nep-hea New Economics Papers
on Health Economics
Issue of 2006‒06‒03
twelve papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. UK Employees' Sickness Absence: 1984-2005 By Marco G. Ercolani
  2. Tobacco Taxation in the European Union By Sijbren Cnossen
  3. Costs and Quality of Life in Multiple Sclerosis A Cross-Sectional Study in the USA By Kobelt, Gisela; Berg, Jenny; Atherley, Debbie; Hadjimichael, Olympia; Jönsson, Bengt
  4. HIV prevalence and poverty in Africa : micro and macro-econometric evidence applied to Burkina Faso By Jean-Pierre Lachaud
  5. Socio-economic inequality in small area use of elective total hip replacement in the English NHS in 1991 and 2001 By Richard Cookson; Mark Dusheiko; Geoffrey Hardman
  6. The Health Status of Indigenous and Non-Indigenous Australians By Alison Booth; Nick Carroll
  7. Socio-Economic Status, Health Shocks, Life Satisfaction and Mortality: Evidence from an Increasing Mixed Proportional Hazard Model By Paul Frijters; John Haisken-DeNew; Michael Shields
  8. Overcrowding and Indigenous Health in Australia By Alison Booth; Nick Carroll
  9. The Economics of a Two Tier Health System: A Fairer Medicare? By Patricia Apps; Ray Rees; Elizabeth Savage
  10. Using Census Business Data to Augment the MEPS-IC By Kristin McCue; Alice Zawacki
  11. Contributions to Health Insurance Premiums: When Does the Employer Pay 100 Percent? By Alice Zawacki; Amy Taylor
  12. Using the MEPS-IC to Study Retiree Health Insurance By Alice Zawacki

  1. By: Marco G. Ercolani
    Abstract: This article reports the proportion of contracted work hours that are lost due to sickness absence in the UK. These rates of sickness absence are calculated for all employees across time and across various economic and demographic characteristics using the largest sample possible from the UK Labour Force Surveys. Quantifying sickness absence is of interest to practitioners and researchers because it represents lost work hours for employees and employers, it also highlights issues relating to the health of the workforce.
    JEL: J28 J32 M12
    Date: 2006–03
  2. By: Sijbren Cnossen
    Abstract: Later this year, the European Commission has to submit a report to the Council of Ministers and the European Parliament with its views on tobacco tax policy in the EU. A 2004 publication issued by the Commission expressed the beliefs that tobacco consumption should be controlled by increasing tobacco excises and that harmonization should proceed on the basis of specific rates. This article reviews and evaluates EU tobacco tax policies. It supports the move towards specific taxation, but notes that there are conceptual and empirical limits to excessively high tobacco taxes. Smokers appear to pay their way and cigarette smuggling is a growing menace to health and revenue objectives.
