nep-hea New Economics Papers
on Health Economics
Issue of 2006‒11‒04
fourteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  2. A Theory of Medecine Effectiveness, Differential Mortality, Income Inequality and Growth for Pre-Industrial England By David, DE LA CROIX; Alessandro, SOMMACAL
  3. Cognitive Ability and Scale Bias in the Contingent Valuation Method - An Analysis of Willingness to Pay to Reduce Mortality Risks By Svensson, Mikael; Andersson, Henrik
  4. Don’t Go Breaking your Heart: Do Economic Upturns Really Increase Heart Attack Mortality? By Svensson, Mikael
  5. What Drove First Year Premiums in Stand-Alone Medicare Drug Plans? By Kosali I. Simon; Claudio Lucarelli
  6. Lead Pipes and Child Mortality By Karen Clay; Werner Troesken; Michael Haines
  7. Time Preference, Time Discounting, and Smoking Decisions By Ahmed Khwaja; Dan Silverman; Frank Sloan
  8. An Instrumental Variable Evaluation of Antidepressant Use on Employment Among HIV-Infected Women Using Highly-Active Antiretroviral Therapy in the United States: 1996-2004 By Omar Galarraga; David S. Salkever; Judith A. Cook; Stephen J. Gange
  9. Tradeoffs from Integrating Diagnosis and Treatment in Markets for Health Care By Christopher C. Afendulis; Daniel P. Kessler
  10. Welfare Reform and Indirect Impacts on Health By Marianne Bitler; Hilary W. Hoynes
  11. Non mean reverting affne processes for stochastic mortality By Elisa Luciano; Elena Vigna
  12. The Mismatch between Employment and Child Care in Italy: the Impact of Rationing By Daniela Del Boca; Daniela Vuri
  13. What About Mom? The Forgotten Beneficiary of the Medicaid Expansions By Karen Smith Conway; Andrea Kutinova
  14. The Effects of Unemployment on Childbearing By Andrea Kutinova

  1. By: Alejandro Gaviria; Carlos Medina; Carolina Mejía
    Abstract: This article presents an evaluation of an ambitious health reform implemented in Colombia during the first half of the nineties. The reform attempted to radically change public provision of health services, by means of the transformation of subsidies to supply (direct transfers to hospitals) into a new scheme of subsidies to demand (transfers targeted at the poorest citizens). Although the percentage of the population having medical care insurance has notably increased, mostly among the poorest, problems of implementation have been numerous. It has not been possible to achieve the transformation of subsidies to supply into subsidies to demand. At the same time, competition has not made it possible to increase the efficiency of many public hospitals, which continue to operate with very low occupation rates, while receiving hefty money transfers. Subsidies increased demand for medical consultations, but have curbed demand for hospitalizations. Nonetheless, subsidies might have adversely affected female’s labor market participation and even household consumption. As a whole, evidence suggests that the health reform has been effective in rationalizing households’ demand for health, but not in rationalizing public supply, and neither in increasing the efficiency of service providers.
    Date: 2006–01–24
  2. By: David, DE LA CROIX (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Alessandro, SOMMACAL
    Abstract: We study how mortality reductions and income growth interact, looking at their relationship prior to the Industrial Revolution, when income per capita was stagnant. We first present a model of individual medical spending giving a rationale for individual health expenditures even when medecine was not effective in postponing death. We then explain the rise of effective medecine by a learning process function of expenditures in health. The rise in effective medicine can then be linked to the take-off of the eighteenth century through life expectancy increases, and fostered capital accumulation. The rise of effective medecine has also an impact on the relation between growth and inequality and on the intergenerational persistence of differences in income. These channels are operative through differential mortality induced by medecine effectiveness that turns out to determines a differential in the propensity to save among income groups
    Keywords: Differential mortality, Life expectancy, Propensity to save, Health expenditures
    JEL: J10 I12 D91 E13 N33
    Date: 2006–05–15
  3. By: Svensson, Mikael (Department of Business, Economics, Statistics and Informatics); Andersson, Henrik (Department of Transport Economics)
    Abstract: This study investigates whether or not the scale bias found in contingent valuation (CVM) study on mortality risk reductions is a restraint on cognitive restraints amont respondents. Scale bias refers to insensitivity and non near-proportionality of the respondents' willingness to pay (WTP) to the size of the risk reduction. Two hundred Swedish students participated in an experiment where their cognitive ability was tested before they took part in a CVM-study where they were asked about their WTP to reduce bus-mortality risk. The results imply that WTP answers from respondents with a higher cognitive ability are less flawed by scale bias.
