nep-hea New Economics Papers
on Health Economics
Issue of 2008‒04‒15
seventeen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Does Physicians' Compensation Affect the Probability of their Vetoing Generic Substitution? By Granlund, David
  2. Is Hospital Treatment in Australia Inequitable? Evidence from the HILDA Survey By Stephen Goodall; Anthony Scott
  3. Managerial Challenges in Addressing HIV/AIDS: Gujarat State AIDS Control Society (GSACS) By Ramani K.V.; Mavalankar Dileep; Tirupati Devanath; Vijaya Sherry Chand P.G.
  4. Transitivity in Health Utility Measurement: An Experimental Analysis By Ulrich Schmidt; Michael Stolpe
  5. A theory of dynamics and inequalities under epidemics. By Raouf Boucekkine; Jean-Pierre Laffargue
  6. Keynesian hospitals? Public employment and political pressure By Andrew E. Clark; Carine Milcent
  7. New prospects in the analysis of inequalities in health: a measurement of health encompassing several dimensions of health By Sandy Tubeuf; Marc Perronnin
  8. Decomposing Bodymass Index gaps between Mediterranean countries: A Counterfactual Quantile Regression Analysis* By Costa-Font, J; Fabbri, D; Gil, J
  9. Health effects on labour market exits and entries By García-Gómeza, P; Jones, A.M; Rice, N
  10. Income-related inequalities in self-assessed health: comparisons of alternative measurements of health By Tubeuf, S
  11. Health and Labor Supply Dynamics of Older Married Workers By Danilo Cavapozzi
  12. Optimal Health Care Contracts under Physician Agency By Philippe Chone; Ching-to Albert Ma Author-X-Name-First: Ching-to Albert
  14. Use of Elective Surgery in Public hospitals:Modeling Access-Cost Quality Trade-offs in a Spatial Framework By Anurag Sharma; Anthony Harris; Jeff Richardson
  15. Does disaggregation affect the relationship between health care expenditure and GDP? An analysis using regime shifts By Anurag Sharma; Preety Ramful
  16. Estimating the Economic Cost of Disability in Ireland By John Cullinan; Gannon, Brenda; Sean Lyons
  17. America’s Rejection of Compulsory Government Health Insurance in the Progressive Era and its Legacy for National Insurance Today By Herbert Emery

  1. By: Granlund, David (Department of Economics)
    Abstract: Physicians' decisions whether or not to veto generic substitution were analyzed using a sample of 350,000 pharmaceutical prescriptions. Point estimates show that - compared to county-empoyed physicians on salary - physicians working at private practices were 50-80% more likely to veto substitution. The results indicate that this difference is explained by the difference in direct cost associated with substitution, rather than by private physicians' possibly stronger incentives to please their patients. Also, the probability of a veto was found to increase as patients' copayments decreased. This might indicate moral hazard in insurance, though other exaplanations are plausible.
    Keywords: doctors; salary; fee for service; moral hazard; prescriptions; drugs
    JEL: D86 I11 L33
    Date: 2008–04–04
  2. By: Stephen Goodall (Centre for Health Economics Research and Evaluation, University of Technology, Sydney); Anthony Scott (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: The pursuit of equity is a key objective of many health care systems, including Australia’s Medicare. Using the Household, Income and Labour Dynamics in Australia (HILDA) survey, we measured the extent of inequity in the utilisation of hospital services. We used methodology developed by the ECuity project for measuring horizontal inequity indices. We examine income-related health care inequities in both inpatient and day patient access and utilisation, whilst controlling for morbidity, demographic and socio-economic variables. The probability of hospital inpatient admission appeared equitable, but the probability of a day patient visit demonstrated a pro-rich distribution. Even more pronounced were the findings on the quantity of visits. The positive horizontal inequality indices indicate a degree of inequity favouring the rich, especially for inpatient utilisation. The pro-rich distribution of the probability of a day patient visit was associated with whether individuals held private health insurance. These results suggest that in Australia, which has a universal and comprehensive health system, the rich and poor are not treated equally according to need. Further research should investigate whether the causes of inequities lie in the preferences of individuals or the preferences of health care providers.
