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on Health Economics |
| By: | Kelton, Christina M.L. (College of Business, University of Cincinnati); Rebelein, Robert P. (Vassar College Department of Economics) |
| Abstract: | Retail sales of prescription drugs totaled $154.5 billion in 2001. The National Institute for Health Care Management estimates annual sales will exceed $400 billion by the year 2010. This paper analyzes the welfare and distributional effects of two policy families that could be used to cope with high and rising pharmaceutical costs. We employ a general-equilibrium approach to contrast the current patented-monopoly system with a) a price ceiling imposed on the pharmaceutical sector of the economy; and b) a universal insurance program covering pharmaceutical purchases. We use a version of the Kelton and Wallace (1995) monopoly production environment: a two-good general-equilibrium model in which a license is required to produce one of the goods. Individuals in the model are heterogeneous with respect to preferences, but have identical production technologies and labor resources. Results indicate potential welfare gains for both the price-ceiling and universal-insurance policies, with very distinct distributional effects. |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:vas:papers:78&r=hea |
| By: | Magnus Lindelow (The World Bank); Pieter Serneels (University of Oxford); Teigist Lemma (International Labour Organization) |
| Abstract: | Insufficient attention has been paid to understanding what determines the performance of health workers and how they make labor market choices. This paper reports on findings from focus group discussions with both health workers and users of health services in Ethiopia, a country with some of the poorest health outcomes in the world. It describes performance problems identified by both health, users and health workers participating in the focus group discussions, including absenteeism and shirking, pilfering drugs and materials, informal health care provision and illicit charging, and corruption. The second part of the paper presents four structural reasons why these problems arise: (1) the ongoing transition from a health sector dominated by the public sector, toward a more mixed model; (2) the failure of government policies to keep pace with the transition toward a mixed model of service delivery; (3) weak accountability mechanisms and the erosion of professional norms in the health sector; and (4) the impact of HIV/AIDS. The discussions underline the need to base policies on a micro-analysis of how health workers make constrained choices, both in their career and in their day to day professional activities. |
| Keywords: | Social Development, Health and population, Public sector management |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3558&r=hea |
| By: | Adam Wagstaff (The World Bank); Menno Pradhan (The World Bank) |
| Abstract: | The authors examine the effects of the introduction of Vietnam's health insurance (VHI) program on health outcomes, health care utilization, and non-medical household consumption. The use of panel data collected before and after the insurance program's introduction allows them to eliminate any confounding effects due to selection on time-invariant un-observables, and their coupling of propensity score matching with a double-difference estimator allows them to reduce the risk of biases due to inappropriate specification of the outcome regression model. The authors' results suggest that Vietnam's health insurance program impacted favorably on height-for-age and weight-for-age of young school children, and on body mass index among adults. Their results suggest that among young children, VHI increases use of primary care facilities and leads to a substitution away from the use of pharmacists as a source of advice and non-prescribed medicines toward the use of them as a supplier of medicines prescribed by a health professional. Among older children and adults, VHI results in a marked increase in the use of hospital inpatient and outpatient departments. The results also suggest that VHI causes a reduction in annual out-of-pocket expenditures on health and an increase in non-medical household consumption, including food consumption, but mostly nonfood consumption. The authors' estimate of the VHI-induced reduction in out-of-pocket health spending is considerably smaller than their estimate of the VHI-induced increase in non-medical consumption, which is consistent with the idea that households hold back their consumption considerably if, through lack of health insurance, they are exposed to the risk of large out-of-pocket expenditures. This is especially plausible in a country where at the time (1993), a single visit to a public hospital cost on average the equivalent of 20 percent of a person's annual nonfood consumption. |
| Keywords: | Poverty, Health and population |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3563&r=hea |
| By: | Nicole Hildebrandt (Stanford University); David J. McKenzie (Stanford University) |
| Abstract: | The authors investigate the impact of international migration on child health outcomes in rural Mexico using a nationally representative demographic survey. They use historic migration networks as instruments for current household migration to the United States in order to correct for the possible endogeneity of migrant status. They find that children in migrant households have lower rates of infant mortality and higher birth-weights. The authors study the channels through which migration may affect health outcomes and find evidence that migration raises health knowledge in addition to the direct effect on wealth. However they also find that preventative health care, such as breastfeeding and vaccinations, is less likely for children in migrant households. These results provide a broader and more nuanced view of the health consequences of migration than is offered by the existing literature. |
| Keywords: | Rural development, Health and population |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3573&r=hea |
| By: | Adam Wagstaff (The World Bank) |
