nep-hea New Economics Papers
on Health Economics
Issue of 2007‒11‒03
eleven papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. The Macroeconomics of Health Savings Accounts By Juergen Jung; Chung Tran
  2. Identifying Endogenous Peer Effects in the Spread of Obesity By Timothy J. Halliday; Sally Kwak
  3. Private and Public WTP for Safety - A Validity Test By Andersson, Henrik
  4. The Public Health Costs of Unemployment By Andreas KUHN; Rafael LALIVE; Josef ZWEIMÜLLER
  5. Is the Food and Drug Administration Safe and Effective? By Tomas J. Philipson; Eric Sun
  6. Health Care Quality Indicators Project 2006 Data Collection Uptdate Report By Sandra Garcia Armesto; Maria Luisa Gil Lapetra; Lihan Wei; Edward Kelley
  7. Medicare's Prospective Payment System for Hospitals: New Evidence on Transitions Among Health Care Settings By Xufeng Qian; Louise Russell; Elmira Valiyeva; Jane Miller
  8. Health Econometric: Uncovering the Anthropometric Behavior on Women's Labor Market By Lopez-Pablos, Rodrigo A.
  9. Joiners, leavers, stayers and abstainers: Private health insurance choices in Australia, CHERE Working Paper 2007/8 By Stephanie Knox; Elizabeth Savage; Denzil Fiebig; Vineta Salale
  10. The Economic Impact of Medical Migration: an Overview of the Literature By Martine Rutten
  11. The Economic Impact of Medical Migration: a Receiving CountryÕs Perspective By Martine Rutten

  1. By: Juergen Jung (Indiana University Bloomington); Chung Tran (Indiana University Bloomington)
    Abstract: We analyze whether a consumer driven health care plan like the newly established Health Savings Accounts (HSAs) can reduce health care expenditures in the United States and increase the fraction of the population with health insurance. We use an overlapping generations model with health uncertainty and endogenous health care spending. Agents can choose between a low deductible- and a high deductible health insurance. If agents choose to purchase the high deductible health insurance, they are allowed to contribute tax free to an HSA. We examine the steady state effects of introducing HSAs into a system with private health insurance for young agents and Medicare for old agents. Since the model is a general equilibrium model, we fully account for feedback effects from both, factor markets and insurance markets. Our results from numerical simulations indicate that HSAs can decrease total health expenditures by up to 3% of GDP but increase the number of uninsured individuals by almost 5%. Furthermore, HSAs decrease the aggregate level of health capital and therefore decrease output. We also address possible extensions of the HSA reform that include the eligibility to pay health insurance premiums with HSA funds, the full privatization of Medicaid via HSAs, and Medicare for workers.
    Keywords: Health Savings Accounts
    JEL: H51 I18 I38
    Date: 2007–10
  2. By: Timothy J. Halliday (Department of Economics, University of Hawaii at Manoa); Sally Kwak (Department of Economics, University of Hawaii at Manoa)
    Abstract: Recent research in the New England Journal of Medicine (NEJM) purports to show the existence of peer effects in the spread of obesity. Using a dataset of 5124 residents from Framingham, Massachusetts spanning the years 1971 to 2003, the authors show correlations between own weight gain and friends’ and relatives’ weight gain over this period. They find, furthermore, that these results are strongest for males and weaker for females. We use the Adolescent Health Survey, a nationally representative dataset of seventh through twelfth graders in 1994 and 1996 to examine the effect of peers on weight gain. Despite the differences in the samples, we are able to replicate the pattern of results in the NEJM study. However the results are not robust to alternative definitions of the outcome variable. Furthermore, due to the various identification issues that are unresolved in both this and the NEJM paper, we conclude that the evidence for contagion effects in the spread of obesity is only suggestive at best.
    Keywords: Peer effects, obesity, adolescent health
    JEL: I10 I12 J01
    Date: 2007–10–22
  3. By: Andersson, Henrik (VTI)
    Abstract: To elicit an affected population's preferences for, e.g., better health or environment stated preference (SP) methods are often used. SP methods are based on hypothetical market settings which necessitates validity tests of the results. This study describes a validity test on the basis of theoretical predictions and empirical findings for private and public safety measures. According to the test, public willingness to pay (WTP) should exceed private WTP.
    Keywords: Private; Public; Safety paternalism; Stated preferences; Willingness to pay
    JEL: D61 D64 I10
    Date: 2007–10–19
  4. By: Andreas KUHN; Rafael LALIVE; Josef ZWEIMÜLLER
    Abstract: This paper studies how unemployment affects public health costs. We use plant closure as an instrument for unemployment because bankruptcy is unlikely to be caused by deteriorating health but has a strong impact on workers' subsequent employment. The empirical analysis is based on an extremely rich data set with comprehensive information on various types of health care costs and day-by-day work history of individual workers. Our central findings are (i) expenditures on medical treatments are not strongly affected by joblessness, (ii) lack of employment reduces mental health for men but not for women, and (iii) sickness benefit payments strongly increase due to job loss. Our results also show that OLS estimates strongly overestimate the causal effect of unemployment on public health costs.
