nep-hea New Economics Papers
on Health Economics
Issue of 2007‒05‒26
seven papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Are Urban Children really healthier? By Ellen van de Poel; Owen O'Donnell; Eddy van Doorslaer
  2. Consumer Information and Pharmaceutical Prices: Theory and Evidence By Granlund, David; Rudholm, Niklas
  3. Economic Policy in Health Care: Sickness Absence and Pharmaceutical Cost By Granlund, David
  4. Health Aid and Infant Mortality By Prachi Mishra; David Locke Newhouse
  5. Altruism, Fertility, and the Value of Children: Health Policy Evaluation and Intergenerational Welfare By Javier A. Birchenall; Rodrigo R. Soares
  6. Incentives in Obesity and Health Insurance By Inas Rashad; Sara Markowitz
  7. A Random Parameter Logit model for modeling Health Care Provider Choice in Bolivia By Canaviri, Jose

  1. By: Ellen van de Poel (Erasmus Universiteit Rotterdam); Owen O'Donnell (University of Macedonia, Thessaloniki, Greece); Eddy van Doorslaer (Erasmus Universiteit Rotterdam)
    Abstract: On average, child health outcomes are better in urban than in rural areas of developing countries. Understanding the nature and the causes of this rural-urban disparity is essential in contemplating the health consequences of the rapid urbanization taking place throughout the developing world and in targeting resources appropriately to raise population health. We use micro data on child health taken from the most recent Demographic and Health Surveys for 47 developing countries. First, we document the magnitude of rural-urban disparities in child nutritional status and under-five mortality across all 47 developing countries. Second, we adjust these disparities for differences in population characteristics across urban and rural settings. Third, we examine rural-urban differences in the degree of socioeconomic inequality in these health outcomes. We find considerable rural-urban differences in mean child health outcomes. The rural-urban gap in stunting does not entirely mirror the gap in under-five mortality. The most striking difference between the two is in the Latin American and Caribbean region, where the gap in stunting is more than 1.5 times higher than that in mortality. On average, the rural-urban risk ratios of stunting and under-five mortality fall by respectively 53% and 59% after controlling for household wealth. Controlling thereafter for socio-demographic factors reduces the risk ratios by another 22% and 25%. In a considerable number of countries, the urban poor actually have higher rates of stunting and mortality than their rural counterparts. The findings imply that there is a need for programs that target the urban poor, and that this is becoming more necessary as the size of the urban population grows.
    Keywords: child health; urban-rural inequality; nutrition; child mortality
    JEL: I12 I31 O53
    Date: 2007–04–10
  2. By: Granlund, David (Department of Economics); Rudholm, Niklas (The Swedish Retail Institute (HUI))
    Abstract: In this paper, the impact of increased information on brand name and generic pharmaceutical prices is analyzed both theoretically and empirically. The theoretical results show that an increase in information is likely to reduce the price of brand name pharmaceuticals, while the results regarding generics are less clear. In the empirical part of the paper, the introduction of the substitution reform in the Swedish pharmaceuticals market in October 2002 is used as a natural experiment regarding the effects of increased consumer information on pharmaceutical prices. The results clearly show that the reform has lowered the price of both brand name- and generic pharmaceuticals.
