nep-hea New Economics Papers
on Health Economics
Issue of 2007‒01‒28
twenty-one papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. The relationship of drug reimbursement with the price and the quality of pharmaceutical innovations By María García-Alonso; Begoña Garcia-Mariñoso
  2. Understanding individuals’ decisions about vaccination: a comparison between Expected Utility and Regret Theory models By M Zia Sadique; John Edmunds; Nancy Devlin; David Parkin
  3. The impact of government targets on waiting times for elective surgery: new insights from time-to-event analysis By Sofia Dimakou; David Parkin; Nancy Devlin; John Appleby
  4. Identifying the effect of public health program on child immunisation in rural Bangladesh By M Zia Sadique; M Niaz Asadullah
  5. Parental Education and Child Health: Evidence from a Schooling Reform By Maarten Lindeboom; Ana Llena Nozal; Bas van der Klaauw
  6. Growing richer and taller: Explaining Change in the Distribution of Child Nutritional Status during Vietnam’s Economic Boom By Owen O'Donnell; Ángel López Nicolás; Eddy van Doorslaer
  7. Conjugal Bereavement Effects on Health and Mortality at Advanced Ages By Gerard J. van den Berg; Maarten Lindeboom; France Portrait
  8. Dedicated Doctors: Public and Private Provision of Health Care with Altruistic Physicians By Josse Delfgaauw
  9. Persistence of innovation, technological change and quality-adjusted patents in the US Pharmaceutical industry By Gautier Duflos
  10. The Evolution of the French Public Poliy to Promote Biotech Innovation : The Case of Genomics By Anne Branciard; Vincent Mangematin
  11. Living to Save Taxes By Eliason, Marcus; Ohlsson, Henry
  12. The Health Gradient and Early Retirement: Evidence from the German Socio-economic Panel By Gisela Hostenkamp; Michael Stolpe
  13. Health human resources planning and the production of health: Development of an extended analytical framework for needs-based health human resources planning. By Stephen Birch; George Kephart; Gail Tomblin-Murphy; Linda O'Brien-Pallas; Rob Alder; Adrian MacKenzie
  14. Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California's Tobacco Control Program By Alberto Abadie; Alexis Diamond; Jens Hainmueller
  15. Altruism, Fertility, and the Value of Children: Health Policy Evaluation and Intergenerational Welfare By Javier A. Birchenall; Rodrigo R. Soares
  16. On the Determinants of Mortality Reductions in the Developing World By Rodrigo R. Soares
  17. Prescription Drug Insurance and Its Effect on Utilization and Health of the Elderly By Nasreen Khan; Robert Kaestner; Swu Jane Lin
  18. Do Food Stamps Cause Obesity? Evidence from Immigrant Experience By Neeraj Kaushal
  19. Circulatory Disease in the NHS: Measuring Trends in Hospital Costs and Output By Adriana Castelli; Peter C Smith
  20. Efficiency Performance of Hospitals and Medical Centers in Vietnam By Nguyen, Khac Minh; Giang, Thanh Long
  21. Lowering blood alcohol content levels to save lives, the european experience By Daniel Albalate

  1. By: María García-Alonso; Begoña Garcia-Mariñoso (Department of Economics, City University, London)
    Abstract: This paper studies the strategic interaction between pharmaceutical firms’ pricing decisions and government agencies´ reimbursement decisions which discriminate between patients by giving reimbursement rights to patients for whom the drug is most effective. We show that if the reimbursement decision precedes the pricing decision, the agency only reimburses some patients if the private and public health benefits from the new drug diverge. That is, when (i) there are large externalities of consuming the drug and (ii) the difference in costs between the new drug and the alternative treatment is large. Alternatively, if the firm can commit to a price in advance of the reimbursement decision, we identify a strategic effect which implies that by committing to a high price ex ante, the firm can force a listing outcome and make the agency more willing to reimburse than in the absence of commitment.
