nep-hea New Economics Papers
on Health Economics
Issue of 2006‒08‒05
fourteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Growth and Enduring Epidemic Diseases By Clive Bell; Hans Gersbach
  2. Economy-Wide Estimates of the Implications of Climate Change: Human Health By Francesco Bosello; Roberto Roson; Richard S.J. Tol
  3. Eliciting the Demand for Long Term Care Coverage: A Discrete Choice Modelling Analysis By Rinaldo Brau; Matteo Lippi Bruni
  4. HIV/AIDS: The Impact on Poverty and Inequality By Gonzalo Salinas; Markus Haacker
  5. Quantifying the Cost of Passive Smoking on Child Health: Evidence from Children’s Cotinine Samples By Paul Frijters; Michael A. Shields; Stephen Wheatley Price; Jenny Williams
  6. The Effects of HMO and Its For-Profit Expansion on the Survival of Specialized Hospital Services By Yu-Chu Shen
  7. Investigating Health Technology Diffusion in New Zealand – How Does it Spread and Who Stands to Gain? By Louise Allsopp
  8. Use of Targets to Improve Health System Performance: English NHS Experience and Implications for New Zealand By Nicholas Mays
  9. "Policy Options for Financing the Future Health and Long-term Care Costs in Japan" By Tadashi Fukui; Yasushi Iwamoto
  10. Health Service Delivery in China: A Literature Review By Eggleston, Karen; Ling, Li; Qingyue, Meng; Lindelow, Magnus; Wagstaff, Adam
  11. What Drives Health Care Expenditure? Baumol’s Model of ‘Unbalanced Growth’ Revisited By Jochen Hartwig
  12. Did the Death of Australian Inheritance Taxes Affect Deaths? By Joshua S. Gans; Andrew Leigh
  13. Does the Lunar Cycle Affect Birth and Deaths? By Joshua S. Gans; Andrew Leigh
  14. Inequality and Mortality: Long-Run Evidence from a Panel of Countries By Andrew Leigh; Christopher Jencks

  1. By: Clive Bell; Hans Gersbach
    Abstract: This paper studies the formation of human capital and its transmission across generations when premature adult mortality is a salient feature of the demographic landscape, either permanently or in the form of a long-period wave that follows the outbreak of an epidemic. We establish several threshold properties of the model, for such a shock can severely retard economic growth, even to the point of leading to an economic collapse. Premature adult mortality may exacerbate inequality under nuclear family arrangements. Pooling mortality risks with equal treatment of all children may fend off, or even induce, a collapse, depending on the initial conditions and the size and duration of the shock. Awareness campaigns may also trigger a collapse by introducing undesirable expectational feedbacks.
    Keywords: epidemic diseases, HIV/AIDS, growth, collapse, pooling
    JEL: I10 I20 O11 O40
    Date: 2006
  2. By: Francesco Bosello (Fondazione Eni Enrico Mattei); Roberto Roson (Ca’Foscari University of Venice and International Centre for Theoretical Physics); Richard S.J. Tol (Hamburg University, Vrije Universiteit and Center for Integrated Study of the Human Dimensions of Global Change)
    Abstract: We study the economic impacts of climate-change-induced change in human health, viz. cardiovascular and respiratory disorders, diarrhoea, malaria, dengue fever and schistosomiasis. Changes in morbidity and mortality are interpreted as changes in labour productivity and demand for health care, and used to shock the GTAP-E computable general equilibrium model, calibrated for the year 2050. GDP, welfare and investment fall (rise) in regions with net negative (positive) health impacts. Prices, production, and terms of trade show a mixed pattern. Direct cost estimates, common in climate change impact studies, underestimate the true welfare losses.