    Keywords: Pharmaceutical industry; generic competition; generic drugs; brand name drugs
    JEL: D80 D83 I11 L65
    Date: 2007–04–01
  3. By: Granlund, David (Department of Economics, Umeå University)
    Abstract: This thesis consists of a summary and four papers. The first two concerns health care and sickness absence, and the last two pharmaceutical costs and prices. <p> Paper [I] presents an economic federation model which resembles the situation in, for example, Sweden. In the model the state governments provide health care, the federal government provides a sickness benefit and both levels tax labor income. The results show that the states can have either an incentive to under- or over-provide health care. The federal government can, by introducing an intergovernmental transfer, induce the state governments to provide the socially optimal amount of health care. <p> In Paper [II] the effect of aggregated public health care expenditure on absence from work due to sickness or disability was estimated. The analysis was based on data from a panel of the Swedish municipalities for the period 1993-2004. Public health care expenditure was found to have no statistically significant effect on absence and the standard errors were small enough to rule out all but a minimal effect. The result held when separate estimations were conducted for women and men, and for absence due to sickness and disability. <p> The purpose of Paper [III] was to study the effects of the introduction of fixed pharmaceutical budgets for two health centers in Västerbotten, Sweden. Estimation results using propensity score matching methods show that there are no systematic differences for either price or quantity per prescription between health centers using fixed and open-ended budgets. The analysis was based on individual prescription data from the two health centers and a control group both before and after the introduction of fixed budgets. <p> In Paper [IV] the introduction of the Swedish substitution reform in October 2002 was used as a natural experiment to examine the effects of increased consumer information on pharmaceutical prices. Using monthly data on individual pharmaceutical prices, the average reduction of prices due to the reform was estimated to four percent for both brand name and generic pharmaceuticals during the first four years after the reform. The results also show that the price adjustment was not instant.
    Keywords: vertical fiscal externalities; sickness absence; sickness benefits; health care expenditure; fixed budgets; pharmaceuticals; cost containment; dynamic panel data models; endogeneity; propensity score matching
    JEL: D80 D83 H21 H42 H51 H77 I11 I12 I18 J22 L65
    Date: 2007–05–16
  4. By: Prachi Mishra; David Locke Newhouse
    Abstract: This paper examines the relationship between health aid and infant mortality, using data from 118 countries between 1973 and 2004. Health aid has a statistically significant effect on infant mortality: doubling per capita health aid is associated with a 2 percent reduction in the infant mortality rate. For the average country, this implies that increasing per capita health aid by US$1.60 per year is associated with 1.5 fewer infant deaths per thousand births. The estimated effect is small, relative to the targets envisioned by the Millennium Development Goals.
    Date: 2007–05–01
  5. By: Javier A. Birchenall (University of California, Santa Barbara); Rodrigo R. Soares (University of Maryland, Catholic University of Rio de Janeiro, NBER and IZA)
    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 a "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.
    Keywords: value of life, mortality, fertility, altruism, intergenerational welfare, willingness to pay
    JEL: J17 J13 I10
    Date: 2007–05
  6. By: Inas Rashad; Sara Markowitz
    Abstract: The percentage of those uninsured in the U.S. has risen in recent years, although out-of-pocket expenditures have declined. At the same time, the obesity rate has significantly risen. We look at obesity in the context of a model in which the status of health insurance might play a role in influencing body weights. In this context, adverse selection is likely to be an issue, as those with ailments are more likely to sort themselves into being covered by insurance, or to be shut out of the health insurance market. At the same time, those who are insured might be more likely to be negligent when it comes to their health, or to be more careful due to the services they are receiving. Using 1993-2002 BRFSS data, we aim to isolate these opposing factors in determining the potential effect of health insurance status on obesity. We control for a variety of confounding factors that may influence obesity prevalence and address the endogenous nature of health insurance. We focus on isolating the effect of ex ante moral hazard rather than ex post moral hazard, and find little evidence of moral hazard in this context.
    JEL: I0
    Date: 2007–05
  7. By: Canaviri, Jose
    Abstract: In this paper we model health care provider choice in Bolivia with a Random Parameter Logit (RPL) using MECOVI data during the period 1999 and 2000. To our knowledge this is the first time that a RPL is used for modeling health care provider choice in Bolivia. We found that price and income are determinants of the decision choice of health care provider. Increasing government prices or fees shift the demand from government to private health facilities for children and women. In addition, women are more sensitive than children and adults to changes in price and income. The perception of Quality is significant just for private health facilities except for children. Finally, people would rather private instead of government facilities and self care treatment when they are ill.
    Keywords: Random Parameter Logit; Government and Private Health Facilities; Quality; Prices or User Fees.
    JEL: I19 I18 I11
    Date: 2007–01

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