nep-hea New Economics Papers
on Health Economics
Issue of 2006‒01‒24
33 papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Separating Selection and Incentive Effects in Health Insurance By Gardiol, Lucien; Geoffard, Pierre-Yves; Grandchamp, Chantal
  3. Labour force participation of the elderly in Europe : the importance of being healthy By Kalwij,Adriaan; Vermeulen,Frederic
  4. Financial Health of Private Sector Hospitals in India By Bhat Ramesh
  5. Commitment of State Health Officials: Identifying Factors and Scope for Improvement By Maheshwari Sunil Kumar; Bhat Ramesh; Saha Somen
  6. Measuring the Value of a Statistical Life: Problems and Prospects By Orley Ashenfelter
  7. Ethnicity and Health: An Analysis of Physical Health Differences across Twenty-one Ethnocultural Groups in Canada By Steven Prus; Zhiqiu Lin
  8. The Health Behaviors of Immigrants and Native-born People in Canada By James Ted McDonald
  9. Ethnicity, Immigration and Cancer Screening: Evidence for Canadian Women By James Ted McDonald; Steven Kennedy
  10. The Scots may be Brave but They are Neither Healthy Nor Happy By David Bell; David Blanchflower
  11. IP & External Consumption Effects: Generalizations from Health Care Markets By Tomas Philipson; Stephane Mechoulan; Anupam Jena
  12. Regulation of Health, Safety, and Environmental Risks By W. Kip Viscusi
  13. Private Profits and Public Health: Does Advertising Smoking Cessation Products Encourage Smokers to Quit? By Rosemary Avery; Donald Kenkel; Dean R. Lillard; Alan Mathios
  14. Did Medicare Induce Pharmaceutical Innovation? By Daron Acemoglu; David Cutler; Amy Finkelstein; Joshua Linn
  15. Health Insurance Take-up by the Near Elderly By Thomas C. Buchmueller; Sabina Ohri
  16. Nutrition Labels and Obesity By Jayachandran N. Variyam; John Cawley
  17. Structural Estimation of Caloric Intake, Exercise, Smoking, and Obesity By Inas Rashad
  18. The Determinants of Mortality By David M. Cutler; Angus S. Deaton; Adriana Lleras-Muney
  19. Maternal smoking during pregnancy and birthweight - A propensity score matching approach By Paula Veiga; Ronald P. Wilder
  20. New Evidence on Medicare's Prospective Payment System: A Survival Analysis based on the NHANES I Epidemiologic Followup Study By Xufeng Qian; Louise Russell; Elmira Valiyeva; Jane Miller
  21. Health, Capabilities and Functionings: An Empirical Analysis for the UK By Sergio Destefanis; Vania Sena
  22. Environmental Implications of the Health Care Service Sector By Davies, J. Clarence; Lowe, Adam
  23. Identifying the Most Significant Microbiological Foodborne Hazards to Public Health: A New Risk Ranking Model By Krupnick, Alan; Taylor, Michael; Batz, Michael; Hoffmann, Sandra; Tick, Jody; Morris, Glenn; Sherman, Diane
  24. Socioeconomic Determinants of Disease Transmission in Cambodia By Laxminarayan, Ramanan; Deolalikar, Anil
  25. Economics of Antibiotic Resistance: A Theory of Optimal Use By Laxminarayan, Ramanan; Brown, Gardner
  26. Age, Health, and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey of Ontario Residents By Krupnick, Alan; Cropper, Maureen; Alberini, Anna; Heintzelman, Martin; Simon, Nathalie; O'Brien, Bernie; Goeree, Ron
  27. On the Efficiency of Public and Private Health Care Systems: An Application to Alternative Health Policies in the United Kingdom By Parry, Ian
  28. Does the Value of a Statistical Life Vary with Age and Health Status? Evidence from the United States and Canada By Krupnick, Alan; Cropper, Maureen; Alberini, Anna; Simon, Nathalie
  29. The Health Impacts of Exposure to Indoor Air Pollution from Solid Fuels in Developing Countries: Knowledge, Gaps, and Data Needs By Ezzati, Majid; Kammen, Daniel
  30. Willingness to Pay for Mortality Risk Reductions: Does Latency Matter? By Krupnick, Alan; Alberini, Anna; Simon, Nathalie; Cooper, Maureen
  31. Economic Uncertainties in Valuing Reductions in Children's Environmental Health Risks By Krupnick, Alan; Hoffmann, Sandra; Adamowicz, Wictor
  32. Age, Health, and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey in Japan By Krupnick, Alan; Alberini, Anna; Simon, Nathalie; Itaoka, Kenshi; Akai, Makoto; Cropper, Maureen
  33. The Role of Health Risk Assessment and Cost-Benefit Analysis in Environmental Decision Making in Selected Countries: An Initial Survey By Mazurek, Janice

  1. By: Gardiol, Lucien; Geoffard, Pierre-Yves; Grandchamp, Chantal
    Abstract: This paper provides an analysis of the health insurance and health care consumption. A structural microeconomic model of joint demand for health insurance and health care is developed and estimated using full maximum likelihood method using Swiss insurance claims data for over 60,000 adult individuals. The estimation strategy relies on the institutional features of the Swiss system, in which each individual chooses among the same menu of contracts, ranked by the size of their deductible. The empirical analysis shows strong and robust evidence of selection effects. Nevertheless, once selection effects are controlled for, an important incentive effect ('ex-post moral hazard') remains. A decrease in the co-payment rate from 100% to 10% increases the marginal demand for health care by about 90% and from 100% to 0% by about 150%. The correlation between insurance coverage and health care expenditures may be decomposed into the two effects: 75% may be attributed to selection, and 25 % to incentive effects.
