nep-hea New Economics Papers
on Health Economics
Issue of 2006‒09‒30
fourteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. What Do We know About Competition and Quality in Health Care Markets? By Martin Gaynor
  2. Health and labor force participation of the elderly in Europe : what do objective health measures add to the analysis? By Kalwij,Adriaan; Vermeulen,Frederic
  3. Wages, benefits, hours, commuting time, and license renewal for Iowa Registered Nurses By Imerman, Mark D.; Orazem, Peter; Sikdar, Shiva; Russell, Gina
  4. The Wage Effects of Social Norms: Evidence of Deviations from Peers’ Body-Mass in Europe By René Fahr
  5. The Effectiveness of Cigarette Regulations in Reducing Cases of Sudden Infant Death Syndrome By Sara Markowitz
  6. Do Female Physicians Capture Their Scarcity Value? The Case of OB/GYNs By Jessica Wolpaw Reyes
  7. High School Alcohol Use and Young Adult Labor Market Outcomes By Pinka Chatterji; Jeffrey DeSimone
  8. Do State Expenditures on Tobacco Control Programs Decrease Use of Tobacco Products Among College Students? By Christina Czart Ciecierski; Pinka Chatterji; Frank J. Chaloupka; Henry Wechsler
  9. Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey By Jeffrey R. Brown; Norma B. Coe; Amy Finkelstein
  10. Ex Ante Liability Rules in New Zealand's Health and Safety in Employment Act: A Law and Economics Analysis By Paul Gordon; Alan E. Woodfield
  11. Incentives and the Changing Structure of Penalties in New Zealand's Health and Safety in Employment Act By Paul Gordon; Alan E. Woodfield
  12. Health Care Provider Choice By Christelle Swanepoel; Ian Stuart
  13. Have pro-poor health policies improved the targeting of spending and the effective delivery of health care in South Africa? By Ronelle Burger; Christelle Swanepoel
  14. The impact of cannabis and cigarette use on health By Jenny Williams; Christopher L. Skeels

  1. By: Martin Gaynor
    Abstract: The goal of this paper is to identify key issues concerning the nature of competition in health care markets and its impacts on quality and social welfare and to identify pertinent findings from the theoretical and empirical literature on this topic. The theoretical literature in economics on competition and quality, the theoretical literature in health economics on this topic, and the empirical findings on competition and quality in health care markets are surveyed and their findings assessed. Theory is clear that competition increases quality and improves consumer welfare when prices are regulated (for prices above marginal cost), although the impacts on social welfare are ambiguous. When firms set both price and quality, both the positive and normative impacts of competition are ambiguous. The body of empirical work in this area is growing rapidly. At present it consists entirely of work on hospital markets. The bulk of the empirical evidence for Medicare patients shows that quality is higher in more competitive markets. The empirical results for privately insured patients are mixed across studies.
    Keywords: competition,health care,quality,antitrust,
    JEL: I11 L10 L40
    Date: 2006–07
  2. By: Kalwij,Adriaan; Vermeulen,Frederic (Tilburg University, Center for Economic Research)
    Abstract: In this paper, we study labour force participation behaviour of individuals aged 50-64 in 11 European countries. The data are drawn from the new Survey of Health, Ageing and Retirement in Europe (SHARE). We examine the value added of objective health variables in relation to potentially endogenous self-reported health. We approach the endogeneity of self-reported health as an omitted variables problem. In line with the literature on the reliability of self-reported health, ambiguous results are obtained. In some countries, self-reported health does a fairly good job: controlling for extra health related variables does not seem to add much to the analysis. In other countries, however, self-reported health is clearly endogenous with results that are in line with the justi.cation hypothesis. They illustrate the multidimensional nature of health and the need to control for objective health variables when analyzing labour force participation behaviour. This makes an instrumental variables approach to deal with endogenous self-reported health less appropriate.