    Date: 2008–03
  3. By: Ramani K.V.; Mavalankar Dileep; Tirupati Devanath; Vijaya Sherry Chand P.G.
    Abstract: The spread of HIV/AIDS is not merely a problem of public health; it is also an economic, political, and social challenge that threatens to hinder decades of progress in different parts of Gujarat. There is an urgent need to significantly scale-up public health interventions that work to make a meaningful impact. While NGOs and community based organizations have a critical role to play in implementing these interventions amongst the various population groups, the government must shoulder the overall responsibility for planning, coordinating, mobilizing, and facilitating the various HIV/AIDS prevention, care and treatment services in the state. Generally, the departments of HIV/AIDS are dominated by doctor-managers who lack training in management. This working paper was developed with objective of enhancing the skills of the program implementers. In this paper, in first three chapters we describe the overall situation of HIV/AIDS globally and nationally. Major challenges in managing sentinel surveillance, behavior surveillance, targeted interventions and its subcomponents have been described in chapter four. Issues related to integration of HIV/AIDS activities with reproductive health has also been discussed in the chapter. In chapter five, we present a few case studies from Gujarat State AIDS Control Society. These cases focus on the managerial issues in the following areas: Project Management, Blood Bank Management, VCTC/ICTC Management, Behavioral Surveillance and MIS for Targeted Interventions. These case studies bring out the ground level realities and can help participants develop insights for better management of the HIV/AIDS programme.
    Date: 2008–03–30
  4. By: Ulrich Schmidt; Michael Stolpe
    Abstract: Several experimental studies observed substantial violations of transitivity in decisions between risky lotteries over monetary outcomes. The goal of our experiment is to test whether these violations also affect the evaluation of health states. A particular feature of our experimental design is that it takes into account the possible role of decision errors in generating violations of transitivity. Since we find neither substantial nor systematic deviations from transitive choice behaviour, we can conclude that previously reported violations do not seem to bias health utility measurement.
    Keywords: Transitivity, Health utility, Errors
    JEL: D81 I10 C91
    Date: 2008–03
  5. By: Raouf Boucekkine; Jean-Pierre Laffargue
    Abstract: We develop a tractable general theory for the study of the economic and demographic impact of epidemics. In particular, we analytically characterise the short and medium term consequences of epidemics for population size, age pyramid, economic performance and income distribution. To this end, we develop a three-period overlapping generations where altruistic parents choose optimal health expenditures for their children and themselves. The survival probability of (junior) adults and children depend on such investments. Agents can be skilled or unskilled. The model emphasizes the role of orphans. Ophans are not only penalized in front of death, they are also penalized in the access to education. Epidemics are modeled as one period exogenous shocks to the survival rates. We identify three kinds of epidemics depending on how the epidemic shock alters the marginal efficiency of health expenditures. We first study the demographic dynamics, and prove that while a one-period epidemic shock has no permanent effect on income distribution, it can perfectly alter it in the short and medium run. We then study the impact of the three kinds of epidemics when they hit children and/or junior adults. We prove that while the three epidemics have significantly different demographic implications in the medium run, they all imply a worsening in the short and medium run of economic performance and income distribution. In particular, the distributional implications of the model mainly rely on orphans: if orphans are more penalized in the access to a high level of education than in front of death, they will necessarily lead to the medium-term increase in the proportion of the unskilled, triggering the impoverishment of the economy at that time horizon.
    Date: 2008
  6. By: Andrew E. Clark; Carine Milcent
    Abstract: This paper uses an unusual administrative dataset covering the universe of French hospitals to consider hospital employment: this is consistently higher in public hospitals than in Not-For-Profit or private hospitals, even controlling for many measures of hospital output (such as the type of operations and care provided, and the bed capacity rate). Public-hospital employment is positively correlated with the local unemployment rate, whereas no relationship is found in non-Public hospitals. This is consistent with public hospitals providing employment in depressed areas. We appeal to the Political Science literature and calculate local political allegiance, using expert evaluations on various parties political positions and local election results. The relationship between public hospital employment and local unemployment is stronger the more left-wing the local municipality. This latter result holds especially when electoral races are tight, consistent with a concern for re-election.
    Date: 2008
  7. By: Sandy Tubeuf; Marc Perronnin
    Abstract: This paper develops an innovative method of constructing a concrete measure of health by taking into account individual health information. Using individual survey data from the 2002 IRDES Health and Health Insurance Survey, we propose a measurement of health based on the number of diseases and their respective severity level. The construction relies on a latent variable regression model explaining self-assessed health and controlling various social and health individual characteristics. We compare this construction to other methods proposed in literature for the measurement of health. Moreover, we show how the health index allows to compare distributions of health among di®erent populations and to evaluate inequalities in health in France by using stochastic dominance at first-order.
    Keywords: health measurement, France, reported morbidity, stochastic dominance
    JEL: C13 C43 D63 I12
    Date: 2008–02
  8. By: Costa-Font, J; Fabbri, D; Gil, J
    Abstract: Wide cross-country variation in obesity rates have been reported within European Union member states. However, health production determinants for these differences have been largely overlooked in the health economics literature. In this paper we propose a methodology for conducting standardized cross-country comparisons in BMI. The method we adopt is based on the estimation of the marginal density function of BMI in a given country implied by different counterfactual distributions of all the covariates included within a quantile regression framework. We apply our method to the analysis of the variation in BMI distribution in Spain with respect to Italy in the year 2003. Our findings suggest that Spain-to-Italy BMI gaps are largely explained by cross-country variation in the returns to each health input. Therefore, there appear to be differences in the country-specific behavioural responses to the caloric (im)balance.
