nep-hea New Economics Papers
on Health Economics
Issue of 2007‒12‒08
thirteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Cream-Skimming And Risk Adjustment in Colombian Health Insurance System:: The Public Insurer Case By Ronald Eduardo Gómez Suárez
  2. Innovation and Competitive Capacity in Bangladeshs Pharmaceutical Sector By Gehl Sampath, Padmashree
  3. The Effect of Obesity on Wages and Employment: The Difference Between Having a High BMI and Being Fat By Johansson, Edvard; Böckerman, Petri; Kiiskinen, Urpo; Heliövaara, Markku
  4. Statistical Surveillance of Epidemics: Peak Detection of Influenza in Sweden By Bock, David; Andersson, Eva; Frisén, Marianne
  5. Self-Assessed Health Status and Satisfaction with Health Care Services in the Context of the Enlarged European Union By Popescu, Livia; Rat, Cristina; Rebeleanu-Bereczki, Adina
  6. Mortality Risks, Health Endowments, and Parental Investments in Infancy: Evidence from Rural India By Ashlesha Datar; Arkadipta Ghosh; Neeraj Sood
  7. The influence of supplementary health insurance on switching behaviour: evidence on Swiss data By Brigitte Dormont; Pierre-Yves Geoffard; Karine Lamiraud
  8. Hospital Choice: Survey Evidence From Istanbul By Adaman, Fikret; Ardic, Oya Pinar; Erus, Burcay; Tuzemen, Didem
  9. Open Space Purchases, House Prices, and the Tax Base By Donald , Vandegrift; Michael, Lahr
  10. Health, Pensions, and the Retirement Decision: Evidence from Canada By T. Schirle
  11. Public health policy decisions on medical innovations: What role can early economic evaluation play? By Susanne Hartz; Jürgen John
  12. Hospital Industry Restructuring and Input Substitutability: Evidence from a Sample of Italian Hospitals By Piacenza Massimiliano; Turati Gilberto; Vannoni Davide
  13. Annuities and Aggregate Mortality Uncertainty By Justin van de Ven; Martin Weale

  1. By: Ronald Eduardo Gómez Suárez
    Abstract: This paper analyses the particular case of the bankruptcy of the biggest public insurer in the Colombian Health insurance system (contributory regime) in order to identify some selection atterns within such an insurance market. Using both cross-section and built-in panel data from DANE Quality of Life Survey in two waves (1997 and 2003) and applying an empirical approach based on binary choice models, the paper tries to solve two main questions. The first one is whether exists empirical evidence about advantageous selection in the contributory scheme of Colombian health insurance system. Secondly, I tried to establish whether cream-skimming (if existed) had real influence in the bankruptcy of the Colombian public insurer, which also would imply failures in the risk-adjustment formula. In the final section the principles of a good riskadjustment system suitable for the local scenario are drafted. The results show a strong evidence of dynamic selection from 1997 to 2003, which could take place by favoring both favorable “age load” and good socio economic status (income, education, work type and location) for private insurers. No evidence of selection based on household analysis was found, which reinforces the idea of an individual appraisal before enrollment. This situation affected the financial performance of the public insurance, but by no means was the definitive factor of the bankruptcy. On the other hand, the risk adjustment formula used in the Colombian system presents some theoretical flaws and still is established upon information from fifteen years ago. However, without updated information on morbidity and health care usage (not available) is not possible to measure the quantitative extent of such failures in an accurate manner
    Date: 2007–10–30
  2. By: Gehl Sampath, Padmashree (UNU-MERIT)
    Abstract: The global pharmaceutical sector is highly patent intensive, and firms rely on product, process and formulation patents to protect their innovations. Intellectual property rights on pharmaceutical products, as contained in the Agreement on Trade Related Aspects of Intellectual Property Rights (hereafter, the TRIPS Agreement) have been defended on grounds of extensive R&D investments required to discover and develop new drugs. But at the same time, grant of uniform pharmaceutical patents in all developing and least developed countries that are members of the World Trade Organization in accordance with the TRIPS Agreement, raises a range of issues for access to medicines. These issues can be framed under three broad areas: the restriction of reverse engineering possibilities for firms in developing countries and its implications for catch-up in this sector, higher prices of drugs and access to medicines as well as access to technologies due to patents on upstream technologies. The transitional arrangements under the TRIPS Agreement specifically mandated that all developing countries that are members to the WTO enact national laws that are TRIPS-compliant by 2005. As a result, from 2005 onwards, several countries like India, which played an important role as producers and exporters of generic copies of brand name products patented outside the country, can no longer produce such drugs due to the introduction of TRIPS-compliant patent regimes in their countries. Least developed countries have an extension until 2016 to implement the pharmaceutical patent provisions of the TRIPS Agreement under the Doha Declaration on TRIPS and Public Health. However, such legal flexibility is quite meaningless for least developed countries in the absence of local technological capabilities to produce generic drugs amongst least developed countries. Bangladesh, although a least developed country, is an exception in this regard with thriving domestic processing sectors that are actively engaged in producing textiles and ready made garments (RMGs), processed food products and generic drugs. Therefore, the question that looms large in the global access to medicines debate is whether Bangladesh's pharmaceutical sector can gradually evolve to provide low-cost substitutes of important patented drugs to other developing and least developed countries? This study is an original empirical investigation into issues of innovative capacity and competitiveness of the local pharmaceutical sector in Bangladesh.