    Keywords: Pharmaceutical industry, innovation, health policy
    JEL: I10 I18 L65
    Date: 2005–06
  2. By: M Zia Sadique (Department of Economics, City University, London); John Edmunds (Health Protection Agency, Centre for Infections, London); Nancy Devlin (Department of Economics, City University, London); David Parkin (Department of Economics, City University, London)
    Abstract: This paper proposes two new theoretical models for examining individual decision-making regarding vaccination. In each case, individuals’ decisions are modelled as a binary choice (i.e. to accept or to reject an invitation to receive vaccination) which are a product both of the perceived risk of the preventable disease in question and of the perceived risk of adverse side effects of the vaccine itself. Individuals decisions are modelled in two ways – first, as expected utility maximising and second, as regret minimising – and the results compared. In both cases, the decision to vaccinate is explained by a threshold condition with respect to the risk of remaining exposed to the disease by rejecting vaccination, and the risk of experiencing adverse events from vaccination itself. Regret-averse individuals have a higher threshold – suggesting a lower propensity to vaccinate than that suggested by the expected utility models. Although the results are intuitively plausible, they rest on assumptions about the perceived severity of side effects as opposed to preventable disease. We conclude by identifying a number of theoretical issues that remain to be explored, and outlining the empirical research required.
    Date: 2005–07
  3. By: Sofia Dimakou (Department of Economics, City University, London); David Parkin (Department of Economics, City University, London); Nancy Devlin (Department of Economics, City University, London); John Appleby (King’s Fund, London)
    Abstract: Waiting is an important means by which health care is rationed in the NHS. Waiting times for elective surgery are a key policy and political concern. The principal policy response has been to introduce waiting time targets against which performance is measured and rewarded. As waiting times fall, interest has grown in questions such as: How have behavioural responses to the targets influenced the distributions of waiting times? Does the probability of admission for any given waiting time remain constant? To what extent are clinical distortions evident in the pattern of admissions? Can variations in waiting times be explained by clinical, patient or provider-level characteristics? This paper investigates these questions using time-to-event techniques applied to NHS waiting time data for three specialties (general surgery, trauma & orthopaedics and ophthalmology) during 2001/02 and 2002/03. The analysis generates some powerful insights; estimation of the survival functions reveals considerable variations in waiting times between different specialties, operative procedures and trusts. Hazard rates vary over time and notable peaks -increased probabilities of admission- coincide with targets and do change when targets change. Finally, patient characteristics such as age, sex or ethnicity do not influence the time they have to wait while classification as NHS/private patient and day surgery play an important role.
    Date: 2006–07
  4. By: M Zia Sadique (Department of Economics, City University, London); M Niaz Asadullah
    Abstract: Using unit-level data from Matlab villages in rural Bangladesh, this paper examines the impact of an exogenously assigned health care intervention– Maternal and Child Health (MCH) program– on children’s immunisation status. In particular, we investigate how the program effect interacts with two key determinants of household immunisation choice, namely maternal education and risk perception of households. Results show that the MCH program has significantly enhanced immunisation status of children. In addition to directly improving immunisation demand, the MCH program also acts as a substitute for maternal education and compensates households for low access to public health information. Yet the MCH intervention does not have any influence on the household’s risk awareness and perception towards child health. On the contrary, prenatal-care visits and tetanus toxoid immunisation by pregnant mothers, services which are provided by government health facilities, have independent effects on the household’s demand for childhood immunisation. This suggests that the role of government health facilities cannot be ignored even in the presence of a very effective MCH program.
    Date: 2006–08
  5. By: Maarten Lindeboom (Vrije Universiteit Amsterdam); Ana Llena Nozal (Vrije Universiteit Amsterdam); Bas van der Klaauw (Vrije Universiteit Amsterdam)
    Abstract: This paper investigates the impact of parental education on child health outcomes. To identify the causal effect we explore exogenous variation in parental education induced by a schooling reform in 1947, which raised the minimum school leaving age in the UK. Findings based on data from the National Child Development Study suggest that postponing the school leaving age by one year had little effect on the health of their offspring. Schooling did however improve economic opportunities by reducing financial difficulties among households. We conclude from this that the effects of parental income on child health are at most modest.