    Keywords: tobacco taxation, European Union
    JEL: H20 H80
    Date: 2006
  3. By: Kobelt, Gisela (Karolinska Institute Stockholm, Sweden, and European Health Economics, France); Berg, Jenny (Stocholm Health Economics); Atherley, Debbie (University of Washington, USA); Hadjimichael, Olympia (School of Medicine, Yale University, and Barrow Neurological Institute, USA); Jönsson, Bengt (Dept. of Economics, Stockholm School of Economics)
    Abstract: SUMMARY <p> Treatment of multiple sclerosis (MS) has changed substantially during the past decade, as new biological disease-modifying treatments have been introduced in a field where only symptomatic pharmacological treatment had been available. The new treatments come at a high cost, between $ 8-12,000 per patient and year. Consequently, it must be expected that the part of total costs represented by drugs has increased, from essentially a very minor part in the nineties (2-5%) to a much larger proportion. However, no studies investigating this development from a societal perspective have so far been published. <p> Objective <p> The objective of this study was to investigate the current cost structure in MS and the effect of disease severity on costs and quality of life (utility) for patients treated with the new disease modifying drugs (DMDs) in the US. <p> Methods <p> The study follows closely the methodology used in three previous observational studies in Sweden, the United Kingdom and Germany. It is a descriptive bottom-up prevalence-based cost of illness study. The analysis was performed from the societal perspective and did not investigate costs for different payers. Costs were calculated as mean annual cost per patient in the sample, and mean costs for patients using a given resource. All unit costs are for 2004, or were inflated to 2004 using the CPI. <p> Demographic variables, information on disease severity and disease activity, resource utilization and utility were collected directly from a sub-sample of ~24,000 patients taking part in a regular follow-up since up to 8 years, the North American Committee on Multiple Sclerosis (NARCOMS) Patient Registry. A questionnaire was mailed to a 4,000 randomly selected sample and the target answer rate was 50%. <p> Results <p> 1,989 (49.7%) of patients contacted returned the questionnaire, but 80 of them were returned empty and had to be excluded. This left a sample of 1,909 (47.7%) for analysis. The mean age of the sample was 49 years and three quarters were women. Their age at first symptoms was 30 years, and time since diagnosis was 13 years. <p> 10.5% of patients had primary progressive, 47.6% relapsing-remitting and 33.3% secondary progressive disease. Less than 1% of patients did not answer the question, but 7.6% were unsure. 28.8% of patients indicated to have experienced a relapse during the past 3 months. 34.8% had mild, 42.7% had moderate and 22.1% had severe disease. Slightly less than one third (31.4%) was in early retirement due to MS. <p> Total costs are estimated at $ 47,215 per patient and year. The largest proportions of costs are indirect costs ($ 17,581 or 37.2%) and drugs ($ 18,628 or 39.5%). Of the latter, disease modifying drugs accounted for 86% of total drug cost and 34% of total costs ($ 16,050), while OTC medication amounted to $ 122. Informal care represented 9.8% ($ 4614) and services and investments, which were to a large extent paid for by patients themselves, amounted to $ 2707 per patient (5.7%). <p> Using the new (unpublished) US health status system, the mean utility in the sample was 0.698, with women having higher utility than men (0.709 versus 0.667). Patients who had experienced a relapse in the past 3 months had a utility of 0.648, compared to 0.742 for those who did not. <p> On the absence of published gender and age specific population values in the US, the UK tariff has been used to estimate the age and gender specific utility loss of MS patients compared to the normal population. The loss of quality-adjusted life years (QALYs) was estimated at 0.255 QALY/patient. Using a willingness to pay for a QALY of $ 60000, intangible costs were estimated at $ 15,315. <p> Costs increased and utility decreased with decreasing functional capacity. Patients with mild disease had a cost of $ 32,297 and a utility of 0.824; figures for patients with moderate MS were $ 50,293 and 0.679, and for patients with severe MS $ 64,492 and 0.533. The proportion of bed-ridden patients in the sample (EDSS 8.0 or more) was small compared to the expected prevalence. When the proportion was increased to 4%, costs for patients in the severe group increased slightly to $ 65,173 and utility decreased to 0.479. Thus, it appears that the effect of very severe disease is more pronounced on patients’ quality of life than on costs. <p> Conclusions <p> The objective of this study was to investigate the overall costs for patients treated with the new MS therapies, and cost distribution among different resources after the introduction of the new MS treatments. In view of the high cost of these treatments, our results are not surprising, with MS drugs representing 34% of total costs. When the use of disease modifying drugs is adjusted to the estimated national average (52%), the share of costs represented by these drugs is 21%. <p> The findings are consistent with previous studies into the cost of MS: costs and utilities are significantly correlated with functional capacity (EDSS). <p> This study does not investigate the value of the investment in these treatments. Rather it provides the necessary input into a disease model where costs and utility are linked to disease progression, without treatment, or with different treatments.
