nep-hea New Economics Papers
on Health Economics
Issue of 2006‒08‒26
fifteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Sibling Death Clustering in India: State Dependence vs. Unobserved Heterogeneity By Wiji Arulampalam; Sonia Bhalotra
  2. Gender Differences in Smoking Behavior By Thomas Bauer; Silja Göhlmann; Mathias Sinning
  3. The Impact of Increased Utilization of HIV Drugs on Longevity and Medical Expenditures: An Assessment Based on Aggregate U.S. Time-Series Data By Frank R. Lichtenberg
  4. When Knowledge is not Enough: HIV/AIDS Information and Risky Behavior in Botswana By James A. Levinsohn; Taryn Dinkelman
  5. Policy Options for Financing the Future Health and Long-Term Care Costs in Japan By Tadashi Fukui; Yasushi Iwamoto
  6. Health Insurance Enrollment Decisions: Preferences for Coverage, Worker Sorting, and Insurance Take Up By Alan C. Monheit; Jessica Primoff Vistnes
  7. Employment and Adverse Selection in Health Insurance By Jayanta Bhattacharya; William B. Vogt
  8. Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis By Patrick Bajari; Han Hong; Ahmed Khwaja
  9. Youth Smoking, Cigarette Prices, and Anti-Smoking Sentiment By Philip DeCicca; Donald S. Kenkel; Alan D. Mathios; Yoon-Jeong Shin; Jae-Young Lim
  10. Does Work during Childhood affect Adult's Health? An Analysis for Guatemala By F. Rosati; R. Straub
  11. Depression and Substance Abuse: A Rationalization of a Vicious Circle By Levy, Amnon; Faria, João Ricardo
  12. The Economic Implications of Epidemics Old and New By Clive Bell; Maureen Lewis
  13. Primary Health Care in Practice: Is It Effective? By Maureen Lewis; Gunnar Eskeland; Ximena Traa-Valerezo
  14. Addressing the Challenge of HIV/AIDS: Macroeconomic, Fiscal and Institutional Issues By Maureen Lewis
  15. Patents, Price Controls and Access to New Drugs: How Policy Affects Global Market Entry By Jean O. Lanjouw

  1. By: Wiji Arulampalam (University of Warwick and IZA Bonn); Sonia Bhalotra (University of Bristol, CSAE, QEH and CHILD)
    Abstract: Data from a range of different environments indicate that the incidence of death is not randomly distributed across families but, rather, that there is a clustering of death amongst siblings. A natural explanation of this would be that there are (observed or unobserved) differences across families, for example in genetic frailty, education or living standards. Another hypothesis of considerable interest for both theory and policy is that there is a causal process whereby the death of a child influences the risk of death of the succeeding child in the family. Drawing language from the literature on the economics of unemployment, the causal effect is referred to here as state dependence (or scarring). This paper investigates the extent of state dependence in India, distinguishing this from family-level risk factors common to siblings. It offers a number of methodological innovations upon previous research. Estimates are obtained for each of three Indian states, which exhibit dramatic differences in socio-economic and demographic variables. The results suggest a significant degree of state dependence in each of the three regions. Eliminating scarring, it is estimated, would reduce the incidence of infant mortality (among children born after the first child) by 9.8% in the state of Uttar Pradesh, 6.0% in West Bengal and 5.9% in Kerala.
    Keywords: death clustering, infant mortality, state dependence, scarring, unobserved heterogeneity, dynamic random effects logit, multi-level model, India
    JEL: J1 C1 I1 O1
    Date: 2006–08
  2. By: Thomas Bauer (RWI Essen, CEPR London and IZA Bonn); Silja Göhlmann (RWI Essen); Mathias Sinning (RWI Essen)
    Abstract: This paper investigates gender differences in smoking behavior using data from the German Socio-economic Panel (SOEP). We develop a Blinder-Oaxaca decomposition method for count data models which allows to isolate the part of the gender differential in the number of cigarettes daily smoked that can be explained by differences in observable characteristics from the part attributable to differences in coefficients. Our results reveal that the major part of the gender smoking differential is attributable to differences in coefficients indicating substantial differences in the smoking behavior between men and women rather than differences in characteristics.
    Keywords: Blinder-Oaxaca decomposition, count data models, SOEP, smoking, gender differences
    JEL: C25 I12
    Date: 2006–08
  3. By: Frank R. Lichtenberg
    Abstract: We estimate the medical cost per life-year gained from increased utilization of HIV drugs by estimating the impact of increased drug utilization on the life expectancy and drug and hospital expenditure of HIV/AIDS patients, using aggregate (U.S. national-level) data for the period 1982-2001. We use IMS Health data on the aggregate number of and expenditure on HIV drug prescriptions, the CDC’s AIDS Public Information Data Set, and data from AHRQ’s Nationwide Inpatient Sample. Estimates of mortality models imply that actual life expectancy of HIV/AIDS patients in 2001 was 13.4 years higher than it would have been if the drug utilization rate had not increased from its 1993 level. Estimates of a model of hospital discharges imply that increased utilization of HIV drugs caused hospital utilization to decline by .25 to .29 discharges per person per year during the period 1993-2001. Medical cost per additional life-year is estimated to have been $17,175. Treatments that cost this amount are widely considered to be cost-effective. The consistency of this estimate with those from previous studies suggests that analysis of aggregate data may be a useful alternative or additional approach to evaluating the cost-effectiveness of new treatments.