    Keywords: adverse selection; demand for health care; full maximum likelihood estimation; health insurance; moral hazard
    JEL: C51 D82 I11
    Date: 2005–12
  2. By: Matilde P. Machado,; Ricardo Mora; Antonio Romero- Medina
    Abstract: In this paper, we propose an alternative methodology to rank hospitals based on the choices of Medical Schools graduates over training vacancies. We argue that our measure of relative hospital quality has the following desirable properties: a) robustness to manipulation from the hospital’s administrators; b) comprehensiveness in the scope of the services analyzed; c) inexpensive in terms of data requirements, and d) not subject to selection biases. Accurate measures of health provider quality are needed in order to establish incentive mechanisms, to assess the need for quality improvement, or simply to increase market transparency and competition. Public report cards in certain US states and the NHS ranking system in the UK are two attempts at constructing quality rankings of health care providers. Although the need for such rankings is widely recognized, the criticisms at these attempts reveal the difficulties involved in this task. Most criticisms alert to the inadequate risk-adjustment and the potential for perverse consequences such as patient selection. The recent literature, using sophisticated econometric models is capable of controlling for case-mix, hospital and patient selection, and measurement error. The detailed data needed for these evaluations is, however, often unavailable to researchers. In those countries, such as Spain, where there is neither public hospital rankings nor public data on hospital output measures such as mortality rates our methodology is a valid alternative. We develop this methodology for the Spanish case. In a follow-up paper we will present results using Spanish data. In Spain graduates choose hospital training vacancies in a sequential manner that depends on their average grade. Our framework relies on three assumptions. First, high quality hospitals provide high quality training. Second, graduates are well informed decision makers who are well qualified to assess hospital quality. Third, they prefer to choose a high quality vacancy rather than a low quality one ceteris paribus. If these assumptions hold, then the first physicians to choose are likely to grab the best vacancies while the ones who choose last are stuck with the worst available. Thus, it is possible to infer from physicans’ choices quality differentials amongst hospitals. We model the physician’s decision as a nested-logit a la McFadden. Unlike in standard applications of McFadden’s model, in our application the choice set is not constant across physicians but it shrinks along the sequential hospital choice process
    Date: 2006–01
  3. By: Kalwij,Adriaan; Vermeulen,Frederic (Tilburg University, Center for Economic Research)
    Abstract: In this paper we study labour force participation behaviour of individuals aged 50-64 in 11 European countries. The data are drawn from the new Survey of Health, Ageing and Retirement in Europe (SHARE). The empirical analysis shows that health is multi-dimensional, in the sense that different health indicators have their own significant impact on individuals' participation decisions. Health effects differ markedly between countries. A counterfactual exercise shows that improved health conditions may yield over 10 percentage points higher participation rates for men in countries like Austria, Germany and Spain, and for females in the Netherlands and Sweden. Moreover, we show that the declining health condition with age accounts considerably for the decline in participation rates with age.
    Keywords: SHARE;labour force participation;health;retirement
    JEL: I10 J22 J26
    Date: 2005
  4. By: Bhat Ramesh
    Abstract: Hospitals are an important component of the healthcare delivery system. Over the years, India has experienced a significant increase in the number of hospital beds to meet the growing health demands of its population. Most of this growth has been experienced in the small sized private hospital sector (popularly known as nursing homes in India). The corporate hospital sector, however, has not exhibited similar growth though private expenditures on medical and health care in real terms have grown at 10 per cent per annum and government of India initiating number of policy reforms after 1991 aimed at attracting more capital to hospital sector. This experience has something to do with the financial health and risks, as these are critical determinants in attracting private capital. Using the financial balance sheets and profit and loss account data of 128 hospitals in India, this paper examines the financial health of hospitals in the private sector. Based on 26 key financial ratios, the paper empirically identifies relevant dimensions of financial health of hospitals. These dimensions are: profitability, financial structure, overall efficiency, cost structure, profit appropriation, technology advancement, credit management, fixed asset intensity, liquidity and current assets efficiency. It then discusses the implications of the findings. Because of lower profitability, lower financial efficiencies and less understood economies of scale, the risks in the health sector are likely to remain high. Other risk factors are the geographic pull factor, long gestation periods, a highly fragmented sector and inadequacy of standards. In this scenario, new investment in the health sector will remain resource dependent on subsidised channels of funding and will be sensitive to the out-of-pocket payment of fees, which still remains the main channel of revenues of these hospitals.