    Keywords: Impacts of climate change, Human health, Computable general equilibrium
    JEL: C68 D58 Q25
    Date: 2005–07
  3. By: Rinaldo Brau (University of Cagliari); Matteo Lippi Bruni (University of Bologna)
    Abstract: We evaluate the demand for long term care (LTC) insurance prospects in a stated preference context, by means of the results of a choice experiment carried out on a representative sample of the Emilia-Romagna population. Choice modelling techniques have not been used yet for studying the demand for LTC services. In this paper these methods are first of all used in order to assess the relative importance of the characteristics which define some hypothetical insurance programmes and to elicit the willingness to pay for some LTC coverage prospects. Moreover, thanks to the application of a nested logit specification with ‘partial degeneracy’, we are able to model the determinants of the preference for status quo situations where no systematic cover for LTC exists. On the basis of this empirical model, we test for the effects of a series of socio-demographic variables as well as personal and household health state indicators.
    Keywords: Health Insurance, Long Term Care, Choice Experiments, Nested Logit Models
    JEL: I11 I18 H40 C25
    Date: 2006–05
  4. By: Gonzalo Salinas; Markus Haacker
    Abstract: Using available data on the distribution of HIV/AIDS prevalence across population groups for four sub-Saharan African countries and transposing this information to household income and expenditure surveys, we simulate the impact of HIV/AIDS on poverty and inequality. We find that the epidemic lowers average income and increases poverty, and that the jump in poverty is larger than expected from the fall in average income. This disproportionate increase in poverty reflects the large share of the population living on the threshold of poverty and the higher HIV prevalence rates in those segments of the population.
    Keywords: Income distribution , Sub-Saharan Africa , Ghana , Kenya , Swaziland , Zambia , Poverty , Economic growth , Health care , HIV and AIDS , Social security ,
    Date: 2006–05–25
  5. By: Paul Frijters (Queensland University of Technology); Michael A. Shields (University of Melbourne and IZA Bonn); Stephen Wheatley Price (University of Leicester); Jenny Williams (University of Melbourne)
    Abstract: Passive smoking is a major public health issue. This paper documents the main risk factors that determine children’s exposure to passive smoke, and then uses econometric techniques to provide a new economic quantification of the impact of this exposure on child health. Such information is valuable to policy-makers when deciding upon the amount of resources to direct towards the problem of passive smoking. One of our main contributions is the use of a large nationally representative sample of children drawn from the Health Survey for England, for whom we match parental and household smoking and demographic characteristics. We also utilise an objective measure of children’s exposure, namely, the level of cotinine – a metabolite of nicotine - in their saliva. We find that both parental and child carer smoking behaviour, as well as area deprivation, are major risk factors in determining children’s exposure to passive smoke. Accounting for the potential measurement error in cotinine in our estimations, we have calculated that for a child who is exposed to a high number of passive smoking risk factors, the shadow price or income-equivalence of such exposure is £16,000 (US$30,000) per year. A further policy-related result is that comprehensively controlling for child passive smoking does not explain the observed gradient between household income and child health.
    Keywords: passive smoking, child health, parental smoking, cotinine, income
    JEL: D1 I1
    Date: 2006–07
  6. By: Yu-Chu Shen
    Abstract: This study examines the effect of HMO and for-profit HMO share on the survival of safety net services and profitable services in hospitals. Using data from 1990-2003 and proportional hazard models, I find that hospitals in high HMO markets started out having lower hazard of shutting down services in 1990-1994 than those in low HMO markets, but their hazard rates increase over time. By 2000-2003, hospitals in high HMO markets ended up with higher risk of shutting down profitable services than those in low HMO markets. Conditional on overall HMO penetration, markets with higher for-profit share of HMOs have higher hazard of shutting down services, and the gap in survival between high and low for-profit HMO markets is bigger in high HMO areas. Lastly, I find that the hazard rate of shutting down profitable services is comparable among not-for-profit, for-profit, and government hospitals, while the hazard of shutting down safety net services is the highest in for-profit hospitals and lowest in government hospitals.