    JEL: I12 J1 O33
    Date: 2006–08
  4. By: James A. Levinsohn; Taryn Dinkelman
    Abstract: The spread of the HIV/AIDS epidemic is still fueled by ignorance in many parts of the world. Filling in knowledge gaps, particularly between men and women, is considered key to preventing future infections and to reducing female vulnerabilities to the disease. However, such knowledge is arguably only a necessary condition for targeting these objectives. In this paper, we describe the extent to which HIV/AIDS knowledge is correlated with less risky sexual behavior. We ask: even when there are no substantial knowledge gaps between men and women, do we still observe sex-specific differentials in sexual behavior that would increase vulnerability to infection? We use data from two recent household surveys in Botswana to address this question. We show that even when men and women have very similar types of knowledge, they have different probabilities of reporting safe sex. Our findings are consistent with the existence of non-informational barriers to behavioral change, some of which appear to be sex-specific. The descriptive exercise in this paper suggests that it may be overly optimistic to hope for reductions in risky behavior through the channel of HIV-information provision alone.
    JEL: I18 O10
    Date: 2006–08
  5. By: Tadashi Fukui; Yasushi Iwamoto
    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.
    JEL: H55 I10
    Date: 2006–08
  6. By: Alan C. Monheit; Jessica Primoff Vistnes
    Abstract: The weak response by the uninsured to policy initiatives encouraging voluntary enrollment in health insurance has raised concerns regarding the extent to which the uninsured value health insurance. To address this issue, we use data from the 2001 Medical Expenditure Panel Survey to examine the association between health insurance preferences and coverage status. We also consider the role of such preferences in decisions to seek out and enroll in employment-based coverage. We find that adults with weak or uncertain preferences for health insurance are more likely than persons with strong preferences to be uninsured and less likely to acquire coverage. Our econometric work indicates that workers with weak or uncertain preferences are less likely to obtain job offers with insurance, reinforcing prior evidence that workers sort among jobs according to preferences for coverage. We also find that workers with weak or uncertain preferences are less likely to enroll in offered coverage and we estimate the subsidy necessary to compensate such workers for the utility loss were they to enroll. Our results suggest a dual approach to expanding coverage that includes both subsidies and educational efforts to inform targeted groups among the uninsured about the value of health insurance.
    JEL: I1 J3
    Date: 2006–08
  7. By: Jayanta Bhattacharya; William B. Vogt
    Abstract: We construct and test a new model of employer-provided health insurance provision in the presence of adverse selection in the health insurance market. In our model, employers cannot observe the health of their employees, but can decide whether to offer insurance. Employees sort themselves among employers who do and do not offer insurance on the basis of their current health status and the probability distribution over future health status changes. We show that there exists a pooling equilibrium in which both sick and healthy employees are covered as long as the costs of job switching are higher than the persistence of health status. We test and verify some of the key implications of our model using data from the Current Population Survey, linked to information provided by the U.S. Department of Labor about the job-specific human capital requirements of jobs.
    JEL: I1 J10 J33
    Date: 2006–08
  8. By: Patrick Bajari; Han Hong; Ahmed Khwaja
    Abstract: Theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard. However, previous empirical research has found it difficult to disentangle adverse selection from moral hazard in health care. We empirically study this question by using data from the Health and Retirement Study to estimate a structural model of the demand for health insurance and medical care. Using a two-step semi-parametric estimation strategy we find significant evidence of moral hazard, but not of adverse selection.
    JEL: C14 D82 I11
    Date: 2006–08
  9. By: Philip DeCicca; Donald S. Kenkel; Alan D. Mathios; Yoon-Jeong Shin; Jae-Young Lim
    Abstract: In this paper, we develop a new direct measure of state anti-smoking sentiment and merge it with micro data on youth smoking in 1992 and 2000. The empirical results from the cross-sectional models show two consistent patterns: after controlling for differences in state anti-smoking sentiment, the price of cigarettes has a weak and statistically insignificant influence on smoking participation; and state anti-smoking sentiment appears to be a potentially important influence on youth smoking participation. The cross-sectional results are corroborated by results from discrete time hazard models of smoking initiation that include state fixed effects. However, there is evidence of price-responsiveness in the conditional cigarette demand by youth and young adult smokers.
    JEL: I10
    Date: 2006–08
  10. By: F. Rosati; R. Straub
    Abstract: The diversity of potential relationships between child labor and health makes the empirical disentanglement of the causal relationship a difficult exercise. This paper examines the long run impact of child labour on health by controlling for unobserved household specific characteristics. In order to control for the unobserved households specific effect, we estimate a conditional fixed effect model using data on siblings constructed from the Guatemalan National Survey of Living Condition. The estimation results reinforce the conventional wisdom that child labor is harmful for health in the long run. The results can be interpreted as a lower bound of the true impact since healthier children are most likely to offer themselves for employment and to be appointed.
