nep-hea New Economics Papers
on Health Economics
Issue of 2008‒02‒23
fourteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. What explains the Rural-Urban Gap in Infant Mortality — Household or Community Characteristics? By Ellen van de Poel; Owen O'Donnell; Eddy Van Doorslaer
  2. HIV/AIDS, Risk Aversion and Intertemporal Choice By Judith Lammers; Sweder van Wijnbergen
  3. Health and Income across the Life Cycle and Generations in Europe By Hans van Kippersluis; Tom Van Ourti; Owen O'Donnell; Eddy van Doorslaer
  4. Health Insurance and the Labor Supply Decisions of Older Workers: Evidence from the U.S. Department of Veterans Affairs By Melissa Boyle; Joanna N. Lahey
  5. Physician Labour Supply in Canada: a Cohort Analysis By Thomas F. Crossley; Jeremiah Hurley; Sung-Hee Jeon
  6. Publicly Funded Medical Savings Accounts: Expenditures and Distributional Impacts By Jeremiah Hurley; G. Emmanuel Guindon; Vicky Rynard; Steve Morgan
  7. Mental Health Service Delivery in Ontario, Canada: How Do Policy Legacies Shape Prospects for Reform? By Gillian Mulvale; Julia Abelson; Paula Goering
  8. Parallel Lines do Intersect: Interactions between the Workers’ Compensation and Provincial Publicly Financed Health Care Systems in Canada By Jeremiah Hurley; Diana Pasic; John Lavis; Cameron Mustard; Tony Culyer; William Gnam
  9. Unemployment and Mortality in France, 1982-2002 By Tom Buchmueller; Michel Grignon; Florence Jusot
  10. Psychosocial Resources and Social Health Inequalities in France: Exploratory Findings from a General Population Survey By Florence Jusot; Michel Grignon; Paul Dourgnon
  11. Insurance Coverage and the Treatment of Mental Illness: Effect on Medication and Provider Use in Canada By Gillian Mulvale; Jeremiah Hurley
  12. Public and Private Health Care Financing with Alternate Public Rationing Rules By Katherin Cuff; Jeremiah Hurley; Stuart Mestelman; Andrew Muller; Robert Nuscheler
  13. Parallel Payers and Preferred Access: How Canada's Workers' Compensation Boards Expedite Care for Injured and Ill Workers By Jeremiah Hurley; Dianna Pasic; John Lavis; Tony Culyer; Cameron Mustard; William Gnam
  14. Using Cigarette Taxes When Smokers Are Heterogeneous: Evidence on Hyperbolic Preferences, Endogenous Preferences, Smoking, and Price Elasticity of Smoking in France By Michel Grignon

  1. By: Ellen van de Poel (Erasmus University Rotterdam); Owen O'Donnell (University of Macedonia, Thessaloniki, Greece); Eddy Van Doorslaer (Erasmus University Rotterdam)
    Abstract: The rural-urban gap in infant mortality rates is explained using a new decomposition method that permits identification of the ontribution of unobserved heterogeneity at the household and the community level. Using Demographic and Health Survey data for six Francophone countries in Western Sub-Saharan Africa, we find that differences in the distributions of factors that determine mortality – not differences in their effects – explain almost the entire gap. Higher infant mortality rates in rural areas mainly derive from the rural disadvantage in household level characteristics; both observed and unobserved, which explain three-quarters of the gap. Among the observed characteristics, household environmental factors—potable water, electricity and quality of housing materials—are the most important contributors explaining 38% of the gap. Unobserved household level determinants explain 10% of the gap. Community level determinants explain 13% of the gap, including 3% that is due to unobservable community level heterogeneity.
