an endogenous demand for the health insurance. We use the Medical Expenditure Panel Survey (MEPS) to calibrate the process for income, health expenditure shocks, and health insurance offer status and succeed in producing the pattern of insurance demand as observed in the data, which serve as a solid benchmark for the policy experiments.
    Date: 2005
  12. By: Michael R. Pakko
    Abstract: Revenues at three gaming facilities in Delaware declined significantly after the implementation of a smoke-free law. The relative magnitudes of losses at the three facilities correspond to the availability of alternative gaming venues in the region, suggesting consumer flight. Efforts to mitigate revenue losses engendered additional costs, further reducing operating profits.
    Keywords: Tobacco industry ; Gambling industry
    Date: 2005
  13. By: Roger Wilkins (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); David Black (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Hielke Buddelmeyer (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: This paper describes the dynamics of smoking behaviour in Australia and investigates what impact smoking ban regulations have, if any, on individual smoking patterns. Such legislation receives a lot of press attention when announced and introduced, but its effect on individuals’ smoking behaviour has received little research attention. The main argument used to motivate the introduction of tougher smoking bans is reducing exposure of non-smokers to second hand smoke. From a public policy perspective it is important to know if these policies also affect whether people smoke, or if they only influence when and where people smoke. The Household, Income and Labour Dynamics in Australia (HILDA) survey data allow us to track individuals’ smoking behaviour over the period 2001 to 2003, during which time smoking ban initiatives in Queensland, Victoria and the Northern Territory came into effect. We exploit this variation over time and across states to assess the impact of tougher smoking regulations. Our findings indicate that smoking is strongly correlated with education, gender, early life experiences, alcohol consumption, income, and other characteristics. Conditional on being a smoker in the previous period, we find that the single biggest predictor of quitting is pregnancy. Few other characteristics are able to explain who quits. Conditional on not smoking in the previous period, people who drink daily or weekly and couples who separated or divorced between the previous and current periods are most likely to take up smoking. The effect of the introduction of smoking ban regulations on individuals’ smoking behaviour is generally in the expected direction, albeit not statistically significant for most types of individual. However, we find a significant ‘rebellion’ effect among 18 to 24 year old smokers, with the introduction of smoking bans found to increase the likelihood that they continue to smoke.
    Date: 2005–09
  14. By: Bhat Ramesh; Rajagopal Srikanth
    Abstract: This paper provides preliminary analysis of claims data of Mediclaim insurance scheme to understand the relationship between disease pattern and the quality of health care. We use length of stay (LOS) and average length of stay (ALS) as one of the indicators of quality of care. We use the Diagnostic Related Grouping (DRG) based ALS as the benchmark to make this evaluation and comparison. It is observed that the reimbursements in insurance system are tied to hospital inputs and resource use and not to diagnostic related groups or outputs. Therefore the current system of reimbursements and provider payment system influences the length of stay and there is significant variation in ALS observed across disease groups and its sub-groups. There is no consistency observed in ALS as the severity of diseases under each group increases. This reflects lack of standards/protocols and unintended consequences of current practice of provider payment system. Implementing systems like Diagnosis Related Grouping would be an attempt to link it with outcomes. The paper provides insights into whether there is a significant mismatch in the premium that insurance companies charge in comparison to the risk insurer undertake while issuing policies. It was also found that after adjusting for the purchasing power parity, the claims data suggest that healthcare costs reimbursed for medical insurance to private providers in India are actually higher than healthcare costs reimbursed to providers of healthcare in the US under DRG system. The paper argues that under less regulated private healthcare providers market and health insurance market, cost based reimbursement is highly undesirable. The regulators should put in place a system of pre-determined rates for reimbursements in health insurance.
    Date: 2005–09–13
  15. By: Darius Lakdawalla; Neeraj Sood
    Abstract: Innovation policy often involves an uncomfortable trade-off between rewarding innovators sufficiently and providing the innovation at the lowest possible price. However, in health care markets with insurance for innovative goods, society may be able to ensure efficient rewards for inventors and the efficient dissemination of inventions. Health insurance resembles a two-part pricing contract in which a group of consumers pay an up-front fee ex ante in exchange for a fixed unit price ex post. This functions as if innovators themselves wrote efficient two-part pricing contracts, where they extracted sufficient profits from the ex ante payment, but still sold the good ex post at marginal cost. As a result, we show that complete, efficient, and competitive health insurance for innovative products - such as new drugs, medical devices, or patented procedures - can lead to perfectly efficient innovation and utilization, even when moral hazard exists. Conversely, incomplete insurance markets in this context lead to inefficiently low levels of innovation. Moreover, optimally designed public health insurance for innovative products can solve the innovation problem by charging ex ante premia equal to consumer surplus, and ex post co-payments at or below marginal cost. When these quantities are unknown, society can usually improve static and dynamic welfare by covering the uninsured with contracts that mimic observed private insurance contracts.
