nep-hea New Economics Papers
on Health Economics
Issue of 2006‒02‒12
twenty-six papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Can we afford to live longer in better health? By Ed Westerhout; Frank Pellikaan
  2. Entry and Regulation - Evidence from Health Care Professions By Schaumans, Catherine; Verboven, Frank
  3. Price regulation and generic competition in the pharmaceutical market By Dalen, Dag Morten; Strøm, Steinar; Haabeth, Tonje
  4. The Income Distributive Implications of Recent Private Health Insurance Policies in Australia By Jongsay Yong; Alfons Palangkaraya; Elizabeth Webster; Peter Dawkins
  5. Reconciling social and industrial goals: a bargaining model to pricing pharmaceuticals By Stefano Capri; Rosella Levaggi
  6. Projecting OECD health and long-term care expenditures: What are the main drivers? By OECD
  7. Addiction and the Interaction between Alcohol and Tobacco Consumption By Pierpaolo Pierani; Silvia Tiezzi
  8. Who gets AIDS and how ? The determinants of HIV infection and sexual behaviors in Burkina Faso, Cameroon, Ghana, Kenya, and Tanzania By de Walque, Damien
  9. Does the impact of socioeconomic status on mortality decrease with increasing age? By Rasmus Hoffmann
  10. Mortality in varying environment By Maxim S. Finkelstein
  11. The cost of population aging: forecasting future hospital expenses in Germany By Hilke Brockmann; Jutta Gampe
  12. Aging: damage accumulation versus increasing mortality rate By Maxim S. Finkelstein
  13. Does the socioeconomic mortality gradient interact with age? Evidence from US survey data and Danish register data By Rasmus Hoffmann
  14. Economic progress as cancer risk factor - I. Puzzling facts of cancer epidemiology By Svetlana V. Ukraintseva; Anatoli I. Yashin
  15. Economic progress as cancer risk factor - II. Why is overall cancer risk higher in more developed countries? By Svetlana V. Ukraintseva; Anatoli I. Yashin
  16. Teenage Childbearing and Child Health in Eritrea By Gebremariam Woldemicael
  17. Validity of Discrete-Choice Experiments - Evidence for Health Risk Reduction By Harry Telser; Peter Zweifel
  18. Deductible or Co-Insurance: Which is the Better Insurance Contract under Adverse Selection? By Michael Breuer
  19. Optimal Insurance Contracts without the Non-Negativity Constraint on Indemnities Revisited By Michael Breuer
  20. Age and Choice in Health Insurance: Evidence from Switzerland By Karolin Becker; Peter Zweifel
  21. Willingness-to-pay Against Dementia: Effects of Altruism Between Patients and Their Spouse Caregivers By Markus Koenig; Peter Zweifel
  22. Consumer Resistance Against Regulation: The Case of Health Care By Peter Zweifel; Harry Telser; Stephan Vaterlaus
  23. The Purpose and Limits of Social Health Insurance By Peter Zweifel
  24. The Impact of Aging on Future Healthcare Expenditure By Lukas Steinmann; Harry Telser; Peter Zweifel
  25. Cost Sharing in Health Insurance: An Instrument for Risk Selection? By Karolin Becker; Peter Zweifel
  26. Entry in Pharmaceutical submarkets: A Bayesian Panel Probit Approach By Gianni Amisano; Maria Letizia Giorgetti

  1. By: Ed Westerhout; Frank Pellikaan
    Abstract: This document analyses the effects of ageing populations upon public finances. More specifically, it focuses on the implications of ageing for acute health care, long-term care, and public pension expenditure. It does so for 15 EU countries. It pays particular attention to three novel insights: <UL> <LI>a large part of health care spending relates to time to death rather than to age <LI>life expectancy may increase much faster than current demographic projections suggest, and <LI>the average health status may continue to improve in the future. </UL> It adopts a generational accounting model that incorporates health care costs during the last years of life, decomposed into an acute health care component and a long-term care component. <P> The projections show that gains in life expectancy increase age-related expenditure; better health has the opposite effect. Combined, these trends reduce health care expenditure and increase pension expenditure. Their joint effect upon public finance is rather modest, however. Hence, the assessment of public finances in most EU15 countries does not change: even if a faster increase in life expectancy should combine with an improvement in health, current fiscal and social security institutions are unsustainable.
