nep-hea New Economics Papers
on Health Economics
Issue of 2007‒04‒21
37 papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Health Insurance Status and Physician-Induced Demand for Medical Services in Germany : New Evidence from Combined District and Individual Level Data By Hendrik Jürges
  2. Geography, Health, and the Pace of Demo-Economic Development By Strulik, Holger
  3. Retail Price Regulation and Innovation: Reference Pricing in the Pharmaceutical Industry By BARDEY, David; BOMMIER, Antoine; JULLIEN, Bruno
  4. Location Choices of the Pharmaceutical Industry in Europe after 1992 By Frances Ruane; Xiaoheng Zhang
  5. Love on the Rocks: Alcohol Abuse and Domestic Violence in Rural Mexico By Manuela Angelucci
  6. Obesity, Unhappiness, and The Challenge of Affluence: Theory and Evidence By Andrew J. Oswald; Nattavudh Powdthavee
  7. Agency in Health-Care: Are Medical Care-Givers Perfect Agents? By Einat Neuman; Shoshana Neuman
  8. Comparing Subjective and Objective Measures of Health: Evidence from Hypertension for the Income/Health Gradient By David W. Johnston; Carol Propper; Michael A. Shields
  9. Bribery in Health Care in Peru and Uganda By Jennifer Hunt
  10. Predicting Staying in or Leaving Permanent Supportive Housing That Serves Homeless People with Serious Mental Illness By Yin-Ling Irene Wong, CMHPSR; Trevor R. Hadley, CMHPSR; Dennis P. Culhane, CMHPSR; Steve R. Poulin, CMHPSR; Morris R. Davis, MDAC; Brian A. Cirksey, MDAC; James L. Brown, MDAC; M. Davis and Company, Inc.; University of Pennsylvania Center for Mental Health Policy and Services Research (CMHPSR) Philadelphia, PA
  11. Youth well-being in Brazil : an index for cross-regional comparisons By Leon, Joana Severo; Borges, Vicente Cassepp; Koller, Silvia; Cunningham, Wendy; Dell ' Aglio, Debora
  12. Are Hospitals Seasonally Inefficient? Evidence from Washington State Hospitals By Daniel Friesner; Matthew McPherson; Robert Rosenman
  13. Characteristics of demand for antibiotics in primary care: an almost ideal demand system approach By Massimo Filippini; Giuliano Masiero; Karine Moschetti
  14. Australian health services research and its contribution to the international literature, CHERE Discussion Paper No 41 By Jane Hall; Liz Chinchen
  15. The public view of private health insurance, CHERE Discussion Paper No 45 By Jane Hall
  16. It's what's expected: genetic testing for inherited conditions, CHERE Discussion Paper No 46 By Marion Haas; Jane Hall; Richard De Abreu Lourenco
  17. Using qualitative methods to validate a stated preference survey for evaluating health services, CHERE Discussion Paper No 47 By Patricia Kenny; Jane Hall; Rosalie Viney; Angela Yeoh; Marion Haas
  18. The drug bargaining game: Pharmaceutical regulation in Australia, CHERE Discussion Paper No 51 By Donald J Wright
  19. Nurses' retention and hospital characteristics in New South Wales, CHERE Discussion Paper No 52 By Denise Doiron; Glenn Jones
  20. Can we design a market for competitive health insurance? CHERE Discussion Paper No 53 By Jane Hall
  21. Specialist payment schemes and patient selection in private and public hospitals, CHERE Discussion Paper No 54 By Donald J Wright
  22. Insurance and monopoly power in a mixed private/public hospital system, CHERE Discussion Paper No 55 By Donald J Wright
  23. Moral hazard and cash benefits in long-term home care, CHERE Working Paper 2006/12 By Bernard van den Berg; Wolter Hassink
  24. Does the reason for buying health insurance influence behaviour? CHERE Working Paper 2006/1 By Denzil Fiebig; Elizabeth Savage; Rosalie Viney
  25. Horizontal inequities in Australia?s mixed public/private health care system, CHERE Working Paper 2006/13, By Eddy van Doorslaer; Philip Clarke; Elizabeth Savage; Jane Hall
  26. Men?s preferences for treatment of early stage prostate cancer: Results from a discrete choice experiment, CHERE Working Paper 2006/14 By Madeleine King; Rosalie Viney; Ishrat Hossain; David Smith; Sandra Fowler; Elizabeth Savage; Bruce Armstrong
  27. Out-of-pocket health expenditures in Australia: A semi-parametric analysis, CHERE Working Paper 2006/15 By Glenn Jones; Elizabeth Savage; Kees van Gool
  28. Healthy, wealthy and insured? The role of self-assessed health in the demand for private health insurance, CHERE Working Paper 2006/2 By Denise Doiron; Glenn Jones; Elizabeth Savage
  29. Genetic testing, income distribution and insurance markets, CHERE Working Paper 2006/3 By Ray Rees; Patricia Apps
  30. Economic analysis of Tai Chi as a means of preventing falls and falls related injuries among older adults, CHERE Working Paper 2006/4 By Marion Haas
  31. Decision making by patients: An application of naturalistic decision making theory to cervical screening and chronic renal failure, Working Paper 2006/5 By Marion Haas
  32. Economic evaluation of cystic fibrosis screening: A Review of the literature, CHERE Working Paper 2006/6 By Muralikrishnan Radhakrishnan; Kees van Gool; Jane Hall; Martin Delatycki; John Massie
  33. A synthesis of qualitative research on cervical cancer screening behaviour: Women?s perceptions of the barriers and motivators to screen and the implications for policy and practice, CHERE Working Paper 2006/7 By Marion Haas; Sandy Fowler
  34. Who?s getting caught? An analysis of the Australian Medicare Safety Net, CHERE Working Paper 2006/8 By Kees van Gool; Elizabeth Savage; Rosalie viney; Marion Haas; Rob Anderson
  35. Catastrophic insurance: Impact of the Australian Medicare Safety Net on fees, service use and out-of-pocket costs, CHERE Working Paper 2006/9 By Kees van Gool; Elizabeth Savage; Rosalie viney; Marion Haas; Rob Anderson
  36. When is an ounce of prevention worth a pound of cure: The case of cardiovascular disease? By Kees van Gool; Marion Haas; Peter Sainsbury; Richard Gilbert
  37. Assessing the costs of organised health programs: The case of the National Cervical Screening Program By Marion Haas; Marian Shanahan; Rob Anderson

  1. By: Hendrik Jürges
    Abstract: Germany is one of the few OECD countries with a two-tier system of statutory and primary private health insurance. Both types of insurance provide fee-for-service insurance, but chargeable fees for identical services are more than twice as large for privately insured pa-tients than for statutorily insured patients. This price variation creates incentives to induce demand primarily among the privately insured. Using German SOEP 2002 data, I analyze the effects of insurance status and district (Kreis-) level physician density on the individual num-ber of doctor visits. The paper has four main findings. First, I find no evidence that physician density is endogenous. Second, conditional on health, privately insured patients are less likely to contact a physician but more frequently visit a doctor following a first contact. Third, physi-cian density has a significant positive effect on the decision to contact a physician and on the frequency of doctor visits of patients insured in the statutory health care system, whereas, fourth, physician density has no effect on privately insured patients' decisions to contact a physician but an even stronger positive effect on the frequency of doctor visits than the statu-torily insured. These findings give indirect evidence for the hypothesis that physicians induce demand among privately insured patients but not among statutorily insured.