| Abstract: | While there is a great deal of anecdotal evidence on the economic effects of adverse health shocks, there is relatively little hard empirical evidence. The author builds on recent empirical work to explore in the context of postreform Vietnam two related issues: (1) how far household income and medical care spending responds to health shocks, and (2) how far household consumption is protected against health shocks. The results suggest that adverse health shocks - captured by negative changes in body mass index (BMI) - are associated with reductions in earned income. This appears to be only partly - if at all - due to a reverse feedback from income changes to BMI changes. By contrast, there is a hint - the relevant coefficient is not significant - that adverse BMI shocks may result in increases in unearned income. This may reflect additional gifts, remittances, and so on, from family and friends following the health shock. Medical spending is found to increase following an adverse health shock, but not among those with health insurance. The impact for the uninsured is large, equal in absolute size to the income loss associated with a BMI shock. The lack of impact for the insured points to complete insurance against the medical care costs associated with health shocks, and is consistent with the very generous coverage of Vietnam's health insurance program in this period. The question arises: have Vietnamese households been able to hold their food and nonfood consumption constant in the face of these income reductions and extra medical care outlays? The results suggest not. For the sample as a whole, both food and nonfood consumption are found to be responsive to health shocks, indicating an inability to smooth nonmedical consumption in the face of health shocks. Further analysis reveals some interesting differences across different groups within the sample. Households with insurance come no closer to smoothing nonmedical consumption than uninsured households. Furthermore, and somewhat counterintuitively, better-off households - including insured households - fare worse than poorer households in smoothing their nonmedical consumption in the face of health shocks, despite the fact that in the case of insured households there are no medical bills associated with an adverse health event. Why the poor rely on dissaving and borrowing to such an extent, and do not apparently reduce their food and nonfood consumption following an adverse health shock while the better-off do, may be because the levels of food and nonfood consumption of the poor are simply too low relative to basic needs to enable them to cut back in the face of an adverse BMI shock. |
| Keywords: | Poverty, Health and population |
| Date: | 2005–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3644&r=hea |
| By: | Aaditya Mattoo (The World Bank); Randeep Rathindran (The World Bank) |
| Abstract: | There is limited trade in health services despite big differences in the price of health care across countries. Whether patients travel abroad for health care depends on the coverage of treatments by their health insurance plan. Under existing health insurance contracts, the gains from trade are not fully internalized by the consumer. The result is a strong "local-market bias" in the consumption of health care. A simple modification of existing insurance products can create sufficient incentives for consumers to travel. For just 15 highly tradable, low-risk treatments, the annual savings to the United States would be $1.4 billion even if only one in 10 patients who need these treatments went abroad. Half of these annual savings would accrue to the Medicare program alone. The authors examine how measures by destination countries to improve and credibly signal the quality of health care can enhance the scope for trade. |
| Keywords: | International economics, Health and population |
| Date: | 2005–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3667&r=hea |
| By: | Ramanan Laxminarayan (Resources for the Future); Mead Over (The World Bank); David L. Smith (Fogarty International Center, NIH) |
| Abstract: | Artemisinin-based combination treatments (ACTs) are seen as an important tool in the global effort to roll back malaria. With rapidly increasing parasite resistance to chloroquine in many parts of the world, there is greater international recognition of the need for both a different antimalarial and a coordinated malaria treatment strategy to ensure that resistance does not needlessly cut short the useful therapeutic life of any successor drug to chloroquine. The effectiveness of antimalarial drugs is a global public good, of particular value in malarious regions that also are among the most economically impoverished parts of the world. Inappropriate drug use in neighboring countries reduces the incentive of any given country to deploy drug regimens that may be rapidly undermined by resistance originating outside their borders. Therefore, a case can be made for globally coordinated action to protect the effectiveness of these valuable drugs. Translating this case to one for a global subsidy is not straightforward. On the one hand, in the absence of such a subsidy to ensure that ACTs are comparably priced to monotherapies, increasing monotherapy of artemisinin and other antimalarials that would be used along with artemisinin in ACT will hasten the demise of this drug. On the other hand, a global subsidy would greatly increase the use and potential misuse of ACTs and could result in resistance emerging at a more rapid rate. This study finds that a subsidy to ACTs is likely to slow the rate of emergence of resistance to artemisinin and partner drugs, even if such a subsidy were to increase the use of ACTs significantly. This conclusion is robust to alternative assumptions regarding the responsiveness of demand to the lower price for ACTs and a wide range of epidemiological and economic parameters. However, the simulation results show that a subsidy for two or more ACT combinations is likely to be much more cost-effective than a subsidy to a single ACT. The only consideration is that the drugs used as partners to artemisinin be unrelated to each other and to artemisinin in mechanism of action and in genetic bases of resistance, so that a single mutation cannot encode resistance to both components. Such a subsidy program for ACTs, administered globally, that reduces reliance on any single combination, and discourages monotherapy, not only of artemisinin but of any effective antimalarial that could potentially be used as partner drug with artemisinin, is likely to be effective (and cost-effective) both in buying time for ACTs and in saving lives. |
