nep-hea New Economics Papers
on Health Economics
Issue of 2007‒09‒30
sixteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Statistical Studies of Age - Specific HIV - Prevalence Data By Helmut Knolle
  2. Ex Post Welfare under Alternative Health Care Systems By John Leach
  3. "Conditional scholarships" for HIV/AIDS Health Workers: Educating and Retaining the Workforce to Provide Antiretroviral Treatment in Sub-Saharan Africa By Till Bärnighausen; David E. Bloom
  4. Health Status, Health Care and Inequality: Canada vs. the U.S. By June E. O'Neill; Dave M. O'Neill
  5. Equity in Pharmaceutical Utilization in Ontario: A Cross Section and Over Time Analysis By Hai Zhong
  6. Is cannabis a gateway to hard drugs? By Hans Olav Melberg; Anne Line Bretteville-Jensen; Andrew M. Jones
  7. Matching estimators of average treatment effects: a review applied to the evaluation of health care programmes By Rodrigo Moreno-Serra
  8. Persistence in health limitations: a European comparative analysis By Cristina Hernández-Quevedo; Andrew M. Jones; Nigel Rice
  9. Award errors and permanent disability benefits in Spain By Sergi Jimenez-Martin; Jose M. Labeaga; Cristina Vilaplana Prieto
  10. How does heterogeneity shape the socioeconomic gradient in health satisfaction? By Andrew M. Jones; Stefanie Schurer
  11. Unravelling the influence of smoking initiation and cessation on premature mortality using a common latent factor model By Silvia Balia; Andrew M. Jones
  12. Use of instrumental variables in the presence of heterogeneity and self-selection: An application in breast cancer patients By Anirban Basu; James J. Heckman; Salvador Navarro-Lozano; Sergio Urzua
  13. Measuring efficiency in health care: an application to out of hours primary care services in the island of Ireland By Grace Lordan
  14. Looking for private information in self-assessed health By James Banks; Thomas Crossley; Simo Goshev
  15. Reporting expected longevity and smoking: evidence from the SHARE By Silvia Balia
  16. Cross-Country Variation in Obesity Patterns among Older Americans and Europeans By Pierre-Carl Michaud; Arthur van Soest; Tatiana Andreyeva

  1. By: Helmut Knolle
    Abstract: "The infectivity function is a function giving a measure of how infectious a given individual is t time units after becoming infected. Today, no feasible and ethically acceptible study design is known, which would lead to estimates of HIV-infection probability within steady heterosexual partnerships, using standard statistical methodology. In this paper a transmission model is used as a link between the infectivity function and data sets which already exist or can be generated with standard methods and moderate expenses. This model suggests that the distribution of HIV-infections by age and sex depends on the infectivity function as well as on age-dependent patterns of sexual partner choice. Application of the model requires population-based data of age-specific HIV-incidences in men and women of the general heterosexual population. At present, the only known data set suitable for this purpose is a set of HIV-test results from a sample of 8690 Colombian women in pregnancy who attended prenatal care. The prevalence of HIV was 0.33% in the group of 12-24 years, but only 0.16% in the group of 25-34 years. The model can explain this strange result. A data set of age-specific HIV-prevalences in heterosexual Colombian men would be useful, but is not known. Therefore, further research and data collecting is required in order to arrive at well founded conclusions."
    Date: 2007–09–20
  2. By: John Leach
    Abstract: This paper studies the implications of a societal aversion to inequality for the optimal design of a public health care system. Inequality aversion is introduced by postulating a strictly concave ex post social welfare function. Illnesses are characterized by three factors: the agent's health with treatment, the agent's health without treatment, and the cost of treatment. It is shown that the optimal public health care system allocates health care differently than would private health insurance; speci?cally, people who are relatively unhealthy with and without treatment receive more health care, and people who are relatively healthy with and without treatment receive less health care. The aggregate quantity of health care under the optimal public health care system might be either greater or less than under private health care insurance. If the public health care system is optimally designed, allowing agents to purchase supplementary private health care insurance cannot raise social welfare and is likely to decrease it.