    JEL: I1 O3
    Date: 2005–09
  16. By: Amitabh Chandra; Andrew A. Samwick
    Abstract: We estimate consumers’ valuation of disability insurance using a stochastic lifecycle framework in which disability is modeled as permanent, involuntary retirement. We base our probabilities of worklimiting disability on 25 years of data from the Current Population Survey and examine the changes in the disability gradient for different demographic groups over their lifecycle. Our estimates show that a typical consumer would be willing to pay about 5 percent of expected consumption to eliminate the average disability risk faced by current workers. Only about 2 percentage points reflect the impact of disability on expected lifetime earnings; the larger part is attributable to the uncertainty associated with the threat of disablement. We estimate that no more than 20 percent of mean assets accumulated before voluntary retirement are attributable to disability risks measured for any demographic group in our data. Compared to other reductions in expected utility of comparable amounts, such as a reduction in the replacement rate at voluntary retirement or increases in annual income fluctuations, disability risk generates substantially less pre-retirement saving. Because the probability of disablement is small and the average size of the loss — conditional on becoming disabled — is large, disability risk is not effectively insured through precautionary saving.
    JEL: H0 I1 J1
    Date: 2005–09
  17. By: Amy Finkelstein; Robin McKnight
    Abstract: We study the impact of the introduction of one of the major pillars of the social insurance system in the United States: the introduction of Medicare in 1965. Our results suggest that, in its first 10 years, the establishment of universal health insurance for the elderly had no discernible impact on their mortality. However, we find that the introduction of Medicare was associated with a substantial reduction in the elderly’s exposure to out of pocket medical expenditure risk. Specifically, we estimate that Medicare’s introduction is associated with a forty percent decline in out of pocket spending for the top quartile of the out of pocket spending distribution. A stylized expected utility framework suggests that the welfare gains from such reductions in risk exposure alone may be sufficient to cover between half and three-quarters of the costs of the Medicare program. These findings underscore the importance of considering the direct insurance benefits from public health insurance programs, in addition to any indirect benefits from an effect on health.
    JEL: H51 I11 I18
    Date: 2005–09
  18. By: Amy Finkelstein
    Abstract: This paper investigates the effects of market-wide changes in health insurance by examining the single largest change in health insurance coverage in American history: the introduction of Medicare in 1965. I estimate that the impact of Medicare on hospital spending is substantially larger than what the existing evidence from individual-level changes in health insurance would have predicted. Consistent with a disproportionately larger impact of aggregate changes in health insurance, the evidence suggests that the introduction of Medicare altered the practice of medicine. For example, I find that the introduction of Medicare is associated with an increase in the rate of adoption of then-new medical technologies. A back of the envelope calculation based on the estimated impact of Medicare suggests that the overall spread of health insurance between 1950 and 1990 may be able to explain at least forty percent of the increase in real per capita health spending over this time period.
    JEL: H51 I11 I18
    Date: 2005–09
  19. By: Peter Lorentzen; John McMillan; Romain Wacziarg
    Abstract: Analyzing a variety of cross-national and sub-national data, we argue that high adult mortality reduces economic growth by shortening time horizons. Higher adult mortality is associated with increased levels of risky behavior, higher fertility, and lower investment in physical and human capital. Furthermore, the feedback effect from economic prosperity to better health care implies that mortality could be the source of a poverty trap. In our regressions, adult mortality explains almost all of Africa's growth tragedy. Our analysis also underscores grim forecasts of the long-run economic costs of the ongoing AIDS epidemic.
    JEL: I10 J10 O10
    Date: 2005–09
  20. By: Anna Sanz De Galdeano (CSEF, University of Salerno)
    Abstract: This paper uses longitudinal micro-evidence from the European Community Household Panel to investigate the obesity phenomenon in nine EU countries from 1998 to 2001. The author documents cross-country prevalence, trends and cohort-age profiles of obesity among adults and analyses the socioeconomic factors contributing to the problem. The associated costs of obesity are also investigated, both in terms of health status, health care spending and absenteeism.