    JEL: A1
    Date: 2006–01–02
  5. By: Maheshwari Sunil Kumar; Bhat Ramesh; Saha Somen
    Abstract: Commitment, competencies and skills of people working in the health sector has significant impact on sector performance and its reform process. The current paper is a part of broader multi state studies carried out by the authors in India. The paper attempts to analyse the commitment of state health officials and its implications for human resource practices in Gujarat. The study suggests Gujarat, as compared to other states of India, have achieved significant progress in ensuring commitment of its health officials. However, the state needs to invest progressively and in a proactive manner towards improving the leadership quality, supervision skills and autonomy at workplace to improve and sustain the motivation of its health officials. Improving motivation for the health staffs also involves issues related to infrastructure, involvement, supervision and monitoring, continuous medical education and training, human resource planning, smooth reporting process, administration and audit requirements and prioritisation and synchronisation of health programmes. In order to achieve this, two sets of strategies for reforms are suggested. One relates to short term achievable reforms and other relates to long-term research based actions.
    Keywords: Commitment, Health Reform, HR Practices
    Date: 2006–01–04
  6. By: Orley Ashenfelter (Princeton University and IZA Bonn)
    Abstract: Tradeoffs between monetary wealth and fatal safety risks are summarized in the value of a statistical life (VSL), a measure that is widely used for the evaluation of public policies in medicine, the environment, and transportation safety. This paper demonstrates the widespread use of this concept and summarizes the major issues, both theoretical and empirical, that must be confronted in order to provide a credible estimate of a VSL. The paper concludes with an application of these issues to a particular study of speed limits and highway safety.
    Keywords: value of a statistical life, speed limits, safety risks, evaluation
    JEL: J17 H43 I18 R4
    Date: 2006–01
  7. By: Steven Prus; Zhiqiu Lin
    Abstract: The study of health differences across a wide-range of ethnic, racial, and cultural groups has received relatively little attention in the literature. Twenty-one ethnocultural groups are examined in the current study, providing one of the most comprehensive analyses to-date on ethnicity and physical health in Canada. Two specific research questions are addressed. First, what is the extent of ethnocultural-based health inequalities in Canada? Second, do ethnocultural differences in health reflect differences in social structural and health-related behavioural environments? These questions are analyzed using the master datafile of the 2000/2001 Canadian Community Health Survey (n=129,588). Three global measures of physical health are used: self-rated health, functional health, and activity restriction. The results show that certain ethnic and cultural groups experience higher health status compared to other ethnocultural groups. Social structural (i.e., socio-demographic and SES factors) and behavioural (alcohol and cigarette consumption, diet/nutrition, and exercise) control variables are also introduced to determine if these factors mediate the relationship between ethnicity/race and health. These findings show that health differences between ethnic and racial groups are partly attributable to structural and behavioural factors. They also show that the mediating effects of these variables vary across ethnocultural groups, and that social structural factors are generally more important than behavioural ones in explaining ethnocultural-based differences in health. The implications of the study findings for future research on ethnicity and health and for health care policies are discussed.
    Keywords: ethnicity, race, self-rated health, functional health, social structure, lifestyle
    JEL: I10 I18
    Date: 2005–11
  8. By: James Ted McDonald
    Abstract: This paper analyzes the incidence of participation in various activities generally expected to have an impact on current and future physical health. Attention is focused on the incidence of these activities among immigrant and minority groups compared to native-born white Canadians. Immigrants generally exhibit significantly lower rates of alcohol consumption, binge drinking, and daily smoking but also lower participation in vigorous physical activity and consumption of fruit and vegetables. Differences are particularly pronounced for immigrants from Asia and Africa, and this is true for both men and women. For most immigrant men, alcohol consumption and smoking both increase with years in Canada, ceteris paribus, and in the case of immigrants from Europe and the USA, reach native-born white levels after between 10-20 years in Canada. For other immigrant men, the incidence of alcohol consumption remains low even for long-term residents of Canada. Interestingly, there is no significant change with years-since-migration in any of the health behaviors for immigrant women. Canadian born members of visible minorities also display significantly lower rates of alcohol consumption, smoking and (for women) vigorous physical activity than native-born whites, although these rates were still higher than for immigrants from Asia and Africa. Finally, native- born white lifestyle choices are found to exert a significant positive influence on the behaviors of immigrants and native-born minorities who are residents of the same province.
    Keywords: immigrants, health, acculturation, smoking, alcohol
    JEL: I1 J0
    Date: 2005–11
  9. By: James Ted McDonald; Steven Kennedy
    Abstract: Introduction: Canada's annual immigrant intake is increasingly composed of visible minorities, with 59% of immigrants arriving in 1996-01 coming from Asia. However, only a small number of studies have used population health surveys to examine Canadian women's use of cancer screening. We use recent population health surveys to analyze immigrant and native-born women's use of Pap smears, breast exams, breast self-exams, and mammograms. Methods: We study women aged 21-65 drawn from the National Population Health Survey and Canadian Community Health Surveys that together yield a sample size of 105,000 observations. Results: We find that for most forms of cancer screening, recent immigrants have markedly lower utilization rates, but these rates slowly increase with years in Canada. However, there is wide variation in rates of cancer screening by ethnicity. Screening rates for white immigrants approach Canadian-born women's utilization rates after 15-20 years in Canada, but screening rates for immigrants from Asia remain significantly below native-born Canadian levels. Discussion: Health authorities need to tailor their message about the importance of these forms of cancer screening to reflect the perceptions and beliefs of particular minority groups if the objective of universal use of preventative cancer screening is to be achieved.