    Keywords: Cognitive Ability; Contingent Valuation; Mortality Risk; Near-Proportionality; Scale Bias
    JEL: D80 I10 Q51
    Date: 2006–10–26
  4. By: Svensson, Mikael (Department of Business, Economics, Statistics and Informatics)
    Abstract: Several recent papers in the literature have found that short-term economic upturns are bad for your health (a pro-cyclical effect). In this paper I explore the relationship between business cycles and incidence and mortality in acute myocardial infarction (heart attacks) in Sweden. The sample consists of 21 Swedish regions during the period 1987 to 2003. Results from the panel data estimations indicate that the business cycle effect is insignificant on overall rates of incidence and mortality. However, a counter-cyclical and significant effect is found in most specifications for those in prime working age between 20 and 49. It is also shown that a higher share of women, highly educated and non-foreigners decrease incidence and mortality. Further it is shown that results are sensitive to different business cycle proxies as well as different model specifications and previous results from the literature cannot be taken as universal for other countries or settings.
    Keywords: Mortality; Incidence; Heart attacks; Business cycles; Health
    JEL: E32 I12
    Date: 2006–11–01
  5. By: Kosali I. Simon; Claudio Lucarelli
    Abstract: Medicare's Part D offers heavily subsidized new drug coverage to 22.5 million seniors to date, of whom 16.5 million are in stand-alone drug plans (Department of Health and Human Services, 2006). The government delegated the delivery of the benefit to private insurance companies arguing that market incentives would lead them to provide coverage at the lowest price possible. The massive entry of plans and the large variety of actuarial designs and formularies offered make it complicated to assess how insurers set premiums during this first year of the program. This paper presents the first econometric evidence on whether premiums in the stand-alone drug plan markets are driven by the relevant factors predicted by insurance theory. Using data gathered from the Centers for Medicare and Medicaid Services, we measure a plan's generosity as the simulated out of pocket payments for different sets of drugs. We also identify the listed full drug prices by each insurer and merge these with other plan and geographical characteristics to test predictions about how insurers set premiums. We find evidence that a) the number of insurers in a market is big enough such that it does not appear to influence premiums, b) the full drug prices listed appear to be reflected to some degree in the premiums charged c) plan characteristics such as the provision of extra coverage are reflected in higher premiums, but overall there is a weak relationship between premiums and simulated out of pocket payments for different sets of drugs d) the institutional setting and regional market characteristics affect the firms' bidding behavior and their resulting premiums. Insurers appear to have responded strongly to program incentives such as the automatic enrollment of dual Medicaid-Medicare beneficiaries into low cost plans. As data for 2007 are made available, it will be important to see if plans follow similar pricing strategies in subsequent years of this program.
    JEL: I11 I18
    Date: 2006–10
  6. By: Karen Clay; Werner Troesken; Michael Haines
    Abstract: Beginning around 1880, public health issues and engineering advances spurred the installation of city water and sewer systems. As part of this growth, many cities chose to use lead service pipes to connect residences to city water systems. This choice had negative consequences for child mortality, although the consequences were often hard to observe amid the overall falling death rates. This paper uses national data from the public use sample of the 1900 Census of Population and data on city use of lead pipes in 1897 to estimate the effect of lead pipes on child mortality. In 1900, 29 percent of the married women in the United States who had given birth to at least one child and were age forty-five or younger lived in locations where lead service pipes were used to deliver water. Because the effect of lead pipes depended on the acidity and hardness of the water, much of the negative effect was concentrated on the densely populated eastern seaboard. In the full sample, women who lived on the eastern seaboard in cities with lead pipes experienced increased child mortality of 9.3 percent relative to the sample average. These estimates suggest that the number of child deaths attributable to the use of lead pipes numbered in the tens of thousands. Many surviving children may have experienced substantial IQ impairment as a result of lead exposure. The tragedy is that lead problems were avoidable, particularly once data became available on the toxicity of lead. These findings have implications for current policy and events.
