nep-hea New Economics Papers
on Health Economics
Issue of 2006‒03‒18
eight papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Consumer price sensitivity in health insurance By CPB
  2. Crowding-out effect of tobacco expenditure and its implications on intra-household resource allocation By Rijo John
  3. Health Care Employment and Income Impacts on the Economy of Iowa Counties By Imerman, Mark D.; Otto, Daniel; Artz, Georgeanne
  4. Estimating the Out-of-Hospital Mortality Rate Using Patient Discharge Data By Mehdi Farsi; Geert Ridder
  5. Asymmetric Information from Physician Agency:Optimal Payment and Healthcare Quantity By Philippe Chone; Ching-to Albert Ma
  6. Worker Sorting, Taxes and Health Insurance Coverage By Kevin Lang; Hong Kang
  7. The Impact of Poor Health on Education: New Evidence Using Genetic Markers By Weili Ding; Steven Lehrer; J. Niles Rosenquist; Janet Audrain-McGovern
  8. The Gatekeeping Role of General Practitioners. Does Patients' Information Matter? By Paula González

  1. By: CPB
    Abstract: This CPB Discussion Paper presents new estimates for the price elasticity of the residual demand for health insurance. This elasticity measures the loss in market share of a health insurer as a consequence of a unilateral increase in price, assuming other firms keep their prices constant. The main findings are as follows: the price elasticity of residual demand for social health insurance by enrollees was very low during the period 1996-2002. We find small but significant effects of the price of basic insurance but no robust effect of the price of supplementary insurance. Young enrollees are more price sensitive than older enrollees. However, these findings are conditional on the limited variation in price observed in our data. At larger price differentials, the elasticity may well be higher. This Discussion Paper is based on joint work of Machiel van Dijk, Marc Pomp, Rudy Douven (all three at CPB), Trea Laske-Aldershof, Erik Schut (both Erasmus University), Willem de Boer and Anne de Boo (Vektis). We would like to thank Marieke Smit (Vektis) for her help in getting this project off the ground. We would also like to thank Katie Carman (Tilburg University) for her comments on a previous draft of this paper.
    Keywords: Health insurance; price elasticity
    JEL: D12 I11 I18 L11
    Date: 2006–02
  2. By: Rijo John (Indira Gandhi Institute of Development Research)
    Abstract: The aim of this paper is to examine if tobacco consumption crowds-out consumption of basic needs and whether it has implications for nutrition intake and intra-household resource allocation in developing countries. In the process we also examine whether preference over other commodities for tobacco users and non users vary significantly. Using a nationally representative household sample survey from India for the year 1999-2000, we analyze the pattern of spending on various groups of commodities by the status of tobacco consumption of households. Average per capita per diem intake of nutrients such as calorie, fat and protein were reported to be lower among the high tobacco spending group of households vis-a-vis the no-spending category. A system of quadratic conditional Engel curves was estimated for a set of ten broad groups of commodities. Separability between tobacco and most other goods was rejected. The results suggest that tobacco consuming households had lower consumption of certain commodities such as milk, clean fuels and entertainment which has direct bearing on mostly children and female members in the household suggesting possible `gender effects' and biases in intra-household resource allocation. Tobacco spending also found to have negative effects on household nutrition intake.
    Keywords: tobacco, consumption, poverty, crowd-out, India
    JEL: D12 D61 H31 I18 R22
    Date: 2006–03
  3. By: Imerman, Mark D.; Otto, Daniel; Artz, Georgeanne
    Abstract: These county reports provide estimates of the transactional value of the local health care industries in each of the nonmetropolitan counties in Iowa. This transactional value comes from the business transactions that health care providers engage in (employing staff, purchasing supplies, etc.) and is different from the quality and outcome values of the actual services provided. Transaction values are estimated using data from IMPLAN and various state and federal data sources. The importance of health care establishments as community service providers, though difficult to quantify, is generally unquestioned. The advantages of local access to these services are taken as obvious. The transactional role of these providers in the local economy is not the primary justification for the establishment and maintenance of a local health care system. The transactions related to providing these services, however, are economically significant but are often overlooked. Health care establishments, from dentists and physical therapists to hospital facilities and nursing homes, employ many people and have sizeable payrolls. They are involved in a substantial number of economic transactions and capital flows within their local communities. These studies provide estimates of the employment, income, and transactional effects of these industries on the economies of Iowa’s nonmetropolitan counties. The specific objectives of these reports are to: 1. Summarize the direct economic activities of the health sector; 2. Review concepts of community economics and multipliers related to healthcare; and 3. Estimate the secondary impacts of the health sector on each local economy
    Date: 2006–03–14
  4. By: Mehdi Farsi; Geert Ridder
    Abstract: This paper is a case study of the use of public use administrative data for the estimation of empirical relations when key dependent variables are not available in the data. It is shown that the out-of-hospital mortality rates can be identified using the patient discharge data without post-discharge death records. Using data on the lengths of hospitalizations and out-of-hospital spells, the mortality rates before and after discharge as well as discharge and re-hospitalization rates are estimated for a sample of heart-attack patients hospitalized in California between 1992 and 1998. The results suggest that ignoring variation of discharge rates among hospital types could be misleading in evaluating hospital performance regarding mortality risks.