    Keywords: Sub-Saharan Africa; rural-urban inequality; infant mortality; decomposition; unobserved heterogeneity
    JEL: I12 I31 O53
    Date: 2007–08–28
  2. By: Judith Lammers (Tilburg University); Sweder van Wijnbergen (University of Amsterdam)
    Abstract: This study analyses the relation between perceived health status and intertemporal choice. We use data from experiments with real monetary rewards conduEted among students in South Africa to estimate risk and time preferences. These experimental data, based on muitiple price lists developed by Coller & Williams (1999), Holt & Laury (2002), and Harrison et al. (2002, 2005), show that HIV+ agents and participants that perceive to have a high HIV contraction risk are less risk-averse. Although the latter group displays higher discount rates, HP positive agents seem to have substantially lower discount rates, indicating longer time horizons in spite of their lowered life expectancy. However, we show that direct estimates of discount rates can be seriously biased estimators of the pure rate of time preference when other factors than just the pure rate of time preference are not considered simultaneously. We correct for differential mortality risk, risk aversion and differences in anticipated future marginal utility increases and price in these factors when calculating pure rates of time preference from observed discount rates. Once these factors are taken into account, HIV+ agents’ time preferences conform to expectations.
    Keywords: discount rate; risk aversion; perceived HIV infection risk; mortality; time preferences; marginal utility; hyperbolic discounting
    JEL: D81 D91 I18
    Date: 2007–12–18
  3. By: Hans van Kippersluis (Erasmus University Rotterdam); Tom Van Ourti (Erasmus Universiteit Rotterdam); Owen O'Donnell (University of Macedonia, Thessaloniki, Greece); Eddy van Doorslaer (Erasmus University Rotterdam)
    Abstract: An age-cohort decomposition applied to panel data identifies how the mean, overall inequality and income-related inequality of self-assessed health evolve over the life cycle and differ across generations in 11 EU countries. There is a moderate and steady decline in mean health until the age of 70 or so and a steep acceleration in the rate of health deterioration beyond that age. In southern European countries and in Ireland, which have experienced the greatest changes in economic and social development, the average health of younger generations is significantly better than that of older generations. This is not observed in the northern European countries. In almost all countries, health is more dispersed among older generations indicating that Europe has experienced a reduction in overall health inequality over time. Although there is no consistent evidence that health inequality increases as a given cohort ages, this is true in the three largest countries – Britain, France and Germany. In the former two countries and the Netherlands, at least for males, the income gradient in health peaks around retirement age, as has been found for the US, but this pattern is not observed in the other countries. In most European countries, unlike the US, there is no evidence that income-related health inequality is greater among younger than older generations.
    Keywords: Health; Health inequality; Life cycle; Cohort
    JEL: D30 D31 I10 I12
    Date: 2008–01–18
  4. By: Melissa Boyle (Department of Economics, College of the Holy Cross); Joanna N. Lahey (Texas A&M University)
    Abstract: This paper exploits a major mid-1990s expansion in the U.S. Department of Veterans Affairs health care system to provide evidence on the labor market effects of expanding health insurance availability. Using data from the Current Population Survey, we compare the labor market behavior of older veterans and non-veterans before and after the VA health benefits expansion to test the impact of public health insurance on labor supply. We find that older workers are significantly more likely to decrease work both on the extensive and intensive margins after receiving access to non-employer based insurance. Older workers are also more likely to leave self-employment, a result inconsistent with "job-lock" effects of employer-based insurance, but consistent with a positive income effect from new access to public insurance. Some relatively disadvantaged subpopulations, however, may increase their labor supply after gaining greater access to public insurance, consistent with complementary positive health effects of health care access for these groups. We conclude that this reform has affected employment and retirement decisions, and suggest that future moves toward universal coverage or expansions of Medicare are likely to have significant labor market effects. To illustrate, we calculate that as much as 10% of the difference in retirement rates in the US and Canada may be due to Canada's provision of universal health care.
    Keywords: labor supply, job-lock, retirement, older workers, health insurance, VA, Medicare, veteran
    JEL: J2 I18
    Date: 2008–01
  5. By: Thomas F. Crossley (Faculty of Economics, University of Cambridge, Department of Economics, McMaster University); Jeremiah Hurley (Department of Economics, Centre for Health Economics and Policy Analysis, McMaster University); Sung-Hee Jeon (Department of Economics, McMaster University, Melbourne Institute of Applied Economic and Social Research, University of Melbourne)
    Abstract: This paper employs cohort analysis to examine the relative importance of different factors in explaining changes in the number of hours spent in direct patient care by Canadian general/ family practitioners (GP/FPs) over the period 1982 to 2002. Cohorts are defined by year of graduation from medical school. The results for male GP/FPs indicate that: there is little age effect on hours of direct patient care, especially among physicians aged 35 to 55; there is no strong cohort effect on hours of direct patient care; but there is a secular decline in hours of direct patient care over the period. The results for female GP/FPs indicate that: female physicians on average work fewer hours than male physicians; there is a clear age effect on hours of direct patient care; there is no strong cohort effect; there has been little secular change in average hours of direct patient care. The changing behaviour of male GP/FPs accounted for a greater proportion of the overall decline in hours of direct patient care from the 80’s through the mid 90’s than did the growing proportion of female GP/FPs in the physician stock.