| Keywords: | Health and population |
| Date: | 2005–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3670&r=hea |
| By: | Elizabeth Kopits (U.S. EPA National Center for Environmental Economics); Maureen Cropper (The World Bank) |
| Abstract: | This paper examines whether the relationship between traffic fatalities and per capita income is the same for different classes of road users and investigates the factors underlying the decline in fatalities per vehicle kilometer traveled (VKT) observed in high-income countries over recent decades. Formal models of traffic fatalities are developed for vehicle occupants and pedestrians. Reduced-form approximations to these models are estimated using panel data for 32 high-income countries over 1964-2002. The results suggest that the downward-sloping portion of the curve relating traffic fatalities per capita to per capita income is due primarily to improved pedestrian safety. The more detailed models shed light on some factors influencing pedestrian fatalities per VKT, but much of the reduction in pedestrian fatalities remains unexplained. Increased motorization and a reduction in the proportion of young drivers in the population, however, clearly played a role. In contrast to pedestrian fatalities, occupant fatalities do not show a significant decline with income. What does explain declines in occupant fatalities per VKT are reductions in alcohol abuse and improved medical services, and a reduction in young drivers. The importance of demographic factors suggests that in countries where young persons (between 15 and 24 years of age) comprise an increasing share of the driving population, adopting policies to improve young driver education and reduce speeds will be crucial. |
| Keywords: | Infrastructure, Health and population |
| Date: | 2005–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3678&r=hea |
| By: | Pieter Serneels (University of Oxford); Magnus Lindelöw (The World Bank); Jose Garcia-Montalvo (University of Pompeu Fabra, Barcelona); Abigail Barr (University of Oxford) |
| Abstract: | Geographical imbalances in the health workforce have been a consistent feature of nearly all health systems, especially in developing countries. The authors investigate the willingness to work in a rural area among final year nursing and medical students in Ethiopia. Analyzing data obtained from contingent valuation questions, they find that household consumption and the student's motivation to help the poor, which is their proxy for intrinsic motivation, are the main determinants of willingness to work in a rural area. The authors investigate who are willing to help the poor and find that women are significantly more likely to help than men. Other variables, including a rich set of psycho-social characteristics, are not significant. Finally, the authors carry out some simulations on how much it would cost to make the entire cohort of starting nurses and doctors choose to take up a rural post. |
| Keywords: | Rural development, Social Development, Health and population, Public sector management |
| Date: | 2005–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3686&r=hea |
| By: | Michael Lokshin (The World Bank); Martin Ravallion (The World Bank) |
| Abstract: | Can self-assessed health be relied on to identify the true socioeconomic gradients in health status? The self-assessed health of Russian adults in 2002 shows remarkably little gradient with respect to economic welfare. The authors document this finding and assess its robustness to the assumptions routinely made in measuring health and welfare. They find that the expected economic gradient only emerges once one focuses on the component of self-assessed health that is explicable in terms of age and more objective health indicators and one allows for broader dimensions of economic welfare than captured by standard income-based measures. The results point to the need for caution in analyzing and interpreting self-assessed health data. |
| Keywords: | Poverty, Health and population |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3698&r=hea |
| By: | Magnus Lindelow (The World Bank); Adam Wagstaff (The World Bank) |
| Abstract: | Health shocks have been shown to have important economic consequences in industrial countries. Less is known about how health shocks affect income, consumption, labor market outcomes, and medical expenditures in middle- and low-income countries. The authors explore these issues in China. In addition to providing new evidence on the general impact of health shocks, they also extend previous work by assessing the extent of risk protection afforded by formal health insurance, and by examining differences in the impact of health shocks between the rich and poor. The authors find that health shocks are associated with a substantial and significant reduction in income and labor supply. There are indications that the impact on income is less important for the insured, possibly because health insurance coverage is also associated with limited sickness insurance, but the effect is not significant. They also find evidence that negative health shocks are associated with an increase in unearned income for the poor but not the non-poor. This effect is however not strong enough to offset the impact on overall income. The loss in income is a consequence of a reduction in labor supply for the head of household, and the authors do not find evidence that other household members compensate by increasing their labor supply. Finally, negative health shocks are associated with a significant increase in out-of-pocket health care expenditures. More surprisingly, there is some evidence that the increase is greater for the insured than the uninsured. The findings suggest that households are exposed to considerable health-related shocks to disposable income, both through loss of income and health expenditures, and that health insurance offers very limited protection. |
| Keywords: | Poverty, Health and population |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3740&r=hea |
| By: | Magnus Lindelow (The World Bank); Adam Wagstaff (The World Bank) |