    JEL: I1 N30
    Date: 2006–10
  7. By: Ahmed Khwaja; Dan Silverman; Frank Sloan
    Abstract: This study examines the relationship between time discounting, other sources of time preference, and intertemporal choices about smoking. Using a survey fielded for our analysis, we elicit rates of time discount from choices in financial and health domains. We also examine the relationship between other determinants of time preference and smoking status. We find very high rates of time discount in the financial realm for a horizon of one year, irrespective of smoking status. In the health domain, the implied rates of time discount decline with the length of the time delay (hyperbolic discounting) and the sign of the payoff (the “sign effectâ€). We use a series of questions about the willingness to undergo a colonoscopy to elicit short- and long-run rates of discount in a quasi-hyperbolic discounting framework, finding no evidence that short-run and long-run rates of discount differ by smoking status. Using more general measures of time preference, i.e., impulsivity and length of financial planning horizon, smokers are more impatient. However, neither of these measures is significantly correlated with the measures of time discounting. Our results indicate that subjective rates of time discount revealed through committed choice scenarios are not related to differences in smoking behavior. Rather, a combination of more general measures of time preference and self-control, i.e., impulsivity and financial planning, are more closely related to the smoking decision.
    JEL: D84 D91 I12
    Date: 2006–10
  8. By: Omar Galarraga; David S. Salkever; Judith A. Cook; Stephen J. Gange
    Abstract: This paper examines the effect of antidepressant use on the likelihood of being employed among HIV-positive women receiving highly active antiretroviral therapy (HAART) in the United States from 1994 to 2004. We use instrumental variables to predict antidepressant use independently of outcomes; thus, addressing potential sources of bias -- more depressed women are more likely to receive antidepressant treatment, but they are also more likely to be unemployed. The results show that antidepressant use has a positive effect on the employment probability of women living with HIV. The proposed instrumental variables can be used to identify antidepressant use in the WIHS population. Among women receiving HAART, and controlling for individual and local area labor market characteristics, the use of antidepressants is associated with a higher probability of being employed.
    JEL: I12 I18 J22
    Date: 2006–10
  9. By: Christopher C. Afendulis; Daniel P. Kessler
    Abstract: What are the important tradeoffs in consulting a single expert for both diagnosis and treatment? On one hand, an integrated diagnostician may have the incentive to recommend treatments that are not in the buyer's best interests. On the other hand, joint production of diagnosis and treatment by an integrated diagnostician may be more efficient. We examine an important special case of this problem: the costs and health outcomes of elderly Medicare beneficiaries with coronary artery disease. We compare the empirical consequences of diagnosis by an "integrated" cardiologist -- one who can provide surgical treatment -- to the consequences of diagnosis by a non-integrated cardiologist. Diagnosis by an integrated cardiologist leads, on net, to higher health spending but similar health outcomes. The net effect contains three components: reduced spending and improved outcomes from better allocation of patients to surgical treatment options; increased spending conditional on treatment option; and worse outcomes from poorer provision of non-surgical care. We conclude that accounting more completely for doctors' incentives to refer patients in setting reimbursements, or in the alternative, allowing doctors more freedom to make and receive payments for referrals, could reduce spending and improve quality.