    Keywords: supplier-induced demand, health care utilization
    JEL: I11
    Date: 2007
  2. By: Strulik, Holger
    Abstract: This paper investigates the impact of subsistence consumption and extrinsic and intrinsic causes of child mortality on fertility and child expenditure. It offers a theory for why mankind multiplies at higher rates at geographically unfavorable, tropical locations. Placed into a macroeconomic framework this behavior creates an indirect channel through which geography shapes economic performance. It is explained why it are countries of low absolute latitude where we observe exceedingly slow (if not stalled) economic development and demographic transition.
    Keywords: Demographic Transition, Geography, Health, Nutrition, Cross-Country Divergence
    JEL: J10 J13 O11 O12
    Date: 2007–04
  3. By: BARDEY, David; BOMMIER, Antoine; JULLIEN, Bruno
    JEL: I18 L11 L15 L51
    Date: 2006–12
  4. By: Frances Ruane; Xiaoheng Zhang
    Abstract: Differences in regulations,technical standards and national medical cultures across EU member states created a highly segmented pharmaceutical market in Europe prior to the implementation of the Single Market Programme. The subsequent reduction in non-tariff barriers to trade would be expected to have an impact on where pharmaceutical multinationals locate production within the EU.Using discrete choice models, we study separately the determinants of multinational location choices in terms of expanded production at existing facilities and location of start-up firms.Our results support the findings of models which predict reduced rather than increased agglomeration in the face of trade-cost reductions.
    Date: 2007–04–17
  5. By: Manuela Angelucci (University of Arizona and IZA)
    Abstract: What causes alcohol abuse and domestic violence and how can we stop them? These behaviors have multiple determinants, making the effects of changes in wife's and husband's income ambiguous. This paper estimates the effects of exogenous changes in wife's and husband's income on husband alcohol abuse and alcohol-induced violence using new data from rural Mexico. A long-lasting 20 dollar monthly increase in wife income decreases husbands' alcohol abuse by 15% and aggressive behavior by 21%; the extra money increase the wife's freedom and security, is spent on individual and household goods, and it crowds out transfers from the husband only for 5% of the wives whose income increases. Alcohol abuse and violence are insensitive to short-term fluctuations in husband's income. These findings suggest that the wife uses her higher income to reduce the consumption of goods that lower her utility, that alcohol abuse responds more to changes in permanent than in temporary income, and that targeting women as recipients of micro-credit or of other welfare programs may have beneficial effects in reducing alcohol dependence and domestic violence.
    Keywords: public health, household behavior, Mexico
    JEL: D13 I18 O12
    Date: 2007–03
  6. By: Andrew J. Oswald (University of Warwick and IZA); Nattavudh Powdthavee (IoE, University of London)
    Abstract: Is affluence a good thing? The book The Challenge of Affluence by Avner Offer (2006) argues that economic prosperity weakens self-control and undermines human well-being. Consistent with a pessimistic view, we show that psychological distress has been rising through time in modern Great Britain. Taking over-eating as an example, our data reveal that half the British population view themselves as overweight, and that happiness and mental health are worse among fatter people in both Britain and Germany. A 10-point move up in body mass index (BMI) is associated in the cross-section with a drop in psychological health of approximately 0.3 GHQ points. Comparisons also matter. For a given level of BMI, we find that people who are educated or who have high income are more likely to view themselves as overweight. We discuss problems of inference and argue that longitudinal data on BMI are needed. We suggest a theory of imitation - where utility depends on relative weight - in which there can be obesity spirals after only small drops in the price of food.
    Keywords: body mass index, happiness, mental health, General Health Questionnaire, GHQ scores, BMI, well-being, obesity, BHPS, GSOEP, imitation, weight, relative income, comparisons
    JEL: D1 I12 I31
    Date: 2007–03
  7. By: Einat Neuman (Academic College of Tel-Aviv-Yaffo); Shoshana Neuman (Bar-Ilan University, CEPR and IZA)
    Abstract: It has been suggested in the literature that a source of incompleteness in the agency relationship between the doctor and the patient is that the provider may respond to an incomplete or biased perception of the patient’s interests. However, this has not been shown empirically. This paper is novel in presenting an empirical test of the fundamental assumption of the agency model that health care professionals understand what their patients want. Discrete Choice Experiments (DCEs) are conducted simultaneously within samples of patients (women who gave birth) and care-givers (doctors and nurses), to elicit and contrast patients’ authentic preferences (for five maternity ward attributes) with what care-givers believe them to be. Conclusion: agents have a biased perception of principals’ preferences, and therefore a complete agency relationship does not exist. Our findings add a novel empirical contribution to the agency relationship literature. Moreover, parallel preference patterns of patients and care-givers are certainly of much interest to the field of health economics: Informing the unaware medical care-givers about the patients' preferences, will improve treatment and patients' satisfaction.