    Keywords: ageing populations; fiscal sustainability
    JEL: H62 I10 J11
    Date: 2005–06
  2. By: Schaumans, Catherine; Verboven, Frank
    Abstract: The health care professions in Europe have been subject to substantial entry and conduct regulation. Most notably, pharmacies have frequently received high regulated markups over wholesale costs, and have been protected from additional competition through geographic entry restrictions. We develop an entry model to study the direct impact of the regulations on the pharmacies, and the indirect impact on the physicians who provide related services. We study the case of Belgium, which is representative for many other countries with geographic entry restrictions. We find that the entry decisions of pharmacies and physicians are strategic complements. Furthermore, the entry restrictions have directly reduced the number of pharmacies by more than 50%, and indirectly reduced the number of physicians by about 7%. A policy analysis shows that a removal of the entry restrictions, combined with a large reduction in the regulated markups (by between 10-18%, down from the current 28%) would lead to a large shift in rent to consumers, without reducing the geographic coverage of pharmacies throughout the country. These findings show that the public interest motivation for the current regime has no empirical support. Our findings are also relevant in light of the renewed attention by competition authorities to liberalize professional regulation.
    Keywords: entry; professional services; regulation
    JEL: I11 K21 L10 L43
    Date: 2006–01
  3. By: Dalen, Dag Morten (Norwegian School of Management and the Frisch Centre); Strøm, Steinar (Dept. of Economics, University of Oslo); Haabeth, Tonje (University of Oslo and the Frisch Centre)
    Abstract: In March 2003 the Norwegian government implemented yardstick based price regulation schemes on a selection of drugs experiencing generic competition. The retail price cap, termed “index price”, on a drug (chemical substance) was set equal to the average of the three lowest producer prices on that drug, plus a fixed wholesale and retail margin. This is supposed to lower barriers of entry for generic drugs and to trigger price competition. Using monthly data over the period 1998-2004 for the 6 drugs (chemical entities) included in the index price system, we estimate a structural model enabling us to examine the impact of the reform on both demand and market power. Our results suggest that the index price helped to increase the market shares of generic drugs and succeeded in triggering price competition.
    Keywords: Discrete choice; demand for pharmaceuticals; monopolistic competition; evaluation of yardstick based price regulation
    JEL: C35 D43 I18 L11
    Date: 2005–11–25
  4. By: Jongsay Yong (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Alfons Palangkaraya (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Elizabeth Webster (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Peter Dawkins (Victorian Department of Treasury and Finance)
    Abstract: The Australian government implemented a series of new private health insurance policies between 1997 and 2000. As a result, the proportion of the population with private health insurance coverage increased by more than 35%. However, this paper finds significant evidence that the policy reform disproportionately favours high income earners. In particular, the 30 per cent premium subsidy represents a windfall gain for households which would have purchased private health insurance even without the rebate. The amount of the gain is approximately $900 million per year, a large proportion of which would go to higher income households.
    Date: 2006–02
  5. By: Stefano Capri (Cattaneo University (LIUC)); Rosella Levaggi (Brescia University)
    Abstract: The issues at stake for determining the price of a drug are related to finding an "equitable" trade-off between the legitimate need for the pharmaceutical industry to make a profit and full exploitation of the consumer’s surplus in a market with asymmetry of information. This paper develops a bargaining process where the regulator sets the price of drug in order to maximise the society’s net benefit while the pharmaceutical industry maximises its profit. The resulting price is a weighted average of willingness to pay and cost of the new drug. The weights are represented by the relative strength of the two actors which we show to depend on the importance of the drug for society (other alternatives on the market, the degree of innovation and effectiveness), and on the sustainability of the threat by the pharmaceutical industry to sell the drug only on the private market (medicaments not reimbursed by public healthcare system). Our proposed method allows to set the price of new drugs in different market contexts, i.e. where less effective alternatives are already sold or in new therapeutic areas. Keywords: Pharmaceutical Industry, Regulation, Health Care
    Date: 2005–05
  6. By: OECD
