nep-hea New Economics Papers
on Health Economics
Issue of 2006‒04‒22
twenty papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Who carries the Burden of Reproductive Health and AIDS Programs? - Evidence from OECD Donor Countries By Hendrik P. van Dalen
  2. The Impact of Aggregate and Idiosyncratic Income Shocks on Health Outcomes: Evidence from the PSID By Timothy Halliday
  3. Sickness absence and health care in an economic federation By Granlund, David
  4. Socioeconomic Status and Sickness Absence - What do twins tell us about causality? By Nilsson, William
  5. The effects of taxes and bans on passive smoking By Jerome Adda; Francesca Corniglia
  6. Testing for adverse selection into private medical insurance By Pau Olivella; Marcos Vera-Hernandez
  7. Health Information and the Choice of Fish Species: An Experiment Measuring the Impact of Risk and Benefit Information By Marette, Stéphan; Roosen, Jutta; Blanchemanche, Sandrine; Verger, Philippe
  8. Dynamics of Work Disability and Pain By Arie Kapteyn; James P. Smith; Arthur van Soest
  9. Consumer Demand under Price Uncertainty: Empirical Evidence from the Market for Cigarettes By Mark Coppejans; Donna Gilleskie; Holger Sieg; Koleman Strumpf
  10. Health Care Quality Indicators Project: Initial Indicators Report By Soeren Mattke; Edward Kelley; Peter Scherer; Jeremy Hurst; Maria Luisa Gil Lapetra; HCQI Expert Group Members
  11. Health Care Quality Indicators Project: Conceptual Framework Paper By Edward Kelley; Jeremy Hurst
  12. Income-related reporting heterogeneity in self-assessed health: evidence from France. By Fabrice Etilé; Carine Milcent
  13. Avoidable Mortality Risks and Measurement of Wellbeing and Inequality By K.K.Tang; Prasada Rao
  14. Measuring Selection Incentives in Managed Care: Evidence from the Massachusetts State Employee Insurance Program By Anupa Bir; Karen Eggleston
  15. Pseudo-Generic Products and Mergers in Pharmaceutical Markets By Granier, L.; Trinquard, S.
  16. Income, relative income, and self-reported health in Britain 1979-2000 By Hugh Gravelle; Matt Sutton
  17. Trends in health care commissioning in the English NHS: an empirical analysis By Mark Dusheiko; Maria Goddard; Hugh Gravelle; Rowena Jacobs
  18. GP supply and obesity By Stephen Morris; Hugh Gravelle
  19. Do the incentive payments in the new NHS contract for primary care reflect likely population health gains? By Robert Fleetcroft; Richard Cookson
  20. The main methodological issues in costing health care services: A literature review By Zsolt Mogyorosy; Peter Smith

  1. By: Hendrik P. van Dalen (Erasmus Universiteit Rotterdam, and NIDI, The Hague)
    Abstract: This paper tries to establish who carries the burden in supporting reproductive health and AIDS programs worldwide. The 1994 International Conference of Population and Development (ICPD) in Cairo established goals for the expansion of assistance in matters of reproductive health and AIDS. This global effort has so far not sufficiently been supported by funds and this paper looks at what lies behind the level of funds and the sharing of financial burdens. Panel data on expenditures for population and AIDS activities funded by 21 donor countries for the years 1983-2002 are examined by means of dynamic panel data estimation. On an aggregated scale small donors 'exploit' the large donors: large donors give more resources than their 'fair share', i.e. their income weight in the group of donors. However, this picture is not true for the finance and support for multilateral organizations where every donor country pays its fair share. The exploitation hypothesis is true for the cases of bilateral aid and NGOs. The exploitation model gives however a partial view of what determines the sharing of burdens. To understand burden sharing across countries fully one needs to take account of the most dominant religions in a country, the pro-foreign aid stance of a government and the government size. Donor countries are not much affected in their funding behavior by the state of development of the least developed countries.