    Keywords: immigrants, ethnic groups, cancer, screening, acculturation
    JEL: I10 I18 J15
    Date: 2005–12
  10. By: David Bell; David Blanchflower
    Abstract: On almost all measures of physical health, Scots fare worse than residents of any other region of the UK and often worse than the rest of Europe. Deaths from chronic liver disease and lung cancer are particularly prevalent in Scotland. The self-assessed wellbeing of Scots is lower than that of the English or Welsh, even after taking into account any differences in characteristics. Scots also suffer from higher levels of self-assessed depression or phobia, accidental death and suicide than those in other parts of Great Britain. This result is particularly driven by outcomes in Strathclyde and is consistent with the high scores for other measures of social deprivation in this area. On average, indicators of social capital in Scotland are no worse than in England or Wales. Detailed analysis within Scotland, however, shows that social capital indicators for the Strathclyde area are relatively low. We argue that these problems seem unlikely to be fixed by indirect policies aimed at raising economic growth.
    JEL: J4
    Date: 2006–01
  11. By: Tomas Philipson; Stephane Mechoulan; Anupam Jena
    Abstract: There is a long-standing literature that recognizes that an efficient solution in correcting a consumption externality is applying subsidies or taxes that align private with social incentives. An equally long-standing literature tackles the appropriate methods of generating the efficient amount of R&D into goods without external effects in consumption, e.g., the analysis of the welfare effects of patent regulations. This paper addresses the joint determination of intellectual property (IP) and externality remedies. We discuss the impact that IP has on remedies for externalities as well as the reverse problem of the impact externalities have on the design of IP. The results are discussed in the context of health care markets in general, and pharmaceutical markets in particular, the latter being one of the most R&D-intensive industries, and at the same time often being faced with altruistic access issues. A central but non-recognized tradeoff in health care concerns the correct R&D incentives when altruistic motives dictate that lives will be saved whenever feasible technologies exist. Understanding this tradeoff is central to understanding the efficiency of the observed growth ifn health care spending often attributed to technological change. We calibrate the model for the US health care sector and find that altruistic gains amount to 27 percent of consumer gains and that this implies R&D is under-provided by 61 percent in face of such altruistic motives.
    JEL: I1
    Date: 2006–01
  12. By: W. Kip Viscusi
    Abstract: This paper provides a systematic review of the economic analysis of health, safety, and environmental regulations. Although the market failures that give rise to a rationale for intervention are well known, not all market failures imply that market risk levels are too great. Hazard warnings policies often can address informational failures. Some market failures may be exacerbated by government policies, particularly those embodying conservative risk assessment practices. Labor market estimates of the value of statistical life provide a useful reference point for the efficient risk tradeoffs for government regulation. Guided by restrictive legislative mandates, regulatory policies often strike a quite different balance with an inordinately high cost per life saved. The risk-risk analysis methodology enables analysts to assess the net safety implications of policy efforts. Inadequate regulatory enforcement and behavioral responses to regulation may limit their effectiveness, while rising societal wealth will continue to generate greater levels of health and safety.
    JEL: K32 Q2 J28 J17
    Date: 2006–01
  13. By: Rosemary Avery; Donald Kenkel; Dean R. Lillard; Alan Mathios
    Abstract: To shed new light on the role private profit incentives play in promoting public health, in this paper we conduct an empirical study of the impact of pharmaceutical industry advertising on smoking cessation decisions. We link survey data on individual smokers with an archive of magazine advertisements. The rich survey data allow us to measure smokers' exposure to smoking cessation advertisements based on their magazine-reading habits. Because we observe the same information about the consumers that the advertisers observe, we can control for the potential endogeneity of advertising due to firms' targeting decisions. We find that when smokers are exposed to more advertising, they are more likely to attempt to quit and are more likely to have successfully quit. While some of the increased quitting behavior involves purchases of smoking cessation products, our results indicate that advertisements for smoking cessation products also increase the probability of quitting without the use of any product. Thus, the public health returns to smoking cessation product advertisements exceed the private returns to the manufacturers. Because advertising of a wide range of consumer products may have important and under-studied spillover effects on various non-market behaviors, our results have broad implications for the economics of advertising.
    JEL: I1 L1
    Date: 2006–01
  14. By: Daron Acemoglu; David Cutler; Amy Finkelstein; Joshua Linn
    Abstract: The introduction of Medicare in 1965 was the single largest change in health insurance coverage in U.S. history. Many economists and commentators have conjectured that the introduction of Medicare may have also been an important impetus for the development of new drugs that are now commonly used by the elderly and have substantially extended their life expectancy. In this paper, we investigate whether Medicare induced pharmaceutical innovations directed towards the elderly. Medicare could have played such a role only if two conditions were met. First, Medicare would have to increase drug spending by the elderly. Second, the pharmaceutical companies would have to respond to the change in market size for drugs caused by Medicare by changing the direction of their research. Our empirical work finds no evidence of a "first-stage" effect of Medicare on prescription drug expenditure by the elderly. Correspondingly, we also find no evidence of a shift in pharmaceutical innovation towards therapeutic categories most used by the elderly. On the whole, therefore, our evidence does not provide support for the hypothesis that Medicare had a major effect on the direction of pharmaceutical innovation.