    Abstract: This paper proposes a comprehensive framework for projecting public heath and long-term care expenditures. Notably, it considers the impact of demographic and non-demographic effects for both health and long-term care. Compared with other studies, the paper extends the demographic drivers by incorporating death-related costs and the health status of the population. Concerning non-demographic drivers of health care, the projection method accounts for income elasticity and a residual effect of technology and relative prices. For long-term care, the effects of increased labour participation, reducing informal care, and wage inflation are taken into account. Using this integrated approach, public health and long-term care expenditure are projected for all OECD countries for the years 2025 and 2050. Alternative scenarios are simulated, in particular a 'cost-pressure' and 'cost-containment' scenario, together with sensitivity analysis. Depending on the scenarios, the total health and long-term care spending is projected to increase on average across OECD countries in the range of 3.5 to 6 percentage points of GDP for the period 2005-2050. Cette étude propose un cadre assez complet pour effectuer des projections de dépenses de soins de santé et de soins de long terme. Notamment, à la fois pour les dépenses de santé et les soins de long terme, les effets des facteurs démographiques et non démographiques sont considérés dans l'analyse. En comparaison avec d'autres études, les effets démographiques ont été élargis pour incorporer les coûts liés à la mortalité et à l'état de santé de la population. Pour ce qui concerne les facteurs non démographiques des dépenses de santé, la méthode de projection incorpore un effet d'élasticité-revenu et l'effet résiduel de la technologie et des prix relatifs. Pour les soins de long terme, l'effet d'une participation accrue dans le marché du travail diminuant l'offre de soins informels, et de l'inflation des salaires ont été pris en compte. Sur la base de cette approche intégrée, les dépenses publiques de santé et des soins de long terme sont projetées pour tous les pays de l'OCDE et pour les années 2025 et 2050. Des scénarios alternatifs ont été simulés, en particulier un "scénario de pression sur les coûts" et un "scénario de contention des coûts", ainsi qu’une analyse de sensitivité. En fonction des scénarios, le total des dépenses de santé et des soins de long terme est projeté d'augmenter pour la moyenne de l’OCDE entre 3.5 et 6 points de PIB pour la période 2005-2050.
    Keywords: ageing populations, vieillissement de la population, longevity, longévité
    JEL: H51 I12 J11 J14
    Date: 2006–02
  7. By: Pierpaolo Pierani; Silvia Tiezzi
    Abstract: This paper adopts a multi-commodity habit formation model to study whether unhealthy behaviours are related, i.e. whether there are contemporaneous and inter temporal complementarities in Italian consumption of alcohol and tobacco. Own and crossprice elasticities, as well as the income elasticities, are calculated from the parameters of a semi-reduced system estimated on aggregate annual time series for alcohol and tobacco expenditures over the period 1960-2002. Own price elasticities are negative and tobacco appears to be more responsive than alcohol demand, although both responses are less than unity. Cross price elasticities are also negative and asymmetric showing that alcohol and tobacco are complements. Whereby a ”double dividend” could then be exploited, because public policy needs to tackle the consumption of one good only to control the demand of both. The asymmetry in the values of the cross price elasticities coupled with the relative magnitude of the own price responses suggest that the optimal strategy for maximizing public revenues through increases in ”sin” goods excise taxation would be to raise alcohol taxation more than tobacco. Finally, past consumption of one addictive good does not significantly reinforce current consumption of the other addictive good
    Keywords: addiction models; sin goods; GMM estimator
    JEL: D12 C32
    Date: 2005–11
  8. By: de Walque, Damien
    Abstract: This paper analyzes the determinants of HIV infection and associated sexual behaviors using data from the first five Demographic and Health Surveys to include HIV testing for a representative sample of the adult population. Emerging from a wealth of country relevant results, four important findings can be generalized. First, married women who engage in extra-marital sex are less likely to use condoms than single women when doing so. Second, having been in successive marriages is a significant risk-factor, as evidenced by the results on HIV infection and on sexual behaviors. Contrary to prima facie evidence, education is not associated positively with HIV status. But schooling is one of the most consistent predictors of behavior and knowledge: education predicts protective behaviors like condom use, use of counseling and testing, discussion amo ng spouses and knowledge, but it also predicts a higher level of infidelity and a lower level of abstinence. Finally, male circumcision and female genital mutilation are often associated with sexual behaviors, practices, and knowledge related to AIDS. This might explain why in the analysis in the five countries there is no significant negative association between male circumcision and HIV status, despite recent evidence from a randomized control trial that male circumcision has a protective effect.
