nep-hea New Economics Papers
on Health Economics
Issue of 2008‒05‒24
eleven papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Claims-Made and Reported Policies and Insurer Profitability in Medical Malpractice By Patricia Born; M. Martin Boyer
  2. Risk Retention Groups in Medical Malpractice Insurance: A Test of the Federal Chartering Option By Patricia Born; M. Martin Boyer
  3. BRINGING INSTITUTIONS INTO HEALTH ECONOMICS By Liliana Chicaíza; Mario García; Jaime Lozano
  4. Pharmaceutical Research Strategies By Sandra Phlippen; An Vermeersch
  5. The Smoker's Wage Penalty Puzzle - Evidence from Britain By Lasse Brune
  6. Be Wealthy to Stay Healthy: An Analysis of Older Australians Using the HILDA Survey By Lixin Cai
  7. Food price policies and the distribution of body mass index: Theory and empirical evidence from France. By Fabrice Etilé
  8. Trying to estimate a monetary value for the QALY By Jose Luis Pinto Prades; Graham Loomes; Raul Brey
  9. Prevention Failure: The Ballooning Entitlement Burden of U.S. Global AIDS Treatment Spending and What to Do About It By Mead Over
  10. The Not-So-Visible Determinants of Youth Reproductive Health in Sub-Saharan Africa. By Soiliou Namoro
  11. Mother's education and birth weight By Arnaud Chevalier; Vincent O'Sullivan

  1. By: Patricia Born; M. Martin Boyer
    Abstract: The liability crisis of the 1970s led to the introduction of a new type of insurance policy designed, according to Doherty (1991), to reduce the un-diversifiable uncertainty associated with writing long-tail liability lines. These new claims-made and reported policies gained favor in place of the traditional occurrence coverage in the early eighties not only in medical malpractice, but also in the general liability arena. Under occurrence coverage, a loss incurred in a given year is covered by the contract for that year, regardless of when the claim is reported. In contrast, a claims-made policy pays only the claims reported in the policy year. Our paper presents a structure, conduct, and performance analysis à la Joskow (1973) of the medical malpractice insurance industry by focusing on the differences between the two contracts. The main question we want to address is why there are two types of contracts that cover the same risk exposure in the medical malpractice insurance industry whereas in other lines of insurance, only one exists primarily. <P>La crise de la responsabilité civile des années 70 a mené à la création d’un nouveau type de contrat d’assurance qui avait pour but, selon Doherty (1991), de réduire le risque systématique associé aux polices d’assurance à longue durée. Ces contrats CMR (Claims-Made and Reported) ont obtenu la faveur du public dans les années 80 particulièrement pour ce qui est de l’assurance de la responsabilité civile des professionnels de la médecine. Nous présentons ainsi une étude de la structure et de la performance de l’industrie de l’assurance de la responsabilité civile des professionnels de la médecine en mettant en relief les deux types de contrats dans ce marché. La question à laquelle nous voudrions ultimement répondre est la suivante : pourquoi dans le marché de l’assurance de la responsabilité civile des professionnels de la médecine retrouvons-nous les deux types de contrats alors qu’un seul type est généralement offert dans les autres marchés?
    Keywords: medical malpractice insurance, industry structure and performance analysis, claims-made contracts, assurance de la responsabilité civile des professionnels de la médecine, analyse de la structure et de la performance de l’industrie, contrats CMR
    Date: 2008–05–01
  2. By: Patricia Born; M. Martin Boyer
    Abstract: The liability crisis of the eighties led to the enactment of the federal Liability Risk Retention Act of 1986, which encouraged the formation of risk retention groups, a new organizational form that is incorporated under a federal charter. We use risk retention groups as a proxy for insurers opting for a federal charter and assess empirically the economic viability of an optional federal charter. Using annual data from the National Association of Insurance Commissioners, we assess whether risk retention groups increase insurance availability and competition in the medical malpractice insurance industry. We consider the insurers’ use of two different types of insurance contracts, namely occurrence contracts and claims-made and reported contracts, and evaluate the benefits to policyholders and society of insurers having access to an optional federal charter, while remaining under state regulatory and solvency controls. <P>La crise des assurances de la responsabilité civile qu’ont connue les États-Unis au milieu des années 80 a mené le gouvernement fédéral à légiférer pour augmenter le nombre d’assureurs au pays via le Liability Risk Retention Act de 1986. Cette loi a permis la création d’un nouveau type d’assureurs, les risk retention groups (RRG), qui sont régis par une charte quasi-fédérale contrairement aux assureurs traditionnels qui doivent obtenir un permis d’exploitation dans chaque état américain. Nous utilisons ces RRG dans notre étude pour évaluer la pertinence d’autoriser les assureurs américains d’être incorporés et réglementés par le gouvernement fédéral plutôt qu’au niveau des états individuellement. En utilisant des données de la National Association of Insurance Commissioners, nous examinons si la présence des RRG a augmenté la compétition et la disponibilité de produits d’assurance de la responsabilité civile des professionnels de la médecine. Nous évaluons ainsi les bénéfices pour les assurés et la société de permettre aux assureurs d’être réglementés et incorporés au niveau fédéral.