    Date: 2007–09
  3. By: Till Bärnighausen; David E. Bloom
    Abstract: Without large increases in the number of health workers to treat HIV/AIDS (HAHW), most developing countries will be unable to achieve universal coverage with antiretroviral treatment (ART), leading to large numbers of potentially avoidable deaths among people living with HIV/AIDS. We use Markov Monte Carlo microsimulation to estimate the expected net present value (eNPV) of a scholarship for health care education that is conditional on the recipient entering into a contract to work for a number of years after graduation delivering ART in sub-Saharan Africa. Such a scholarship could increase the number of health workers educated in the region and decrease the probability of HAHW emigration. "Conditional scholarships" for a team of health workers sufficient to provide ART for 500 patients have an eNPV of 1.23 million year-2000 US dollars, assuming that the scholarship recipients are in addition to the health workers who would have been educated without scholarships and that the scholarships reduce annual HAHW emigration probabilities from 15% to 5% for five years. When individual variable values are varied from this base case within plausible bounds suggested by the literature, eNPV of the "conditional scholarships" never falls below 0.5 million year-2000 US dollars.
    JEL: I18 I22 J2 J24
    Date: 2007–09
  4. By: June E. O'Neill; Dave M. O'Neill
    Abstract: Does Canada's publicly funded, single payer health care system deliver better health outcomes and distribute health resources more equitably than the multi-payer heavily private U.S. system? We show that the efficacy of health care systems cannot be usefully evaluated by comparisons of infant mortality and life expectancy. We analyze several alternative measures of health status using JCUSH (The Joint Canada/U.S. Survey of Health) and other surveys. We find a somewhat higher incidence of chronic health conditions in the U.S. than in Canada but somewhat greater U.S. access to treatment for these conditions. Moreover, a significantly higher percentage of U.S. women and men are screened for major forms of cancer. Although health status, measured in various ways is similar in both countries, mortality/incidence ratios for various cancers tend to be higher in Canada. The need to ration resources in Canada, where care is delivered "free", ultimately leads to long waits. In the U.S., costs are more often a source of unmet needs. We also find that Canada has no more abolished the tendency for health status to improve with income than have other countries. Indeed, the health-income gradient is slightly steeper in Canada than it is in the U.S.
    JEL: I1 I11 I12 I18
    Date: 2007–09
  5. By: Hai Zhong (University of Western Ontario)
    Abstract: This study investigates inequality and inequity in pharmaceutical utilization in Ontario. First, I compare inequality and inequity in drug use between senior and non-senior population in Ontario at each of three points in time. During this time period, all seniors in Ontario have been universally covered by the publicly financed OBD program. This is not the case for the non-senior population. Second, I examine the changes in inequality and inequity for each population group at each of the three time points: 1990, 1996/97 and 2000/01. During this period, cost-sharing and other changes were introduced into the ODB, which allows us to identify the influence on equity of changes on drug coverage policies.
    Date: 2007
  6. By: Hans Olav Melberg; Anne Line Bretteville-Jensen; Andrew M. Jones
    Abstract: The gateway hypothesis proposes that cannabis use increases the risk of starting to consume hard drugs. We test this controversial, but influential, hypothesis on a sample of cannabis users employing a unique set of drug prices. A flexible approach is developed to identify the causal gateway effect using a bivariate survival model with shared frailty estimated using a latent class approach. The model suggests two distinct groups; a smaller group of “troubled youths” for whom there is a statistically significant gateway effect that doubles the hazard of starting to use hard drugs and a larger fraction of “most youths” where previous cannabis use has little impact.