    Keywords: Obesity; Body mass index, Demand for health care
    JEL: I12 I18
    Date: 2004–09–01
  21. By: Sean Barrett; (Department of Economics, Trinity College)
    Abstract: The analysis contained in the YHEC report indicates that the report did not consider adequately the role of competition in the market for health insurance. This is a major weakness and appears in part to be due to a late deletion of competition from the report’s final research brief by the HIA.(p.90) The evidence on the average age of BUPA Ireland members, 38 years and VHI members, 44 years provides no basis for transfers from BUPA Ireland to VHI. In the case of females between 38 and 44 years health expenditures decline with extra years. The regressiveness of the transfers and cross subsidies in Irish health insurance under community rating is illustrated by the internal transfers from low cost profitable Plans A and B within VHI to high cost loss making Plans C, D and E. Under the proposed transfer of €34m a year from BUPA Ireland to VHI a low cost BUPA essential health insurance cover with a premium of €272.39 would be levied to cross subsidise VHI Plan E costing €1,316.33 per adult. The price of the most expensive subsidised product under the HIA proposal is 4.8 times the price of the product to be levied in order to finance the cross subsidisation. The average BUPA premium was €327 while the average VHI premium was €435. The price of the average product to be subsidised is therefore 33% greater than the price of the average product to be levied to finance the cross subsidisation. CSO data confirms that expenditure on health insurance rises over all ten income deciles. Incomes in the top decile are 10.1 times those in the bottom decile but health insurance expenditure is 22.9 times greater. Section C of this report deals with the HIA letter to BUPA Ireland requiring the equalisation payment of €34m annually from BUPA Ireland for transfer to VHI which had operating profits of €73.3m (before unexpired risk reserve) in their accounts to February 2004. The HIA presents no analysis of the rationale for the payment. It mistakenly asserts that consumers as a whole will be better off from levying one firm in order to cross-subsidise another. It asserts without evidence that the payments required are significant, rising, likely to rise further in the absence of risk equalisation and that in their absence the stability of the industry will be threatened. While there is recognition of possible withdrawal from BUPA Ireland of some younger members because of the price rise in order to finance payments to VHI there is no recognition in the letter of the benefits of competition to health insurance consumers. Section D examines the competition issues neglected by both YHEC and HIA and the benefits foregone by the anti-competitive levies imposed on BUPA. The Irish health service is characterised by high costs and rent-seeking by producers which are extreme by EU standards. The scope for immediate cost savings and further future leveraged savings in a high cost health service is therefore large but these benefits are foregone by regulators adopting the anticompetitive levies recommended by the regulator in this sector.
    Date: 2005–08
  22. By: Stan McMillen; Kathryn Parr; Xiumei Song; Brian Baird
    Keywords: health care, Connecticut, health insurance
    JEL: I18 H51
    Date: 2004–10
  23. By: Vicente Ortún; Jaume Puig; María Callejón
    Abstract: This article tries to reconcile economic-industrial policy with health policy when dealing with biomedical innovation and welfare state sustainability. Better health accounts for an increasingly large proportion of welfare improvements. Explanation is given to the welfare losses coming from the fact than industrial and health policy tend to ignore each other. Drug’s prices reflecting their relative relative effectiveness send the right signal to the industry –rewarding innovation with impact on quantity and quality of life- and to the buyers of health care services. The level of drug’s public reimbursement indicates the social willingness to pay of the different national health systems, not only by means of inclusion, or rejection, in the basket of services covered, but especially establishing the proportion of the price that is going to be financed publicly. Reference pricing for therapeutic equivalents –as the upper limit of the social willingness to pay- and two-tiered co-payments for users (avoidable and inversely related with the incremental effectiveness of de drug) are deemed appropriate for those countries concerned at the same time with increasing their productivity and maintaining its welfare state. Profits drive R&D but not its location. There is no intrinsic contradiction between high productivity and a consolidated National Health Service (welfare state) as the European Nordic Countries are telling us every day.
    Keywords: Biomedical R&D, Industrial Policy, Drug's Price Regulation, Health Policy, Welfare State, Health Economics
    JEL: I11 I18 L51
    Date: 2005–01
  24. By: Beatriz González López-Valcárcel; Anselmo López Cabañas; Antonio Cabeza Mora; José Antonio Díaz Berenguer; Vicente Ortún; Fayna Álamo Santana
    Abstract: This article reviews the methodology of the studies on drug utilization with particular emphasis on primary care. Population based studies of drug inappropriateness can be done with microdata from Health Electronic Records and e-prescriptions. Multilevel models estimate the influence of factors affecting the appropriateness of drug prescription at different hierarchical levels: patient, doctor, health care organization and regulatory environment. Work by the GIUMAP suggest that patient characteristics are the most important factor in the appropriateness of prescriptions with significant effects at the general practicioner level.
    Keywords: Drug Utilization Studies, Multilevel Models, Primary Care, Health Information Systems, Health Economics.
    JEL: I18
    Date: 2005–02

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