    Keywords: medical malpractice insurance, optional federal charter, insurance availability, claims-made contracts, assurance de la responsabilité civile, charte fédérale optionnelle, disponibilité des assurances, contrats CMR.
    Date: 2008–05–01
  3. By: Liliana Chicaíza; Mario García; Jaime Lozano
    Date: 2008–05–14
  4. By: Sandra Phlippen (Erasmus University Rotterdam); An Vermeersch (McKinsey and Company)
    Abstract: This study analyses 1400 research projects of the top 20 R&D-spending pharmaceuticals to identify the determinants of successful research projects. We provide clear evidence that externally sourced projects and projects involving biotechnologies perform better than internal projects and chemical projects, respectively. Controlling for these effects, we find that big pharma should either build a critical mass of disease area knowledge or diversify projects over different DA’s in order to obtain higher success probabilities. Projects in which a firm has built a critical mass of disease knowledge (through at least 10 projects per DA) are significantly more likely to reach clinical testing. Moreover, within large disease areas, the success probabilities of internal projects increases when a few (less than 20%) externally sourced projects are involved. We interpret this finding as knowledge spillovers from external to internal projects, as the limited number of external projects enables the same people to be involved in both external and internal research projects and apply externally generated knowledge internally.
    Keywords: research strategies; pharmaceutical industry; innovation; external collaborations; make-or-buy
    JEL: L65 L25 L21 D21 D83
    Date: 2008–03–03
  5. By: Lasse Brune (World Bank)
    Abstract: This work investigates the effect of smoking on wages for male workers using panel data from Britain for the period of 1991–2005. The strong negative correlation of smoking and wages found in a cross- sectional analysis reduces substantially when accounting for unobserved individual heterogeneity using Fixed Effects estimation. I find a statistically significant wage penalty that is causally due to smoking of about –2% for smokers over those who quit. Further analysis indicates, however, that the negative effect might be underestimated when comparing with those who never started smoking or quit a long time ago.
    Date: 2007–12
  6. By: Lixin Cai (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: Using the Household, Income and Labour Dynamics in Australia (HILDA) survey data, this study examines the effect of wealth, as measured by net worth, on health transitions of older Australians. By focusing on health transitions instead of health status itself, the study avoids potential endogeneity of wealth arising from the reverse effect of health on wealth. Two health indicators are used to define health transitions: self-reported general health status and the existence of long-term health conditions. The results show that for both health indicators wealthy people are less likely to experience a transition from good to poor health, suggesting that wealth might have a causal effect on health.
    Date: 2008–05
  7. By: Fabrice Etilé
    Abstract: This paper uses French food expenditures data to examine the effect of the prices of 23 food product categories on the distribution of Body Mass Index (BMI) in a sample of French adults. A dynamic choice model that uses standard assumptions from physiology is developed. It is shown that the slope of the price-BMI relationship is affected by the individual's Physical Activity Level (PAL). When the latter is unobserved, identification of price effects at conditional quantiles of the BMI distribution requires quantile independence between PAL and the covariates, especially income. Then, using quantile regression results, unconditional BMI distributions can be simulated for various price policies. It is found that increasing the price of beverages, fats and sugars and sweets by 10%, and decreasing the price of fruits and vegetables by 10% would reduce the prevalence of overweight and obesity by 7 and 5 percentage points respectively.