    JEL: I1
    Date: 2006–10
  10. By: Marianne Bitler; Hilary W. Hoynes
    Abstract: The stated goals of welfare reform are to increase work, reduce dependency on welfare, reduce births outside marriage, and to increase the formation of two parent families. However, welfare reform may also have indirect impacts on health. We provide a comprehensive review of the literature on the impacts of welfare reform on health. We illustrate the main findings from the literature by presenting estimates of the impact of reform on health insurance, health utilization, and health status using data from five state waiver experiments. The most consistent finding is that welfare reform led to a reduction in health insurance coverage. The impacts on health care utilization and health status tend to be more mixed and fewer are statistically significant. While the results are not conclusive, they suggest that welfare-to-work programs need not have large negative health effects.
    JEL: I1 I3
    Date: 2006–10
  11. By: Elisa Luciano; Elena Vigna
    Abstract: In this paper we use doubly stochastic processes (or Cox processes) in order to model the random evolution of mortality of an individual. These processes have been widely used in the credit risk literature in modelling default arrival, and in this context have proved to be quite flexible, especially when the intensity process is of the affne class. We investigate the applicability of time-homogeneous a±ne processes in describing the individual's intensity of mortality and the mortality trend, as well as in forecasting it. We calibrate them to the UK population. Calibrations suggest that, in spite of their popularity in the financial context, mean reverting time-homogeneous processes are less suitable for describing the death intensity of individuals than non mean reverting processes. Among the latter, affne processes whose determin- istic part increases exponentially seem to be appropriate. They are natural generalizations of the Gompertz law. Stress analysis and analytical results indicate that increasing the randomness of the intensity process for a given cohort results in improvements in survivorship. Mortality forecasts and their comparison with experienced mortality rates provide further encour- aging evidence in favour of non mean reverting processes. The mortality trend is evidenced through the evolution over time of the parameters and through the intensity simulation for di®erent gener- ations.
    Keywords: doubly stochastic processes (Cox processes), affne processes, stochastic mortality, mortality forecasting.
    JEL: G22 J11
    Date: 2006
  12. By: Daniela Del Boca; Daniela Vuri
    Abstract: In Italy the participation of women has not increased very much in the last few decades relative to other developed countries and it is still among the lowest in Europe. The female employment rate stands almost 13 percentage points below the EU average and 22 below the Lisbon target. One of the most important reasons is related to the characteristics of child care system. In this paper we analyze the characteristics of the child care system in Italy and its relationship to the labor market participation decision of mothers. We present a simple discrete choice framework in which the two decisions can be jointly considered, which also allows for simple forms of rationing. We go on to estimate a bivariate probit model of the child care and employment decisions and interpret the results within the framework of our model. We find evidence that rationing is an important factor in interpreting price effects on utilization rates and employment decisions.
    Keywords: Labor Market Decisions, Fertility, Child care.
    JEL: J2 C3 D1
    Date: 2006
  13. By: Karen Smith Conway; Andrea Kutinova (University of Canterbury)
    Abstract: This paper contributes to evidence regarding the effectiveness of the Medicaid expansions by focusing on a key beneficiary - the mother - who has previously been overlooked. Using the Natality Detail Files for 1989-96, we estimate the relationship between Medicaid eligibility and maternal health outcomes for several treatment groups and a control group. Potential biases caused by improved reporting are addressed by using a 'straw man' maternal complication not preventable with prenatal care. Our results suggest that increased Medicaid eligibility lead to fewer preventable maternal complications among women most likely to have benefited from the Medicaid expansions.
    Keywords: Maternal health; Medicaid; Prenatal care
    JEL: I18
    Date: 2006–06–22
  14. By: Andrea Kutinova (University of Canterbury)
    Abstract: Are recessions good for pregnancy? In this paper, I investigate the relationship between unemployment fluctuations, prenatal care utilization, and infant and maternal health. Analyzing the US Natality Detail Files data for the period 1989-99 aggregated by county, year, and race, I find the overall effects of unemployment to be beneficial but conclude that at least some of the apparent benefits may be attributable to the Medicaid 'safety net'.
    Keywords: Unemployment; Prenatal Care; Infant and Maternal Health
    JEL: I18
    Date: 2006–06–26

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