    Keywords: Bangladesh, WTO, TRIPs, Intellectual Property Rights, Pharmaceutical Industry, Public Health
    JEL: O34 O31 O24 F13 I18
    Date: 2007
  3. By: Johansson, Edvard (Swedish School of Economics and Business Administration); Böckerman, Petri (Labour Institute for Economic Research); Kiiskinen, Urpo (National Public Health Institute); Heliövaara, Markku (National Public Health Institute)
    Abstract: In this paper, we re-examine the relationship between overweight and labour market success, using indicators of individual body composition along with BMI (Body Mass Index). We use the dataset from Finland in which weight, height, fat mass and waist circumference are not self-reported, but obtained as part of the overall health examination. We find that waist circumference, but not weight or fat mass, has a negative effect on wages for women, whereas all measures of obesity have negative effects on women’s employment probabilities. For men, the only obesity measure that is significant for men’s employment probabilities is fat mass. One interpretation of our findings is that the negative wage effects of overweight on wages run through the discrimination channel, but that the negative effects of overweight on employment have more to do with ill health. All in all, measures of body composition provide a more refined picture about the effects of obesity on wages and employment.
    Keywords: wages; employment; bmi; overweight; obesity; fatness; adiposity
    Date: 2007–06–13
  4. By: Bock, David (Statistical Research Unit, Department of Economics, School of Business, Economics and Law, Göteborg University); Andersson, Eva (Statistical Research Unit, Department of Economics, School of Business, Economics and Law, Göteborg University); Frisén, Marianne (Statistical Research Unit, Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: A statistical surveillance system gives a signal as soon as data give enough evidence of an important event. We consider on-line surveillance systems for detecting changes in influenza incidence. One important feature of the influenza cycle is the start of the influenza season, and another one is the change to a decline (the peak). In this report we discuss statistical methods for on-line peak detection. One motive for doing this is the need for health resource planning. Surveillance systems were adapted for Swedish data on laboratory verified diagnoses of influenza. In Sweden, the parameters of the influenza cycles vary too much from year to year for parametric methods to be useful. We suggest a non-parametric method based on the monotonicity properties of the increase and decline around a peak. A Monte Carlo study indicated that this method has useful stochastic properties. The method was applied to Swedish data on laboratory verified diagnoses of influenza for seven periods.
    Keywords: Disease surveillance; Monitoring; Non-parametric; Order restrictions
    JEL: C10
    Date: 2007–11–28
  5. By: Popescu, Livia (Faculty of Sociology and Social Work, Babes-Bolyai University Cluj-Napoca); Rat, Cristina (Faculty of Sociology and Social work, Babes-Bolyai University Cluj-Napoca); Rebeleanu-Bereczki, Adina (Faculty of Sociology and Social work, Babes-Bolyai University Cluj-Napoca)
    Abstract: The paper aims at analysing the relationship between self-rated health-status, satisfaction with health care services and socio-economic factors, in the context of different national health care systems in the enlarged European Union. The effects of socio-economic deprivation and the functioning of national health care systems on self-rated health status and satisfaction with health care services are investigated using the European Social Survey 2006 dataset (ESS3), and macro data provided by Eurostat (2007) and the World Health Organization (2007). Socio-economic deprivation is measured both at the micro-level (using indicators of economic strain, household income, education, employment status and belonging to discriminated groups), and the macro-level (national poverty rates, the values of poverty thresholds, quintile ratios and GDP per capita). The performance of national health care systems is quantified with the help of two indexes, designed for the purpose of the present study: an index of total health care provisions and an index of governmental commitment to health care. The following countries are included in the analysis: Belgium, Bulgaria, Denmark, Finland, France, Germany, Hungary, Poland, Portugal, Romania, Slovenia, Slovakia, Spain, Sweden, and the United Kingdom.