    Keywords: BMI, country weight gap, quantile regression, counterfactual decomposition, Mediterranean countries, Italy, Spain.
    JEL: I18 J15 J16
    Date: 2008–02
  9. By: García-Gómeza, P; Jones, A.M; Rice, N
    Abstract: This paper analyses the role of health on exits out of and entries into employment using data from the first twelve waves of the British Household Panel Survey (1991-2002). We use discretetime duration models to estimate the effect of health on the hazard of becoming non-employed and on the hazard of becoming employed. The results show that general health, measured by a variable that captures health limitations and by a constructed latent health index, affects entries into and exits out of employment; the effects being higher for men than for women. Moreover, results suggest that changes in mental health status influences only the hazard of nonemployment for the stock sample of workers. The results are robust to different definitions of employment, and to the exclusion of older workers from the analysis.
    Keywords: health, health shocks, discrete-time hazard models, employment, BHPS
    JEL: I1 C41 J60
    Date: 2008–03
  10. By: Tubeuf, S
    Abstract: This study analyses income-related inequalities in health in France in 2004, using a decomposed concentration index and alternative refined measurements of health. Interval regression method is used to cardinalise self-assessed health. Results are offered at two levels. Firstly, this analysis shows income-related inequalities in health favouring socially advantaged groups. The strongest contributions to inequalities come from income level, education level and social status. Secondly, the analysis being carried out with alternative measurements of health, inequalities in health appear to vary quantitatively with both the number of categories of self-assessed health and the distribution of health used to cardinalise self-assessed health.
    Keywords: concentration index, France, health measurement, HUI, SF6D
    JEL: C13 C43 D63 I12
    Date: 2008–03
  11. By: Danilo Cavapozzi (University of Padova)
    Abstract: This empirical analysis investigates how the labor supply dynamics of married workers aged 46-65 is influenced by their own health conditions and by those of their cohabiting partners. Exploiting the information conveyed by the European Community Household Panel (1995-2001), our econometric specifications focus on the transition towards not employment within the next year and use alternative health indicators to describe the overall physical and mental conditions of couple members. We also control for partners labor supply because of its close relationship with their own health and the well-documented coordination with the labor market position of the other couple member. Our results show that while healthier individuals present higher chances of remaining at work in the future, living with healthier spouses affects positively the likelihood of ceasing from work. Finally, when the spouse is employed, the probability of keeping on working is estimated to rise. This last result upholds the hypothesis, suggested by the literature, that couple members prefer to spend their time in the same employment status.
    Keywords: Labor supply, health, married workers
    JEL: J26 J14
    Date: 2008–03
  12. By: Philippe Chone (CREST-LEI and CNRS URA 2200); Ching-to Albert Ma Author-X-Name-First: Ching-to Albert (Department of Economics, Boston University)
    Abstract: We examine contracts between insurers and physicians when the treatment is chosen to maximize a combination of physician profit and patient benefit (“physician agency”). The degree of substitution between doctor profit and patient benefit in the physician-patient coalition is the physician’s private information, as is the patient’s intrinsic valuation of treatment quantity. The equilibrium mechanism only depends on the physician-patient coalition parameter. Moreover, the equilibrium mechanism exhibits extensive pooling, with prescribed quantity and physician reimbursement being insensitive to the agency characteristics or patient’s actual benefit. The optimal mechanism is interpreted as managed care where strict approval protocols are placed on treatments.
    Keywords: physician agency, optimal payment, health care quantity, managed care, minimum profit, asymmetric information
    JEL: D82 I1 I10 L15
    Date: 2007–01
  13. By: Greir Godager (Department of Health Management and Health Economics, University of Oslo); Tor Iversen (Department of Health Management and Health Economics, University of Oslo); Ching-to Albert Ma (Department of Economics, Boston University and University of Oslo)
    Abstract: We model physicians as health care professionals who care about their services and monetary rewards. These preferences are heterogeneous. Different physicians trade off the monetary and service motives differently, and therefore respond differently to incentive schemes. Our model is set up for the Norwegian health care system. First, each private practice physician has a patient list, which may have more or less patients than he desires. The physician is paid a fee-for-service reimbursement and a capitation per listed patient. Second, a municipality may obligate the physician to perform 7.5 hours per week of community services. Our data are on an unbalanced panel of 435 physicians, with 412 physicians for the year 2002, and 400 for 2004. A physician’s amount of gross wealth and gross debt in previous periods are used as proxy for preferences for community service. First, for the current period, accumulated wealth and debt are predetermined. Second, wealth and debt capture lifestyle preferences because they correlate with the planned future income and spending. The main results show that both gross debt and gross wealth have negative effects on physicians’ supply of community health services. Gross debt and wealth have no effect on fee-for-service income per listed person in the physician’s practice, and positive effects on the total income from fee-for-service. The higher income from fee-for-service is due to a longer patient list. Patient shortage has no significant effect on physicians’ supply of community services, a positive effect on the fee-for-service income per listed person, and a negative effect on the total income from fee for service. These results support physician preference heterogeneity.