    Keywords: principal-agent relationship, health-care, maternity wards, discrete choice experiment, preferences
    JEL: I1
    Date: 2007–04
  8. By: David W. Johnston (University of Melbourne); Carol Propper (CMPO, University of Bristol, CASE and CEPR); Michael A. Shields (University of Melbourne and IZA)
    Abstract: Economists rely heavily on self-reported measures of health status to examine the relationship between income and health. In this paper we directly compare survey responses to a self-reported measure of health that is commonly available in nationally-representative individual and household surveys, with objective measures of the same health condition. Our particular focus is on hypertension, which is the most prevalent health condition in Western countries. Using data from the Health Survey for England, we find that there is a substantial difference in the percentage of adult survey respondents reporting that they have hypertension as a chronic health condition compared to that from repeated measurements by a trained nurse. Around 85% of individuals measured as having hypertension do not report having it as a chronic illness. Importantly, we find no evidence of an income/health gradient using self-reported hypertension, but a large (about 14 times the size) gradient when using objectively measured hypertension. We also find that the probability of false negative reporting, that is an individual not reporting to have chronic hypertension when in fact they have it, is significantly higher for individuals living in low income households. Given the wide use of such self-reported chronic health conditions in applied research, and the asymptomatic nature of many major illnesses such as hypertension, diabetes, heart disease and cancer at moderate and sometimes very elevated levels, we show that using commonly available self-reported chronic health measures is likely to lead to an underestimate of true income-related inequalities in health. This has important implications for policy advice.
    Keywords: hypertension, objective health, self-reported health, reporting error, income
    JEL: I10 I18 C42
    Date: 2007–04
  9. By: Jennifer Hunt
    Abstract: In this paper, I examine the role of household income in determining who bribes and how much they bribe in health care in Peru and Uganda. I find that rich patients are more likely than other patients to bribe in public health care: doubling household consumption increases the bribery probability by 0.2-0.4 percentage points in Peru, compared to a bribery rate of 0.8%; doubling household expenditure in Uganda increases the bribery probability by 1.2 percentage points compared to a bribery rate of 17%. The income elasticity of the bribe amount cannot be precisely estimated in Peru, but is about 0.37 in Uganda. Bribes in the Ugandan public sector appear to be fees-for-service extorted from the richer patients amongst those exempted by government policy from paying the official fees. Bribes in the private sector appear to be flat-rate fees paid by patients who do not pay official fees. I do not find evidence that the public health care sector in either Peru or Uganda is able to price-discriminate less effectively than public institutions with less competition from the private sector.
    JEL: H4 K4 O1
    Date: 2007–04
  10. By: Yin-Ling Irene Wong, CMHPSR; Trevor R. Hadley, CMHPSR; Dennis P. Culhane, CMHPSR; Steve R. Poulin, CMHPSR; Morris R. Davis, MDAC; Brian A. Cirksey, MDAC; James L. Brown, MDAC; M. Davis and Company, Inc.; University of Pennsylvania Center for Mental Health Policy and Services Research (CMHPSR) Philadelphia, PA
    Abstract: The Permanent Housing component of the Supportive Housing Program, the Department’s principal program to meet the needs of homeless people with disabilities, was established to offer homeless people with disabilities, including mental illness, an assurance of permanent housing and appropriate supportive services. The program is designed to provide a structure that counteracts the disruptions of both homelessness and disability. However, while many formerly homeless people remain in permanent supportive housing for many years, substantial numbers leave within months of entry. The questions of why people leave permanent housing and what happens to them constitute the principal focus of this study.
    JEL: I38
    Date: 2006–03
  11. By: Leon, Joana Severo; Borges, Vicente Cassepp; Koller, Silvia; Cunningham, Wendy; Dell ' Aglio, Debora
    Abstract: This study constructs three indices to measure how well Brazil ' s young people are surviving their transition to adulthood. Youth development is difficult to quantify because of the multi-dimensionality of youth b ehavior. Most monitoring use individual indicators in specific sectors, making it difficult to track overall progress. The study adapts to the Brazilian case a methodology developed by Duke University to measure the well-being of U.S. children and youth. It uses readily available data to construct three indices for each Brazilian state based on 36 indicators encompassing the health, behavior, school performance, institutional connectedness, and socioeconomic conditions. The indices conclude that young people in the states of Santa Catarina and the Federal District are doing particularly well and those in Alagoas and Pernambuco are the worst off. While these rankings are expected to continue into the next generation, young people in other states have a brighter (Espiritu Santo) or more dismal (Rio Grande de Sul, Tocatins) future due to underinvestment in today ' s children. Still others (Rio de Janeiro) are underutilizing their resources so their young citizens are in a worse situation than they could be if the state were to invest more. The hope is that the methodology can be used in Brazil as it has been used in the United States to estimate the indices annually, thus allowing policymakers, young people, and society to track the well-being of youth in each state over time.
    Keywords: Health Monitoring & Evaluation,Adolescent Health,Youth and Governance,Population Policies,Children and Youth
    Date: 2007–04–01
  12. By: Daniel Friesner; Matthew McPherson; Robert Rosenman (School of Economic Sciences, Washington State University)
    Abstract: Efficiency measurement has been one of the most extensively explored areas of health services research over the past two decades. Despite this attention, few studies have examined whether a provider’s efficiency varies on a monthly, quarterly or other, sub-annual basis. This paper presents an empirical study that looks for evidence of seasonal inefficiency. Using a quarterly panel of general, acute-care hospitals from Washington State, we find that hospital efficiency does vary over time; however, the nature of this dynamic inefficiency depends on the type of efficiency being measured. Our results suggest that technical and cost efficiency vary by quarter. Allocative and scale efficiency also vary on a quarterly basis, but only if the data are jointly disaggregated by quarter and another, firm-specific factor such as size or operating status. Thus, future research, corporate decisions and government policies designed to improve the efficiency of hospital care need to account for seasonal trends in hospital efficiency.
    Keywords: repeated auction; seasonality, efficiency, hospitals, data envelopment analysis
    JEL: I11 I18
    Date: 2006–02
  13. By: Massimo Filippini (Department of Management, Technology and Economics, ETH Zurich, Switzerland); Giuliano Masiero (Department of Economics and Technology Management, University of Bergamo, Italy); Karine Moschetti (Department of Economics, University of Lugano, Switzerland)
    Abstract: We model demand for different classes of antibiotics used for respiratory infections in outpatient care using a linear approximate almost ideal demand system approach. We compute elasticities to socioeconomic determinants of consumption and own- and cross- price elasticities between different groups of antibiotics. We find significant elasticities between newer/more expensive generations and older/less expensive generations of antibiotics. The larger use of more expensive antibiotics is also associated with the self-dispensing status of practices, ceteris paribus.