    Keywords: SHARE;labour force participation;self-reported health;objective health; retirement
    JEL: I10 J22 J26
    Date: 2006
  3. By: Imerman, Mark D.; Orazem, Peter; Sikdar, Shiva; Russell, Gina
    Abstract: The Iowa Board of Nursing licensing database for Registered Nurses (RNs) contains information on Registered Nurses who have renewed their licenses including age, race, gender, education, and location of employment. It also contains comparable information on nurses who opted not to renew at the time of their last renewal. This report contains an analysis of the nurses’ characteristics that increase the likelihood of license renewal based on all useable information contained in the licensing database. In addition, we randomly sampled subpopulations of nurses who had current licenses and nurses who had allowed their licenses to expire. A survey of these nurses was analyzed to provide insights into the effects of individual wages, benefits, family income, family responsibilities, hours worked, and commuting time on the decision to work, work in nursing, and maintain a nursing license.
    Keywords: wages, benefits, labor force, workforce, nurses, health care,
    JEL: J0 J3 J4
    Date: 2006–09–18
  4. By: René Fahr (University of Cologne and IZA Bonn)
    Abstract: We investigate wage effects of deviations from peer group body mass index (BMI) to evaluate the influence of social norms on wages. Our approach allows for disentangling the influence of the social norm from any (anticipated) productivity effects associated with deviations from a clinically recommended BMI. Estimates of between effects models for 9 European countries for the years 1998-2001 suggest that the influence of the social norm varies considerably between countries and wage penalties are rather found for upward deviations from the norm and for men.
    Keywords: social norms, discrimination, body-mass-index, cross-country evidence, wage effects
    JEL: I10 J30 J70 M51
    Date: 2006–09
  5. By: Sara Markowitz
    Abstract: Sudden Infant Death Syndrome is a leading cause of mortality among infants and is responsible for thousands of infant deaths every year. Prenatal smoking and postnatal environmental smoke have been identified as strong risk factors for SIDS. Given the link between smoking and SIDS, this paper examines the direct effects of cigarette prices, taxes and clean indoor air laws in explaining changes in the incidence of SIDS over time in the United States. State-level counts of SIDS cases are generated from death certificates for 1973 to 2003. After controlling for some observed and unobserved confounding factors, the results show that higher cigarette prices and taxes are associated with reductions in SIDS cases. Stronger restrictions on smoking in restaurants and child care centers are also effective in reducing SIDS deaths.
    JEL: I0
    Date: 2006–09
  6. By: Jessica Wolpaw Reyes
    Abstract: This paper analyzes how the imperfectly competitive market for Obstetricians and Gynecologists clears in the face of an excess demand for female OB/GYNs. This excess demand results from the convergence of three factors: i) all OB/GYN patients are women, ii) many women prefer to be treated by a female OB/GYN, iii) only a small portion of OB/GYNs are female. The paper finds that both money and non-money prices adjust: female OB/GYNs charge higher fees and also have longer waiting times. Furthermore, these effects are mediated by institutional structure: in contract settings in which money prices are rigid (i.e. managed care), waiting times are more likely to adjust, and in settings in which money prices are more flexible, the reverse occurs. In the end, female OB/GYNs are able to capture some of the value of the preferred service they provide but do not entirely close the gender income gap.
    JEL: I1 J16 J44
    Date: 2006–09
  7. By: Pinka Chatterji; Jeffrey DeSimone
    Abstract: We estimate the relationship between 10th grade binge drinking in 1990 and labor market outcomes in 2000 among National Educational Longitudinal Survey respondents. For females, adolescent drinking and adult wages are unrelated, and negative employment effects disappear once academic achievement is held constant. For males, negative employment effects and, more strikingly, positive wage effects persist after controlling for achievement as well as background characteristics, educational attainment, and adult binge drinking and family and job characteristics. Accounting for illegal drug use and other problem behaviors in 10th grade eliminates the unemployment effect, but strengthens the wage effect. As the latter is not explicable by the health, income or social capital justifications that are often used for frequently observed positive correlations between adult alcohol use and earnings, we conjecture that binge drinking conveys unobserved social skills that are rewarded by employers.