    Keywords: returns to education; intergenerational mobility; health; regression-discontinuity
    JEL: I12 I28
    Date: 2006–12–19
  6. By: Owen O'Donnell (University of Macedonia, Greece); Ángel López Nicolás (Universidad Politecnica de Cartagena, Universitat Pompeu Fabra, Spain); Eddy van Doorslaer (Erasmus Universiteit Rotterdam)
    Abstract: Over a five-year period in the 1990s Vietnam experienced annual economic growth of more than 8% and a decrease of 15 points in the proportion of children chronically malnourished (stunted). We estimate the extent to which changes in the distribution of child nutritional status can be explained by changes in the level and distribution of income, and of other covariates. This is done using data from the 1993 and 1998 Vietnam Living Standards Surveys and a flexible decomposition technique that explains change throughout the complete distribution of child height. One-half of the decrease in the proportion of children stunted is explained by changes in the distributions of covariates and 35% is explained by change in the distribution of income. Covariates, including income, explain less of the decrease in very severe malnutrition, which is largely attributable to change in the conditional distribution of child height.
    Keywords: Malnutrition; child height; decomposition; quantile regression; Vietnam
    JEL: I12 I31 O53
    Date: 2007–01–16
  7. By: Gerard J. van den Berg (Vrije Universiteit Amsterdam); Maarten Lindeboom (Vrije Universiteit Amsterdam); France Portrait (Vrije Universiteit Amsterdam)
    Abstract: We specify a model for the lifetimes of spouses and the dynamic evolution of health, allowing spousal death to have causal effects on the health and mortality of the survivor. We estimate the model using a longitudinal survey that traces many health status aspects over time, and that is linked to register data on the vital status of the individuals. The model takes account of selectivity in partners' mortality and health evolution. We find strong instantaneous effects of bereavement on mortality and on certain aspects of health. Individuals lose on average 12% of residual life expectancy after bereavement. Bereavement affects the share of healthy years in residual lifetime, primarily because healthy years are replaced by years with chronic diseases.
    Keywords: death; longevity; health care; disease; life expectancy; elderly couples; impairment
    JEL: I12 C41
    Date: 2007–01–17
  8. By: Josse Delfgaauw (Erasmus Universiteit Rotterdam)
    Abstract: Physicians are supposed to serve patients' interests, but some are more inclined to do so than others. This paper studies how the system of health care provision affects the allocation of patients to physicians when physicians differ in altruism. We show that allowing for private provision of health care, parallel to (free) treatment in a National Health Service, benefits all patients. It enables rich patients to obtain higher quality treatment in the private sector. Because the altruistic physicians infer that in their absence, NHS patients receive lower treatment quality than private sector patients, they optimally decide to work in the NHS. Hence, after allowing for private provision, the remaining (relatively poor) NHS patients are more likely to receive the superior treatment provided by altruistic physicians. We also show, however, that allowing physicians to moonlight, i.e. to operate in both the NHS and the private sector simultaneously, nullifies part of these beneficial effects for the poorest patients.
    Keywords: Altruism; Health care systems; Subsidy; Moonlighting
    JEL: D64 H44 I11 I18
    Date: 2007–01–19
  9. By: Gautier Duflos (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], CREST-LEI - [Ecole Nationale des Ponts et Chaussées])
    Abstract: This paper analyzes American pharmaceutical firms' persistence in innovating prior to the wave of mergers and acquisitions that accompanied the "Biotech revolution". We evaluate the impact of past innovative activity on firms' innovation propensities using a non-linear GMM estimator for exponential models that allows for predetermined regressors and linear feedback. We find that innovative activity at the firm level depends strongly on the technological importance of past innovations. In particular, breakthroughs depend largely on past innovations' scope, and this effect is likely to deter further pioneering behaviors rather than strengthen incentives to invest on non cumulative R&D. The results also shed light on the importance of small firms for the technological change in pharmaceuticals, and suggest that large firms may persist in using patents strategically to retain sales.