    JEL: H51 I18 O33 O38 L65
    Date: 2006–01
  15. By: Thomas C. Buchmueller; Sabina Ohri
    Abstract: This study examines the effect of price on the demand for health insurance by early retirees between the ages of 55 and 64. The analysis is based on administrative data from a medium sized employer and takes advantage of a natural experiment created by the firm's health insurance contribution policy. The amount the firm contributes toward retiree health insurance coverage depends on when a person retired and her years of service at that date. As a result of this policy, there is considerable variation in out-of-pocket premiums faced by individuals in the data, but this variation is independent of the non-price attributes of the health insurance plans offered, and plausibly exogenous to individual characteristics that are likely to affect the demand for insurance. We find that price has a statistically significant but small effect on the decision to take up coverage. The implied elasticities are very similar to results found in previous studies using very different data.
    JEL: D12 H51 I11 J26 J32
    Date: 2006–01
  16. By: Jayachandran N. Variyam; John Cawley
    Abstract: The Nutrition Labeling and Education Act (NLEA) imposed significant changes in the information about calories and nutrients that manufacturers of packaged foods must provide to consumers. This paper tests whether the release of this information impacted body weight and obesity among American adults. We estimate the effect of the new label using a difference-in-differences method. We compare the change before and after the implementation of NLEA in body weight among those who use labels when food shopping to that among those who do not use labels. In National Health Interview Survey data we find, among non-Hispanic white women, that the implementation of the new labels was associated with a decrease in body weight and the probability of obesity. Using NLEA regulatory impact analysis benchmarks, we estimate that the total monetary benefit of this decrease in body weight was $63 to $166 billion over a 20-year period, far in excess of the costs of the NLEA.
    JEL: I18
    Date: 2006–01
  17. By: Inas Rashad
    Abstract: The escalating rate of obesity in the US highlights the importance of understanding the causes for this rise. In this paper I employ the First, Second, and Third National Health and Nutrition Examination Surveys to estimate a structural model of the determinants of adult obesity. To control for the potential endogeneity of some explanatory variables, such as caloric intake (adjusted for activity level) and smoking, a set of reduced form equations for these outcomes is estimated simultaneously with the obesity equation. To identify each equation, I use an array of state-level characteristics as instrumental variables. Trends in these variables shed light on the sources of the rapid increase in obesity since 1980.
    JEL: I10 I12
    Date: 2006–01
  18. By: David M. Cutler; Angus S. Deaton; Adriana Lleras-Muney
    Abstract: Mortality rates have fallen dramatically over time, starting in a few countries in the 18th century, and continuing to fall today. In just the past century, life expectancy has increased by over 30 years. At the same time, mortality rates remain much higher in poor countries, with a difference in life expectancy between rich and poor countries of also about 30 years. This difference persists despite the remarkable progress in health improvement in the last half century, at least until the HIV/AIDS pandemic. In both the time-series and the cross-section data, there is a strong correlation between income per capita and mortality rates, a correlation that also exists within countries, where richer, better-educated people live longer. We review the determinants of these patterns: over history, over countries, and across groups within countries. While there is no consensus about the causal mechanisms, we tentatively identify the application of scientific advance and technical progress (some of which is induced by income and facilitated by education) as the ultimate determinant of health. Such an explanation allows a consistent interpretation of the historical, cross-country, and within-country evidence. We downplay direct causal mechanisms running from income to health.
    JEL: I1 J1 O1 N3
    Date: 2006–01
  19. By: Paula Veiga (NIMA, Universidade do Minho); Ronald P. Wilder (University of South Carolina)
    Abstract: There is accumulated evidence of the existence of a deleterious effect of smoking on birth outcomes. Whether there is a causal link or a mere statistical association is not clear. Understanding the effect of smoking on pregnancy is a critical issue because of the public policy implications for dissuading maternal smoking. This study was designed to distinguish causal links from statistical association in the relationship between fetal exposure to maternal smoking and birth outcomes. Although the task involves several aspects of estimation we restrict our focus to the issue of self-selection. We explore this issue by using the propensity score method and compare that with parametric estimators. First we estimate the treatment effect of smoking during pregnancy on different birth outcomes. Then, we extend the method to the case of the multi-treatment "intensity of smoking". The deleterious effect of smoking is found robust to the different estimation methods used.
    Keywords: Smoking, birth outcomes, causal effects, propensity score and matching
    JEL: I12 C12 C21
    Date: 2006–01
  20. By: Xufeng Qian (Moody's); Louise Russell (Rutgers/Economics and Institute for Health); Elmira Valiyeva (Rutgers); Jane Miller (Rutgers/Bloustein School and Institute for Health)
    Abstract: Medicare’s prospective payment system (PPS), introduced in 1983, pays hospitals a fixed price for each stay rather than reimbursing costs. Previous studies evaluated its first few years using endogenous measures to control for heterogeneity in patients’ health. We examine PPS over a full decade using competing risks Cox survival models and a national longitudinal survey with independent information on patients’ health. New findings include: risk of death in hospital increased; risk of discharge to a nursing home continued to increase as PPS matured; and risk of nursing home admission from the community following hospital discharge rose. HMOs may have contributed to these outcomes.