    JEL: I1 J2 J3
    Date: 2006–09
  8. By: Christina Czart Ciecierski; Pinka Chatterji; Frank J. Chaloupka; Henry Wechsler
    Abstract: The objective of this paper is to investigate the effects of state tobacco control program expenditures on individual-level tobacco use behaviors among young adults. Data come from the 1993, 1997, 1999 and 2001 waves of the Harvard School of Public Health College Alcohol Study (CAS). Our findings indicate that a higher level of state spending on tobacco control programs is associated with a statistically significant increase in the probability that smokers report at least one attempt to quit smoking in the past year, as well as increases in the number of attempts to quit in the past year among smokers. We also find that higher state expenditures on tobacco control programs are associated with reductions in the prevalence of smokeless tobacco and cigar use among college students. We do not find, however, any statistically significant association between state tobacco control program expenditures and the overall prevalence and intensity of cigarette use among college students, a finding that is at odds with previous research on high school students.
    JEL: I1
    Date: 2006–09
  9. By: Jeffrey R. Brown; Norma B. Coe; Amy Finkelstein
    Abstract: This paper provides empirical evidence of Medicaid crowd out of demand for private long-term care insurance. Using data on the near- and young-elderly in the Health and Retirement Survey, our central estimate suggests that a $10,000 decrease in the level of assets an individual can keep while qualifying for Medicaid would increase private long-term care insurance coverage by 1.1 percentage points. These estimates imply that if every state in the country moved from their current Medicaid asset eligibility requirements to the most stringent Medicaid eligibility requirements allowed by federal law – a change that would decrease average household assets protected by Medicaid by about $25,000 – demand for private long-term care insurance would rise by 2.7 percentage points. While this represents a 30 percent increase in insurance coverage relative to the baseline ownership rate of 9.1 percent, it also indicates that the vast majority of households would still find it unattractive to purchase private insurance. We discuss reasons why, even with extremely stringent eligibility requirements, Medicaid may still exert a large crowd-out effect on demand for private insurance.
    JEL: G22 H51 H53 I18
    Date: 2006–09
  10. By: Paul Gordon; Alan E. Woodfield (University of Canterbury)
    Abstract: In addition to penalties imposed for breaches of statutory duties in the event of workplace accidents involving physical harms, New Zealand's Health and Safety in Employment Act 1992 also provides for penalties where accidents have not occurred. Ordinary negligence rules are ex post in that both an accident and harm must occur before liability accrues, whereas ex ante liability rules create liability for deficient care per se. This paper examines whether liability for breaches of duty that do not give rise to accidents have a useful incentive-enhancing role for health and safety decisions by employers in the New Zealand context when used in conjunction with ex post liability rules. We argue that ex post rules by themselves are insufficient to induce appropriate levels of precaution due to the combined presence of weak penalties and considerable uncertainty surrounding the Courts' required standard of care. Merely augmenting ex post liability with ex ante liability, however, is unlikely to induce desirable levels of employer precautions. Further, more strict ex ante standards than socially optimal precaution levels may be desirable since inspection probabilities, prosecution rates, and penalties for breaches of ex ante standards are relatively low, providing some justification for the relatively stringent safety regulations and required standard of care observed in New Zealand. Nevetheless, a weaker but less uncertain standard may instead induce a small degree of overprecaution, removing the need for ex ante regulations from this particular perspective.
    Keywords: ex ante and ex post liability; safety incentives, health and safety standards; uncertainty
    JEL: K32
    Date: 2006–06–01
  11. By: Paul Gordon; Alan E. Woodfield (University of Canterbury)
    Abstract: This article argues that it is doubtful that the fivefold increase in maximum fines under New Zealand's Health and Safety in Employment Amendment Act 2002 will be successful in providing suitable precautionary incentives. Expected penalties remain at relatively low levels, with the continued use of capped fines along with substantial margins for deterrence of the most serious cases. On average, fines were initially substantially lower in response to the introduction of the Sentencing Act 2002 for which uncapped (but insurable) reparations take precedence over fines, and must be accounted for in setting fines. The combined effects of the legislation led to average total financial penalties approximately doubling through 2004 rather than increasing at anything like the rate signalled for fines by the amendments. Subsequently, while fines have grown in absolute terms, even more rapid growth in reparations has caused relative crowding-out while total penalties remain well below those signalled by the amendments alone. The case for low caps on fines appears weak, while 'asset-testing' fines is unlikely to be an efficient practice. Absent further significant changes in workplace safety incentives, New Zealand is likely to face an ongoing (if possibly somewhat abated) stream of prosecutions for serious breaches of relatively onerous statutory health and safety duties.
