nep-hea New Economics Papers
on Health Economics
Issue of 2008‒05‒05
four papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Adverse selection in the U.S. health insurance markets: Evidence from the MEPS By Di Novi, Cinzia
  2. From theory to implementation of the best instrument to protect human health: a brief overview By Di Novi, Cinzia
  3. Generation of Political Priority for Global Health Initiatives: A Framework and Case Study of Maternal Mortality By Jeremy Shiffman and; Stephanie Smith
  4. The simple economics of risk-sharing agreements between the NHS and the pharmaceutical industry By Barros, Pedro Pita

  1. By: Di Novi, Cinzia
    Abstract: We use the 2003/2004 Medical Expenditure Panel Survey in conjunctions with the 2002 National Health Interview Survey to test for adverse selection in the U.S. private health insurance market. The key idea is to test whether the individuals who are more exposed to health risks also buy insurance contracts with more coverage or higher expected payments. The critical statistical problem is that the extension of insurance is only measured for those who are insured and face positive health care expenditure. So there is a possible sample selection bias effect. The procedure used is based on a method suggested by Wooldridge (1995). The method also accounts for heterogeneity across individuals. The simultaneous account taken of both possible sources of bias is new for this kind of application.
    Keywords: adverse selection, health insurance, risk profile
    JEL: I11 I18 D82
    Date: 2008–04
  2. By: Di Novi, Cinzia
    Abstract: This paper presents a survey of methods of regulations with focus on pollution abatement and of various approaches to the issue of measuring quantities such as the marginal benefit of improved health that are crucial in view of implementing the regulation. Since pollution is a public bad, in general the efficient level of pollution can only be reached by way of some sort of public intervention. The paper's focus is on so-called marketbased mechanisms, which in turn are classified into price-based mechanisms (pollution taxes) and quantity-based mechanisms (tradeable permits). The basic framework for addressing the comparison between the two types of mechanisms is Weitzman (1974). In order to actually choose between regulation methods and to eventually implement chosen methods, estimates are needed of some crucial quantities, in particular of marginal costs and benefits of pollution abatement. The most problematic one is of course marginal benefit. Therefore the paper considers various approaches to the measurement of marginal benefits.
    Keywords: marginal costs, marginal benefits, pollution regulation, health
    JEL: Q51 I18
    Date: 2008–04
  3. By: Jeremy Shiffman and; Stephanie Smith
    Abstract: Why do some global health initiatives receive priority from international and national political leaders while others receive minimal attention? We propose a framework for analyzing this question consisting of four categories of factors: the strength of the actors involved in the initiative, the power of the ideas they use to frame the issue, the nature of the political contexts in which they operate, and characteristics of the issue itself. We apply this framework to the case of a global initiative to reduce maternal mortality, launched in 1987. Using a process-tracing methodology commonly employed in qualitative research, we conducted archival research and interviewed actors involved in the initiative. We find that despite two decades of effort the initiative remains in an early phase of development, hampered by difficulties in all these categories. However, the initiative’s twentieth anniversary year, 2007, presents opportunities to build political momentum. To generate political priority advocates will need to address several challenges, including the creation of effective institutions to guide the initiative and the development of a public positioning of the issue that convinces political leaders to act. We draw on the framework and case study to suggest areas for future research on the determinants of political priority for global health initiatives, a subject that has attracted much speculation but little scholarship.
    Keywords: global health, maternal mortality
    Date: 2007–10
  4. By: Barros, Pedro Pita
    Abstract: The Janssen-Cilag proposal for a risk-sharing agreement regarding bortezomib received a welcome signal from NICE. The Office of Fair Trading report included risk-sharing agreements as an available tool for the National Health Service. Nonetheless, recent discussions have somewhat neglected the economic fundamentals underlying risk-sharing agreements. We argue here that risk-sharing agreements, although attractive due to the principle of paying by results, also entail risks. Too many patients may be put under treatment even with a low success probability. Prices are likely to be adjusted upward, in anticipation of future risk-sharing agreements between the pharmaceutical company and the third-party payer. An available instrument is a verification cost per patient treated, which allows obtaining the first-best allocation of patients to the new treatment, under the risk sharing agreement. Overall, the welfare effects of risk-sharing agreements are ambiguous, and care must be taken with their use.
    Keywords: risk sharing agreements; pharmaceutical prices
    JEL: I11 I18
    Date: 2007–12

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