    Date: 2007–04
  14. By: Anurag Sharma (Centre for Health Economics, Monash University); Anthony Harris (Centre for Health Economics, Monash University); Jeff Richardson (Centre for Health Economics, Monash University)
    Abstract: The overall objective of the paper is to model and econometrically analyze the impact of access costs (travel time to hospital) and quality of health care on the utilization of elective health services in public hospitals. We argue that patients might face a trade-off between better perceived quality of care and access costs. The extant literature has not yet developed a common framework which explicitly incorporates the quality and access trade-off. The first aim of this paper is to help fill this gap. We propose a stylized model where GPs and Specialists act as gatekeepers, waiting times act as a rationing device; and perception of quality and access costs contributes to the choice of hospital for treatment. A secondary objective of the paper is to explore econometric approaches to simultaneously deal with access cost quality tradeoff and its effect on patient flows across regions. The geographic access costs lead to interaction between regions which is termed as spatial dependence. This is econometrically tested by applying spatial regression techniques focussing on spatial panel models recently proposed but not yet been widely applied to health economics. The results show that spatial effects especially the geographic neighborhood effects significantly affect the hospital utilization rates at a regional level. Travel time is found to have significant and negative effect on hospital utilization for some Diagnostic categories. The effect of quality of care (measured by the rate of adverse events) is negative and significant for one category of separations. However the effect is quantitatively small. We do not find any evidence of trade-off between quality and travel time for all category of separations. Policy implications are discussed..
    Date: 2008–03
  15. By: Anurag Sharma (Centre for Health Economics, Monash University); Preety Ramful (Centre for Health Economics, Monash University)
    Abstract: This paper investigates the impact of policy shifts on disaggregated health expenditure- GDP relationship for Australia and the USA. In contrast to previous studies the disaggregation is at the level of type of service delivered and not at the level of source of expenditure. Our results show that the subcomponents of health expenditure exhibit different patterns of behaviour at both cointegration and unit root stages once policy shifts or structural breaks, such as the introduction of a publically funded medicare policy in the USA, are allowed in the empirical analysis. When the possibility of structural break is allowed we find a significant long run relationship between subcomponents of aggregate health expenditure and GDP that is not found when no break is considered. The underlying reasons for the occurrence of breaks and policy lessons are discussed subsequently..
    Date: 2008–03
  16. By: John Cullinan (Department of Economics, National University of Ireland, Galway, Ireland); Gannon, Brenda (Irish Centre for Social Gerontology/Department of Economics, National University of Ireland, Galway, Ireland); Sean Lyons (Economic and Social Research Institute (ESRI))
    Abstract: Addressing the extra economic costs of disability seems a logical step towards alleviating elements of social exclusion for people with disabilities. This paper estimates the economic cost of disability in Ireland in terms of the additional spending needs that arise due to disability. It defines and estimates models of the private costs borne by families with individuals who have a disability in Ireland when compared to the wider population, both in general and by severity of illness. Our modelling framework is based on the standard of living approach to estimating the cost of disability. We extend on previous research by applying an ordered logit modelling approach to Living in Ireland survey data 1995-2001 to quantify the extra costs of living associated with disability in Ireland. We also derive estimates of the cost of disability for ‘pensioner’ and ‘non-pensioner’ households, as well as over time. Our findings suggest that the economic cost of disability in Ireland is large, varies by severity of disability, and across household types. Overall our findings have important implications for measures of poverty in Ireland.
    Date: 2008–03
  17. By: Herbert Emery
    Abstract: Between 1915 and 1920, 18 U.S. states considered the introduction of compulsory health insurance. Given the alleged deficiencies of voluntary arrangements for insuring sickness, reformers expected social insurance to be welfare enhancing for American wage-workers since it would result in lower cost insurance and an extension of coverage to more of the population. Scholars commonly ascribe the inability of states to introduce government health insurance to American ideology and institutions that prevented the political mobilization of wage-workers. They view the lack of government insurance as a policy failure and significant for explaining why the U.S. does not have national health insurance today. The evidence presented in this paper casts doubt on this interpretation. Compulsory insurance would not have provided gains for wage-workers, and this explains the absence of broad political support for health insurance legislation in this early period.
    JEL: H51 H53 I11 I18 I38 N3 N4
    Date: 2008–01–01

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