    Keywords: health and safety incentives; expected penalties; capped fines; reparations
    Date: 2006–06–01
  12. By: Christelle Swanepoel (Department of Economics, Stellenbosch University); Ian Stuart (South African National Treasury, Pretoria)
    Abstract: In order to achieve an ‘optimal health system’ health policies should not only be focused on the supply of health care, but also take cognisance of the demand for health care. Studies of health care demand in South Africa are scarce due to considerable data limitations. This analysis attempts to fill this gap by combining two data sets (specifically, the GHS 2004 and IES/LFS 2000) in order to be able to utilize the wealth of information regarding health care utilization in the General Household Survey. The aim is to inform and encourage debate on how to incorporate demand side considerations in order to arrive at improved public health care in South Africa.
    Keywords: health care, demand for health, combining data sets, South Africa
    JEL: D0 C2 I11 I18
    Date: 2006
  13. By: Ronelle Burger (Department of Economics, Stellenbosch University); Christelle Swanepoel (Bureau of Economic Research, Stellenbosch University)
    Abstract: Since 1994 there have been a number of radical changes in the public health care system in South Africa. Budgets have been reallocated, decision making was decentralised, the clinic network was expanded and user fees for primary health care were abolished. The paper examines how these recent changes have affected the incidence of spending and the accessibility and quality of health care. The paper finds that between 1995 and 2003 there have been advances in the pro-poor spending incidence of both clinics and hospitals. The increased share of the health budget allocated to the more pro-poor clinic services has contributed further to the improvement in the targeting of overall health spending. Also, it appears that the elimination of user fees for clinics and the expansion of the clinic network have helped to make health services more affordable and geographically accessible to the poor and were associated with a notable rise in health service utilisation for individuals in the bottom two expenditure quintiles. South Africa’s spending on clinics and hospitals is well targeted and more progressive than other developing country public health systems. Unfortunately, it appears that to a considerable extent this result is driven by perceptions that services offered in public hospitals and clinics are of a low and variable quality. These perceptions seem to be encouraging most of those who can afford to pay more for health services to opt out of the public health system, thereby increasing the pro-poor incidence of public health spending. Complaints by users of public health facilities include long waiting times, staff rudeness and problems with drug availability. Dissatisfaction with health services is significantly higher in the public sector than in the private sector and the gap has expanded slightly over time. It is consequently not surprising that a substantial and increasing share of individuals – also including the very poorest – prefer to consult private providers.
    Keywords: fiscal incidence, South Africa, health
    JEL: H51 I18
    Date: 2006
  14. By: Jenny Williams; Christopher L. Skeels
    Abstract: Chronic daily cannabis use has been shown to have long term harmful health effects, which in turn is expected to reduce labour market productivity. The evidence is less clear on the health impact of less frequent consumption, which is the more typical mode of use, and previous empirical studies fail to find robust evidence of an adverse impact of these modes of use on labour market productivity. This paper attempts to shed some light on this issue by directly estimating the impact of cannabis consumption in the past week and past year on health status using information on prime age individuals living in Australia. We find that cannabis use does reduce self-assessed health status, with the effect of weekly use being of a similar magnitude as smoking cigarettes daily. Moreover, we find evidence of a dose-response relationship in the health impact of cannabis use, with annual use having roughly half the impact of weekly use.
    Keywords: self-assessed health, cannabis, cigarettes, productivity
    JEL: I1
    Date: 2006

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