    Keywords: Antibiotic use, Demand equations, Demand elasticities, Almost Ideal Model, Self-dispensing
    JEL: I0 C3 C43
    Date: 2007–04
  14. By: Jane Hall (CHERE, University of Technology, Sydney); Liz Chinchen (CHERE, University of Technology, Sydney)
    Abstract: This study was prompted by the findings of Butler et al (1998) that the Australian contribution to the international health services research literature accounted for 5.6% in 1993-1994. First, the methodology used in that study is critically appraised, and second, to identify the extent to which Health Services Research (HSR) is published in the journals identified by Butler et al, and to assess the contribution of Australian HSR, an alternative search strategy is used. Findings indicate that Australian HSR is far from out-performing other medical research fields in international publication.
    Keywords: Health services research, Australia, Comparison
    JEL: I19
  15. By: Jane Hall (CHERE, University of Technology, Sydney)
    Abstract: Until the 1996 Federal election, the Liberal Party remained committed to the repeal of Medicare. In that election the Liberal platform endorsed the continuation of Medicare, and support for private health insurance. Since then the Government has pursued a strategy of support for private health insurance involving three stages: one, rebates for the poor and penalties for the well-off; two, universal rebates; and three, departure from community rating to what has been described as ?lifetime health cover?. This paper reviews the coverage by the quality media of the private health insurance issue from the beginning of 1996 (prior to the beginning of the formal election campaign) to the end of 1999 (after the announcement of lifetime health cover). Over 500 articles were reviewed. Federal elections and budgets are most likely to trigger articles on private health insurance. The topic has become newsworthy, with stories now appearing which report only changes in insurance coverage. Most articles report differing perspectives on the issue; however, opposing views are frequently given little column space and appear at the end of the article. While many articles report events in a factual way, there are a significant number which provide only one perspective or viewpoint. The media rely heavily on authoritative experts and these are usually spokespersons for the private sector and the organised medical profession. When independent figures are quoted, there has been no disclosure of any financial or other links with the private health sector. The story angle was generally conflict between the various stakeholders, although the politics of health policy was also a major theme. The editorials, in contrast, urged a view of what was good for the country, rather than the winners/losers in a political conflict. The Age and the Sydney Morning Herald (SMH) took quite different stances on the issue of access, hospital costs and the importance of community rating. Clearly, the media has a role to inform. Many articles are a means of disseminating new policies, or explaining their detail, or advising individuals of the implications for them. However, the media has also defined what and why private health insurance is a problem, floated unpopular policy responses, defined the solution and popularised it. For those concerned to see public debate on private health insurance, to promote information and evidence as a basis for policy, and to see community values inform health policy, there is little here to encourage.
    Keywords: Private health insurance, media, Australia
    JEL: I11
  16. By: Marion Haas (CHERE, University of Technology, Sydney); Jane Hall (CHERE, University of Technology, Sydney); Richard De Abreu Lourenco
    Abstract: The development of new genetic technology brings with it responsibility for evaluating the effectiveness and efficiency of testing programs, including gaining an understanding of the value of information. This study examined the factors individuals took into account when making decisions about having a genetic test for Tay Sachs Disease. Fifteen people participated in an in-depth interview as they attended a clinic for genetic testing. A thematic analysis of the data was undertaken. Participants were most influenced to have testing by personal factors: e.g. ethnic background and desire to have children. Disease characteristics were also important. The results informed the development of a Stated Preference Discrete Choice (SPDCM) experiment. Participants were motivated to have testing by a need for reassurance and certainty. Thus, information was an important outcome for them. The results of the SPDCM experiment indicate that participants valued information positively thus providing support for the findings of the qualitative research.
    Keywords: Genetic testing, Tay Sachs disease, Discrete choice experiment
    JEL: I11
  17. By: Patricia Kenny (CHERE, University of Technology, Sydney); Jane Hall (CHERE, University of Technology, Sydney); Rosalie Viney (CHERE, University of Technology, Sydney); Angela Yeoh; Marion Haas (CHERE, University of Technology, Sydney)
    Abstract: This study used a qualitative approach to assess parents? opinions of a self-completed stated preference discrete choice modelling (SPDCM) questionnaire for assessing the uptake of a new childhood vaccination against chickenpox. The aim was to assess the way parents understood and used the technical information provided, the factors they deemed important to decisions about childhood immunisation and the extent to which these were consistent with the models produced by analysis of the questionnaire data. Following completion of the SPDCM questionnaire, 34 respondents participated in a semi-structured interview by telephone. Interview transcripts were analysed using content analysis. Comparisons were then made with the SPDCM questionnaire results. The technical information used to describe the program attributes appeared to be used appropriately by respondents, although their explanations indicated that their understanding did not always come from the questionnaire information. Only one respondent appeared to misunderstand the stated preference task, and a small number thought that the complexity and length should be reduced. The group results for the questionnaire data were supported by the qualitative study, with the notable features of the model being reflected in the views commonly expressed about the immunisation decision. Generally, the study provides support for the potential usefulness of the SPDCM methodology for predicting the uptake of a new vaccination.
    Keywords: Discrete choice modelling, questionnaires, methodology
  18. By: Donald J Wright (Department of econoics, University of Sydney)
    Abstract: Many countries, including Australia, regulate the price consumers pay for pharmaceuticals. In this paper, the Australian Pharmaceutical Benefits Scheme (PBS) is modelled as a multi-stage game played between the regulator and pharmaceutical firms. Conditions are derived under which vertically differentiated firms are regulated and a number of issues are discussed. These include efficiency, regulated firm profitability, leakage, and price discrimination. An extension examines the introduction of new drugs and concludes that if all the benefits of a new drug are to be realised, then existing agreements and transfers (per-unit subsidies) need to be renegotiated.
