nep-hea New Economics Papers
on Health Economics
Issue of 2006‒09‒03
twelve papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Sick Pay, Health and Work By Granberg, Malin; Löfgren, Karl-Gustaf
  2. Variations Among Regions and Hospitals in Managing Chronic Illness: How Much Care Is Enough? Seventeenth Annual Herbert Lourie Memorial Lecture on Health Policy. By John E. Wennberg
  3. Smoke Signals: Adolescent Smoking and School Continuation By Philip J. Cook; Rebecca Hutchinson
  4. First Do No Harm?: Tort Reform and Birth Outcomes By Janet Currie; W. Bentley MacLeod
  5. The Consequences of Teenage Childbearing By Adam Ashcraft; Kevin Lang
  6. The value of mortality risk reductions in Delhi, India By Bhattacharya, Soma; Alberini, Anna; Cropper, Maureen L.
  7. Pseudo-Generic Products and Mergers in Pharmaceutical Markets By Granier, L.; Trinquard, S.
  8. `Coaching´ Small Biotech Companies into Success: The Value-adding Function of VC By Terttu Luukkonen; Mari Maunula
  9. New Developments in Physician Agency: the Role of Patient Information By F. Barigozzi; R. Levaggi
  10. A Rationale for Searching (Imprecise) Health Information By F. Barigozzi; R. Levaggi
  11. Financing Pharmaceutical Innovation: How Much Should Poor Countries Contribute? By William Jack; Jean O. Lanjouw
  12. Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland By Medhi Farsi; Massimo Filippini

  1. By: Granberg, Malin (Department of Economics, Umeå University); Löfgren, Karl-Gustaf (Department of Economics, Umeå University)
    Abstract: The purpose of this paper is to analyze the effects of different sickness insurance regimes on the employee decision reporting sick or not. We can think of the design problem as a representative employer’s decision to determine the optimal relationship between the wage and the sickness pay. The employee bases her decision to work or not on this relative price and her exogenously given health status that varies between individuals. We believe that the incentives present in the model are able to tell as about relevant aspects of the incentives involved in a state managed sickness insurance system. We calculate how the control variables depend on parameters such as the average productivity of the worker, the average productivity of the substitute, the wage of the substitute, and the search cost to find a substitute. Since we assume that the health status of the work force is heterogeneous and represented by a distribution function, we are also able to calculate the change in the work participation rate, as a function of the parameters.
    Keywords: Sickness insurance design; wage setting; and labour force participation
    JEL: I18 J20 J28
    Date: 2006–08–28
  2. By: John E. Wennberg (Center for the Evaluative Clinical Sciences, Dartmouth Medical School, HB 7251, Hanover, New Hampshire 03755)
    Abstract: Classic epidemiology looks at what happens to people who live in a defined region over time. For example, birth rate, the number of births that occur among populations over a year, is a common statistics that we're all familiar with. Since the early 1990s we have conducted research at Dartmouth Medical School to convert that classic epidemiologic perspective into looking at what is happening in terms of the health care system itself. We ask how much care people are getting in different regions of the country. We want to know the patterns of that care. And we want to get into the causes of so-called unwarranted variation, that is, differences that cannot be explained on the basis of patient illness, the dictates of scientific medicine, or the preferences of patients. Those three key words--illness, preference, and science--ultimately don't explain very much of the variation we see. We began the Dartmouth Atlas Project in 1993 as a study of health care markets in the United States, measuring variations in health care resources and their utilization among geographic areas. In recent years, we have expanded our research agenda to include the resources and utilization among patients at specific hospitals. We use very large claims databases from the Medicare program and other sources to define where people go for medical care, what kind of care they receive, and whether increasing investments in health care resources and their use result in better health outcomes.
    Keywords: nursing home, Medicare, Medicaid, long-term care, elderly, social welfare.
    JEL: I11 I23 I28 J14
    Date: 2006–07
  3. By: Philip J. Cook; Rebecca Hutchinson
    Abstract: This paper presents an exploratory analysis using NLSY97 data of the relationship between the likelihood of school continuation and the choices of whether to smoke or drink. We demonstrate that in the United States as of the late 1990s, smoking in 11th grade was a uniquely powerful predictor of whether the student finished high school, and if so whether the student matriculated in a four-year college. For economists the likely explanation for this empirical link would be based on interpersonal differences in time preference, but that account is called in question by our second finding -- that drinking does not predict school continuation. We speculate that the demand for tobacco by high school students is influenced by the signal conveyed by smoking (of being off track in school), one that is especially powerful for high-aptitude students. To further develop this view, we present estimates of the likelihood of smoking as a function of school commitment and other, more traditional variables. There are no direct implications from this analysis for whether smoking is in some sense a cause of school dropout. We offer some speculations on this matter in the conclusion.