| Abstract: | The most basic argument for insurance is that it reduces financial risk. But since insurance opens up new opportunities for consuming expensive high-technology care which permits health improvements that are valued by the insured, and because in many settings the provider is able and has an incentive to exploit the informational advantage he has over the patient, it is not immediately obvious that insurance will in practice reduce financial risk. The authors analyze the effect of insurance on the probability of an individual incurring "high" annual health expenses using data from three household surveys-one a cross-section survey, the other two panel surveys. All come from China, a country where providers have until recently largely been paid fee-for-service (often according to a schedule that encourages the overprovision of high-technology care and the underprovision of basic care) and who are only lightly regulated. The authors define annual spending as "high" if it exceeds 5 percent of average income in the sample and as "catastrophic" if it exceeds 10 percent of the household's own per capita income. The estimates of the effect of insurance on financial risk allow for the possible endogeneity of health insurance in the panel datasets by allowing for a time-invariant fixed effect capturing unobserved risk that may be correlated with insurance status, and in the cross-section dataset by using instrumental variables, where availability of and eligibility for health insurance are used as instruments. The results suggest that during the 1990s China's government and labor insurance schemes increased financial risk associated with household health care spending, but that the rural cooperative medical scheme significantly reduced financial risk in some areas but increased it in others (though not significantly). From the results, it appears that China's new health insurance schemes (private schemes, including coverage of schoolchildren) have also increased the risk of high levels of out-of-pocket spending on health. Where the authors find evidence of health insurance increasing the risk of "high" out-of-pocket expenses, the marginal effect is of the order of 15-20 percent; in the case of "catastrophic" expenses, it is even larger. |
| Keywords: | Poverty, Health and population |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3741&r=hea |
| By: | Adam Wagstaff (The World Bank); Shengchao Yu (The World Bank Office Beijing, China) |
| Abstract: | The literature contains few impact evaluations of health sector reforms, especially those involving broad and simultaneous changes on both the demand and supply sides of the sector. This paper reports the results of a World Bank-funded health sector reform project in China known as Health VIII. On the supply-side, the project combined infrastructure investments (especially at the township level) with improved planning and management, including a referral system between township health centers and county hospitals, and interventions aimed at improving the effectiveness and quality of care, including the introduction of clinical protocols and essential drug lists. On the demand-side, the project sought to resurrect community health insurance, and to introduce a safety net for the very poor to provide them with financial assistance with their health care expenses. The evaluation reported here concerns just one of the project's seven provinces, namely Gansu, the reason being that no suitable data are available to undertake a rigorous evaluation in all provinces. This paper makes use of a panel dataset collected for quite another purpose but whose timing (just around the time the project started and four years later) and location (covering both project and non-project counties) makes it well-suited to the task. The paper compares estimates obtained using a variety of different estimators, including naïve single differences (before and after, and with and without the project), and differences-in-differences, adjusting for heterogeneity through both regression and matching methods. The results suggest that it makes a difference to the estimated impact of Health VIII which estimator is used, with the naïve single differences producing often markedly different estimates from the preferred approach of combining difference-in-differences with matching. The results further suggest that Health VIII has been mostly successful in its goals. The preferred estimator suggests that the project reduced illness among children, improved self-assessed health, and increased doctor visits among the population in general, and reduced the incidence of catastrophic health spending, defined as annual spending in excess of 10 percent of annual per capita income. But the project appears to have increased the development and use of high-level facilities, hastened the demise of the village clinic, and may have reduced immunization rates. |
| Keywords: | Health and population |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3743&r=hea |
| By: | Ariadna Garcia-Prado (The World Bank) |
| Abstract: | It is widely observed that many physicians working in public health facilities do not put in the required effort and time in their jobs. At the same time, many public physicians remain highly motivated, working long hours for little financial reward, in providing quality health services. This mix of provider-types poses fundamental challenges in the design of compensation mechanisms and monitoring regime in public facilities, where the objective of any reward-control paradigm is to improve the inoptimal performance of some physicians without compromising the effort of those already motivated. This paper presents a model to explain shirking behavior among public physicians and explores combinations of monitoring and incentive mechanisms that meet the twin objectives of inspiring the shirkers without losing the motivated. Drawing on the basic Shapiro-Stiglitz shirking model and the theory of social custom, the paper develops and presents a design of incentive structures that consists of punitive monitoring systems accompanied by non-pecuniary rewards. The analysis shows that intensive monitoring persuades the shirking physicians to improve their performance but may have a negative effect on the morale of those already motivated. The findings indicate that non-pecuniary rewards and recognition for the latter can potentially restore the incentives and counter the deleterious effect of increased supervision. The policy implications are discussed by presenting case studies in the health care context of developing countries. |
| Keywords: | ??? |
| Date: | 2005–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3772&r=hea |