    JEL: I11 L30
    Date: 2006–07
  7. By: Louise Allsopp (The Treasury)
    Abstract: Previous Treasury research has identified “price and coverage” effects as playing a key role in the growth of historical health expenditure. This incorporates factors such as technological change and input prices including wages. Bryant et. al. (2004) found that between 1950-51 and 2001-02, growth in price and coverage effects was the main source of long run growth in government health expenditure and has accounted for 3-4% growth per year since the early 1990s. This paper explores how a new health technology diffuses across District Health Boards (DHBs), the price and coverage effects, and whether access is evenly spread across the population i.e. who benefits from a new device or procedure. In particular, it highlights: • the variation in clinical practice between different DHBs • the degree to which the adoption of a particular technology in one DHB impacts on neighbouring DHBs: ? a “domino” effect occurs when the adoption of a technology in one DHB leads to other DHBs following suit ? the adoption of a technology in one DHB leads to increased inter-district flows between DHBs. • differences in access between geographical regions and also ethnic groups The paper takes the example of a new procedure used in coronary care known as ‘stenting’ and examines its adoption across the different DHBs. Data used pertains to different heart procedures adopted across New Zealand over a particular time frame (1995-2004). It comprises patient details plus information relating to the DHB in which the procedure was carried out and also the patient’s domicile DHB.
    Keywords: technology diffusion; coronary procedures; health expenditure
    JEL: I11 O33
    Date: 2006–07
  8. By: Nicholas Mays (The Treasury)
    Abstract: The setting of quantitative, time-limited ?targets? backed up by institutional and managerial rewards and sanctions has been a notable feature of performance improvement efforts in the National Health Service (NHS) in England since 1998 and especially in the period 2000-2004. Performance improved in the areas covered by English NHS targets, most markedly in relation to waiting times, but also in relation to treatment outcomes. None of the other parts of the United Kingdom followed England and similar trends were not observed, particularly not in waiting times, despite similar injections of funds. Despite the improvements in performance in target areas, targets were criticised, principally, for having perverse and unintended consequences (e.g. distorting priorities, encouraging ?gaming?, etc) which could have potentially out-weighed their benefits. On the other hand most experts in performance improvement in public services argue that carefully chosen, incentivised targets are a useful part of the performance management repertoire when used well (e.g. when sanctions and rewards are proportionate). Some dysfunctional consequences are to be expected, but can be mitigated. Given the similarities between the English NHS and the New Zealand public health system, there is scope to use targets and related incentives sparingly to improve performance in New Zealand in areas of high importance to government and the public.
    Keywords: performance measurement; performance management; performance improvement methods; target-setting; control of public services
    JEL: I18
    Date: 2006–07
  9. By: Tadashi Fukui (Faculty of Economics, Kyoto Sangyo University); Yasushi Iwamoto (Faculty of Economics, University of Tokyo)
    Abstract: As the Japanese population structure changes, health care and long-term care costs will steadily increase. The current style of financing (pay-as-you-go) will create a large increase in future burden of these costs. This paper studies an alternative policy that prefunds the social insurance benefits for the elderly. During a transition process, the proposed scheme maintains a higher contribution rate in order to accumulate sufficient funds. Under our baseline scenario, the sum of the contribution rates toward health insurance and long-term care insurance increases from 5.06 percent of earnings to 12.41 percent of the same. The rate of increase in overall burdens, including taxes and subsidies, is 63 percent. Our sensitivity analysis has shown that the quantitative implications of the increase in total burdens depend on social cost scenarios, the labor force, and the interest rate. However, labor force scenarios do not have a considerable impact on the rate of burden. As against this, the setting of social costs has a significant impact on the same. Even under the most optimistic scenario, the rate of increase in total burden is 34 percent. Even though we cannot predict the exact amount of the necessary contribution rate that is capable enough to transfer the funded system, what we are sure of is that a significant increase in the contribution rate is inevitable.