    Keywords: Foreign aid; donors; health; HIV/AIDS; global collective action; free rider
    JEL: D74 F35 D78 O19
  2. By: Timothy Halliday (Department of Economics, University of Hawaii at Manoa; John A. Burns School of Medicine, University of Hawaii at Manoa)
    Abstract: In this paper, we investigate the impact of aggregate and idiosyncratic economic shocks on health using data on self-reported health status and mortality from the Panel Study of Income Dynamics. First, we document a large correlation between poor macroeconomic conditions and mortality for working-aged men. This correlation is robust to controls for baseline health which mitigates concerns that the correlation is the result of selection. There is no relationship between macroeconomic conditions and mortality for women. Next, to better understand how much of this correlation is the result of a causal impact of income shocks on health, we use methods from the literature on dynamic panel data models. Doing this, we find evidence of a causal impact of income shocks on health for working-aged men at the lowest parts of the income distribution. Finally, our analysis provides no evidence that recessions are good for your health.
    Keywords: gradient, recessions, health, dynamic panel data models
    JEL: I0 I12 J1
    Date: 2006
  3. By: Granlund, David (Department of Economics, Umeå University)
    Abstract: This paper concerns vertical fiscal externalities in a model where the state governments provide health care and the federal government provides a sickness benefit. Both levels of government tax labor income and policy decisions affect labor income as well as participation in the labor market. The results show that the vertical externality affecting the state governments’ <p> policy decisions can be either positive or negative depending on, among other things, the wage elasticity of labor supply and the marginal product of expenditures on health care. Moreover, it is proved that the vertical fiscal externality will not vanish by assigning all powers of taxation to the states.
    Keywords: economic federation; moral hazard; vertical fiscal externalities; sickness absence; sickness benefits
    JEL: H21 H42 H77
    Date: 2005–10–03
  4. By: Nilsson, William (Department of Economics, Umeå University)
    Abstract: The purpose of this study is to empirically investigate causal effects between socioeconomic status and absence from the workplace due to sickness. To be able to conclude that income causally affects health it is important to control for both reverse causality and unobserved heterogeneity. This study uses a Swedish sample of female twins and a semiparametric censored fixed-effects model. Spousal income is correlated in cross-section with the share of total income that comes from benefits due to sickness absence. Results from this twin study indicate that male spousal income, i.e. a non-shared environmental influence, does not have a causal effect.
    Keywords: Income; education; health; causality; twins
    JEL: C24 I12 I21
    Date: 2006–01–19
  5. By: Jerome Adda (Institute for Fiscal Studies and University College London); Francesca Corniglia
    Abstract: This paper evaluates the effect of excise taxes and bans on smoking in public places on the exposure to tobacco smoke of non-smokers. We use a novel way of quantifying passive smoking: we use data on cotinine concentration- a metabolite of nicotine- measured in a large population of non-smokers over time. Exploiting state and time variation across US states, we reach two important conclusions. First, excise taxes have a significant effect on passive smoking. Second, smoking bans have on average no effects on non smokers. While bans in public transportation or in schools decrease the exposure of non smokers, bans in recreational public places can in fact perversely increase their exposure by displacing smokers to private places where they contaminate non smokers, and in particular young children. Bans affect socioeconomic groups differently: we find that smoking bans increase the exposure of poorer individuals, while it decreases the exposure of richer individuals, leading to widening health disparities.
    Date: 2005–12
  6. By: Pau Olivella; Marcos Vera-Hernandez (Institute for Fiscal Studies)
    Abstract: We develop a test for adverse selection and use it to examine private health insurance markets. In contrast to earlier papers that consider a purely private system or a system in which private insurance supplements a public system, we focus our attention on a system where privately funded health care is substitutive of the publicly funded one. Using a model of competition among insurers, we generate predictions about the correlation between risk and the probability of taking private insurance under both symmetric information and adverse selection. These predictions constitute the basis for our adverse selection test. The theoretical model is also useful to conclude that the setting that we focus on is especially attractive to test for adverse selection. Using the British Household Panel Survey, we find evidence that adverse selection is present in this market.