    Keywords: Patent citations, pharmaceutical industry, persistence in innovation.
    Date: 2007–01–15
  10. By: Anne Branciard (LEST - Laboratoire d'économie et de sociologie du travail - [CNRS : UMR6123] - [Université de Provence - Aix-Marseille I][Université de la Méditerranée - Aix-Marseille II]); Vincent Mangematin
    Abstract: European Biotechnology companies and public policy-makers face to a number of crucial problems related to the development of Biotechnology in Europe : European industrial competitiveness, the relative under-exploitation of the European science base in Biotechnology, poor technology transfer mechanisms and difficulties in starting 'spin-off' firms. <br />The aim of this paper on innovation in genomics and biomedical related biotechnologies is to study the relative impact of the different public policy in France compared to the action of the private non for profit sector. Public policies in favour of biotech have changed during the last ten years from a support of research in large firms to a support of SME's creation in biotech. At the same time, large non-for profit organisations such as CEPH (Human Polymorphism Research Center) and AFM (French Organisation Against Myopaty) create a new dynamic by initiating path breaking scientific and technical programmes. This new scientific space has been complementary to the public policy, but only to a certain extend. <br />By studying the co-ordination mechanisms between the different organisations (non for profit organisations, public authorities, public sector research, Biotech SMEs and large firms, especially in the biomedical sector), this paper shows that the existing contradiction between the different tools to encourage biotech economic development can explain the poor development of biotech sector in France in the last few years. It also shows that the situation is getting better the last two years, especially in terms of firms' creation.
    Keywords: Public Policy; Research Policy; Biotechnology; Innovation; R&D; SME
    Date: 2007–01–19
  11. By: Eliason, Marcus (Centre for European Labour Market Studies); Ohlsson, Henry (Department of Economics)
    Abstract: Does taxation affect the timing of death? This is important as an example of how behavior might be affected by economic incentives. We study how three changes in Swedish inheritance taxation 2004-2005 have affected daily all-cause mortality. Our first main result is that mortality decreased by 16 percent the day before the beginning of expected tax reductions. Second, there was no corresponding effect before an unexpected tax reduction.
    Keywords: Behavioral responses to taxation; estate tax; inheritance tax; tax avoidance; timing of death
    JEL: D64 H24 I19
    Date: 2007–01–08
  12. By: Gisela Hostenkamp; Michael Stolpe
    Abstract: This paper examines the role of the health gradient – the positive correlation between household income and health – in individual retirement behavior, using data from the German Socio-economic Panel (GSOEP). We first estimate agegroup-specific health gradients and find their slope increases with age, but declines among retired workers. We then estimate a variety of parametric and semi-parametric duration models and find that workers’ position relative to the agegroup-specific health gradient has about the same explanatory power as self-assessed health and income together. We argue our method promises better predictions of the long-term impact of policies affecting the health gradient on workers' timing of retirement amid population aging. Our findings also underline the importance of imperfect medical technology in reconciling the human capital theory of health demand with the observation of more rapid declines in health among less educated workers.