    Keywords: Medicare;
    JEL: C41 I18
    Date: 2005–07–19
  21. By: Sergio Destefanis (University of Salerno, CELPE and CSEF); Vania Sena (Aston Business School, Aston University)
    Abstract: We analyse the relationship between socio-economic variables and health outcomes for adult participants in three waves of the British Household Panel Survey from 1999 to 2001. We adopt Sen’s capability approach and compute a capability index ranking individuals on the basis of their ability to transform health and economic resources into health functionings. The results show that, even when controlling for access to health resources, socio-economic variables affect significantly the health functionings in the UK. This suggests the need for more equalitarian access policies to health care facilities.
    Keywords: Health; Capability Approach; Production Frontier
    JEL: B59 I19
    Date: 2006–01–01
  22. By: Davies, J. Clarence (Resources For the Future); Lowe, Adam
    Abstract: This report analyzes the environmental effects associated with activities undertaken and influenced by the health care service sector. It is one part of a larger study to better understand the environmental effects of service sector activities and the implications for management strategies. Considerable analysis has documented the service sector's contribution to domestic economic conditions, yet little analysis has been performed on the broad impacts service firms have on environmental quality. For this study the authors developed a framework to examine the nature of service sector industries' influence on environmental quality. Three primary types of influence were identified- direct impacts, upstream impacts, and downstream impacts. In addition, indirect impacts induced by service sector activities include their influence over settlement patterns and indirect influences over other sectors of the economy. In their initial analysis, the authors noted that many functions performed in the service sector also are commonly found in other sectors. The impacts of these activities have been analyzed separately from those unique to the health care sector, as they present different challenges. Health care is one of the largest U.S. industries, employing one in nine workers and costing one in seven dollars generated in the economy. Functions performed in the industry that are common in other sectors include- transportation; laundry; food services; facility cleaning; heating and cooling; and photographic processing. Activities unique to the health care industry include- infectious waste generation and disposal; medical waste incineration; equipment sterilization; dental fillings; ritual mercury usage; x-ray diagnosis; nuclear medicine; pharmaceutical usage and disposal; and drinking water fluoridation. The industry has considerable leverage upstream on its suppliers, which is important to managing risks from the use of goods commonly used in the industry, including- mercury-containing products, polyvinyl chloride plastics, latex gloves, and syringe needles. The authors identified a number of areas for potential environmental management initiatives- controlling emissions from on-site "production" type functions; mercury use; the environmental consequences of infection control measures; pollution prevention through substitution of alternative health care services; and research and data collection.
  23. By: Krupnick, Alan (Resources For the Future); Taylor, Michael; Batz, Michael (Resources For the Future); Hoffmann, Sandra (Resources For the Future); Tick, Jody; Morris, Glenn; Sherman, Diane
    Abstract: In order to help facilitate a risk-based food safety system, we developed the Foodborne Illness Risk Ranking Model (FIRRM), a decisionmaking tool that quantifies and compares the relative burden to society of 28 foodborne pathogens. FIRRM estimates the annual number of cases, hospitalizations, and fatalities caused by each foodborne pathogen, subsequently estimates the economic costs and QALY losses of these illnesses, and, lastly, attributes these pathogen-specific illnesses and costs to categories of food vehicles, based on outbreak data and expert judgment. The model ranks pathogen-food combinations according to five measures of societal burden. FIRRM incorporates probabilistic uncertainty within a Monte Carlo simulation framework and produces confidence intervals and statistics for all outputs. Gaps in data, most importantly in regards to food attribution and the statistical uncertainty of incidence estimates, currently limit the utility of the model. Once we address these and other problems, however, FIRRM will be a robust and useful decisionmaking tool.
    Keywords: foodborne illness, risk ranking, pathogens, health valuation, QALYs, cost of illness, uncertainty, modeling, Monte Carlo
  24. By: Laxminarayan, Ramanan (Resources For the Future); Deolalikar, Anil
    Abstract: The process of acquiring an infection has two components- first, exposure through proximity to another infected individual, and second, transmission of the disease. Earlier studies of the socioeconomic factors that affect the probability of acquiring an illness assume uniform exposure to infected individuals and may therefore result in biased estimates. This paper develops an empirical model, consistent with epidemiological models of spread of infections, to estimate the impact of socioeconomic variables on the extent of disease transmission within villages in Cambodia. Data from the 1997 Cambodia Socioeconomic Survey are used in this analysis.
  25. By: Laxminarayan, Ramanan (Resources For the Future); Brown, Gardner
    Abstract: In recent years bacteria have become increasingly resistant to antibiotics, leading to a decline in the effectiveness of antibiotics in treating infectious disease. This paper uses a framework based on an epidemiological model of infection in which antibiotic effectiveness is treated as a nonrenewable resource. In the model presented, bacterial resistance (the converse of effectiveness) develops as a result of selective pressure on nonresistant strains due to antibiotic use. When two antibiotics are available, the optimal proportion and timing of their use depends precisely on the difference between the rates at which bacterial resistance to each antibiotic evolves and on the differences in their pharmaceutical costs. Standard numerical techniques are used to illustrate cases for which the analytical problem is intractable.