    JEL: I12 I2
    Date: 2006–08
  4. By: Janet Currie; W. Bentley MacLeod
    Abstract: We examine the impact of tort reforms using U.S. birth records for 1989-2001. We make four contributions: First, we develop a model that analyzes the incentives created by specific tort reforms. Second, we assemble new data on tort reform. Third, we examine a range of outcomes. Finally, we allow for differential effects by demographic/risk group. We find that reforms of the "deep pockets rule" reduce complications of labor and C-sections, while caps on noneconomic damages increase them. Our results demonstrate there are important interactions between incentives created by tort law and other incentives facing physicians.
    JEL: I12 I18 K13
    Date: 2006–08
  5. By: Adam Ashcraft; Kevin Lang
    Abstract: We examine the effect of teenage childbearing on the adult outcomes of a sample of women who gave birth, miscarried or had an abortion as teenagers. If miscarriages are (conditionally) random, then if all miscarriages occur before teenagers can obtain abortions, using the absence of a miscarriage as an instrument for a live birth provides a consistent estimate of the effect of teenage motherhood on women who give birth. If all abortions occur before any miscarriage can occur, OLS on the sample of women who either have a live birth or miscarry provides an unbiased estimate of this effect. Under reasonable assumptions, IV underestimates and OLS overestimates the effect of teenage motherhood on adult outcomes. For a variety of outcomes, the two estimates provide a narrow bound on the effect of teenage motherhood on adult outcomes and which is relatively modest. The bounds can also be combined to provide consistent estimates of the effects of teen motherhood. These effects are generally adverse but modest.
    JEL: I3 J13
    Date: 2006–08
  6. By: Bhattacharya, Soma; Alberini, Anna; Cropper, Maureen L.
    Abstract: The authors interviewed commuters in Delhi, India, asking them to report their willingness to pay (WTP) to reduce their risk of dying in road traffic accidents in each of three scenarios that mirror the circumstances under which the majority of the road fatalities in Delhi occur. The WTP responses are internally valid, in the sense that WTP increases with the size of the risk reduction, income, and exposure to road traffic risks, as measured by length of commute and whether the respondent drives a two-wheeler. As a result, the " value of a statistical life " (VSL) is individuated-that is, it varies across groups of beneficiaries. For the most likely beneficiaries of road safety programs-the most highly exposed individuals-the VSL is about 150,000 PPP$.
    Keywords: Transport Economics Policy & Planning,Roads & Highways,Airports and Air Services,Road Safety,Insurance & Risk Mitigation
    Date: 2006–08–01
  7. 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
  8. By: Terttu Luukkonen; Mari Maunula
    Keywords: venture capital, biotechnology
    JEL: O16 G24 O38 L65
    Date: 2006–08–23
  9. By: F. Barigozzi; R. Levaggi
    Date: 2005
  10. By: F. Barigozzi; R. Levaggi
    Date: 2006
  11. By: William Jack; Jean O. Lanjouw
    Abstract: We use a public economics framework to consider how pharmaceuticals should be priced when at least some of the R&D incentive comes from sales revenues. We employ familiar techniques of public finance to relax some of the restrictions implied in the standard use of Ramsey pricing. In the more general model, poor countries should not necessarily cover even their own marginal costs, and the pricing structure is not related to that which would be chosen by a monopolist in a simple way. We use this framework to examine on-going debates regarding the international patent system as embodied in the WTO’s TRIPS agreement.
    Keywords: pharmaceutical, poor countries, pricing structure, patent system
    JEL: O32 D42 D40 D63 I12
  12. By: Medhi Farsi (Department of Management, Technology and Economics, ETH Zurich, Switzerland); Massimo Filippini (Istituto microeconomia e economia pubblica (MecoP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera)
    Abstract: This paper explores the cost structure of Swiss hospitals, focusing on differences due to teaching activities and those across different ownership and subsidization types. A stochastic total cost frontier with a Cobb-Douglas functional form has been estimated for a panel of 150 general hospitals over the six-year period from 1998 and 2003. Inpatient cases adjusted by DRG cost weights and ambulatory revenues are considered as two separate outputs. The adopted econometric specification allows for unobserved heterogeneity across hospitals. The results indicate that the time-invariant unobserved factors could account for considerable cost differences that could be only partly due to inefficiency. The results suggest that teaching activities are an important cost driving factor and hospitals that have a broader range of specialization are relatively more costly. The excess costs of university hospitals can be explained by more extensive teaching activities as well as the relatively high quality of medical units. However, even after controlling for such differences university hospitals have shown a relatively low cost-efficiency especially in the first two or three years of the sample period. The analysis does not provide any evidence of significant efficiency differences across ownership and subsidization categories.
    Keywords: general hospitals, teaching hospitals, stochastic frontier, cost efficiency
    Date: 2006–07

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