    Keywords: AIDS HIV,Adolescent Health,Population & Development,Anthropology,Gender and Development
    Date: 2006–02–01
  9. By: Rasmus Hoffmann (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The impact of SES on mortality is an established fact. I examine if this impact decreases with increasing age. Most research finds that it does so but it is unknown whether this decrease is due to mortality selection. The data I use come from the US-Health and Retirement Study, which surveyed 9376 persons aged 59 and over from 1992 to 2000. The variables allow for a time varying measurement of SES, health and behavior. Event-history-analysis is applied to analyze differences in mortality rates. My results show that socioeconomic mortality differences are stable across ages whereas they clearly decline with decreasing health. My first finding, that health rather than age is the equalizer combined with the second finding, that good health itself is unequally distributed, leads to the conclusion that in old age, the impact of SES is transferred to the health status and hence it is stable across ages.
    Keywords: United States, mortality, old age, socio-economic differentials
    JEL: J1 Z0
    Date: 2004–05
  10. By: Maxim S. Finkelstein (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: An impact of environment on mortality, similar to survival analysis, is often modeled by the proportional hazards model, which assumes the corresponding comparison with a baseline environment. This model describes the memory-less property, when the mortality rate at a given instant of time depends only on the environment at this in-stant of time and does not depend on the history. In the presence of degradation the assumption of this kind is usually unrealistic and history-dependent models should be considered. The simplest stochastic degradation model is the accelerated life model. We discuss these models for the cohort setting and apply the developed approach to the period setting for the case when environment (stress) is modeled by the functions with switching points (jumps in the level of the stress).
    JEL: J1 Z0
    Date: 2004–12
  11. By: Hilke Brockmann (Max Planck Institute for Demographic Research, Rostock, Germany); Jutta Gampe (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Forecasts are always wrong. Still, they paint potential future scenarios and provide a platform for policy decisions today. This is what gives forecast such a high salience in political debates about the effects of population aging. The paper aims at gauging the effect of population aging on hospital expenses in Germany. We use a probabilistic forecast model comprising a stochastic demographic component that exploits historical mortality trends, a stochastic cost component based on typical hospital costs over the life-course, and a quality measure of medical progress, which builds on past advances in hospital treatment. Three different scenarios are constructing, yielding 3 important results. Firstly, there is an increase in overall hospital expenditure until the German baby boomers will die out (2040 to 2050). Secondly, the increase is comparably moderate because the average individual costs are likely to decline as elderly health improves and since medical progress has an ambiguous influence on hospital expenditures. Finally, the cost increase varies significantly by gender and disease.
    JEL: J1 Z0
    Date: 2005–03
  12. By: Maxim S. Finkelstein (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: If aging is understood as some process of damage accumulation, it does not necessarily lead to increasing mortality rates. Within the framework of a suggested generalization of the Strehler-Mildwan (1960) model, we show that even for models with monotonically increasing degradation, the mortality rate can still decrease. The de-cline in vitality and functions, as manifestation of aging, is modeled by the monotonically decreasing quality of life function. Using this function, the initial lifetime ran-dom variable with ultimately decreasing mortality rate is ‘weighted’ to result in a new random variable which is already characterized by the increasing rate.
    JEL: J1 Z0
    Date: 2005–08
  13. By: Rasmus Hoffmann (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The aim of our paper is to provide an answer to the questions if and why social differences in health and mortality decrease with age. Most research confirms this decrease but the reasons for it and the role of unobserved heterogeneity are unknown. The data used for our analysis come from the US Health and Retirement Study (n=9376) and from the Danish Demographic Database (Denmark’s population above age 58). They offer detailed information about SES and health information. The technique of event-history-analysis is used, and frailty models address mortality selection. A new method is developed to consider systematic difference in the change of average frailty over age between social groups. SES differentials in mortality converge with age in Denmark but not in the US. In both countries, they converge strongly with decreasing health. When controlled for health, the differences are stable across age in both countries. This means that worsening health levels social mortality differences and not increasing age. Controlling for mortality selection removes the converging pattern over age.