    Keywords: Pharmaceuticals, Australia
    JEL: I11
  19. By: Denise Doiron (CHERE, University of Technology, Sydney); Glenn Jones (CHERE, University of Technology, Sydney)
    Abstract: Nursing shortages are commonly observed features of hospital systems in Australia, Europe and the United States. To date there has been very little research on the effects of hospital characteristics on the retention of the nursing staff. In this paper we match individual data on registered nurses (RNs) working in the public sector in NSW in 1996 to the hospital in which they work. We analyze the annual retention probability for these RNs using the nurses? personal characteristics as well as the characteristics of the hospitals. It is found that the type of hospital per se does not help explain the retention probability of the nurses employed in the premise but the hospital characteristics do. Hospital characteristics include measures of size, complexity, intensity, expenditures and staffing levels. The results suggest that the effects of these variables are complex. For example, complexity of the work as measured by admissions from emergency increase retention while high cost procedures and large ANDRG weights reduce retention. Higher levels of expenditures (at constant staffing levels) increase retention except for expenditures on visiting medical officers which reduce retention. The effects on the expected retention probability are very large and significant. One implication of our findings is that simply increasing staffing levels is unlikely to achieve much impact on nurses? retention levels unless problem areas of the job are also addressed.
    Keywords: Medical workforce
    JEL: I11
  20. By: Jane Hall (CHERE, University of Technology, Sydney)
    Abstract: The topic of this paper is whether it is possible, given the current state of knowledge and technology, to design the appropriate market structure for managed competition. The next section reviews market failure in the private health insurance market. The subsequent two sections describe the principles of managed competition and its development and application in other countries. Then, the paper outlines recent developments in private health insurance policy in Australia, and proposals to apply managed competition in this country. The required design of the managed competition market place is described, and four major issues, risk adjustment, budget holding, consumer behaviour, and insurer behaviour, are identified. The final sections of the paper review the evidence on these four issues to determine if managed competition can be implemented, given current knowledge.
    Keywords: Health Insurance, Managed competition, Australia
    JEL: I11
  21. By: Donald J Wright (Department of Economics, University of Sydney)
    Abstract: It has been observed that specialist physicians who work in private hospitals are usually paid by fee-for-service while specialist physicians who work in public hospitals are usually paid by salary. This paper provides an explanation for this observation. Essentially, fee-for-service aligns the interests of income preferring specialist with profit maximizing private hospitals and results in private hospitals treating a high proportion of short stay patients. On the other hand, salary aligns the interests of fairness preferring specialists with welfare maximizing public hospital and results in public hospitals treating all patients irrespective of their length of stay.
    Keywords: Physician payments
    JEL: I11
  22. By: Donald J Wright (Department of Economics, University of Sydney)
    Abstract: Consumers, when ill, often have the choice of being treated for free in a public hospital or at a positive price in a private hospital. To compensate for the positive price, private hospitals offer a higher quality treatment. Private hospitals and doctors also have a degree of monopoly power in their pricing. In this setting, it is shown that the presence of insurance does not affect the number of consumers treated in the private hospital, rather the private hospital and the doctor respond to the presence of insurance by increasing the prices they charge and the quality of the private hospital experience.
    Keywords: Physician payments
    JEL: I11
  23. By: Bernard van den Berg (Vrije University Amsterdam); Wolter Hassink
    Abstract: This paper tests empirically for moral hazard in a system based on demand-side subsidies. In the Netherlands, demand-side subsidies were introduced in 1996. Clients receive a cash benefit to purchase the type of home care (housework, personal care, support with mobility, organisational tasks or social support) they need from the care supplier of their choice (private care provider, regular care agency, commercial care agency or paid informal care provider). Furthermore, they negotiate with the care supplier about price and quantity. Our main findings are the following. 1) The component of the cash benefit a client has no residual claimant on, has a positive impact on the price of care. 2) In contrast, the components of the cash benefit a client has residual claimant on, have no or a negative impact on the price of care. Both results point at the existence of moral hazard in a system of demand-side subsidies.
    Keywords: Long-term care, cash benefits, consumer directed services, demand-side subsidies, direct payments, moral hazard
    JEL: I10
  24. By: Denzil Fiebig (University of NSW); Elizabeth Savage (CHERE, University of Technology, Sydney); Rosalie Viney (CHERE, University of Technology, Sydney)
    Abstract: The inter-relationship between private health insurance cover and hospital utilisation is complex. The current policy approach in Australia appears to rely on relatively simple models of the relationships between health insurance coverage, and public and private hospital use. There is considerable evidence of unexplained heterogeneity among the privately insured population. Heterogeneity of preferences is likely to be important not just in determining the uptake of private health insurance, but also the impact of changes in private health insurance on the use of private treatment. A number of studies have used attitudinal variables to model heterogeneity of preferences in other contexts. This study uses the 2001 ABS National Health Survey to identify ?types? among the insured population using their stated reasons for purchasing private health insurance. We find that insurance type is significantly associated with hospital utilisation, particularly the probability of being admitted as a public or private patient. We also find that the government?s insurance incentives were more attractive to particular types of the insured population. This has implications for the effectiveness of the insurance incentives and for the design of policies that aim to reduce pressure on the public hospital system.
    Keywords: Private health insurance, health policy, Australia
    JEL: I11
  25. By: Eddy van Doorslaer (Erasmus University, Rotterdam); Philip Clarke (University of Sydney); Elizabeth Savage (CHERE, University of Technology, Sydney); Jane Hall (CHERE, University of Technology, Sydney)
    Abstract: Recent OECD country comparative evidence suggests that Australia?s mixed public-private health system does a good job in ensuring high and fairly equal access to doctor, hospital and dental care services. This paper provides some further analysis of the same data from the Australian National Health Survey for 2001 to see to what extent the general finding of horizontal equity remains when the full potential of the data is realized. We extend the common core cross-country comparative analysis by expanding the set of indicators used in the procedure of standardizing for health care need differences, by providing a separate analysis for the use for general practitioner and specialist care and by differentiating between admissions as public and private patients. Overall, our analysis confirms that in 2001 Medicare largely did seem to be attaining its goal of an equitable distribution of health care access: Australians in need of care did get to see a doctor and to be admitted to a hospital. However, they were not equally likely to see the same doctor and to end up in the same hospital bed. As in other OECD countries, higher income Australians are more likely to consult a specialist, all else equal, while lower income patients were more likely to consult a general practitioner. The unequal distribution of private health insurance contributes to the phenomenon that the better-off and the less well-off do not receive the same mix of services. There is a risk that, as in some other OECD countries, the Medicare objective of equal access for equal need may be further compromised by the future expansion of the private sector in secondary care services. To the extent that such inequalities in use may translate in inequalities in health outcomes, they may be some reason for concern.