    Keywords: Mortality, Hospital quality, Duration models, Survival analysis
  5. By: Philippe Chone (CREST-LEI and CNRS URA 2200); Ching-to Albert Ma (Department of Economics, Boston University)
    Abstract: We model asymmetric information arising from physician agency, and its effect on the design of payment and healthcare quantity. The physician-patient coalition aims to maximize a combination of physician profit and patient benefit. The degree of substitution between profit and patient benefit in the physician-patient coalition is the physician’s private information, as is the patient’s intrinsic valuation of treatment quantity. The equilibrium mechanism depends only on the physician-patient coalition parameter. Moreover, the equilibrium mechanism exhibits extensive pooling, with prescribed quantity and payment being insensitive to the agency characteristics or patient’s actual benefit. The optimal mechanism is interpreted as managed care where strict approval protocols are placed on treatments.
    Keywords: Physician Agency, Altruism, Optimal Payment, Healthcare Quantity, Managed Care
    JEL: D82 I1 I10 L15
    Date: 2004–08
  6. By: Kevin Lang (Department of Economics, Boston University); Hong Kang (Department of Economics, Boston University)
    Abstract: We develop a model in which firms hire heterogeneous workers but must offer all workers insurance benefits under similar terms. In equilibrium, some firms offer free health insurance, some require an employee premium payment and some do not offer insurance. Making the employee contribution pre-tax lowers the cost to workers of a given employee premium and encourages more firms to charge. This increases the offer rate, lowers the take-up rate, increases (decreases) coverage among high (low) demand groups, with an indeterminate overall effect. We test the model using the expansion of section 125 plans between 1987 and 1996. The results are generally supportive.
    Date: 2005–03
  7. By: Weili Ding (Queen's University); Steven Lehrer (Queen's University); J. Niles Rosenquist (University of Pennsylvania); Janet Audrain-McGovern (University of Pennsylvania)
    Abstract: This paper examines the influence of health conditions on academic performance during adolescence. To account for the endogeneity of health outcomes and their interactions with risky behaviors we exploit natural variation within a set of genetic markers across individuals. We present strong evidence that these genetic markers serve as valid instruments with good statistical properties for ADHD, depression and obesity. They help to reveal a new dynamism from poor health to lower academic achievement with substantial heterogeneity in their impacts across genders. Our investigation further exposes the considerable challenges in identifying health impacts due to the prevalence of comorbid health conditions and endogenous health behaviors.
    Keywords: health, education, genetic predisposition, obesity, ADHD, depression, instrumental variables, risky health behaviors
    JEL: I1 I2 C21
    Date: 2006–01
  8. By: Paula González (Department of Economics, Universidad Pablo de Olavide)
    Abstract: We develop a principal-agent model in which the health authority acts as a principal for both a patient and a general practitioner (GP). The goal of the paper is to investigate the relative merits of gatekeeping and non-gatekeeping systems and to analyze the role of the quality of patient information and referral pressure in determining which model dominates. We find that, whenever GPs incentives matter, non-gatekeeping is better only if there is a sufficiently high pressure for referral. At the same time, for a non-gatekeeping system to dominate, the quality of the patient information should not be extreme: neither too bad (patient’ s self-referral would be very inefficient) nor too good (the GP’s agency problem would be very costly).
    Keywords: General Practice, Moral hazard, Incentives, Patients’ beliefs, Patients’ pressure, Referrals.
    JEL: D82 H51 I18 L51
    Date: 2006–03

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