    Date: 2008
  8. By: Jose Luis Pinto Prades (Department of Economics, Universidad Pablo de Olavide); Graham Loomes (Department of Economics, University of East Anglia); Raul Brey (Department of Economics, Universidad Pablo de Olavide)
    Abstract: In this paper we study the possibility of estimating a monetary value for the QALY. Using two different surveys of the Spanish population (n=900), we try to establish whether willingness to pay (WTP) is (almost) proportional to the health gains measured in QALYs. We also explore whether subjects’ responses are prone to any biases. We find that the monetary value of the QALY is higher the smaller the health gain, pointing to insensitivity in WTP. We also find two clear biases. One is the existence of sequencing effects. The other is the insensitivity of WTP to the duration of the period of payment. All these effects translate into a large variation in estimates of the monetary value of the QALY. We conclude that in order to be able to obtain consistent and stable estimates, we should try to understand better the causes of these problems with a view to developing ways of mitigating them.
    Keywords: QALYs, willingness to pay, biases.
    JEL: I10 I18
    Date: 2008–05
  9. By: Mead Over
    Abstract: U.S. global AIDS spending is helping to prolong the lives of more than a million people and is widely seen as a foreign policy and humanitarian success. Yet this success contains the seeds of a future crisis. Life-long treatment costs are increasing as those on treatment live longer, and the number of new HIV infections continues to outpace the number of people receiving treatment. Escalating treatment costs coupled with neglected prevention measures threaten to squeeze out U.S. spending on other global health needs, even to the point of consuming half of the entire U.S. foreign assistance budget by 2016. This paper describes the dimensions of these problems and argues that the United States has unwittingly created a new global “entitlement” to U.S.-funded AIDS treatment that currently costs about $2 billion per year and could grow to as much as $12 billion a year by 2016— more than half of what the United States spent on total overseas development assistance in 2006. And the AIDS treatment entitlement would continue to grow, squeezing out spending on HIV prevention measures or on other critical development needs, all of which would be considered “discretionary” by comparison. Over suggests ways to substantially restructure the President’s Emergency Plan for AIDS Relief (PEPFAR) in order to avert a crisis in which Americans would have to choose among indefinitely increasing foreign assistance spending on an entitlement, eliminating half of other foreign aid programs, or withdrawing the medicine that millions of people depend upon to stay alive. His suggestions include consolidating treatment success and leveraging treatment for prevention by making the extension of further AIDS treatment financing conditional on success in both treatment adherence and prevention outreach; shifting to a focus on prevention by underwriting male circumcision efforts and expanding HIV testing and counseling for couples more so than for individuals; and intensifying the effects of prevention interventions by mapping high risk locations and targeting them with tailor-made prevention programs.
    Keywords: HIV/AIDS, global AIDS, PEPFAR, foreign aid
    Date: 2008–05
  10. By: Soiliou Namoro
    Abstract: We establish the importance of government corruption and youth literacy for their effects on Youth Reproductive Health (YRH), with particularly strong effects on adolescent girls, in sub-Saharan Africa (SSA). We identify the magnitude of these previously unspecified factors in the reproductive health of young people by controlling for the commonly cited influences of poverty and social inequality. We also measure the policy-mediated effects of ethnic diversity on women’s ages at marriage, the marriage age-gap, the age at first sexual encounter, and the prevalence of sexual encounters before age 15. Our analysis highlights the interplay of these factors in a region where there is high risk for sexually-transmitted diseases (STD).We account for the possible endogeneity of youth literacy when used as a predictor of YRH. Our crosscountry Ordinary Least Squares (OLS) and Instrumental Variable (IV) regressions show that corruption, ethnic fractionalization and youth literacy are powerful predictors of YRH.
    Date: 2008–05
  11. By: Arnaud Chevalier (Department of Economics, Royal Holloway, University of London, and Geary Institute, University College Dublin); Vincent O'Sullivan (Department of Economics, Warwick University and Geary Institute, University College Dublin)
    Abstract: Low birth weight has considerable short and long-term consequences and leads to high costs to the individual and society even in a developed economy. Low birth weight is partially a consequence of choices made by the mother pre- and during pregnancy. Thus policies affecting these choices could have large returns. Using British data, maternal education is found to be positively correlated with birth weight. We identify a causal effect of education using the 1947 reform of the minimum school leaving age. Change in compulsory school leaving age has been previously used as an instrument, but has been criticised for mostly picking up time trends. Here, we demonstrate that the policy effects differ by social background and hence provide identification across cohorts but also within cohort. We find modest but heterogenous positive effects of maternal education on birth weight with an increase from the baseline weight ranging from 2% to 6%.
    Keywords: Returns to education, health
    JEL: I12 I29
    Date: 2007–06–12

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