    Date: 2006–07
  10. By: Eggleston, Karen; Ling, Li; Qingyue, Meng; Lindelow, Magnus; Wagstaff, Adam
    Abstract: The authors report the results of a review of the Chinese-language and English-language literatures on service delivery in China, asking how well China ' s health care providers perform, what determines their performance, and how the government can improve it. They find current performance leaves room for improvement in terms of quality, responsiveness to patients, efficiency, cost escalation, and equity. The literature suggests that these problems will not be solved by simply shifting ownership to the private sector, or by simply encouraging providers-public and private-to compete with one another for individual patients. In contrast, substantial improvements could be (and in some places have already been) made by changing the way providers are paid-shifting away from fee-for-service and the distorted price schedule toward prospective payments. Active purchasing by insurers could further improve outcomes.
    Keywords: Health Monitoring & Evaluation,Health Law,Health Economics & Finance,Health Systems Development & Reform,Population Policies
    Date: 2006–08–01
  11. By: Jochen Hartwig (Swiss Institute for Business Cycle Research (KOF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: The share of health care expenditure in GDP rises rapidly in virtually all OECD countries, causing increasing concern among politicians and the general public. Yet, economists have to date failed to reach an agreement on what the main determinants of this development are. This paper revisits Baumol’s (1967) model of ‘unbalanced growth’, showing that the latter offers a ready explanation for the observed inexorable rise in health care expenditure. The main implication of Baumol’s model in this context is that health care expenditure is driven by wage increases in excess of productivity growth. This hypothesis is tested empirically using data from a panel of 19 OECD countries. Our tests yield robust evidence in favor of Baumol’s theory.
    Keywords: Rising health care expenditure, ‘unbalanced growth’, OECD panel explosion, Declining GDP growth rates, Switzerland
    JEL: C12 C22 I10 O41
    Date: 2006–03
  12. By: Joshua S. Gans; Andrew Leigh
    Abstract: In 1979, Australia abolished federal inheritance taxes. Using daily deaths data, we show that approximately 50 deaths were shifted from the week before the abolition to the week after (amounting to over half of those who would have been eligible to pay the tax). Our results imply that over the very short run, the death rate is highly elastic with respect to the inheritance tax rate.
    Keywords: behavioural responses to taxation, timing of deaths, estate tax
    JEL: H26 I12
    Date: 2006–08
  13. By: Joshua S. Gans; Andrew Leigh
    Abstract: There is a commonplace notion that full moons affect natality and mortality. To test this theory, we obtain daily births and deaths data from Australia, covering all 10,592 days from 1 January 1975 to 31 December 2003. We find that full moons are not associated with any significant change in the number of conceptions, births, or deaths. Moreover, our standard errors are sufficiently tight to make it possible to rule out even modest positive or negative effects of the lunar cycle.
    Keywords: conceptions, births, deaths, timing, lunar cycle, full moon
    JEL: I12 J13
    Date: 2006–08
  14. By: Andrew Leigh; Christopher Jencks
    Abstract: We investigate whether changes in economic inequality affect mortality in rich countries. To answer this question we use a new source of data on income inequality: tax data on the share of pretax income going to the richest 10 percent of the population in Australia, Canada, France, Germany, Ireland, the Netherlands, New Zealand, Spain, Sweden, Switzerland, the UK, and the US between 1903 and 2003. Although this measure is not a good proxy for inequality within the bottom half of the income distribution, it is a good proxy for changes in the top half of the distribution and for the Gini coefficient. In the absence of country and year fixed effects, the income share of the top decile is negatively related to life expectancy and positively related to infant mortality. However, in our preferred fixed-effects specification these relationships are weak, statistically insignificant, and likely to change their sign. Nor do our data suggest that changes in the income share of the richest 10 percent affect homicide or suicide rates.
    Keywords: health, inequality, mortality, top incomes, homicide, suicide
    JEL: I12 N30
    Date: 2006–08

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