nep-hea New Economics Papers
on Health Economics
Issue of 2009‒05‒02
seven papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. AIDS Treatment in South Asia: Equity and Efficiency Arguments for Shouldering the Fiscal Burden When Prevalence Rates are Low By Mead Over
  2. HIV and Income Inequality: If There Is a Link, What Does It Tell Us? By Göran Holmqvist
  3. Pension Risk, Retirement Saving and Insurance By Luigi Guiso; Tullio Jappelli; Mario Padula
  4. Universal Health Care 101: Lessons for the Eastern Caribbean and Beyond By Evridiki Tsounta
  5. Do the poor still cost more? The relationship between small area income deprivation and length of stay for elective hip replacement in the English NHS from 2001/2 to 2006/7 By Cookson, R; Laudicella, M
  6. Health Human Capital, Height and Wages in China By Wenshu Gao; Russell Smyth
  7. Can You Get What You Pay For? Pay-For-Performance and the Quality of Healthcare Providers By Kathleen J. Mullen; Richard G. Frank; Meredith B. Rosenthal

  1. By: Mead Over
    Abstract: The slower spread of AIDS in South Asian countries, combined with the fact that most South Asian countries have higher per capita incomes than the most severely affected countries of other regions imply that the various impacts of the disease will be smaller in South Asia than in the worst affected countries in other regions. While justified with respect to the impact of the disease on economic output, on poverty, or on orphanhood, this conclusion does not follow with respect to the health sector, where the relatively minor public role in health care delivery and the entrepreneurial and heterogeneous private health and pharmaceutical sectors combine to magnify the potential impact of the epidemic. This paper uses recent epidemiological data on the extent and rate of spread of HIV/AIDS in South Asian countries and alternative scenarios regarding future government efforts to expand access to AIDS treatment in order to estimate the future need for antiretroviral treatment in South Asian countries and the fiscal burden that their governments will shoulder if they decide to provide or finance all of the needed care. Since AIDS treatment cannot be presumed to slow HIV transmission and may speed it, the usual argument for paying for such treatment with public funds is on equity grounds—that it will prevent poverty and orphanhood. Indeed this paper estimates that public financing of AIDS treatment might avert poverty for about three percent of the Indian population, for example. However, data on the quality of private health care in India suggests that another effect of publicly produced AIDS treatment would be to crowd out lower-quality private AIDS treatment, thereby preventing some of the negative spillovers of poor quality private treatment. The paper closes by arguing on efficiency grounds that the government role in AIDS treatment should encompass both regulation of the private sector and support for quality “structured” AIDS treatment in the public sector.
    Keywords: AIDS, HIV, South Asia
    Date: 2009–02
  2. By: Göran Holmqvist (Institute for Futures Studies and Nordic Africa Institute)
    Abstract: The global HIV prevalence map reveals striking contrasts between high- and low-prevalence countries. Africa is the most affected continent, but within Africa there is a distinct geographical pattern. A handful of Southern African countries have prevalence indicators in the range of 15?35 per cent, while rates in West African countries are in the range of 1?5 per cent and those in East African countries are somewhere in between. What explains this variation in HIV prevalence rates? The answer could offer some clues about the HIV epidemic and how to counteract it. More generally, it may also teach us something about why certain societies are more vulnerable than others to an infectious disease such as HIV. (...)
    Keywords: HIV and Income Inequality: If There Is a Link, What Does It Tell Us?
    Date: 2009–04
  3. By: Luigi Guiso (European University Institute and CEPR); Tullio Jappelli (Università di Napoli Federico II, CSEF, and CEPR); Mario Padula (Università di Venezia, and CSEF)
    Abstract: Using a representative sample of Italian investors, we estimate the risk associated with pension benefits by eliciting for each individual the subjective distribution of the replacement rate as a summary indicator of social security wealth. We find substantial heterogeneity of pension risk and show that it is consistently related to observable features in the pension system that have different effects on individuals with different characteristics. We then relate subjective pension risk to individuals’ financial decisions. We find that people try to attenuate the adverse consequences of pension wealth uncertainty by increasing demand for targeted retirement saving and for insurance. Individuals facing more pension wealth risk tend to enroll more often in private pension funds, invest more in life insurance and buy more private health insurance. These effects are consistent with people becoming more risk-averse when pension wealth becomes less predictable, leading them to search for greater financial security.