    Keywords: Health gradient; Retirement behaviour; Duration analysis; Germany
    JEL: H51 H55 I12 J26
    Date: 2006–12
  13. By: Stephen Birch; George Kephart; Gail Tomblin-Murphy; Linda O'Brien-Pallas; Rob Alder; Adrian MacKenzie
    Abstract: Traditional approaches to health human resources planning emphasize the role of demographic change on the needs for health human resources. Conceptual frameworks have been presented that recognize the limited role of demographic change and the broader determinants of health human resource requirements. Nevertheless, practical applications of health human resources planning continue to base plans on the size and demographic mix of the population applied to simple population-provider or population-utilization ratios. In this paper an analytical framework is developed based on the production of health care services and the multiple determinants of health human resource requirements. In this framework attention is focused on estimating the ‘flow’ of services required to meet the needs of the population that is then translated into the required ‘stock’ of providers to deliver this ‘flow’ of services. The requirements for human resources in the future is shown to depend on four elements: the size and demographic mix of the population (demography), the levels of risks to health and morbidity in the population (epidemiology), the services deemed appropriate to address the levels of risks to health and morbidity (standards of care), and the rate of service delivery by providers (productivity). Application of the framework is illustrated using hypothetical scenarios.
    Keywords: health human resources planning, demography, epidemiology, standards of care, productivity
    JEL: I18 J18
    Date: 2007–01
  14. By: Alberto Abadie; Alexis Diamond; Jens Hainmueller
    Abstract: Building on an idea in Abadie and Gardeazabal (2003), this article investigates the application of synthetic control methods to comparative case studies. We discuss the advantages of these methods and apply them to study the effects of Proposition 99, a large-scale tobacco control program that California implemented in 1988. We demonstrate that following Proposition 99 tobacco consumption fell markedly in California relative to a comparable synthetic control region. We estimate that by the year 2000 annual per-capita cigarette sales in California were about 26 packs lower than what they would have been in the absence of Proposition 99. Given that many policy interventions and events of interest in social sciences take place at an aggregate level (countries, regions, cities, etc.) and affect a small number of aggregate units, the potential applicability of synthetic control methods to comparative case studies is very large, especially in situations where traditional regression methods are not appropriate. The methods proposed in this article produce informative inference regardless of the number of available comparison units, the number of available time periods, and whether the data are individual (micro) or aggregate (macro). Software to compute the estimators proposed in this article is available at the authors' web-pages.
    JEL: C21 C23 H75 I18 K32
    Date: 2007–01
  15. By: Javier A. Birchenall; Rodrigo R. Soares
    Abstract: This paper accounts for the value of children and future generations in the evaluation of health policies. This is achieved through the incorporation of altruism and fertility in "value of life" type of framework. We are able to express adults' willingness to pay for changes in child mortality and also to incorporate the welfare of future generations in the evaluation of current policies. Our model clarifies a series of puzzles from the literature on the "value of life" and on intergenerational welfare comparisons. We show that, by incorporating altruism and fertility into the analysis, the estimated welfare gain from recent reductions in mortality in the U.S. easily doubles.
    JEL: I10 J13 J17
    Date: 2007–01
  16. By: Rodrigo R. Soares
    Abstract: This paper presents and critically discusses a vast array of evidence on the determinants of mortality reductions in developing countries. We argue that increases in life expectancy between 1960 and 2000 were largely independent from improvements in income and nutrition. We then characterize the age and cause of death profile of changes in mortality and ask what can be learned about the determinants of these changes from the international evidence and from country-specific studies. Public health infrastructure, immunization, targeted programs, and the spread of less palpable forms of knowledge all seem to have been important factors. Much of the recent debate has revolved around antagonistic approaches, which are not supported by the evidence discussed here. Finally, the paper suggests that the evolution of health inequality across and within countries is intrinsically related to the process of diffusion of new technologies and to the nature of these new technologies (public or private).
    JEL: I10 I18 J1
    Date: 2007–01
  17. By: Nasreen Khan; Robert Kaestner; Swu Jane Lin
    Abstract: The Medicare Modernization Act was recently established, to provide limited drug coverage to the elderly. However, there is limited evidence on how drug coverage might affect health. The goal of this paper is to obtain “causal effects” of prescription drug coverage on drug use, use of other medical services and health of the elderly. We use fixed-effects analysis to control for unmeasured person-specific effects that may confound the relationships of interest. Results show prescription drug coverage, particularly public coverage, significantly increased the utilization of prescription drugs, but had no discernable effect on hospital admissions or health.