    Keywords: Costs; Quality of Life; Multiple Sclerosis
    JEL: I10 I12
    Date: 2005–03–31
  4. By: Jean-Pierre Lachaud (CED, IFReDE/GRES, Université Montesquieu-Bordeaux IV)
    Abstract: Based on the data of the Demographic and Health Survey, and of the Household Priority Survey, carried out in 2003, the present study, examining the factors of the HIV prevalence in Burkina Faso, provides two conclusions. Firstly, the fight against poverty is not necessarily a means of reducing at the same time in a drastic way the HIV/AIDS prevalence, an assertion based on several elements of empirical analysis. First of all, the concentration curve, measuring the « socioeconomic » inequality of the seroprevalence, is « pro-poor ». Then, the micro-econometric estimates of the probit models suggest a positive relation between the HIV prevalence of the adult women and men, and the standard of living of the individuals. At the same time, the probit models highlight a probability of HIV prevalence increasing with : (i) the age, and ; (ii) the localization in Ouagadougou, the capital, and in the majority of the areas of the west and south-west of the country, compared to the other zones. On the other hand, the sexual relations with condoms reduce the chances of seroprevalence, an effect growing with the wealth of the households. Lastly, the macro-econometric approach reveals the existence of a positive (negative) relation between, on the one hand, the level of the regional HIV prevalence, and, on the other hand, the average monetary provincial standard of living (the poverty) of the households. At the same time, the relation between the HIV prevalence and the poverty, apprehended at the regional level, is not linear. Moreover, the estimate of the spatial econometrics models indicates an impact of the crisis of Côte d’Ivoire on the HIV prevalence in Burkina Faso, consecutively with the massive return of a large number of refugees, displaced or repatriated persons originating from Côte d’Ivoire – in particular, since 2000 –, country where the seroprevalence is, on average, five times higher than in Burkina Faso. Secondly, and correlatively, the relation between the HIV prevalence and poverty is questioned. First of all, some structural factors could contribute to skew the relation between the resources of the households and the prevalence of the HIV/AIDS. On the one hand, the persistence of cognitive and behavioral factors inherent to the traditional society, in spite of the high rate of economic growth per capita which prevailed during two last decades. In particular, the social construction of the female attributes and roles confers to men a statute of « decision-makers » with regard to the sexual intercourse, while the persistence of the secular beliefs contributes to minimize the perception of the HIV/SIDA in terms of risks, independently of the standard of living. In addition, the two geographical subsets where the HIV prevalence is higher than the national average, tend to have higher regional averages per capita expenditure, compared to the other zones. In addition, the enclavement of Burkina Faso required a development of the road and railway traffic with the countries bordering, in particular Côte d’Ivoire. So, it may be that the structural conditions of the process of development of Burkina Faso, concomitant with significant flows of exchange of goods, services and labour with a country where the prevalence of the HIV is particularly high, constitute an element of explanation of the positive relation between the resources of the households and the HIV seroprevalence. Then, factors related to the conjuncture probably contributed to reinforce the opposite relation between the HIV seroprevalence and poverty, the macro-econometric analysis highlighting a direct relation between the massive return of the migrants of Côte d'Ivoire and the level of HIV prevalence in Burkina Faso. (Full text in english)
    JEL: I12 I32
    Date: 2005–07
  5. By: Richard Cookson (School of Medicine, Health Policy and Practice, University of East Anglia. Centre for Health Economics, University of York); Mark Dusheiko (National Primary Care Research and Development Centre, Centre for Health Economics, University of York); Geoffrey Hardman (Centre for Health Economics, University of York)