    Keywords: social cost of unemployment; health; non-employment; plant closure
    JEL: I12 I19 J28 J65
    Date: 2007–07
  5. By: Tomas J. Philipson; Eric Sun
    Abstract: In the United States, drug safety and efficacy are primarily regulated by the Food and Drug Administration (FDA) and the legal system, which gives manufacturers large incentives to produce safe drugs and provide proper warnings for side effects, since patients can sue manufacturers that provide unsafe drugs and/or insufficient warnings. <br><br>In this paper, we begin by examining the efficiency implications of this joint regulation of drug safety. We find that joint regulation of drug safety can be inefficient when the regulatory authority mandates a binding and well enforced level of safety investment. In this case, product liability has no effect on a firm's safety investment, but affects welfare by raising a firm's costs and therefore prices. Using these results, we calibrate a model of the pharmaceutical market and find that, depending on the share of liability costs in marginal costs, a product liability exemption for activities that are well regulated by the FDA could increase consumer welfare by $47.8-$754.7 billion annually (4-66 percent of sales) and producer welfare by $11.9-$173.9 billion annually (1-15 percent of sales). <br><br>In addition, we summarize the welfare effects of recent legislation, the Prescription Drug User Fee Acts (PDUFA), which mandated faster FDA review times in exchange for user fees levied on the pharmaceutical industry. Overall, we find that the faster review times mandated by PDUFA raised social surplus by $18-31 billion, and that at most, the concomitant cost of reduced drug safety was $5.6-$16.6 billion.
    JEL: I0 I11 I18
    Date: 2007–10
  6. By: Sandra Garcia Armesto; Maria Luisa Gil Lapetra; Lihan Wei; Edward Kelley
    Abstract: This report is an update to the OECD Health Working Paper No. 22, Health Care Quality Indicators Project: Initial Indicators Report that was based on data collected between 2003 and 2005 and released in 2006. That report presented the OECD’s initial work on developing a set of health care quality indicators that could be used to raise questions about differences in quality of care across countries. The 2006 report covered 21 “initial indicators” with data provided by 24 countries. It identified 17 of these indicators as being fit for international comparisons of which 4 were identified as needing further work. Following the release of that report in March 2006, the OECD undertook a second round of data collection on the initial indicator set and also gathered data for the first time on new indicators in a questionnaire sent to participating HCQI countries. This paper reports on the results of that second round of data collection. Data is presented here on an augmented indicator set considered fit for the purpose of making international comparisons on quality of health care. The data is comprised of 19 indicators (17 initial indicators plus 2 new ones). The paper also presents the data provided on 7 other indicators that are not yet considered fit for international comparison. In this round of data collection, data were reported by 32 countries... <BR>Le présent rapport est une version actualisée du Document de travail de l’OCDE sur la santé n 22 intitulé Health Care Quality Indicators Project : Initial Indicators Report, établi sur la base des données rassemblées en 2003/2005 et publié en 2006. Ce rapport présentait les travaux initiaux de l’OCDE concernant l’élaboration d’une série d’indicateurs sur la qualité des soins de santé qui pourraient être utilisés pour tenter d’expliquer les différences en matière de qualité de soins entre les pays. Le rapport 2006 portait sur 21 « indicateurs initiaux » pour lesquels 24 pays avaient communiqué des données ; il a été estimé que 17 de ces indicateurs se prêtaient à des comparaisons internationales et que quatre d’entre eux nécessitaient des travaux approfondis. A la suite de la publication du rapport en mars 2006, l’OCDE a entamé un deuxième cycle de collecte de données relatives à la série initiale d’indicateurs et a entrepris de recueillir pour la première fois des données sur de nouveaux indicateurs par le biais d’un questionnaire adressé aux pays participants au projet HCQI. Le présent rapport fait état des résultats du deuxième cycle de collecte de données. Il contient des données sur la série élargie d’indicateurs considérés comme se prêtant à des comparaisons internationales, soit des données portant sur 19 indicateurs (17 indicateurs existants et 2 nouveaux). Il présente également les données fournies en ce qui concerne 7 autres indicateurs dont on estime qu’ils ne se prêtent pas encore à des comparaisons internationales. Les données communiquées émanent cette fois de 32 pays (des pays de l’UE qui ne sont pas membres de l’OCDE ont été invités à participer au projet)...