    Keywords: self-assessed health ; health care systems ; health inequalities ; governmental policies
    JEL: I18 H51
    Date: 2007–11
  6. By: Ashlesha Datar; Arkadipta Ghosh; Neeraj Sood
    Abstract: This paper examines whether increased background mortality risks induce households to make differential health investments in their high- versus low-endowment children. We argue that increases in background mortality risks may disproportionately affect the survival of the low-endowment sibling, consequently increasing the mortality gap between the high- and low-endowment siblings. This increase in mortality gap may induce households to investment more in their high endowment children. We test this hypothesis using nationally representative data from rural India. We use birth size as a measure of initial health endowment, immunization & breastfeeding as measures of childhood investments and infant mortality rate in the child’s village as a measure of mortality risks. We find that in villages with high mortality risks, small-at-birth children in a family are 6 - 17 percent less likely to be breastfed or immunized compared to their large-at-birth siblings. In contrast, we find no significant within family differences in investments in villages with low mortality risks.
    JEL: D11 I12 J13
    Date: 2007–11
  7. By: Brigitte Dormont; Pierre-Yves Geoffard; Karine Lamiraud
    Abstract: This paper focuses on the switching behaviour of sickness fund enrolees in the Swiss health insurance system. Even though the new Federal Law on Social Health Insurance (LAMal) was implemented in 1996 to promote competition among health insurers in basic insurance, there still remains large premium variations within cantons. This indicates that competition has not been able so far to lead to a single price, and reveals some inertia among consumers who seem reluctant to switch to less expensive funds. We investigate one possible barrier to switching behaviour, namely the influence of the supplementary insurance. Our aim is to analyse two decisions (switching decision in basic insurance, subscription to supplementary insurance contracts). We use survey data on health plan choice and import some market data related to the sickness funds (number of enrollees, premiums). The decision to switch and the decision to subscribe to a supplementary contract are estimated both separately and jointly. The results suggest that holding a supplementary insurance contract substantially decreases the propensity to switch. However the impact of supplementary insurance is not significant when the individual assesses his/her health as "very good" ; to the contrary, holding a supplementary contract significantly reduces the propensity to switch when the indivual's subjective health status deteriorates. Futhermore, the switching decision is positively influenced by the expected gain of switching. In comparison with the range of the premium difference, the limitations to switch due to the supplementary insurance is moderate, though non negligible. As for the decision to subscribe a supplementary contract, the results show that the income level has a direct positive influence on the propensity to buy a supplementary insurance. Our results suggest that a major mechanism is going on in relation to supplementary insurance: holding a supplementary contract might stop individuals from switching when the individual thinks that she/he could be regarded as a bad risk due to the selection practices that are allowed in supplementary insurance markets. This result bears major policy implications concerning the regulation of basic and supplementary insurance markets.
    Date: 2007
  8. By: Adaman, Fikret; Ardic, Oya Pinar; Erus, Burcay; Tuzemen, Didem
    Abstract: This paper analyzes the patient characteristics that affect the choice between public and private health care providers in Istanbul, Turkey. In addition to socioeconomic variables, such as insurance status or income, which have often been considered in the previous literature, we also focus on another factor, the availability of social networks, which might determine ease of access to hospital services in developing countries. The analysis is based on data from a household survey conducted in Istanbul. The econometric results indicate that potential social ties play an important role in choosing public health care centers over private ones for minor health problems. As public facilities have long been characterized by long waiting lines even for appointments for medical exams, this finding indicates that households who possess higher levels of social networks might be using those in easing access to public facilities.
    Keywords: Public vs. Private Health Care Providers; Hospital Choice; Social Networks; Household Survey; Turkey.
    JEL: D12 Z13 C25 I10
    Date: 2007–10–25
  9. By: Donald , Vandegrift; Michael, Lahr
    Abstract: This paper examines the effect of public acquisitions of open space on house prices and the municipal tax base. While a series of studies show that open space acquisitions raise values of nearby properties, no research to date appears to focus upon the effect of open space acquisitions upon local tax base. Existing studies focus on the effect of open space acreage on house prices. We examine the effect of open space expenditures on house prices at the municipal level. We find that a one-dollar increase in open space expenditures per housing unit is associated with average house prices that are about $13 higher and with a tax base that is about $15 lower per acre. Open space expenditures per housing unit also show a consistent positive effect on the percentage change in house prices over the period 1995-2000. However, we find no statistically significant effect from open space expenditures on the percentage change in the tax base over the period 1995-2000. Local funding (rather than state funding) for open space has a smaller impact on house prices but the effect is significant only in some specifications. Despite the negative effect of open space purchases on the tax base, we find that higher open space expenditures are associated with lower tax rates. In addition, we find that while higher tax rates are associated with a lower tax base, a larger tax base does depress tax rates. The percentage change in the general property tax rate over the period 1995-2000 shows a significant negative effect on the percentage change in the tax base per acre over the period.