    JEL: I11 J24
    Date: 2007
  6. By: Jeremiah Hurley (Department of Economics, Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); G. Emmanuel Guindon (Centre for Health Economics and Policy Analysis, McMaster University); Vicky Rynard; Steve Morgan (Centre for Health Services and Policy Research, University of British Columbia)
    Abstract: This paper presents the findings from simulations of the introduction of publicly funded Medical Savings Accounts in the province of Ontario, Canada. The analysis exploits a unique data set linking population-based health survey information with individual-level information on all physician services and hospital services utilization over a four year period. The analysis provides greater detail than have previous analyses regarding: the distributional impacts of publicly funded MSAs across individuals of differing health statuses, incomes, ages and current expenditures; the impact of differing degrees of risk-adjustment for MSA contributions; and the impact of MSA funding over multiple years, incorporating year-to-year variation in spending at the individual level. In addition, it analyses designs for publicly funded MSAs than existing studies. Government uses information available from period t-1 to allocate its budget for year t between MSA contributions and catastrophic insurance in a manner that is actuarially fair for the public sector: the government first withholds funds equal to expected catastrophic insurance payments under the MSA plan, and then allocates only the balance to individual MSA accounts. The government captures the savings associated with reduced health care utilization under MSAs and we examine deductibles that vary by income rather than current health care expenditures. The impacts on public expenditures under these designs are more modest than existing studies and under plausible assumptions MSAs are predicted to decrease public expenditures. MSAs, however, are predicted to have unavoidable negative distributional consequences with respect to both public expenditures and out-of-pocket spending.
    Keywords: Medical Savings Accounts, Health Care Financing, Health Care Funding, Costsharing
    JEL: I10 I11 I18
    Date: 2007–04–11
  7. By: Gillian Mulvale; Julia Abelson (Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Paula Goering (Health Systems Research and Consulting Unit, Centre for Addictions and Mental Health, University of Toronto)
    Abstract: Mental health policy-making in Ontario has a long history of frustrated attempts to move from a hospital and physician-based tradition to a coordinated system with greater emphasis on community-based mental health care. This study examines policy legacies associated with the introduction of psychiatric hospitals in the 1850s and the introduction of public health insurance (medicare) in the 1960s in Ontario; and their effect on subsequent mental health reform initiatives using a qualitative case study approach. Following Pierson (1993) we capture the resource/incentive and interpretive effects of prior policies on three groups of actors: government elites, interests and mass publics. Data is drawn from academic and policy literature, and key informant interviews. The findings suggest that psychiatric hospital policy resulted in important policy legacies which were reinforced by medicare. These legacies explain the traditional difficulty in achieving mental health reform, but are less helpful in explaining recent promising developments that support community-based care. Current reform of the Ontario health system features the introduction of regionalized service delivery and new models of interdisciplinary team-based primary care delivery and presents an opportunity to overcome several of these legacies. The analysis suggests a pressing need to link these two initiatives to overcome system fragmentation.