    Keywords: Equity, OECD comparisons, hospital care, privae health insurance
    JEL: I11
  26. By: Madeleine King (CHERE, University of Technology, Sydney); Rosalie Viney (CHERE, University of Technology, Sydney); Ishrat Hossain (CHERE, University of Technology, Sydney); David Smith (Cancer Council, NSW); Sandra Fowler (CHERE, University of Technology, Sydney); Elizabeth Savage (CHERE, University of Technology, Sydney); Bruce Armstrong (University of Sydney)
    Abstract: Prostate cancer is the most common cancer in men in Australia; each year over 10,000 Australians are diagnosed with this disease. There are a number of treatment options for early stage prostate cancer (ESPC); radical prostatectomy, external beam radiotherapy, brachytherapy, hormonal therapy and combined therapy. Treatment can cause serious side-effects, including severe sexual and urinary dysfunction, bowel symptoms and fatigue. Furthermore, there is no evidence as yet to demonstrate that any of these treatments confers a survival gain over active surveillance (watchful waiting). While patient preferences should be important determinants in the type of treatment offered, little is known about patients? views of the relative tolerability of side effects and of the survival gains needed to justify these. To investigate this, a discrete choice experiment (DCE) was conducted in a sample of 357 men who had been treated for ESPC and 65 age-matched controls. The sample was stratified by treatment, with approximately equal numbers in each treatment group. The DCE included nine attributes: seven side-effects and two survival attributes (duration and uncertainty). An orthogonal fractional set of 108 scenarios from the full factorial was used to generate three versions of the questionnaire, with 18 scenarios per respondent. Multinomial logit (MNL) and mixed logit (MXL) models were estimated. A random intercept MXL model provided a significantly better fit to the data than the simple MNL model, and adding random coefficients for all attributes dramatically improved model fit. Each side-effect had a statistically significant mean effect on choice, as did survival duration. Most attributes had significant variance parameters, suggesting considerable heterogeneity among respondents in their preferences. To model this heterogeneity, we included men?s health-related quality of life scores following treatment as covariates to see whether their preferences were influenced by their previous treatment experience. This study demonstrate how DCEs can be used to quantify the trade-offs patients make between side-effects and survival gains. The results provide useful insights for clinicians who manage patients with ESPC, highlighting the importance of patient preferences in treatment decisions.
    Keywords: Prostate cancer, discrete choice experiment, preferences, quality of life
    JEL: I10
  27. By: Glenn Jones (Macquarie University); Elizabeth Savage (CHERE, University of Technology, Sydney); Kees van Gool (CHERE, University of Technology, Sydney)
    Abstract: Out-of-pocket health expenditures in Australia are high in international comparisons and have been growing at a faster rate than most other health costs in recent years. This raises concerns about the extent to which out-of-pocket costs have constrained access to health services for low income households and the amount of protection against high out-of-pocket costs health care cards give to eligible households. There has been little detailed analysis of the relationship between specific health expenditures and total expenditure in Australia. This paper models the relationships between health expenditures as a share of total expenditure and per capita total expenditure. We use data from the ABS Household Expenditure Survey 2003. To allow for flexibility in the relationship we adopt a semi-parametric estimation technique. We find that, at the same level of total per capita expenditure, cardholders generally have higher total health expenditure shares than non-cardholders but that expenditure patterns vary with subcategories of health expenditure. Quite similar distributions are found for health insurance and non-prescription medicines. Overall, health concession cards do not appear to be providing the level of OOP protection for GP and specialist visits that might be expected. An unexpected finding is the that neither the PBS concession rate nor the PBS safety net appears to provide protection against high OOPs for prescriptions for poorer cardholders suggesting that higher utilisation more than offsets lower prescription prices for cardholders.
    Keywords: Out-of-pocket costs, international comparisons, Australia
    JEL: I10
  28. By: Denise Doiron (University of NSW); Glenn Jones (Macquarie University); Elizabeth Savage (CHERE, University of Technology, Sydney)
    Abstract: Both adverse selection and moral hazard models predict a positive relationship between risk and insurance; yet the most common finding in empirical studies of insurance is that of a negative correlation. In this paper we investigate the relationship between ex ante risk and private health insurance using data from the 2001 Australian National Health Survey (NHS). The Australian health system provides a setting where the relationship between risk and insurance is more transparent than many other institutional frameworks; private health insurance is not tied to employment; community rating limits the actions of insurers; and private coverage is high for a country providing free public hospital treatment. We find a strong positive association between self-assessed health and private health cover. We use the detailed information available in the NHS to investigate whether we can identify factors responsible for the negative correlation between risk (lower SAHS) and insurance cover. However this relationship persists despite the inclusion of a large set of controls for personal and socio-economic characteristics, risk-related behaviours, objective health measures and an index of mental health. The opposite effect of self-assessed health and long-term conditions on coverage suggests that SAHS is capturing factors such as personality or risk preferences.
    Keywords: Private health insurance, self-assessed health, Australia
    JEL: I11
  29. By: Ray Rees (Univerity of Munich); Patricia Apps (Univerity of Sydney)
    Abstract: This paper analyses the policy implications for health insurance markets of the development of genetic testing. A central issue surrounding this development is whether insurers should be allowed access to the information provided by such tests. The paper first shows that on efficiency grounds alone, insurance buyers should be allowed voluntarily to supply this information to insurers. The source of the considerable opposition to this proposal is really the distributional implications: those with the worst genetic endowments will as a result have to pay the highest insurance premiums. The paper then goes on to analyse possible redistributional policies that can remedy this. In doing so, it makes a significant departure from the mainstream literature on adverse selection in insurance markets, by assuming that individuals have differing income endowments.