    Keywords: Open Space; Tax Base; Municipality; Tax Rate
    JEL: H4 H2 R51 R52
    Date: 2007–09–24
  10. By: T. Schirle (Wilfrid Laurier University)
    Abstract: Using longitudinal data from the Canadian Survey of Labour and Income Dynamics, I use an option value framework to examine the effects of health and employer provided pensions on retirement decisions. This study fills existing gaps in the literature by jointly modeling the impact of financial incentives and health on the retirement decisions of Canadians. The results indicate that both factors have substantial and significant effects on retirement, as having poor health increases the likelihood of entering retirement by up to 25 percentage points. Given the longitudinal aspect of the data, I am also able to address several identification issues discussed in the literature. The results corroborate previous evidence regarding the relative importance of attenuation and justification bias in self-reported health measures. The results also confirm U.S. and European evidence that employer-provided pensions and health are significant determinants of retirement.
    Keywords: Retirement; Private Pensions; Health
    JEL: J26 I10
    Date: 2007
  11. By: Susanne Hartz (Friedrich-Schiller-University Jena, Department of Microeconomics); Jürgen John (Helmholtz Center Munich – National Research Center for Environmental Health, Institute of Health Economics and Healthcare Management)
    Abstract: Objectives: Our contribution aims to explore the different ways in which early economic data can inform public health policy decisions on new medical technologies. Methods: A broad explorative literature research was conducted to detect methodological contributions covering the health policy perspective. Results: Early economic data on new technologies can support public health policy decisions in several ways. Embedded in horizon scanning and HTA activities, it adds to monitoring and assessment of innovations. It can play a role in the control of technology diffusion by informing coverage and reimbursement decisions as well as the direct public promotion of health care technologies, leading to increased efficiency. Major problems include the uncertainty related to economic data at early stages as well as the timing of the evaluation of an innovation. Conclusions: Decision-makers can benefit from the information supplied by early economic data, but the actual use in practice is difficult to determine. Further empirical evidence should be gathered, while the use could be promoted by further standardization.
    Keywords: economic evaluation, early data, innovation, public health policy decision-making
    JEL: I18
    Date: 2007–12–04
  12. By: Piacenza Massimiliano (Ceris - Institute for Economic Research on Firms and Growth, Moncalieri (TO), Italy); Turati Gilberto (University of Torino, Department of Economics and Finance "G. Prato", Torino, Italy); Vannoni Davide (University of Torino, Ceris-CNR and HERMES, Department of Economics and Finance "G. Prato", Torino, Italy)
    Abstract: In this paper we investigate the economic rationality of the bed downsizing process characterising the hospital industry worldwide in the last decades, providing new evidence on the factor substitutability in the production of hospital services. We consider a sample of Italian regional producers and – differently from other studies – estimate a general cost function model, namely the Generalised Composite, firstly introduced by Pulley & Braunstein (1992). Alternative cost function specifications (included Translog) are estimated jointly with their associated input cost-share equations. For all models we derive Allen, Morishima and Shadow elasticities of substitution between input pairs, obtaining a fairly consistent picture across all specifications and elasticity concepts. More precisely, our results suggest a very limited degree of substitutability between factors in the production of hospital services (in particular, between beds and medical staff). These findings, consistent with previous evidence in the literature, suggest that a restructuring policy of the hospital industry which is confined to limiting the number of beds could not be a viable strategy for controlling the increase in public health care expenditure.
    Keywords: Public health care expenditure, Hospital industry downsizing, Input substitutability
    JEL: D24 I18 L32
    Date: 2007–06
  13. By: Justin van de Ven (National Institute of Economic and Social Research); Martin Weale (National Institute of Economic and Social Research)
    Abstract: This paper explores the effect of aggregate mortality risk on thepricing of annuities. It uses a two-period model; in the second period people face a constant but intiially unknown risk of death. Old people can either carry the aggregat emortlaity risk for themselves or buy annuities which are sold by young people. A market-clearing price for such annuties is established. It is found that old people would, given the choice, decide to carry a considerable part of aggregate mortality risk for themselves.
    Date: 2007–03

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