    Date: 2007–01
  7. By: Rodrigo Moreno-Serra
    Abstract: The general aim of this paper is to review how matching methods try to solve the evaluation problem – with a particular focus on propensity score matching – and their usefulness for the particular case of health programme evaluation. The “classical” case of matching estimation with a single discrete treatment is presented as a basis for discussing recent developments concerning the application of matching methods for jointly evaluating the impact of multiple treatments and for evaluating the impact of a continuous treatment. For each case, I review the treatment effects parameters of interest, the required identification assumptions, the definition of the main matching estimators and their main theoretical properties and practical features. The relevance of the “classical” matching estimators and of their extensions for the multiple and continuous treatments settings is illustrated using the example of a health programme implemented with different levels of population coverage in different geographic areas.
    Keywords: Evaluation methods, treatment effects, matching, propensity score, programme evaluation.
    JEL: C14 C21 C33 I10
    Date: 2007–02
  8. By: Cristina Hernández-Quevedo; Andrew M. Jones; Nigel Rice
    Abstract: This paper investigates the persistence in health limitations for individuals within the member states of the European Union. We use the full 8 waves of data available in the European Community Household Panel (ECHP) to explore the relative contributions of state dependence, unobserved heterogeneity and socioeconomic characteristics, in particular income, education and activity status, and how these vary across countries. We focus on binary measures of health limitations, constructed from the answers to the question: “Are you hampered in your daily activities by any physical or mental health problem, illness or disability?”. Dynamic non-linear panel data models are specified and estimated using both pooled and random effects probit and logit models together with complementary log-log models. The random effects probit specifications are preferred. Results reveal high state dependence of health limitations which remains after controlling for measures of socioeconomic status. There is heterogeneity in the socioeconomic gradient across countries.
    Keywords: health limitations, dynamic models, panel data
    JEL: I12 C23
    Date: 2007–03
  9. By: Sergi Jimenez-Martin; Jose M. Labeaga; Cristina Vilaplana Prieto
    Abstract: In this paper we estimate equations for deserving or "true disability indicator" and receiv- ing disability benefits to evaluate the award error as the difference between both probabilities using survey data from Spain. As expected award errors are not randomly distributed across the population. We find that individuals aged between 55 and 59, self-employed, working in an agricultural sector or living in a depressed region, have a significantly higher probability of receiving a benefit without deserving than the rest of individuals. We also find evidence of gender discrimination since males have a significantly higher probability of receiving a benefit without deserving it. Finally we show that the probability of getting a benefit being healthy is not distributed at random across the population. We have estimated the cost of wrongful benefit concession at a minimum of 1500 million euros or 0,2 percent of the Spanish GDP for year 2000. All these findings confirm that disability benefits are being used as an instrument for exiting the labor market for individuals approaching the early retirement age. Since the awarding process depends on Social Security Regional offices, this implies that some regional offices are applying loosely the requirements for granting disability benefits.
    Keywords: Disability benefits, award error, early retirement, social security.
    JEL: H55 J26
    Date: 2007–04
  10. By: Andrew M. Jones; Stefanie Schurer
    Abstract: Individual heterogeneity plays a key role in explaining variation in self-reported well-being and, in particular, health satisfaction. It is hypothesised that the inuence of this heterogeneity varies over levels of health and increases over the life-cycle. These hypotheses are tested with data on health satisfaction from 22 waves of the German Socioeconomic Panel (GSOEP). Nonlinear xed eects methods that allow for unobserved heterogeneity are not readily available for categorical measures of well-being. One common solution is to revert to conditional xed eects methods, at the price of a high degree of information loss. Another common solution is to ignore the association between unobserved heterogeneity and socio-economic status by using pooled or random eects models, at the price of potential bias. We use a generalization of the conditional xed eects logit, that allows for individual-specic reporting bias, heterogeneity in health endowments, and heterogeneity in the impact of income on health satisfaction. Adjusting for unobserved heterogeneity accounts for the relationship between income and very good health, but not between income and poorer health states. The income gradient for older age-groups is more strongly aected by controlling for unobserved heterogeneity: revealing an increasing inuence of heterogeneity on health satisfaction over the life-span.