    Date: 2007–10–11
  7. By: Xufeng Qian (Moody's); Louise Russell (Rutgers/Economics and Institute for Health); Elmira Valiyeva (University of Toronto); Jane Miller (Rutgers/Bloustein School and Institute for Health)
    Abstract: Previous studies of Medicare’s prospective payment system for hospitals (PPS), introduced in 1983, evaluated only its first few years, using data collected during the hospital stay to control for patients’ health. We examine transitions among health care settings over a full decade following implementation of PPS, using survival models and a national longitudinal survey with independent information on health. We find that the rate of discharge from hospitals to nursing homes continued to rise as PPS matured, hospital readmissions from the community dropped after the early years, and risk of nursing home admission from the community soon after hospital discharge tripled. Evaluations of new payment systems for one type of provider need to be comprehensive in order to capture the full effects on other providers.
    Keywords: Medicare, prospective payment
    JEL: I18 C41
    Date: 2007–10–09
  8. By: Lopez-Pablos, Rodrigo A.
    Abstract: Exploring current literature which assess relations between cognitive ability and height, obesity, and its productivity-employability effect on women's labor market; we appraised the Argentine case to find these social-physical relations that involve anthropometric and traditional economic variables. Adapting an anthropometric Mincer approach by using probabilistic and censured econometric models which were developed for it. Have been found evidence that could be understood as existence of discriminative behavior on obese women to market entrance; besides, a good performance of women height as an unobserved approximation of cognitive ability measure to explain feminine productivity.
    Keywords: Height; Obesity; Anthropometric Mincer; Discrimination.
    JEL: I12 J24 C34
    Date: 2007–08–30
  9. By: Stephanie Knox (CHERE, University of Technology, Sydney); Elizabeth Savage (CHERE, University of Technology, Sydney); Denzil Fiebig; Vineta Salale
    Abstract: The percentage of Australians taking up Private Health Insurance (PHI) was in decline following the introduction of Medicare in 1984 (PHIAC). To arrest this decline the Australian Government introduced a suite of policies, between 1997 and 2000, to create incentives for Australians to purchase private health insurance. These policies include an increased Medicare levy for those without PHI on high incomes, introduced in 1997, a 30% rebate for private hospital cover (introduced 1998), and the Lifetime Health Cover (LHC) policy where PHI premiums are set at age of entry, increasing for each year older than 30 years (introduced 2000). In 2004 the longitudinal study on Household Income and Labour Dynamics in Australia (HILDA), included a series of questions on private health insurance and hospital use. We used the HILDA data to investigate the demographic, health and income factors related to the PHI decisions, especially around the introduction of the Lifetime Health Cover policy. Specifically we investigate who was most influenced to purchase PHI (specifically hospital cover) in 2000 as a response to the Lifetime Health Cover policy deadline. Are those who have joined PHI since the introduction of LHC different from those who joined prior to LHC? What are the characteristics of those who have dropped PHI since the introduction of LHC? We model the PHI outcomes allowing for heterogeneity of choice and correlation across alternatives. After controlling for other factors, we find that LHC prompted moderately well-off working age adults (30-49 yrs) to purchase before the 2000 deadline. Young singles or couples with no children, and the overseas born were more likely to purchase since 2000, while the relatively less well-off continue to drop PHI in spite of current policy incentives.
    Keywords: private health insurance, Australia
    JEL: I10
  10. By: Martine Rutten (Netherlands Ministry of Finance and Erasmus University)
    Abstract: Despite rapid economic and social development of the Maldives, the vulnerability of the island population in terms of poverty remains high. Using household panel data for the period 1997/98 Ð 2004 we show that, although the majority of the poor manages to escape from poverty, a substantial part of the non-poor falls back into poverty at the same time. Using Logit regression analysis, the most influential determinants of escaping household poverty are shown to be: the level of education, participation in community activities, and the proportion of adults employed. Factors that have the largest impact on impeding a poverty escape are: the proportion of household members not working due to bad health, living in the North, and the proportion of female household members. The former two factors, in addition to household size, are also most influential on the odds of falling into poverty. Working in tourism, or the public sector, and taking out a loan to invest are important factors that prevent households from falling into poverty. Policy implications of these results are not only relevant at government level but also at household level. The government may consider paying more attention to the development of the two Northern regions, improve access to good quality education and health care, and further develop (private sector) tourism across the country. Household coping strategies involve investing in education, entering the labour market (especially in tourism and the public sector) and family planning.
    Keywords: medical migration, brain drain, doctor migration, nurse migration
    JEL: F22 I1
    Date: 2007–08
  11. By: Martine Rutten (Netherlands Ministry of Finance and Erasmus University)
    Abstract: This paper seeks to determine the macro-economic impacts of migration of skilled medical personnel from a receiving countryÕs perspective, taking the UK as an archetype OECD economy that imports medical services. The resource allocation issues have been explored in theory, by further developing the Rybczynski theorem and empirically, using a Computable General Equilibrium (CGE) model with an extended health component. The main finding is that importing foreign doctors and nurses into the UK yields higher overall welfare gains compared to a generic increase in the NHS budget. Welfare gains rise in the case of wage protection.
    Keywords: medical migration, immigrant health care workers, migrant nurses, migrant doctors
    JEL: F22 I1
    Date: 2007–08

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