    Abstract: International evidence suggests that there are substantial socio-economic inequalities in the delivery of specialist health services, even in the UK and other high-income countries with publicly funded health systems (Goddard and Smith 2001, Dixon et al. 2003, Van Doorslaer, Koolman and Jones 2004, Van Doorslaer et al. 2000). Studies of total hip replacement in the English NHS have yielded particularly striking examples, given that hip replacement is such a common, effective and longestablished health technology. Administrative data show that people living in deprived areas are less likely to receive hip replacement (Chaturvedi and Ben-Shlomo 1995, Dixon et al. 2004) while survey data suggest they may be more likely to need it (Milner et al. 2004). However, previous studies have not examined change in inequality over time. This paper presents evidence on the change in socio-economic inequality in small area use of elective total hip replacement in the English NHS, comparing 1991 with 2001. This was a period of important large-scale health care reform in England, involving at least two significant reforms that might potentially have influenced socio-economic inequality in health care delivery: (1) the introduction and subsequent abolition of the Conservative “internal market” 1991-7, and (2) the introduction in 1995 of a revised NHS resource allocation formula designed to reduce geographical inequalities in health care delivery. Two datasets, for 1991 and 2001, were assembled from routine NHS data sources: Hospital Episode Statistics (HES) on hospital utilisation in England and the corresponding decennial National Censuses in 1991 and 2001. Both datasets contain information on over 8,000 electoral wards in England (over 95% of the total). To improve comparability, a common geography of frozen 1991 wards was adopted. The Townsend deprivation score was employed as an indicator of socio-economic status. Inequality was analysed in two ways. First, for comparability with previous small area studies of hip replacement, by using simple range measures based on indirectly age-sex standardised utilisation ratios (SURs) by deprivation quintile groups. Second, using concentration indices of deprivationrelated inequality in use based on indirectly age-sex standardised utilisation ratios for each individual small area. Each SUR is the observed use divided by the expected use, if each age and sex group in the study population had the same rates of use as the national population.
    Date: 2006–05
  6. By: Alison Booth; Nick Carroll
    Abstract: We use unique survey data to examine the determinants of self-assessed health of Indigenous and non-Indigenous Australians. We explore the degree to which differences in health are due to differences in socio-economic factors, and examine the sensitivity of our results to the inclusion of ‘objective’ health measures. Our results reveal that there is a significant gap in the health status of Indigenous and non-Indigenous Australians, with the former characterised by significantly worse health. These findings are robust to alternative estimation methods and measures of health. Although between one third and one half of the health gap can be explained by differences in socio-economic status - such as income, employment status and education - there remains a large unexplained component. These findings have important policy implications. They suggest that, in order to reduce the gap in health status between Indigenous and non-Indigenous Australians, it is important to address disparities in socio-economic factors such as education. The findings also suggest that there are disparities in access to health services and in health behaviour. These issues need to be tackled before Australia can truly claim to have 100% health-care coverage and high levels of health and life expectancy for all of its population.
    Keywords: self-assessed health, Indigenous health
    JEL: I1 I12
    Date: 2005–03
  7. By: Paul Frijters; John Haisken-DeNew; Michael Shields
    Abstract: The socio-economic gradient in health remains a controversial topic in economics and other social sciences. In this paper we develop a new duration model that allows for unobserved persistent individual-specific health shocks and provides new evidence on the roles of socio-economic characteristics in determining length of life using 19-years of high-quality panel data from the German Socio-Economic Panel. We also contribute to the rapidly growing literature on life satisfaction by testing if more satisfied people live longer. Our results clearly confirm the importance of income, education and marriage as important factors in determining longevity. For example, a one-log point increase in real household monthly income leads to a 12% decline in the probability of death. We find a large role of unobserved health shocks, with 5-years of shocks explaining the same amount of the variation in length of life as all the other observed individual and socio-economic characteristics (with the exception of age) combined. Individuals with a high level of life satisfaction when initially interviewed live significantly longer, but this effect is completely due to the fact that less satisfied individuals are typically less healthy. We are also able to confirm the findings of previous studies that self-assessed health status has significant explanatory power in predicting future mortality and is therefore a useful measure of morbidity. Finally, we suggest that the duration model developed in this paper is a useful tool when analysing a wide-range of single-spell durations where individual-specific shocks are likely to be important.