    Keywords: Panel data, generalized conditional xed eects logit, generalized ordered logit, health, GSOEP.
    JEL: I12 C23
    Date: 2007–04
  11. By: Silvia Balia; Andrew M. Jones
    Abstract: Duration models for lifespan and smoking, that focus on the socio-economic gradient in smoking durations and length of life, are estimated controlling for individual-specific unobservable heterogeneity by means of a latent factor model. The latent factor influences the risk of starting and quitting smoking as well as the hazard of mortality. Frailty could in°uence smoking behaviour through two mechanisms: the effect of life expectancy on initiation of smok- ing and the impact of adverse health events on quitting. Our findings suggest that individual-specific preference for experimentation, which leads those peo- ple who start smoking soonest to quit early, is a potential source of spurious correlation between smoking durations. They also suggest that frailty acts according to both mechanisms, driving selection into early smoking initiation as well as selection into early smoking cessation. Overall, determinants of smoking durations and mortality hazard are largely unaffected by unobserv- able heterogeneity. However, the latent factor model strengthens the results of the univariate models suggesting that increasing the quitting rate and reduc- ing the duration of smoking would decrease premature mortality. Whereas, prompting people to delay starting would shorten the length of time spent smoking.
    Keywords: smoking; mortality; duration analysis; unobservable heterogeneity; latent factors
    JEL: I1 C10 C41
    Date: 2007–06
  12. By: Anirban Basu; James J. Heckman; Salvador Navarro-Lozano; Sergio Urzua
    Abstract: Instrumental variables methods (IV) are widely used in the health economics literature to adjust for hidden selection biases in observational studies when estimating treatment effects. Less attention has been paid in the applied literature to the proper use of instrumental variables if treatment effects are heterogeneous across subjects and individuals select treatments based on expected idiosyncratic gains or losses from treatments. In this paper, we analyze the role of conventional instrumental variable analysis and alternative approaches using instrumental variables for estimating treatment effects for models with treatment heterogeneity and self-selection. Instead of interpreting IV estimates as the effect of treatment at an unknown margin of patients, we identify the marginal patients and we apply the method of local instrumental variables to estimate the Average Treatment Effect (ATE) and the Effect on the Treated (TT) on 5-year direct costs of breast conserving surgery and radiation therapy compared to mastectomy in breast cancer patients. We use a sample from the Outcomes and Preferences in Older Women, Nationwide Survey (OPTIONS) which is designed to be representative of all female Medicare beneficiaries (aged 67 or older) with newly diagnosed breast cancer between 1992 and 1994. Our results reveal some of the advantages and limitations of conventional and alternative IV methods in estimating mean treatment effect parameters.
    Keywords: Self-selection, essential heterogeneity, instrumental variables, breast cancer, local instrumental variable method.
    JEL: C01 C21 C31
    Date: 2007–06
  13. By: Grace Lordan
    Abstract: This paper is a cross border study that explores isolating the efficiency component and measuring its overall contribution to productivity in the case of out of hours (OOH) primary care services operating on the Island of Ireland. Out of hours GP care is supplied throughout the Island of Ireland by OOH co-operatives. Although Northern Ireland (NI) and the Republic of Ireland (ROI) have their own individual health systems the OOH organisations themselves are relatively homogenous in structure. The data for this study has been gathered and collated by the author and relates to six of twelve co-operatives operating in ROI and five of the seven co-operatives in NI. The primary aim of this paper is to estimate efficiency for these organisations using stochastic frontier analysis (SFA) SFA was chosen as the method for analysis as it allows distinction between ‘noise’ effects and efficiency effects. This paper outlines the means that SFA methodology can be used to derive sensible and robust efficiency estimates for OOH primary care organizations operating on the Island of Ireland. The paper also examines the sensitivity of these estimates to the choice of functional form for the health production function, the choice of error distribution for the efficiency terms and the means in which heterogeneity is incorporated into the analysis. Individual efficiency estimates, rankings, cross border rankings and comparisons are reported to allow recommendations to be made on how these organizations can improve their production process.