    Keywords: Denmark, United States, health, mortality, old age, socio-economic differentials, socio-economic status
    JEL: J1 Z0
    Date: 2005–08
  14. By: Svetlana V. Ukraintseva (Max Planck Institute for Demographic Research, Rostock, Germany); Anatoli I. Yashin (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The increase in cancer burden in developed countries refers to three major causes: population aging, an increase in the cancer incidence rate, and an improvement in the survival of cancer patients. Among these reasons, only the increase in the cancer incidence rate is a negative factor that could be really managed to decrease cancer burden; it, thus, urgently needs explanation and action to develop adequate cancer prophylactics. We have conducted a comparative analysis of cancer incidence and mortality rates in different countries of the world for different time periods. The typical age-trajectory of overall cancer incidence rate (for both sexes and all cancers combined) is characterized by a peak in early childhood, low risk in youth, increasing risk afterwards, and a leveling-out or even a decline in cancer risk for the oldest old. Patterns of age-specific cancer mortality resemble the incidence rate patterns; however, mortality is commonly lower and its curve shifts towards higher age. This shift could be due to a time lag between the age of cancer diagnosis and death from the disease. Analysis of time and place differences in the cancer incidence rate revealed that the overall cancer risk is higher in more developed regions as compared with less developed ones, and that until recently it increased over time along with economic progress. The proportions of separate cancer sites within the overall cancer morbidity differ between more and less developed regions, and their change over time is also linked to economic development. Surprisingly, cancer incidence and mortality rates exhibit different time trends. This divergence is most probably related to the substantial improvement in the survival of cancer patients observed in the last 50 years in developed countries. This improved survival has decreased cancer mortality but not its incidence, which has increased. This suggests that in developed countries cancer treatment has seen much more substantial progress than cancer prophylaxis, which has hardly seen positive results for the majority of human cancers (with a few exceptions). In our second paper we discuss possible explanations of the link between economic progress and the increase in the overall cancer risk. Key words: cancer incidence rate, age-patterns, time trends, place differences, economic progress
    JEL: J1 Z0
    Date: 2005–08
  15. By: Svetlana V. Ukraintseva (Max Planck Institute for Demographic Research, Rostock, Germany); Anatoli I. Yashin (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Analysis of data on cancer incidence rates in different countries at different time periods revealed positive association between overall cancer risk and economic progress. Typical explanations of this phenomenon involve improved cancer diagnostics and elevated exposure to carcinogens in industrial countries. Here we provide evidence from human and experimental animal studies suggesting that some other factors associated with high economic development and Western life style may primarily increase the proportion of susceptible to cancer individuals in a population and thus contribute to elevated cancer risks in industrial countries. These factors include (but not limited to): (i) better medical and living conditions that “relax” environmental selection and increase share of individuals prone to chronic inflammation; (ii) several medicines and foods that are not carcinogenic themselves but affect the metabolism of established carcinogens; (iii) nutrition enriched with growth factors; (iv) delayed childbirth. The latter two factors may favor an increase in both cancer incidence rate and longevity in a population. This implies the presence of a trade-off between cancer and aging: factors that postpone aging may simultaneously enhance organism’s susceptibility to several cancers. Key words: cancer risk, individual susceptibility, economic progress, aging
    JEL: J1 Z0
    Date: 2005–08
  16. By: Gebremariam Woldemicael
    Abstract: Data from the 2002 Eritrea Demographic and Health Survey (EDHS) are used to examine teenage childbearing and its health consequences. Bivariate analysis is used to calculate trends and differentials in teenage childbearing. Logistic and Cox hazard models are employed to examine the health impact of teenage childbearing on mothers and their children. Teenage childbearing is high in Eritrea, where around half of all women aged 19 have already been pregnant with their first child. Nearly all first births among teenagers occur within marriage. A decline in teenage childbearing is evident over the period 1995-2002. If the mother is a teenager when she gives birth, particularly if she is under 18, she can expect worse prenatal medical care, an increased risk of low birth weight and higher child mortality compared to an older mother. The effect of age of mothers is significant even when controlling for sociodemographic factors. Strategies designed to reduce the health effecs of teenage childbearing should address both maternal age and behavioral factors.
    JEL: J1 Z0
    Date: 2005–09
  17. By: Harry Telser (Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich)
    Abstract: There is growing interest in discrete-choice experiments (DCE) as a method to elicit consumers' preferences in the health care sector. Increasingly this method is used to determine willingness-to-pay (WTP) for health-related goods. However, its external validity in the health care domain has not been investigated until today. This paper examines the external validity of DCE concerning the reduction of a health risk. Convergent validity is examined by comparing the value of a statistical life with other preference elicitation techniques, such as revealed preference. Criterion validity is shown by comparing WTP values derived from stated choices in the experiment with those derived from actual choices made by the same individuals. Both tests provide strong evidence in favor of external validity of the DCE method.