    Keywords: Pension Risk, Retirement Saving, Insurance
    JEL: H55 E21
    Date: 2009–04–24
  4. By: Evridiki Tsounta
    Abstract: Despite the increasing interest in universal health care, little is known about the optimal way to finance, design, and implement it. This paper attempts to fill this gap by providing some general policy recommendations on this important issue. While most of the paper addresses the Eastern Caribbean Currency Union (ECCU) countries, its policy implications are applicable to any country. The paper finds that the best financing option is country-specific¯depending on a country’s economic, cultural, institutional, demographic and epidemiological characteristics, as well as political economy considerations. However, taxation should be the primary financing source. It also concludes that an appropriate and realistic benefit package would need to be designed to ensure the system’s financial viability. Regarding the optimal way to implement universal health care, certain preconditions are needed, including sound public administration, a small informal economy, and a transparent health financing system that builds social consensus.
    Keywords: Health care , Eastern Caribbean Currency Union , Government expenditures , Social safety nets , Aging , Population , Fiscal policy , Tax administration , Taxation , Political economy ,
    Date: 2009–03–19
  5. By: Cookson, R; Laudicella, M
    Abstract: We examine whether hospital patients living in low income areas of England cost more to treat, using elective hip replacement as a tracer procedure and length of stay as a cost indicator. Anonymous hospital records are extracted on all 235,813 patients admitted to English NHS Hospital Trusts for elective total hip replacement from 2001/2 through 2006/7. The relationship between length of stay and small area income deprivation is modelled using linear regression, allowing for patient characteristics (age, sex, number of diagnoses, procedure type), time trends and Trust effects. Patients from the most income deprived decile of areas stay 12-15% longer than those from the least deprived decile, or 8% longer after adjusting for patient characteristics and Trust effects. This relationship did not change during the period, despite substantial NHS expenditure growth and reform along with substantial declines in average length of stay and waiting time. The major determinants of length of stay are age and number of diagnoses. Under the current NHS fixed price payment system, there are incentives for hospitals to avoid offering hip replacements to elderly patients, patients with substantial co-morbidity and, to a lesser extent, patients from low income areas.
    Keywords: Health Care Economics and Organizations, Hospital Costs, Length of Stay, Prospective Payment System, Socioeconomic Factors
    Date: 2009–04
  6. By: Wenshu Gao; Russell Smyth
    Abstract: We estimate the returns to height using data from 12 Chinese cities. We present both ordinary least squares (OLS) and two-stage least squares (TSLS) estimates. In the latter height is instrumented using proxies for health human capital accumulated in childhood and adolescence, which influence adult height. The OLS estimates suggest that an additional centimetre of adult height is associated with wages being 1.1 per cent higher for males and 0.9 per cent higher for females. The TSLS estimates suggest each additional centimetre of adult height is associated with wages being 4.8 per cent higher for males and 10.8 per cent for females. The difference reflects the fact that the OLS estimates are predominantly determined by the random genetic factors influencing height, while the TSLS estimates also take into account returns from investment in health human capital during childhood and adolescence. These results imply considerable returns to investment in health human capital.
    Keywords: China, health, height, wages
    JEL: I10 J15 J31 J71
    Date: 2009–04
  7. By: Kathleen J. Mullen; Richard G. Frank; Meredith B. Rosenthal
    Abstract: Despite the popularity of pay-for-performance (P4P) among health policymakers and private insurers as a tool for improving quality of care, there is little empirical basis for its effectiveness. The authors use data from published performance reports of physician medical groups contracting with a large network HMO to compare clinical quality before and after the implementation of P4P, relative to a control group. They consider the effect of P4P on both rewarded and unrewarded dimensions of quality. In the end, they fail to find evidence that a large P4P initiative either resulted in major improvement in quality or notable disruption in care.
    JEL: D23 I12 H51
    Date: 2009–04

This nep-hea issue is ©2009 by Yong Yin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.