  26. By: Krupnick, Alan (Resources For the Future); Cropper, Maureen; Alberini, Anna; Heintzelman, Martin; Simon, Nathalie; O'Brien, Bernie; Goeree, Ron
    Abstract: Much of the justification for environmental rulemaking rests on estimates of the benefits to society of reduced mortality rates. This research aims to fill gaps in the literature that estimates the value of a statistical life (VSL) by designing and implementing a contingent valuation study for persons 40 to 75 years of age, and eliciting WTP for reductions in current and future risks of death. Targeting this age range also allows us to examine the impact of age on WTP and, by asking respondents to complete a detailed health questionnaire, to examine the impact of health status on WTP. This survey was self-administered by computer to 930 persons in Hamilton, Ontario, in 1999. The survey uses audio and visual aids to communicate baseline risks of death and risk changes and are tested for comprehension of probabilities before being asked WTP questions. We credit these efforts at risk communication with the fact that mean WTP of respondents faced with larger risk reductions exceeds mean WTP of respondents faced with smaller risk reductions; that is, our respondents pass the external scope test. Our mean WTP estimates for a contemporaneous risk reduction imply a VSL ranging approximately from $1.2 to $3.8 million (1999 C$), depending on the size of the risk change valued, which is at or below estimates commonly used in environmental cost-benefit analyses by the Canadian and the U.S. governments. Interestingly, we find that age has no effect on WTP until roughly age 70 and above (the VSL is about $0.6 million for this age group) and that physical health status, with the possible exception of having cancer, has no effect. We also find that being mentally healthy raises WTP substantially. In addition, compared with estimates of WTP for contemporaneous risk reductions, mean WTP estimates for risk reductions of the same magnitude but beginning at age 70 are more than 50% smaller.
  27. By: Parry, Ian (Resources For the Future)
    Abstract: Health policy will be a major issue in Britain’s next general election. The Labour government is committed to a substantial increase in funds for the National Health Service (NHS) and has eliminated tax relief for private health insurance. The Conservative Opposition party favors subsidizing private health insurance, though it has pledged to match the government’s funding increases for the NHS. This paper develops and implements a methodology for estimating the welfare effects of increasing public and private health care in the United Kingdom, when these policies are financed either by distortionary taxes or by user fees for the NHS. User fees are currently minimal, and the national health market “clears” by creating waiting costs. In the private sector we assume that prices approximately reflect marginal supply costs, and there are no waiting lists. We find that the welfare change from increasing NHS output could easily be negative, particularly when extra spending is financed by distortionary taxes. In contrast, expanding private health care is always efficiency-improving in our simulations. In our central estimates, increasing private health care by a pound’s worth of output produces an efficiency gain of 55 pence, but increasing national health output produces a net efficiency loss of 32 pence per pound! One reason for these results is that increasing the output of rationed health care has ambiguous effects on the total deadweight losses from waiting costs, but these costs unambiguously fall when the private health sector expands. Financing policies by user fees avoids the efficiency costs of raising distortionary taxes, and it also produces efficiency gains by reducing waiting lists. In fact, increasing national health care output produces an overall efficiency gain in most of our simulations, rather than an efficiency loss, when the policy is financed by higher user fees rather than by distortionary taxes. Still, the policy is generally less efficient than a user fee–financed increase in private health care.
  28. By: Krupnick, Alan (Resources For the Future); Cropper, Maureen; Alberini, Anna; Simon, Nathalie
    Abstract: Much of the justification for environmental rulemaking rests on estimates of the benefits to society of reduced mortality rates. Yet the literature providing estimates of the willingness to pay (WTP) for mortality risk reductions measures the value that healthy, prime-aged adults place on reducing their risk of dying, whereas the majority of statistical lives saved by environmental programs, according to epidemiological studies, appear to be the lives of older people and people with chronically impaired health. This paper provides an empirical assessment of the effects of age and baseline health on WTP for mortality risk reductions by reporting the results of two contingent valuation surveys designed to test the above hypotheses. One survey was administered in-person to residents of Hamilton, Ontario, and the other to a nationally representative sample of U.S. residents using the Internet. Both surveys elicited respondents’ WTP for reductions in mortality risk of different magnitudes. Respondents were limited to persons aged 40 years and older, including those older than 60, to examine the impact of age on WTP. Extensive information was collected about each respondent’s health status to see whether it systematically influenced WTP. Our results provide weak support for the notion that WTP declines with age, but only after age 70. Specifically, in our Canadian sample, WTP declines by about 30% after age 70 compared with WTP at younger ages. There is no such statistically significant decline, however, in the U.S. sample. We similarly find no support for the idea that people who have cancer or chronic heart or lung disease are willing to pay less to reduce their risk of dying than people without these illnesses. If anything, people with these illnesses are willing to pay more.
