nep-hea New Economics Papers
on Health Economics
Issue of 2007‒11‒24
twelve papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Measuring annual price elasticities in Dutch health insurance: A new method By Rudy Douven; Harm Lieverdink; Marco Ligthart; Ivan Vermeulen
  2. Reaching the goal: expanding health insurance coverage in New England: current strategies and new initiatives By Alicia Sasser
  3. Working for God? Evidence form a Change in Financing of not-for-profit Health Care Providers in Uganda By Reinikka, Ritva; Svensson, Jakob
  4. Health Insurance and Life Style Choices: Identifying the Ex Ante Moral Hazard By Stanciole, Anderson
  5. Long-Run Longevity Effects of a Nutritional Shock Early in Life: The Dutch Potato Famine of 1846-1847 By Gerard J. van den Berg; Maarten Lindeboom; France Portrait
  6. Death, Happiness, and the Calculation of Compensatory Damages By Andrew J. Oswald; Nattavudh Powdthavee
  7. Public and Private Health Care Financing with Alternate Public Rationing By Katherine Cuff, Jeremiath Hurley, Stuart Mestelman, Andrew Muller, and Robert Nuscheler
  8. Modelling stochastic mortality for dependent lives By Elisa Luciano; Jaap Spreeuw; Elena Vigna
  9. Psychological health before, during, and after an economic crisis : results from Indonesia, 1993 - 2000 By Thomas, Duncan; Friedman, Jed
  10. Restrictions on the number of physicians and Intergenerational Inequalities : Experience, Time and Vintage effects in GPs’ earnings* By Brigitte Dormont; Anne-Laure Samson
  11. Bowling Alone, Drinking Together By Paolo Buonanno; Paolo Vanin
  12. Mark versus Luke? Appropriate Methods for the Evaluation of Public Health Interventions By Karl Claxton; Mark Sculpher; Tony Culyer

  1. By: Rudy Douven; Harm Lieverdink; Marco Ligthart; Ivan Vermeulen
    Abstract: This paper proposes a new method for estimating annual price elasticities from market share data of health insurers. In contrast to traditional methods the elasticity is derived from bilateral price elasticities which relate the net share of switchers between two health insurers not only to their premium difference but also to the market share and premium of the higher priced health insurer. Our new method explains the annual variation in the Dutch market share data better than the traditional methods. We find in the Dutch social health insurance for the period 1996- 2005 rather low negative annual price elasticities ranging between -1 and 0. In that period stickiness of insurer choices was high and less than 5% of the population switched annually from health insurer. This result, however, was in sharp contrast with an exceptional high price elasticity of -7 for the year 2006, where after a major health care reform about 18% of the population switched mostly to lower priced health insurers. Besides large media coverage, one important difference with previous years was that many consumers holding an individual contract could switch to a lower priced group contract.
    Keywords: health plan choice; premium elasticities; switching costs
    JEL: D12 I11 I18 L11
    Date: 2007–11
  2. By: Alicia Sasser
    Abstract: As the number and percentage of people without health insurance continues to climb, the goal of expanding such coverage is even more pressing. Traditional strategies have had only limited success. And with little movement at the federal level, states have chosen to enact their own bold initiatives. Four New England states - Maine, Massachusetts, Rhode Island, and Vermont - have recently passed or implemented programs to expand health insurance coverage, some with the goal of achieving near-universal coverage. By combining different strategies from across the political spectrum, the new initiatives represent a unique amalgam approach to expanding health care coverage. This paper examines existing strategies that have taken a more incremental approach to expanding coverage and also explores the new initiatives in New England, comparing and contrasting their designs and strategies.
    Keywords: Insurance, Health - New England ; Health care reform - New England ; Medically uninsured persons - New England
    Date: 2007
  3. By: Reinikka, Ritva (World Bank); Svensson, Jakob (Institute for International Economic Studies, Stockholm University)
    Abstract: What motivates religious not-for-profit health care providers? This paper uses a change in financing of not-for-profit health care providers in Uganda to test two theories of organizational behavior. We show that financial aid leads to more laboratory testing, lower user charges, and increased utilization. These findings are consistent with the view that religious not-for-profit providers are intrinsically motivated to serve (poor) people and that these preferences matter quantitatively.
    Keywords: not-for-profit organizations; health care provision; organizational behavior; Uganda
    JEL: I10 L31 O12
    Date: 2007–11–14
  4. By: Stanciole, Anderson (The University of York)
    Abstract: There is extensive debate in the literature about the practical significance of the concept of ex-ante moral hazard. This paper uses data from the 1999-2003 PSID waves to estimate a structural model of individual choice of insurance coverage and four life style related decisions: heavy smoking, heavy drinking, sedentarism and obesity. The results show that health insurance has significant incentive effects on life style choices, increasing the propensity to heavy smoking, sedentarism and obesity. Somewhat surprisingly, however, health insurance decreases the propensity to heavy drinking. There is also significant correlation among the errors of each equation. The results might also have implications for the design of health financing policies.