    Date: 2007
  8. By: Jeremiah Hurley (Department of Economics, Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Diana Pasic; John Lavis (Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Cameron Mustard (Institute of Work and Health, Toronto, Department of Public Health Sciences, University of Toronto); Tony Culyer (Institute of Work and Health, Toronto, Department of Economics and Related Studies, University of York, UK, Cancer Care Ontario, Department of Health Policy, Management, and Evaluation, University of Toronto); William Gnam (Institute of Work and Health, Department of Pschiatry, University of Toronto)
    Abstract: This paper uses a case study approach to document and analyze the interactions that arise between two health care payers in Canada: the provincial public health care insurance plans and the provincial Workers Compensation Boards. Through a documentary review and semistructured key-respondent interviews, the study identified a set of policy events and decisions undertaken by each payer that had consequences for the other. These events, which included changes to governance, funding, and service delivery within each system, generated interactions transmitted through the political environment, the institutional environment , the economic environment (primarily through competition for the same resources) and cross-system learning. The two payers currently lack a formalized process by which to consider such spillover effects and to coordinate policy between them. These interactions and their associated consequences for both payers raise important policy challenges and provide insight into the dynamics of a parallel system of health care finance more generally.
    Date: 2007
  9. By: Tom Buchmueller (University of Michigan, National Bureau of Economic Research); Michel Grignon (Centre for Health Economics and Policy Analysis, Department of Economics, McMaster University); Florence Jusot (Institut de Recherche et de Documentation en Economie de la Santé (IRDES), Paris, France)
    Abstract: This study uses aggregate panel data on 96 French départements for the period from 1982 to 2002 to investigate the relationship between macroeconomic conditions and mortality, controlling for local area and time fixed effects. Consistent with research using data from other countries, we find that increases in the local unemployment rates are associated with significant reductions in mortality. Models of mortality by source indicate that the negative relationship between unemployment and mortality is strongest for deaths due to cardiovascular disease and accidents. A finding that mortality among the elderly fluctuates with the unemployment rate suggests the possible importance of externalities associated with economic upturns.
    Keywords: unemployment, macroeconomic conditions, mortality, health
    JEL: E32 I12 J2
    Date: 2007
  10. By: Florence Jusot (Institut de Recherche et de Documentation en Economie de la Santé (IRDES), Paris, France); Michel Grignon (Departments of Economics and Health, Aging, & Society, Centre for Health Economics and Policy Analysis, McMaster Universitym Associate Researcher, IRDES, France); Paul Dourgnon (Institut de Recherche et de Documentation en Economie de la Santé (IRDES), Paris, France)
    Abstract: We study the psychosocial determinants of health, and their impact on social inequalities in health in France. We use a unique general population survey to assess the respective impact on self-assessed health status of subjective perceptions of social capital controlling for standard sociodemographic factors (occupation, income, education, age and gender). The survey is unique for two reasons: First, we use a variety of measures to describe self-perceived social capital (trust and civic engagement, social support, sense of control, and self-esteem). Second, we can link these measures of social capital to a wealth of descriptors of health status and behaviours. We find empirical support for the link between the subjective perception of social capital and health. Sense of control at work is the most important determinant of health status. Other important ones are civic engagement and social support. To a lesser extent, sense of being lower in the social hierarchy is associated with poorer health status. On the contrary, relative deprivation does not affect health in our survey. Since access to social capital is not equally distributed in the population, these findings suggest that psychosocial factors can explain a substantial part of social inequalities in health in France.
    Keywords: social capital, social support, relative deprivation, sense of control, social health inequalities
    Date: 2007
  11. By: Gillian Mulvale (Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Jeremiah Hurley (Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, Department of Economics, McMaster University)
    Abstract: Background- Canada’s public health insurance system fully covers medically necessary hospital and physician services, but does not cover community-based non-physician mental health provider services or prescription drugs. Almost 2/3 of Canadians have private supplemental insurance for extended health benefits, typically through their employer, so its distribution is skewed to higherincome, employed Canadians, and typically features substantial cost-sharing and coverage limits. A recent national survey suggests only one-third of Canadians with selected mental disorders talked to a health professional during the previous 12 months and only a minority (19.3%) receive drug treatment. Financial barriers to care constitute a potentially important contributor to this under-use of mental health treatments. Aims of the Study- The objective is to understand how private supplemental insurance status affects the utilization of prescription medication and four types of community-based providers for mental health problems in Canada. Methods- The data derive from a special mental health supplement to the nationally representative Canadian Community Health