    Keywords: Choice Experiments (DCE), Willingness-to-Pay (WTP), Validity, Risk Reduction, Hip Protectors
    JEL: C25 C52 D12 I18 I19
    Date: 2003–10
  18. By: Michael Breuer (Socioeconomic Institute, University of Zurich)
    Abstract: The standard solution to adverse selection is the separating equilibrium introduced by Rothschild and Stiglitz. Usually, the Rothschild-Stiglitz argument is developed in a model that allows for two states of the world only. In this paper adverse selection is dis-cussed for continuous loss distributions. This gives rise to the new problem of finding the proper form of an insurance contract to impose partial insurance of the low risks. This paper contributes to the discussion on optimal insurance. It analyzes two basic forms of insurance contracts: A contract with a deductible and a contract imposing a positive co-insurance rate. Since high risks can always self-reveal themselves as high risks and buy the optimal insurance contract at high risks’ premiums the Pareto-superior insurance contract is the one that leaves the low risks with higher expected utility while deterring high risks from joining the contract that is designed for low risks. The deductible contract turns out to be superior if premiums contain a sufficiently high loading.
    Keywords: Insurance, Adverse Selection, Deductible, Co-Insurance
    JEL: D81 D82 D62
    Date: 2004–01
  19. By: Michael Breuer (Socioeconomic Institute, University of Zurich)
    Abstract: In the literature on optimal indemnity schedules, indemnities are usually restricted to be non-negative. Gollier (1987) shows that this constraint might well bind: insured could get higher expected utility if insurance contracts would allow payments from the insured to the insurer at some losses. However, due to the insurers’ cost function Gollier supposes, the optimal insurance contract he derives underestimates the relevance of the non-negativity constraint on indemnities. This paper extends Gollier’s findings by allowing for negative indemnity payments for a broader class of insurers’ cost functions.
    Keywords: Insurance, Indemnity, Deductible, Co-Insurance
    JEL: D80 D81 D89
    Date: 2004–04
  20. By: Karolin Becker (Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich)
    Abstract: Elements of regulation inherent in most social health insurance systems are a uniform package of benefits and uniform cost sharing. Both elements risk to burden the population with a welfare loss if preferences differ. This suggests introducing more contracted choice; however, it is widely believed that this would not benefit the aged. This study examines the relationship between age and willingness-to-pay (WTP) for additional options in Swiss social health insurance. Through discrete choice experiments, a marked diversity of preferences can be established. The .ndings suggest that the aged require less rather than more compensation for all cutbacks considered, pointing to potential for contracts that induce self-rationing, in return for lower premiums.
    Keywords: willingness-to-pay, health insurance, age, rationing
    JEL: C35 C93 D61 I11 I18
    Date: 2004–08
  21. By: Markus Koenig; Peter Zweifel (Socioeconomic Institute, University of Zurich)
    Abstract: Objectives - Preferences of both Alzheimer patients and their spouse caregivers are related to a willingness-to-pay (WTP) measure which is used to test for the presence of mutual (rather than the conventional one-way) altruism. Methods - Identical contingent valuation interviews were conducted in 2000 - 2002 for 126 Alzheimer patients and their caregiving spouses living in the Zurich metropolitan area (Switzerland). We elicit WTP three hypothetical treatments of the demented patient. The treatment Stabilization prevents the worsening of the disease, bringing dementia to a standstill. Cure restores patient health to its original level. In No burden, dementia takes its normal course while caregiver’s burden is reduced to its level before the disease. Results - Different characteristics of therapies are reflected in differences in WTP values. Accepting WTP values as expression of preferences, one finds that patients do not rank Cure higher than No burden; implying that their WTP is entirely altruistic. Caregiving spouses rank Cure before Burden, some 40 percent of their WTP reflecting an altruistic motive again. Discussion - The evidence suggests that WTP values are reliable measures of subjective preferences even in Alzheimer patients. Using this indicator, it is found that only caregivers have extra WTP for Cure, implying that curing dementia has value exclusively to them.