    Keywords: Ex ante moral hazard; Insurance ; Life Style ; Max Simulated Likelihood
    JEL: I11 I11 I11 C15
    Date: 2007–11
  5. By: Gerard J. van den Berg (Free University Amsterdam, IFAU-Uppsala, CEPR, IFS, Netspar and IZA); Maarten Lindeboom (Free University Amsterdam, HEB-Bergen, Tinbergen Institute, Netspar and IZA); France Portrait (Free University Amsterdam and Tinbergen Institute)
    Abstract: Background: Nutrition in utero and infancy may causally affect health and mortality at old ages. Until now, very few studies have demonstrated long-run effects on survival of early life nutrition, mainly because of data limitations and confounding issues. Methods: This paper investigates whether exposure to nutritional shocks in early life negatively affects longevity at older ages, using unique individual data and exploiting the exogenous variation implied by natural experiments. In particular, early nutritional conditions are instrumented by exposure to the potato famine of unprecedented severity that the Dutch faced in 1846-47. The individual data are from the Historical Sample of the Netherlands and are augmented by food price data and macro-economic data. The sample used in the study covers lifetimes of 398 individuals exposed and 1,342 individuals not exposed to severe famine during gestation and/or till age three. We compare non-parametrically the total and residual lifetimes of treated and controls per gender. We also estimate survival models in which we control for other individual characteristics and additional (early life) determinants of mortality. Results: Men exposed to severe famine during pregnancy (at least four months) and directly after birth have a significant lower residual life expectancy at age 50 than others, but not at earlier ages. We could not demonstrate any long-run effects for men exposed at ages 0-2 and for women. Conclusion: To our knowledge, this is the first evidence suggesting long-run effects of early nutritional stresses on mortality at old ages for men.
    Keywords: nutrition in early life, famine, longevity, natural experiments, survival analysis, mortality, food intake, developmental origins, fetal origins
    JEL: N33 J10 I10
    Date: 2007–10
  6. By: Andrew J. Oswald (University of Warwick and IZA); Nattavudh Powdthavee (IoE, University of London)
    Abstract: This paper studies the mental distress caused by bereavement. The largest emotional losses are from the death of a spouse; the second-worst in severity are the losses from the death of a child; the third-worst is the death of a parent. The paper explores how happiness regression equations might be used in tort cases to calculate compensatory damages for emotional harm and pain-and-suffering. We examine alternative well-being variables, discuss adaptation, consider the possibility that bereavement affects someone’s marginal utility of income, and suggest a procedure for correcting for the endogeneity of income. Although the paper’s contribution is methodological, and further research is needed, some illustrative compensation amounts are discussed.
    Keywords: bereavement, damages, happiness, compensation, well-being, GHQ scores
    JEL: D1 I3 I31 K0
    Date: 2007–11
  7. By: Katherine Cuff, Jeremiath Hurley, Stuart Mestelman, Andrew Muller, and Robert Nuscheler
    Abstract: We develop a model to analyze health care nancing arrangements and under alternative public sector rationing rules. Health care is demanded by individuals varying in income and severity of illness. There is a limited supply of health care resources used to treat individuals, causing some individuals to go untreated. We examine outcomes under full public finance, full private finance, and mixed, parallel public and private finance under two rationing rules for the public sector: needs-based rationing and random rationing. Insurers (both public and private) must bid to obtain the necessary health care resources to treat their beneficiaries. While the public insurer's ability-to-pay is limited by its (fixed) budget, the private insurer's willingness-to-pay re ects the individuals' willingness-to-pay for care. When permitted, the private sector supplies supplementary health care to those willing and able to pay. The introduction of private insurance diverts treatment from relatively poor to relatively rich individuals. Moreover, if the public insurer allocates care according to need, the average severity of the untreated is higher in a mixed system than in a pure public system. While we can unambiguously sign most comparative static effects for a general set of distribution functions for income and severity, a complete analysis of the relationship between public sector rationing and the scope for a private health insurance market requires distributional assumptions. For a bivariate uniform distribution function we nd that the private health insurance market is smaller when the public sector rations according to need as compared to random allocation of health care.