    Keywords: Contract theory, Testing, Health Insurance
    JEL: D82 I19 G22
    Date: 2006–01
  7. By: Marette, Stéphan; Roosen, Jutta; Blanchemanche, Sandrine; Verger, Philippe
    Abstract: An experiment was conducted in France to evaluate the impact of health information on consumers’ choice between two different types of fish. Successive messages revealing risks (methylmercury) and benefits (omega-3s) of consuming the fish, along with consumption recommendations, were delivered. Results show a significant difference of reaction according to the order and type of information. The information about risks had a larger marginal impact on change in willingness to pay (WTP) than did the information about benefits. While the results show that detailed messages on risks/benefits, including recommendations for nutrition behavior, matter in the modification of WTP, 40% of respondents did not change their initial choices after the revelation of health information.
    Keywords: experimental economics, fish consumption, health information, nutrition.
    Date: 2006–04–05
  8. By: Arie Kapteyn (RAND and IZA Bonn); James P. Smith (RAND and IZA Bonn); Arthur van Soest (RAND, Tilburg University and IZA Bonn)
    Abstract: This paper investigates the role of pain in affecting self-reported work disability and employment of elderly workers in the US. We investigate pain and its relationship to work disability and work in a dynamic panel data model, using six biennial waves from the Health and Retirement Study. We find the dynamics of the presence of pain is central to understanding the dynamics of self-reported work disability. By affecting work disability pain also has important implications for the dynamic patterns of employment.
    Keywords: work limiting disability, health
    JEL: J28 I12 C81
    Date: 2006–03
  9. By: Mark Coppejans; Donna Gilleskie; Holger Sieg; Koleman Strumpf
    Abstract: The goal of this paper is to analyze consumer demand in markets with large price uncertainty. We develop a demand model for goods that are subject to habit formation. We show that consumption plans of forward looking individuals depend not only on preferences and current period prices, but also on individual beliefs about the evolution of future prices. Moreover, a mean preserving spread in the price distribution and, hence, an increase in price uncertainty reduces consumption along the optimal path. With smoking as our application, we test the predictions of our model. We use a unique data set of prices for cigarettes collected by the Bureau of Labor Statistics to characterize price uncertainty and price expectations of individuals. We have also obtained access to the restricted use version of the National Education Longitudinal Study, which provides detailed information on smoking behavior of teenagers in the U.S. Our estimation results suggest that teenagers who live in metropolitan areas with a large amount of cigarette price volatility have, on average, significantly lower levels of cigarette consumption. Moreover, these individuals are less likely to start consuming cigarettes. Our results also provide evidence that young individuals are forward looking. Myopic individuals would not respond to an increase in uncertainty about future prices by reducing consumption.
    JEL: C8 D8 I1
    Date: 2006–04
  10. By: Soeren Mattke; Edward Kelley; Peter Scherer; Jeremy Hurst; Maria Luisa Gil Lapetra; HCQI Expert Group Members
    Abstract: The OECD Health Care Quality Indicator (HCQI) Project was started in 2001. The long-term objective of the HCQI Project is to develop a set of indicators that can be used to raise questions for further investigation concerning quality of health care across countries. It was envisioned that the indicators that were finally recommended for inclusion in the HCQI measure set would be scientifically sound, important at a clinical and policy level and feasible to collect in that data would be available and could be made comparable across countries. It was also envisioned that the indicators would not enable any judgement to be made on the overall performance of whole health systems. In essence, they should be used as the basis for investigation to understand why differences exist and what can be done to reduce those differences and improve care in all countries. Le projet de l’OCDE sur les indicateurs de la qualité des soins de santé (HCQI) a été lancé en 2001. Son objectif à long terme est d’élaborer un ensemble d’indicateurs qui puissent être utilisés pour déterminer de nouvelles pistes de recherche sur la qualité des soins dans les pays de l’OCDE. Les indicateurs devant finalement être recommandés pour faire partie de cet ensemble d’indicateurs doivent en principe être pertinents du point de vue scientifique et importants sur le plan clinique et stratégique, et leur collecte réalisable dans la pratique au sens où les données y afférentes doivent être disponibles et comparables à l’échelon international. Ces indicateurs ne sont pas non plus censés permettre de porter un jugement sur la performance globale des systèmes de santé dans leur intégralité. Ils devraient essentiellement être utilisés comme point de départ pour comprendre pourquoi des différences existent et par quels moyens les réduire et améliorer les soins de santé dans tous les pays.