    Keywords: Primary Care, Out of Hours, Efficiency, Stochastic Production Frontiers.
    Date: 2007–06
  14. By: James Banks; Thomas Crossley; Simo Goshev
    Abstract: The paper investigates whether self-assessed health status (SAH) contains information about future mortality and morbidity, beyond the information that is contained in standard “observable” characteristics of individuals (including pre-existing diagnosed medical conditions). Using a ten-year span of the Canadian National Population Health Survey, we find that SAH does contain private information for future mortality and morbidity. Moreover the extra information in SAH is greater at older ages. In many developed countries there a major shift occurring from defined benefit (DB) to defined contributions (DC) pension arrangements. One consequence of this shift is an effective delay in the age at which workers commit to an annuity. Our results therefore suggest that adverse selection problems in annuity markets are likely to be more severe at older ages, and therefore, that the DB to DC shift may expose workers to greater longevity risk. This is an aspect of the DB to DC shift which has received little attention.
    Keywords: Self-Assessed Health, Annuities, Mortality, Morbidity
    JEL: H0 I1
    Date: 2007–06
  15. By: Silvia Balia
    Abstract: This paper investigates formation of expected longevity in an elderly popu- lation. We use Italian data from the early (2004) release of the Survey of Health, Ageing and Retirement in Europe (SHARE). The SHARE provides a numerical measure for subjective survival probability (SSP). To assess inter- nal consistency and investigate validity of SSP as a proxy of actual mortality, we compare SSP to lifetables and look at the variation with health, smok- ing and socio-economic variables. In a multivariate framework, we propose a recursive model for expected longevity, self-assessed health and smoking duration, where health and smoking variables are potentially endogenous. Unobservable individual-speci¯c heterogeneity is considered by estimating a finite mixture model via the EM algorithm, which allows division of the popu- lation according to different latent classes and estimation of class membership probabilities. Our mixture model fits the data better than the single class model and provides evidence of individual unobserved heterogeneity in the formulation of survival expectations. Expectations are shown to vary most with health status, socio-economic characteristics, parental mortality and age. Two-types of individuals in the population are identified, that differ in terms of unobservable frailty and rationality in addiction. We also find differences between current and former smokers in the way they discount future conse- quences of tobacco consumption on health and mortality risk. Our findings suggest caution in the use of SSP as a proxy of actual mortality.
    Keywords: subjective survival probability; smoking; beta regression; duration analysis; unobservable heterogeneity; mixture model; EM algorithm.
    JEL: I12 C0 C30 C41
    Date: 2007–07
  16. By: Pierre-Carl Michaud; Arthur van Soest; Tatiana Andreyeva
    Abstract: While the fraction of obese people is not as large in Europe as in the United States, obesity is becoming an important issue in Europe as well. Using comparable data from the Survey of Health, Aging and Retirement in Europe (SHARE) and the Health and Retirement Study in the U.S. (HRS), this paper analyzes the correlates of obesity in the population ages 50 and above, focusing on measures of energy intake and expenditure as well as socio-economic status. The main results are as follows: 1) Obesity rates differ substantially on both sides of the Atlantic and across European countries, with most of the difference coming from the right tail of the weight distribution. 2) Part of the difference in obesity prevalence between the U.S. and Europe is explained by a higher fraction of food eaten away from home and notably lower time devoted to cooking in the U.S. 3) Sedentary lifestyle or a lack of vigorous and moderate physical activity may also explain a substantial share of the cross-country differences. 4) Differential SES patterns of energy intake and expenditure across countries cannot fully account for the observed cross-country variation in the SES gradient in obesity.
    Keywords: Body Mass Index, International Comparison, SHARE
    JEL: I12
    Date: 2007–05

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