Survey. Utilization of five types of prescribed medications (sleep, anxiety, mood stabilizers, anti-depressants and anti-psychotics) is measured dichotomously as use/no-use in the previous 12 months. Utilization of community-based provider services (family physician, psychiatrist, psychologist and social worker) is measured as (i) use/no-use and (ii) conditional on use, number of contacts in the previous 12 months. We employ multivariate regression methods appropriate to the binary and count nature of the dependent variable to measure the impact of supplemental private insurance status on utilization, controlling for health, demographic and socio-economic characteristics. We test for endogeneity of insurance status using instrumental variable techniques. Results- Having private supplemental insurance significantly increases the odds of using medications for mental illness, with particularly large increases for anti-psychotic and mood-stabilizer medications. Private supplemental insurance coverage does not significantly determine use of provider services. We find little evidence of endogeneity of private insurance. Discussion- Lack of supplemental insurance for prescription medication is a potentially important financial barrier to mental health treatment in Canada. The estimated effect is likely understated because the utilization measure does not capture quantity of use. It is not surprising that no significant relationship between private insurance status and utilization of provider services is found for publicly-covered family physician and psychiatry services, where the link between supplemental insurance and use is indirect, through the need to visit a physician to obtain a prescription. The result is surprising for psychologists and social workers, and may reflect limits to private coverage which are not fully captured here. Implications for Health Care Provision and Use Insurance coverage has an important relative impact on the likelihood of drug use for mental illness. Implications for Health Policies A program that offers insurance coverage for anti-psychotic and mood-stabilizing medication could reduce the high personal and societal burden associated with serious mental illness, without a large overall budgetary impact. Implications for Future Research Future research should incorporate insurance measures which capture details of coverage among all survey respondents. Linking survey to utilization data will help to overcome issues of recall bias.
    Date: 2007
  12. By: Katherin Cuff (Department of Economics, McMaster University); Jeremiah Hurley (Department of Economics, Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Stuart Mestelman; Andrew Muller (Department of Economics, McMaster University); Robert Nuscheler (Department of Economics, University of Waterloo)
    Abstract: We develop a model to analyze alternative health care financing arrangements. 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 public insurer's ability-to-pay is limited by its (fixed) budget; the private insurers willingness-to-pay reflects the individuals' willingness-to-pay for care. When permitted, the private sector supplies supplementary health care to those willing and able to pay. We find that the introduction of a private sector diverts treatment from relatively poor to relatively rich individuals. Moreover, if the public system allocates care according to need, then 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, an 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 find 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
  13. By: Jeremiah Hurley (Department of Economics, Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Dianna Pasic; John Lavis (Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Tony Culyer (Institute of Work and Health, Toronto, Department of Economics and Related Studies, University of York, UK, Cancer Care Ontario, Department of Health Policy, Management and Evaluation, University of Toronto); Cameron Mustard (Institute of Work and Health, Toronto, Department of Public Health Sciences, University of Toronto); William Gnam (Institute of Work and Health, Toronto, Department of Psychiatry, University of Toronto)
    Abstract: Canada’s Workers’ Compensation Boards (WCBs) finance health care for injured and ill workers in parallel to provincial health insurance plans. Parallel systems of health care finance can create preferred access for some. WCBs have in recent years pursued a number of strategies to expedite or improve the quality of care for injured or ill workers, including in-house provision in WCB-owned facilities, contracting with private, for-profit clinics, contracting with publicly funded hospitals and clinics for use of facilities “off-hours”, and supporting specialized clinics within publicly funded hospitals. Many of these strategies incorporate incentive payments to physicians and facilities for treating WCB cases more quickly than patients covered by provincial plans. In this paper we both document the development of these strategies and discuss their implications for physicians, patients, government, and the provincial public insurance plans.
    Date: 2007
  14. By: Michel Grignon (Department of Economics, Department of Health, Aging, & Society, and, Centre for Health Economics and Policy Analysis, McMaster University)
    Abstract: I use a unique dataset to estimate the relationship between time preferences, social capital, and the decision to start and quit smoking. I find impatient respondents do not differ much from patient ones, but quasi-hyperbolic respondents tend to smoke more often and have much more difficulties quitting. I also find that trust in the community protects from starting and helps quitting, but sense of control encourages starting smoking. These preliminary results strongly suggest that smokers form a heterogeneous population: I argue that such heterogeneity means that taxes on cigarettes are a blunt and inefficient instrument of public health.
    Date: 2007

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