    Date: 2006–03–09
  11. By: Edward Kelley; Jeremy Hurst
    Abstract: This paper represents an attempt to set out a conceptual framework for the OECD’s Health Care Quality Indicator (HCQI) Project. Two main issues are tackled: what concepts, or dimensions, of quality of health care should be measured and how, in principle, should they be measured. The need for a conceptual framework for the Project was expressed by a large group of participating countries. In interviews by the OECD Secretariat with member countries in April and May 2005, country experts and delegates to the Group on Health reiterated the need for a framework for the OECD’s health care quality work. Countries stated that the framework should be: a) based on country experience and b) could be used to guide both current and future work by the OECD in health care quality measurement and monitoring. Ce document a pour objet de présenter le cadre conceptuel du projet de l’OCDE sur les indicateurs de la qualité des soins de santé (projet HCQI). Deux grandes questions y sont traitées : quels concepts, ou aspects, de la qualité des soins convient-il d’évaluer et comment ceux-ci doivent-ils en théorie être évalués. La nécessité d’élaborer un cadre conceptuel pour le projet a été exprimée par un grand nombre de pays participants. Lors des entretiens menés par le Secrétariat de l’OCDE avec les pays membres en avril et mai 2005, les experts et délégués nationaux auprès du Groupe sur la santé ont réaffirmé la nécessité d’élaborer un cadre pour les travaux de l’OCDE sur la qualité des soins de santé. Les pays ont indiqué que ce cadre devait a) être fondé sur l’expérience des pays et b) pouvoir être utilisé pour éclairer les travaux actuels et futurs de l’OCDE dans le domaine de l’évaluation et du suivi de la qualité des soins de santé.
    Date: 2006–03–09
  12. By: Fabrice Etilé; Carine Milcent
    Abstract: This paper tests for income-related reporting heterogeneity in self-assessed health (SAH). It also constructs a synthetic measure of clinical health to decompose the effect of income on SAH into an effect on clinical health (which is called a health production effect) and a reporting heterogeneity effect. We find health production effects essentially for low-income individuals, and reporting heterogeneity for the choice between the medium labels i.e. "fair" vs. "good" and for high-income individuals. As such, SAH should be used cautiously for the assessment of income-related health inequalities in France. It is however possible to minimize the reporting heterogeneity bias by converting SAH into a binary variable for poor health versus other health statuses.
    Date: 2006
  13. By: K.K.Tang (MRG - School of Economics, The University of Queensland); Prasada Rao (MRG - School of Economics, The University of Queensland)
    Abstract: This paper proposes a data envelopment method to separate avoidable and unavoidable mortality risks. As unavoidable mortality is the result of nature, only avoidable mortality is of relevance in measuring wellbeing and inequality. The new method is applied to a dataset consisting of life tables for 191 countries in the year 2000 to obtain a reference distribution of unavoidable mortality risks. The reference distribution is used to improve on the standard age-at-death measure to obtain an age-at-avoidable-death measure. Comparing with the original measure, age-at-avoidable-death provides a very different picture of wellbeing, and more so when it comes to inequality measures.