    Keywords: health insurance, genetic testing
    JEL: I11
  30. By: Marion Haas (CHERE, University of Technology, Sydney)
    Abstract: This study has examined the costs and consequences of a randomised controlled trial of a community based Tai Chi program for people over 60 years of age. The hypothesis for the trial was that compared to non-participants, participants in the Tai Chi program would have fewer falls and may experience additional health and other benefits. In terms of resource use it was anticipated that the Tai Chi program would use additional resources in terms of running costs but was expected to save resources as a result of falls prevented. Data for this economic evaluation were collected prospectively alongside the randomised controlled trial. The aim of this evaluation was to investigate the cost-effectiveness of Tai Chi as means of preventing falls in elderly people living in the community. Costs included were those of the Tai Chi trial and health service utilisation (including GP and specialist and other consultations, tests, hospitalisations and medications). Effectiveness was measured as the number of participants in the intervention and control groups, all participants and the number of falls avoided. SPSS was used to analyse the data; Fisher?s exact and the student?s t-test were used to test differences between the intervention and control groups. From the perspective of NSW Health, the cost of providing Tai Chi as part of this trial ($81232) outweighed any costs of health service provision ($24795). Only a small proportion used health services and this mostly involved the use of over-the-counter pain relieving medication and GP consultations. Only 3 people were admitted to hospital. There were no significant differences between the study and control groups in terms of utilisation and costs except in terms of overall costs where the control group costs were significantly more than the study group (p=0.43). However, this difference was driven by the cost of one admission to hospital. In the trial 3/216 falls resulted in hospitalisation. This means that for every 100 falls avoided, 1.4 serious falls were prevented. Assuming that Tai Chi would continue to prevent falls at the same rate as the trial, 740 individuals would need to participate in Tai Chi to avoid 100 falls and 1.4 serious falls. The value of avoiding a small number of serious falls must be weighed against the high cost of treating and managing the consequences of such falls.
    Keywords: Tai chi, economic aspects, Australia
    JEL: I19
  31. By: Marion Haas (CHERE, University of Technology, Sydney)
    Abstract: Over their lifetime, individuals typically make many decisions about health and health care. Theoretical approaches to decision making have been dominated by a rational, analytic approach which assumes that problems are relatively fixed and well-defined and which have foreseeable and measurable endpoints. Naturalistic decision making (NDM) approaches attempt to mimic ?real world? situations where problems vary, may be defined differently by individuals with diverse perspectives and where endpoints are uncertain and complicated. In-depth interviews were conducted with 40 individuals living in the community: twenty participants had chronic renal failure and twenty were women in the target age range for cervical cancer screening. Decision making processes used by these two groups of health care consumers correspond well with the concepts of NDM. In particular, Image Theory provides a framework within which the process of decision making by health care consumers can be described, including the issues which influence what decisions are made. The findings also demonstrate the usefulness of studying decision making in ?real world? situations and in using less analytic techniques than traditional normative approaches in evaluating health care decision making. The results suggest that NDM is deserving of a wider audience in health care. Health care providers who use NDM models to understand their patients? decision making processes may improve their capacity to involve patients in decision making.
    Keywords: Decision making, cervical screening
    JEL: I11
  32. By: Muralikrishnan Radhakrishnan (CHERE, University of Technology, Sydney); Kees van Gool (CHERE, University of Technology, Sydney); Jane Hall (CHERE, University of Technology, Sydney); Martin Delatycki (Royal Children's Hopsital, Melbourne); John Massie (Royal Children's Hopsital, Melbourne)
    Abstract: Objectives: To critically examine the economic evidence on Cystic Fibrosis (CF) screening and to understand issues relating to the transferability of findings to the Australian context for policy decisions. Methods: A systematic literature search identified 25 economic studies with empirical results on CF published between 1990 and 2005. These articles were then assessed against international benchmarks on conducting and reporting of economic evaluations, focusing on the transferability of the evidence to the local setting. Results: Six studies described only costs, 12 were cost-effectiveness studies, 6 were cost-benefit studies and one had a combined design (cost utility, cost benefit and cost effectiveness). Most of the cost-effectiveness studies compared screening versus ?no-screening? but the screening programs under consideration differed markedly. Four considered neonatal screening, three prenatal screening, three pre-conception and carrier screening, and one considered all types of screening programs. The outcome measures also varied considerably between studies. One study included a quality adjusted life year measure. Cost?benefit measures mostly included economic savings ? evaded lifetime medical costs of avoiding CF child birth. Conclusion: The variability in study design, model inputs and reporting of economic evaluations of CF carrier screening raises issues on the applicability and transferability of such evidence to the Australian context.
    Keywords: Cystic fibrosis, economic evaluation
    JEL: I19
  33. By: Marion Haas (CHERE, University of Technology, Sydney); Sandy Fowler (CHERE, University of Technology, Sydney)
    Abstract: Cervical cancer is one of the most preventable and treatable cancers. It has been estimated that up to 90% of the most common type of cervical cancer may be prevented if cell changes are detected and treated early. Early detection is undertaken using a Pap test. In most Western countries, including Australia, and in many less developed countries, screening for cervical cancer is provided to women in the form of an organised program. These programs typically provide Pap tests free or at low cost, at the point of delivery. However, as most cancers occur in women who have never or rarely screened, increasing the rate of screening remains an important issue. Numerous studies have identified the variables associated with women rarely or never screening. Older, poorer women, women living in rural communities and those from non-European ethnic backgrounds (in Australia, especially those who do not speak English) are much less likely to screen than their younger, richer, urban-dwelling, English-speaking sisters. This type of information can be used to target women less likely to screen but does not address what women perceive to be the major barriers to their having a Pap test or what messages might be most effective in convincing them to have the test. A number of qualitative studies have examined these issues. In this project, the results of such studies have been synthesised in an attempt to answer two questions: 1. Why don?t some women have Pap tests? 2. What would work to encourage women who currently do not screen to change their behaviour? This synthesis adopted the meta-ethnographic approach as described in Campbell et al (2003). The results from 16 papers were appraised in terms of the quality of the research undertaken as well as results and conclusions. The results indicate that the majority of women have heard of or know about the Pap test. However, many were misinformed about the details of the test and its implications. Women may not think a Pap test is relevant for them for a number of reasons: many believe that it detects cancer (rather than cervical abnormalities which may or may not be pre-cancerous lesions). This may lead to under-screening if a woman is afraid of cancer or believes that screening is only necessary if and when symptoms appear. Women may also not screen if their cultural and/or religious beliefs connect cervical cancer with sexually transmitted infections acquired as the result of pre-marital or extra-marital sexual contact (ie promiscuity). Common barriers to accessing Pap tests included the direct cost of the test and various opportunity costs in terms of time and availability of childcare. The lack of availability of female health care providers was also an important barrier. The synthesis has indicated that there are some standard preferences and barriers which cross cultural, demographic and socio-economic lines that could be considered by practitioners and policy makers attempting to improve services and increase screening uptake. Practitioners can encourage women to screen by emphasising the curable nature of cervical lesions, being honest about the relationship between sexual activity and cervical cancer and explicitly recommending a Pap test. There is also a need for more individually tailored approaches to target specific ethnic groups. An understanding of community-specific beliefs is invaluable to health professionals if they are to provide cultural sensitive and appropriate services.