    Date: 2006–02
  11. By: Levy, Amnon (University of Wollongong); Faria, João Ricardo
    Abstract: While a mind-altering-substance consumption alleviates current level of depression, it facilitates future depression. Our analysis incorporates this trade off and shows that the stationary state of a consistently overly ambitious sophisticated substance user is improved by impatience, and that this improvement is amplified by the ratio of the instantaneous depression-relief effect to the state-degradation effect of the substance. The analysis also shows that the existence of a supportive personal community leads to permanent cyclical substance consumption when the user is relatively patient.
    Keywords: Substance abuse, ambition, consistency, sophistication, impatience, state-maturation, state-degradation, depression, relief, community support, cycles
    JEL: D91 I12
    Date: 2006
  12. By: Clive Bell; Maureen Lewis
    Abstract: The outbreak of Severe Acute Respiratory Syndrome (SARS) in the winter of 2002–03 raised the specter of a new, unknown and uncontrollable infectious disease that spreads quickly and is often fatal. Certain branches of economic activity, notably tourism, felt its impact almost at once, and investor expectations of a safe and controlled investment climate were brought into question. Part of the shock of SARS was the abrupt reversal of a mounting legacy of disease control that had altered societies’ expectations from coping with waves of epidemics of smallpox, cholera, and measles, among other diseases, to complacency with the virtual elimination of disease epidemics. This paper analyzes the economic implications of the Great Plague in the fourteenth century, the 1918–19 influenza epidemic, HIV/AIDS and SARS to demonstrate the short- and long-term effects of different kinds of epidemics.
    Keywords: severe acute respiratory syndrome (SARS), infectious disease, epidemics
    JEL: I12 I18 O15
  13. By: Maureen Lewis; Gunnar Eskeland; Ximena Traa-Valerezo
    Abstract: Primary health care is accepted as the model for delivering basic health care to low income populations in developing countries. Using El Salvador as a case study, the paper draws on three data sets and a qualitative survey to assess health care access and utilization across public and private sector options (including NGOs). Multivariate analysis is used to estimate the quantitative determinants of health seeking behavior. Physical and financial access is generally good. Households do not value the community health workers, and prefer high cost private care, even the poorest families, because of the lower waiting times and higher probability of successful treatment. Similarly, higher level public facilities—health centers and hospitals—are preferred because they are less costly in terms of time as they offer "one stop shopping" and do not require multiple visits, and treatment success is higher than among health posts, health units or community health workers. These results combined with the small size of El Salvador suggest that alternative strategies to community health workers may be a more cost effective approach. While prevention is desirable, community health workers do not have the skills or services that the communities value, which makes them less effective in promoting prevention. Alternative modes of reaching the community could reduce costs and raise the effectiveness of public health spending.
    Keywords: health care, El Salvador, public health spending
    JEL: H4 I11 I12 I18 D1
  14. By: Maureen Lewis
    Abstract: After decades of neglect the HIV/AIDS epidemic has rightly become one of the highest priorities on the global agenda. Funding pledges from the donors have doubled resource commitments between 2002 and 2004 to over $6 billion. That surge in funding belies the volatile nature of contributions to HIV/AIDS initiatives at the country level. The paper analyzes the impacts of abrupt HIV/AIDS funding on macroeconomic stability, fiscal health and the development of health institutions. The macroeconomic effects are ambiguous, but depend on the overall level of aid flows, as well as those for HIV/AIDS, the management of foreign exchange inflows, and effective spending policies. The fiscal ramifications revolve around the jump in external funding that reached around 1000% in Lesotho and Swaziland, and 650% in Zambia between 2002 and 2004, and the required rapid scale up if resources are to be used productively. At the same time, the new HIV/AIDS monies are swamping public health budgets in some cases exceeding 150% of the government’s total allocations for health. The vertical HIV/AIDS programs and the set aside funding threaten to undermine the very institutions that will need to carry forward the long term HIV/AIDS prevention and treatment agenda for each country. Health systems are already fragile, and governance problems and uneven productivity compound the challenges. Health institutions require funding and attention to strengthen them in the fight against HIV/AIDS. While the committed funds are desperately needed, solutions to the dilemma will require creative options to ensure the flow of funds, manage the economic implications and ensure effective service delivery. These are explored in the concluding section.
    Keywords: HIV/AIDS, health institutions, aid flows
    JEL: E0 E6 I11 I18 O11
  15. By: Jean O. Lanjouw
    Abstract: We consider how patent rights and price regulation affect whether new drugs are marketed in a country, and how quickly. The analysis covers a large sample of 68 countries at all income levels and includes all drug launches over the period 1982-2002. It uses newly compiled information on legal and regulatory policy, and is the first systematic analysis of the determinants of drug launch in poor countries. Price control tends to discourage rapid product entry, while the results for patents are mixed. There is evidence that local capacity to innovate matters and that international pricing externalities may play a role.
    Keywords: patent, drugs, access, market entry, price control
    JEL: D62 D4 K2 K10 I11 I18

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