  14. By: Anupa Bir; Karen Eggleston
    Abstract: Health economists and policymakers have long recognized that capitation gives insurers incentive to manipulate their offerings to deter the sick and attract the healthy. The shadow-price ap- proach to measuring such selection incentives was pioneered by Frank, Glazer and McGuire (2000). We extend their model to allow for partial capitation and nonfinancial concerns of insurers. We calculate three kinds of selection metrics using managed care medical and pharmacy spending data for fiscal years 2001 and 2002 from the Massachusetts state employee insurance program. Financial returns to risk selection are high, as indicated by all three selection indices as well as by the direct profits an insurer could earn if it could exclude unprofitable patients. Empirically, the financial temptation to distort service quality increases non- linearly with supply-side cost sharing. The more an insurer di- rectly values quality or patient benefit relative to profit, the less severe risk selection incentives become.
    Keywords: risk selection; managed health care; shadow price; mixed payment
    JEL: I11
    Date: 2006
  15. By: Granier, L.; Trinquard, S.
    Abstract: This paper fills the gap in the theoretical literature concerning mergers between brand-name and generic laboratories in pharmaceutical markets. To prevent generic firms from increasing their market share, some brand-name furms produce generics themselves, called pseudo-generics, enabling them to set up barriers to entry. We develop this topic by considering the pseudo-generics production as a mergers.catalyst. We show, in a duopoly model with substitutable goods, in which a brand-name firm and a generic firm compete à la Cournot, that a brand-name company always has an incentive to purchase its competitor. The key insight of this paper is that the brand-name laboratory can increase its merger gain by producing pseudo-generics beforehand. In some cases, pseudo-generics would not otherwise be produced.
    Keywords: Mergers, Pharmaceutical Market, Pseudo-Generics.
    JEL: I11 L12
    Date: 2006
  16. By: Hugh Gravelle (National Primary Care Research and Development Centre, Centre for Health Economics, University of York); Matt Sutton (Health Economics Research Unit, University of Aberdeen)
    Abstract: According to the relative income hypothesis, an individual’s health depends on the distribution of income in a reference group, as well as on the income of the individual. We use data on 231,208 individuals in Great Britain from 19 rounds of the General Household Survey between 1979 and 2000 to test alternative specifications of the hypothesis with different measures of relative income, national and regional reference groups, and two measures of self assessed health. All models include individual education, social class, housing tenure, age, gender and income. The estimated effects of relative income measures are usually weaker with regional reference groups and in models with time trends. There is little evidence for an independent effect of the Gini coefficient once time trends are allowed for. Deprivation relative to mean income and the Hey-Lambert-Yitzhaki measures of relative deprivation are generally negatively associated with individual health, though most such models do not perform better on the Bayesian Information Criterion than models without relative income. The only model which performs better than the model without relative income and which has a positive estimated effect of absolute income on health has relative deprivation measured as income proportional to mean income. In this model the increase in the probability of good health from a ceteris paribus reduction in relative deprivation from the upper quartile to zero is 0.010, whereas as an increase in income from the lower to the upper quartile increases the probability by 0.056. Measures of relative deprivation constructed by comparing individual income with incomes within a regional or national reference group will always be highly correlated with individual income, making identification of the separate effects of income and relative deprivation problematic.
    Keywords: relative income, relative deprivation, income inequality, health.