    Keywords: education, marriage, life satisfaction, shocks, mortality, duration analysis
    JEL: I1 C23
    Date: 2005–09
  8. By: Alison Booth; Nick Carroll
    Abstract: We use unique survey data from the 2001 National Health Survey to examine the association between overcrowding and the self-assessed health of Indigenous and non-Indigenous Australians. Our goal is to determine whether or not overcrowding explains why the Indigenous population has worse health than the non-Indigenous population. We find that, after we control for a number of factors, overcrowding of adults (i) appears to be associated with worse health and (ii) explains approximately 30% of the health gap between the Indigenous population living in remote areas and the non-Indigenous population.
    Keywords: self-assessed health, Indigenous health, overcrowding
    JEL: I1 I12
    Date: 2005–09
  9. By: Patricia Apps; Ray Rees; Elizabeth Savage
    Abstract: This paper analyses a recent proposal of the Australian Government to reform the existing Medicare system. It develops models of the physician’s behaviour and of a household’s demand for medical insurance under the proposed system, and then proceeds to characterise the equilibrium under the new proposals. It argues that those most likely to be made worse off are low income households with children, though a full evaluation of the effects of the proposal requires it to be analysed in a public finance framework.
    Keywords: health care, government policy, medical insurance
    JEL: I11 I18
    Date: 2004–09
  10. By: Kristin McCue; Alice Zawacki
    Abstract: This paper has two aims: first to describe methods, issues, and outcomes involved in matching data from the Insurance Component of the Medical Expenditure Panel Survey (MEPSIC) to other business microdata collected by the U.S. Census Bureau, and second to present some simple results that illustrate the usefulness of such combined data. We present the results of linking the MEPS-IC with data from the 1997 Economic Censuses (EC), but also discuss other possible sources of business data. An issue in any linkage is whether the linked sample remains representative and large enough to be useful. The EC data are attractive because, given the survey’s broad coverage and large sample, most of the MEPS-IC sample can be matched to it. We use the combined EC/MEPS-IC data to construct productivity measures that are useful auxiliary data in examining employers’ health insurance offering decisions.
    Date: 2005–12
  11. By: Alice Zawacki; Amy Taylor
    Abstract: We identify the characteristics of establishments that paid 100 percent of health insurance premiums and the policies they offered from 1997-2001, despite increased premium costs. Analyzing data from the MEPS-IC, we see little change in the percent of establishments that paid the full cost of premiums for employees. Most of these establishments were young, small, singleunits, with a relatively high paid workforce. Plans that were fully paid generally required referrals to see specialists, did not cover pre-existing conditions or outpatient prescriptions, and had the highest out-of-pocket expense limits. These plans also were more likely than plans not fully paid by employers to have had a fee-for-service or exclusive provider arrangement, had the highest premiums, and were less likely to be self-insured.
    Keywords: employer-sponsored health insurance, contributions, premiums
    Date: 2005–12
  12. By: Alice Zawacki
    Abstract: This paper discusses using the restricted-access Medical Expenditure Panel Survey- Insurance Component (MEPS-IC) to study employer-sponsored retiree health insurance (RHI). This topic is particularly interesting given current events such as the aging of baby boomers, rising health care costs, new prescription drug coverage under Medicare, and changes in accounting standards for reporting liabilities related to RHI offerings. Consequently, employers are grappling with an aging workforce, evaluating Medicare subsidies to employers for offering retiree drug plans, facing rising premium costs as a result of rising health care costs, and trying to show profitability on financial reports. This paper provides technical information on using the MEPS-IC to study RHI and points out data issues with some of the measures in the database. Descriptive statistics are provided to illustrate the types of retiree estimates possible using the MEPS-IC and to show some of the trends in this subject area. Not surprising, these estimates show that employer offers of RHI have declined, greater numbers of retirees are enrolling in these plans, and expenditures for employer-sponsored RHI have been rising.
    Date: 2006–04

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