    JEL: I12 I18 J14
    Date: 2007–01
  18. By: Neeraj Kaushal
    Abstract: I use changes in immigrant eligibility for food stamps under the 1996 federal law and heterogeneous state responses to set up a natural experiment research design to study the effect of food stamps on Body Mass Index (BMI) of adults in immigrant families. I find that in the post-1996 period food stamps use by foreign-born unmarried mothers with a high school or lower education was 10 percentage points higher in states with substitute programs than in states that implemented the federal ban. However, this increase in FSP participation was not associated with any statistically significant difference in BMI. I find that FSP participation was associated a statistically insignificant 0.3 percent increase in BMI among low-educated unmarried mothers.
    JEL: H0 I0 I3 I31
    Date: 2007–01
  19. By: Adriana Castelli (Centre for Health Economics, University of York); Peter C Smith (Centre for Health Economics, University of York)
    Abstract: Following the publication of the Atkinson Review of the measurement of government outputs in the National Accounts, there has been great interest in measuring the productivity growth of the National Health Service. Such macro measures of productivity are important when deciding how much public money to devote to the NHS, and in holding the NHS to account. However, it is also important to gain an understanding of the productivity of individual programmes of care, so as to ensure that resources are allocated efficiently within the NHS. Hitherto, such information has not been available. This report is an exploratory study of the feasibility and usefulness of developing measures of growth in outputs, costs and productivity of a single programme of care within the NHS: hospital treatment of circulatory diseases.
    Date: 2006–12
  20. By: Nguyen, Khac Minh; Giang, Thanh Long
    Abstract: The purpose of this paper is to analyze the efficiency performance of the hospitals and medical centers in Vietnam by using a non-parametric approach, namely the data envelopment analysis (DEA) model. The data from the Economic Census for Enterprises by the General Statistics Office of Vietnam (GSO) consists of 44 observations, which include 17 hospitals and 27 medical centers in different provinces and cities in 2002. The results indicate that the average scale efficiency of the hospitals was 77.4 percent, while that of the medical centers was 58.7 percent. Further, hospitals were clearly more efficient than medical centers due to some possible factors. Locations in Hanoi and Ho Chi Minh city had no influence on either overall technical efficiency or scale efficiency. Despite differences in the results of testing the impact of net capital-labor ratio on efficiency for hospitals and medical centers, these organizations appear to operate in labor-intensive ways.
    Keywords: data envelopment analysis (DEA); hospital efficiency; Tobit regression; Vietnam
    JEL: C14 I19
    Date: 2004–11
  21. By: Daniel Albalate (Faculty of Economics, University of Barcelona.)
    Abstract: Road safety has become an increasing concern in developed countries due to the significant amount of mortal victims and the economic losses derived. Only in 2005 these losses rose to 200.000 million euros, a significant amount – approximately the 2% of its GDP- that easily justifies any public intervention. One tool used by governments to face this challenge is the enactment of stricter policies and regulations. Since drunk driving is one of the most important concerns of public authorities on this field, several European countries decided to lower their illegal Blood Alcohol Content levels to 0.5 mg/ml during the last decade. This study evaluates for the first time the effectiveness of this transition using European panel-based data (CARE) for the period 1991-2003 using the Differences-in-Differences method in a fixed effects estimation that allows for any pattern of correlation (Cluster-Robust). My results show the existence of positive impacts on certain groups of road users and for the whole population when the policy is accompanied by some enforcement interventions. Moreover, a time lag of more than two years is found in that effectiveness. Finally, I also assert the importance of controlling for serial correlation in the evaluation of this kind of policies.
    Keywords: Road Safety, Policy Evaluation, Differences-in-Differences, Drunk Driving, Illegal Blood Alcohol Content Levels (BAC).
    JEL: I18 H73 K32 R41
    Date: 2006–12

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