    Keywords: willingness to pay, mortality, contingent valuation, age, health status
    JEL: D61 D62 Q20 Q26
  29. By: Ezzati, Majid; Kammen, Daniel
    Abstract: Globally, almost three billion people rely on biomass (wood, charcoal, crop residues, and dung) and coal as their primary source of domestic energy. Exposure to indoor air pollution from the combustion of solid fuels has been implicated, with varying degrees of evidence, as a causal agent of of disease and mortality in developing countries. We review the current knowledge on the relationship between indoor air pollution and disease, and on the assessment of interventions for reducing exposure and disease. Our review takes an environmental health perspective and considers the details of both exposure and health effects that are needed for successful intervention strategies. We also identify knowledge gaps and detailed research questions that are essential for successful design and dissemination of preventive measures and policies. In addition to specific research recommendations, we conclude that given the central role of housing, household energy, and day-to-day household activities in determining exposure to indoor smoke, research and development of effective interventions can benefit tremendously from integration of methods and analysis tools from a range of disciplines—from quantitative environmental science and engineering, to toxicology and epidemiology, to the social sciences.
    Keywords: Household Energy, Developing Countries, Exposure Assessment, Exposure-Response Relationship, Indoor Air Pollution, Intervention, Public Health.
  30. By: Krupnick, Alan (Resources For the Future); Alberini, Anna; Simon, Nathalie; Cooper, Maureen
    Abstract: Using results from two contingent valuation surveys conducted in Canada and the United States, we explore the effect of a latency period on willingness to pay (WTP) for reduced mortality risk using both structural and reduced form approaches. We find that delaying the time at which the risk reduction occurs by 10 to 30 years significantly reduces WTP for respondents aged 40 to 60 years. Additionally, we estimate implicit discount rates equal to 8% for Canada and 4.5% for the United States—both well within the range established previously in the literature.
    Keywords: value of a statistical life, mortality risks, cost–benefit analysis
    JEL: Q51 Q58
  31. By: Krupnick, Alan (Resources For the Future); Hoffmann, Sandra (Resources For the Future); Adamowicz, Wictor
    Abstract: The recognition that environmental hazards can affect children differently and more severely than adults has provoked growing concern in industrialized nations about the impact of environmental pollution on children’s health. In this paper, commissioned by the OECD, we are charged with examining “economic uncertainties” associated with valuing the benefits of environmental policies that reduce risk to children’s health. We examine two sources of uncertainty in benefits estimation- forecasting uncertainty and modeling uncertainty. We explore how these sources of uncertainty affect the use of standard economic and non-economic approaches to the valuation of health benefits. These include willingness-to-pay measures, cost-of-illness and human-capital measures, and quality-adjusted life years (QALYs) and related non-economic measures.
    Keywords: willingness to pay, QALY, children, social welfare function, health valuation, environmental health, household behavior
    JEL: Q51 I18 I1 J17 D13 D6 D63 D64
  32. By: Krupnick, Alan (Resources For the Future); Alberini, Anna; Simon, Nathalie; Itaoka, Kenshi; Akai, Makoto; Cropper, Maureen
    Abstract: A contingent valuation survey was conducted in Sizuoka, Japan, to estimate the willingness to pay (WTP) for reductions in the risk of dying and calculate the value of statistical life (VSL) for use in environmental policy in Japan. Special attention was devoted to the effects of age and health characteristics on WTP. We find that the VSLs are somewhat lower (103 to 344 million yen) than those found in the virtually identical survey applied in some developed countries. These values were subject to a variety of validity tests, which they generally passed. We find that the WTP for those over age 70 is lower than that for younger adults, but that this effect is eliminated in multiple regression. Rather, when accounting for other covariates, we find that WTP generally increases with age throughout the ages in our sample (age 40 and over). The effect of health status on WTP is mixed, with WTP of those with cancer being lower than that of healthy respondents while the WTP of those with heart disease is greater. The VSLs for future risk changes are lower than those for contemporaneous risk reductions. The implicit discount rates of 5.8–8.0% are relatively larger than the discount rate regularly used in environment policy analyses. This first-of-its-kind survey in Japan provides information directly useful for estimating the benefits of environmental and other policies that lower mortality risks to the general population and sub-groups with a variety of specific traits.
    Keywords: willingness to pay, value of statistical life, mortality risk, contingent valuation, age
  33. By: Mazurek, Janice
    Abstract: This paper seeks to inform the current "regulatory reform" effort in the U.S. by describing how information from risk assessments and cost-benefit analyses is used by decision makers in six other industrialized countries. In Japan, Germany, the United Kingdom, Netherlands, Canada and the European Union decision makers deal with uncertainties associated with risk assessments differently than in the U.S. They are less likely to employ "default assumptions" to bridge uncertainties and instead tailor risk evaluations to the chemical in question. Furthermore, while U.S. agencies are sometimes required to pair information from risk assessments with data from cost-benefit analyses in order to estimate how much it costs to stem or avert environmental and health effects, the decision makers in the six study regimes primarily use such information to set standards, screen chemicals, and identify potential substitutes for hazardous chemicals. Respondents in the study countries say that both quantitative risk assessment and cost-benefit analysis presently contain too many uncertainties to yield meaningful results. However, trade liberalization and shrinking government budgets are stirring greater interest abroad in how the U.S. conducts and uses risk assessments.

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