    Keywords: Cervical cancer, screening, Pap tests
    JEL: I10
  34. By: Kees van Gool (CHERE, University of Technology, Sydney); Elizabeth Savage (CHERE, University of Technology, Sydney); Rosalie viney (CHERE, University of Technology, Sydney); Marion Haas (CHERE, University of Technology, Sydney); Rob Anderson
    Abstract: The Medicare Safety Net Policy was introduced in March 2004 to provide financial relief for those Australians who face high out-of-pocket costs incurred through out-of-hospital medical services. This study examines variation in Safety Net benefits by federal electorate and by type of medical service. The results indicate widespread variation in Safety Net benefits. There were significantly higher Safety Net benefits in electorates with relatively high median family income and lower health care needs. The study also shows that patients who use private obstetrician and assisted reproductive services are the greatest beneficiaries of the policy. Whilst the Safety Net was introduced to help reduce out-of-pocket medical costs, this analysis shows that it may be missing the intended policy target.
    Keywords: Medicare, health care policy, out-of-pocket costs, co-payments,catastrophic insurance, Australia
    JEL: I11
  35. By: Kees van Gool (CHERE, University of Technology, Sydney); Elizabeth Savage (CHERE, University of Technology, Sydney); Rosalie viney (CHERE, University of Technology, Sydney); Marion Haas (CHERE, University of Technology, Sydney); Rob Anderson
    Abstract: Objectives: The Medicare Safety Net Policy was introduced in March 2004 to provide financial relief for those Australians who face high out-of-pocket (OOP) costs for outpatient medical services. This study evaluates the extent to which out-of-pocket costs have fallen since the introduction of the Safety Net and examines the impact of the policy on the level of service use, the amount of benefits paid by government and fees charged by medical providers. Methods: Regression modelling of time series data was used to examine whether there have been significant changes in levels of service use, fees charged and benefits paid for services provided by specialists in the two-year period following the introduction of the Safety Net. Four speciality fields were examined in this analysis: general specialists? consultations, obstetrics, pathology and diagnostic imaging. Results: The analysis indicates that the introduction of the Safety Net coincided with a substantial rise in public funding for Medicare services and a much smaller reduction in OOP costs. The policy has coincided with a small but significant change in the number of pathology and diagnostic imaging services used and in some specialty areas a substantial increase in the fees charged by providers. The net impact shows that for specialists? consultations every dollar spent on the Medicare Safety Net, $0.68 went towards higher fees and $0.32 went towards reducing OOP costs. The corresponding figures for diagnostic imaging were $0.74 and $0.26 respectively. Conclusions: The Safety Net was heralded by the government as a fundamental reform in Australia?s Medicare program. Whilst the Safety Net was introduced to help reduce out-of-pocket medical costs, this analysis shows that in its first two years of operation, there has been significant leakage of public funding towards higher provider fees. More research is needed using longer term data to assess the impact of the policy on patient and provider behaviour more widely, including examining the policy?s impact on those who did qualify for Safety Net and those who did not, as well as more disaggregated analysis of different Medicare services.
    Keywords: Out-of-pocket costs; moral hazard; catastrophic insurance; health care financing; Australia
    JEL: I11
  36. By: Kees van Gool (CHERE, University of Technology, Sydney); Marion Haas (CHERE, University of Technology, Sydney); Peter Sainsbury (Sydney South West Area Health Service); Richard Gilbert (Sydney South West Area Health Service)
    Abstract: Objective: To provide decision makers with a tool to inform resource allocation decisions at the local level, using cardiovascular disease prevention as an example. Method: Evidence from the international literature was extrapolated to estimate the health and financial impacts in Central Sydney Area Health Service (CSAHS) of three different prevention programs; smoking cessation; blood pressure reduction and cholesterol lowering. The cost-effectiveness analysis framework was reconfigured to 1) estimate the risk of CVD in the community using local risk factor data, 2) estimate the number of CVD events prevented through investment in preventive programs and 3) estimate the local financial flow-on effects of prevention on acute care services. The model developed here estimates an upper bound of what local decision makers could spend on preventive programs whilst remaining consistent with their willingness to pay for one additional life-year gained. Results: The model predicted that over a five-year period the cumulative impact of the three programs has the potential to save 1245 life-years in people aged 40-79 years living in CSAHS. If decision-makers are willing to invest in cost-saving preventive programs only, the model estimates that they can spend up $12 per person in the target group per year. However, if they are willing to spend $70,000 per life-year gained, this amount rises to $201. Conclusions: Modelling the impact of preventive activities on the acute care health system enables us to estimate the amount that can be spent on preventive programs. The model is flexible in terms of its ability to examine these impacts in a variety of settings and therefore has the potential to be a useful resource planning tool.
    Keywords: Resource allocation, cardiovascular disease, health promotion, Australia
    JEL: I10
  37. By: Marion Haas (CHERE, University of Technology, Sydney); Marian Shanahan (National Drug & Alcohol Research Centre, UNSW); Rob Anderson (Peninsula Technology Assessment Group (PenTAG) & Institute for Health & Social Care)
    Abstract: Economic evaluations of health care programs are relatively common. However, the costs reported often use budgetary information alone, rather than undertake the potentially more complex task of using a variety of routinely collected data for which adjustments and assumptions will need to be made. Relative to the effort required for an individual-level costing exercise, investigating the costs of a health care program targeted at a population or group is likely to be a more complex and difficult undertaking. This paper describes the process of undertaking a program-level cost analysis, using principles developed to ensure the quality of such evaluations. Documenting the costs of the National Cervical Screening Program is used to illustrate the approach and the difficulties encountered, assumptions made and solutions employed are discussed. Despite the limitations to estimating the costs of health programs identified in this paper, evaluators can take full advantage of the data available by using a systematic description of the program as a basis for costing, testing the assumptions and adjustments needed using the expertise available within a specifically appointed advisory or working group and using sensitivity analysis to provide a greater level of confidence in the results.
    Keywords: Cervical screening, economic evaluation, Australia
    JEL: I10

This nep-hea issue is ©2007 by Yong Yin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.