    JEL: I12 I31
    Date: 2006–03
  17. By: Mark Dusheiko (National Primary Care Research and Development Centre, Centre for Health Economics, University of York); Maria Goddard (Centre for Health Economics, University of York); Hugh Gravelle (National Primary Care Research and Development Centre, Centre for Health Economics, University of York); Rowena Jacobs (Centre for Health Economics, University of York)
    Abstract: In recent years there have been marked changes in organisational structures and budgetary arrangements in the English NHS, potentially altering the relationships between purchasers (primary care organisations (PCOs) and general practices) and providers. Using data on elective hospital admissions from 1997/98 to 2002/03 we find that commissioning has become significantly more concentrated at PCO and GP level. There was a reduction in the average number of different providers used by PCOs (16.7 to 14.2), an increase in the average share of admissions accounted for by the main provider (49% to 69%), and an increase in the average Herfindahl index (0.35 to 0.55). About half the increase in concentration arose from the increase in the number of purchasing organisations from 100 to 302. The rest was due to mergers amongst providers and the abolition of fundholding. GP fundholding practices which held budgets for elective admissions had less concentrated admission patterns than non-fundholders whose admissions were paid for by their primary care organisation. There was an increase in concentration of admissions for both types of GP practice but fundholders used more providers, had smaller shares at their main provider, and had smaller Herfindahl indices.
    Keywords: concentration, Herfindahl, purchasing, budgets, elective admissions
    Date: 2006–03
  18. By: Stephen Morris (National Primary Care Research and Development Centre, University of Manchester; and, Tanaka Business School, Imperial College London, South Kensington Campus, London, SW7 2AZ); Hugh Gravelle (National Primary Care Research and Development Centre, Centre for Health Economics, University of York)
    Abstract: We investigate the relationship between GP supply and body mass index (BMI) in England. Individual level BMI is regressed against area whole time equivalent GPs per 1,000 population plus individual and area level covariates. Using IV models we find that a 10% increase in GP supply is associated with a mean reduction in BMI of around 1 kg/m2 (around 4% of mean BMI). Our study suggests that better primary care in the form of reduced list sizes per GP can improve the management of obesity.
    Keywords: Obesity; GP supply; Primary care
    JEL: I10 I12
    Date: 2006–04
  19. By: Robert Fleetcroft (School of Medicine, Health Policy and Practice, University of East Anglia); Richard Cookson (Centre for Health Economics, University of York)
    Abstract: The new contract for primary care in the UK offers fee-for-service payments for a wide range of activities in a quality outcomes framework, with payments designed to reflect likely workload. This study aims to explore the link between these financial incentives and the likely population health gains. The study examines a subset of eight preventive interventions covering 38 of the 81 clinical indicators in the quality framework. The maximum payment for each service was calculated and compared with the likely population health gain in terms of lives saved per 100,000 population based on evidence from McColl et al. (1998). Maximum payments for the eight interventions examined make up 57% of the sum total maximum payment for all clinical interventions in the quality outcomes framework. There appears to be no relationship between pay and health gain across these eight interventions. Two of the eight interventions (warfarin in atrial fibrillation and statins in primary prevention) receive no incentive. Payments in the new contract do not reflect likely population health gain. There is a danger that clinical activity may be skewed towards high-workload activities that are only marginally effective, to the detriment of more cost effective activities. If improving population health is the primary goal of the NHS, then fee-for-service incentives should be designed to reflect likely health gain rather than likely workload.
    Keywords: health policy, incentive payments, primary care, quality, UK
    Date: 2005–05
  20. By: Zsolt Mogyorosy (Centre for Health Economics, University of York); Peter Smith (Centre for Health Economics, University of York)
    Abstract: The Healthbasket project seeks to offer evidence on the basket of services offered by the health system in nine member states, and the costs and prices associated with those services. A specific objective of the project is “to identify what are the existing possibilities for and limitation to [cost] comparison and recommend the minimum data required to furnish meaningful international comparison in the future.” To that end, work programme WP7 assesses the costing methodologies for inpatient and outpatient health services at the micro-level. The aim of the WP7 subproject is to provide a comprehensive review best practice in cost assessment by examining the scientific literature on methodologies for calculating health service costs. This review examines published scientific literature about the methodologies used to estimate the costs associated with the delivery of a particular service at the micro-level in both in-patient and out-patient settings. In addition, the review summarises the scientific literature on methodologies used in international comparative studies of health service costs at the micro-level, including in-patient and outpatient settings.
    Date: 2005

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