    Keywords: health care financing, rationing rules
    JEL: I11 I18
    Date: 2007–11
  8. By: Elisa Luciano; Jaap Spreeuw; Elena Vigna
    Abstract: Stochastic mortality, i.e. modelling death arrival via a jump process with stochastic intensity, is gaining increasing reputation as a way to rep- resent mortality risk. This paper represents a .rst attempt to model the mortality risk of couples of individuals, according to the stochastic inten- sity approach. We extend to couples the Cox processes set up, namely the idea that mortality is driven by a jump process whose intensity is itself a stochastic process, proper of a particular generation within each gen- der. Dependence between the survival times of the members of a couple is captured by an Archimedean copula. We also provide a methodology for fitting the joint survival function by working separately on the (analytical) copula and the (analytical) mar- gins. First, we calibrate and select the best fit copula according to the methodology of Wang and Wells (2000b) for censored data. Then, we provide a sample-based calibration for the intensity, using a time- homogeneous, non mean-reverting, affine process: this gives the marginal survival functions. By coupling the best fit copula with the calibrated mar- gins we obtain a joint survival function which incorporates the stochastic nature of mortality improvements. Several measures of time dependent association can be computed out of it. We apply the methodology to a well known insurance dataset, using a sample generation. The best fit copula turns out to be a Nelsen one, which implies not only positive dependency, but dependency increasing with age.
    Keywords: stochastic mortality, bivariate mortality, copula functions, longevity risk.
    JEL: G22
    Date: 2007
  9. By: Thomas, Duncan; Friedman, Jed
    Abstract: The 1997 Indonesian financial crisis resulted in severe economic dislocation and political upheaval, and the detrimental consequences for economic welfare, physical health, and child education have been previously established in numerous studies. We also find the crisis adversely impacted population psychological well-being. We document substantial increases in several different dimensions of psychological distress among male and female adults across the entire age distribution over the crisis period. In addition, the imprint of the crisis can be seen in the differential impacts of the crisis on low education groups, the rural landless, and residents in those provinces that were hit hardest by the crisis. Elevated levels of psychological distress persist even after indicators of economic well-being such as household consumption had returned to pre-crisis levels suggesting long-term deleterious effects of the crisis on the psychological well-being of the Indonesian population.
    Keywords: Health Monitoring & Evaluation,Disease Control & Prevention,Gender and Health,Population Policies,Health Systems Development & Reform
    Date: 2007–11–01
  10. By: Brigitte Dormont; Anne-Laure Samson
    Abstract: This paper analyses the regulation of ambulatory care and its impact on physicians’careers, using a representative panel of 6,016 French self-employed GPs over the 1983 - 2004 period. The beginning of their activity is infuenced by the regulated number of places in medical schools, named in France numerus clausus. We show that the policies aimed at manipulating the numerus clausus strongly affect physicians’ permanent level of earnings. Our estimates allow us to identify experience, time and vintage effects in physicians’ earnings. The estimated cohort (or vintage) effect appears to be very large, revealing that intergenerational inequalities due to fluctuations in the numerus clausus regulation are far from negligible. Cohorts of GPs beginning during the eighties have the lowest permanent earnings: they faced both the baby-boom numerous cohorts and the consequences of a high number of places in medical schools. Conversely, the decrease in the numerus clausus led to an increase in permanent earnings of GPs who began their practice in the mid nineties. Overall, the estimated gap in earnings between "good" and "bad" cohorts may reach 25%. We performed a more thorough analysis of the earnings distribution to examine whether individual unobserved heterogeneity could compensate for average differences between cohorts. Our results about stochastic dominance between earnings distributions by cohort show that it is not the case.
    Date: 2007–07
  11. By: Paolo Buonanno (Università di Bergamo); Paolo Vanin (Università di Padova)
    Abstract: Alcohol consumption may be associated to a rich social life, but its abuse might be related to a poor social life. This paper investigates whether alcohol consumption is a socially enjoyed good (a complement of social relations) or a substitute for social relations. In particular, it explores whether the answer changes between use and abuse, beer, wine and spirits, youth and adults, controlling or not for family influence and unobserved heterogeneity, and for various forms of social relations. Controlling for a great number of covariates and allowing for non linear and identity-specific family interaction effects, we find that alcohol consumption is a socially enjoyed good.
    Keywords: Social relations, Social interaction, Family, Alcohol consumption, Binge drinking
    JEL: C21 D12 I12 Z13
    Date: 2007–11
  12. By: Karl Claxton (Centre for Health Economics, University of York); Mark Sculpher (Centre for Health Economics, University of York); Tony Culyer (Institute for Work and Health, Toronto, Ontario, Canada)
    Abstract: The purpose of this paper is to demonstrate that a social decision making approach to evaluation can be generalised to interventions such as public health and national policies which have multiple objectives and impact on multiple constraints within and beyond the health sector. We demonstrate that a mathematical programming solution to this problem is possible, but the information requirements make it impractical. Instead we propose a simple compensation test for interventions with multiple and cross-sectoral effects. However, rather than compensation based on individual preferences, it can be based on the net benefits falling on different sectors. The valuation of outcomes is based on the shadow prices of the existing budget constraints, which are implicit in existing public expenditure and its allocation across different sectors. A ‘welfarist’ societal perspective is not sufficient; rather, a multiple perspective evaluation which accounts for costs and effects falling on each sector is required.
    Keywords: cost-effectiveness analysis, decision rules, public health
    Date: 2007–11

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