    Keywords: Alzheimer's Disease, dementia, willingness-to-pay, altruism
    JEL: I12 D13
    Date: 2004–09
  22. By: Peter Zweifel (Socioeconomic Institute, University of Zurich); Harry Telser (Socioeconomic Institute, University of Zurich); Stephan Vaterlaus (Plaut Economics, Regensdorf)
    Abstract: Regulation fostering Managed Care alternatives in health insurance is spreading. This work reports on an experiment designed to measure the amounts of compensation asked by the Swiss population (in terms of reduced premiums) for Managed-Care type restrictions in the provision of health care. It finds that restrictions on the freedom of physician choice would require an average compensation of more than one-third of the premium, while generic substitution even meets with a small willingness to pay. Marked preference heterogeneity is an argument against regulation imposing uniformity of contract in Swiss social health insurance.
    Keywords: health insurance, health care, regulation, preference measurement, discrete choice experiments
    JEL: L51 D61 C93 I11 I18
    Date: 2005–02
  23. By: Peter Zweifel (Socioeconomic Institute, University of Zurich)
    Abstract: This contribution seeks to answer two related questions. First, what is the purpose of social health insurance? Or put in slightly different terms, what are the reasons for social (or public) health insurance to exist, even to dominate private health insurance in most developed countries? And second, what are the limits of social health insurance? Can one say that there is "too much" social health insurance in the following two senses: Should the balance be shifted towards the private alternative? And is the degree of coverage excessive?
    Keywords: social health insurance, private health insurance, insurance coverage
    JEL: I11 I18
    Date: 2005–09
  24. By: Lukas Steinmann (Avenir Suisse, Zurich); Harry Telser (Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich)
    Abstract: The impact of aging on healthcare expenditure (HCE) has been at the center of a prolonged debate. This paper purports to shed light on several issues. First, it presents new evidence on the relative importance of the two components of HCE that have been distinguished by Zweifel, Felder and Meier (1999), viz. the cost of morbidity and the cost of mortality (their "red herring" hypothesis claims that neglecting the mortality component results in excessive estimates of future growth of HCE). Second, it takes account of recent evidence suggesting that HCE does increase life expectancy, implying that time-to-death is an endogenous determinant of HCE. Third, it investigates the contribution of population aging to the future growth of HCE. For the case of Switzerland, it finds this contribution to be relatively small regardless of whether or not the cost of dying is accounted for, thus qualifying the "red herring" hypothesis.
    Keywords: Health econometrics, Aging, Cost of dying, Healthcare expenditure
    JEL: J14 I12
    Date: 2005–09
  25. By: Karolin Becker (Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich)
    Abstract: Health insurance is potentially subject to risk selection, i.e. adverse selection on the part of consumers and cream skimming on the part of insurers. Adverse selection models predict that competitive health insurers can eschew high-risk individuals by o¤ering contracts with low deductibles or co-payment rates, while attracting low-risk individuals with higher copayments, resulting in a separating equilibrium. This contribution seeks to determine whether in competitive Swiss social health insurance policies with deductibles in excess of the legal minimum do indeed serve as an instrument of risk selection. In a discrete choice experiment, e¤ected in 2003, some 1,000 individuals were given the hypothetical choice of alternative insurance contracts that differed both in terms of deductibles and copayments and in bene.ts covered. Results suggest that healthy individuals, i.e. those not having consulted medical services during the past six months, were more likely to select a policy with a high deductible. Compensation demanded for voluntarily accepting an increase in the annual deductible also varies with socioeconomic characteristics and increases with the current level of deductible, as predicted by theory and constituting evidence in favor of the risk selection hypothesis. The experiment allows to compute necessary premium reductions and provides guidance for the pricing policy of insurers when o¤ering di¤erentiated products.
    Keywords: health insurance, deductible, copayment, willingness-to-pay, ad- verse selection
    JEL: C35 C93 D61 I11 I18
    Date: 2005–11
  26. By: Gianni Amisano; Maria Letizia Giorgetti
    Abstract: In this paper we analyze entry dynamics in new submarkets of pharma- ceutical companies in the period 1987-1998 in seven countries considered as a single country and on each country separately. In particular we study entry decisions at time t in a new submarket, conditioned on the entrance or non-entrance in a new submarket at time t-1. Our analysis is based on a Bayesian approach which allows us to properly account for hetero- geneity among ?rms. We try to manage the inclusion among regressors of non strictly exogenous variables, which can be correlated with unobserved heterogeneity. Reassuming, the relevant variables are the achieved diver- si?cation indipendently of the size and other strategic variables connected with the attractiveness of each submarket. The unobservable heterogeneity is not explained by the lagged dependent variable but rather by the initial diversi?cation.

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