nep-hea New Economics Papers
on Health Economics
Issue of 2011‒01‒03
nineteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Health and Retirement Effects in a Collective Consumption Model of Elderly Households By Aline Bütikofer; Arthur Lewbel; Shannon Seitz
  2. Overweight and Poor? On the Relationship between Income and the Body Mass Index By Jolliffe, Dean
  3. Intergenerational Persistence in Health in Developing Countries: The Penalty of Gender Inequality? By Bhalotra, Sonia R.; Rawlings, Samantha
  4. H1N1 influenza in Australia and its macroeconomic effects By George Verikios; James McCaw; Jodie McVernon; Anthony Harris
  5. Determinants of Noneconomic Damages in Medical Malpractice Settlements and Litigations: Evidence from Texas since 1988 By Jun Zhou
  6. The Socioeconomic Gradient of Obesity in Ireland By Madden, D
  7. Inequality of Opportunities in Health in Europe: Why So Much Difference Across Countries? By Jusot, F;; Tubeuf, S;; Trannoy, T;
  8. Inequality and Polarisation in Health Systems’ Responsiveness: A Cross-Country Analysis By Janoes, A;; Rice, N;; Robone, S;; Rosa Dias, P;
  9. Health systems’ responsiveness and its characteristics: a cross-country comparative analysis By Robone, S;; Rice, N;; Smith, P;
  10. Demand for hospital care and private health insurance in a mixed publicprivate system: empirical evidence using a simultaneous equation modeling approach By Chai Cheng, T;; Vahid, F;
  11. Smoking, Expectations, and Health: A Dynamic Stochastic Model of Lifetime Smoking Behavior By Darden, M
  12. Is fiscal decentralization good for your health? Evidence from a panel of OECD countries By Jiménez-Rubio, D;
  13. Healthcare Delivery and Stakeholder’s Satisfaction under Social Health Insurance Schemes in India: An Evaluation of Central Government Health Scheme (CGHS) and Ex- servicemen Contributory Health Scheme (ECHS) By Sukumar Vellakkal; Shikha Juyal; Ali Mehdi
  14. The Cultural Revolution, Stress and Cancer By Tilak Abeysinghe; Jiaying Gu
  15. Income Growth, Price Variation and Health Care Demand: A Mixed Logit Model Applied to Tow-period Comparison in Rural China By Yong HE; Jacky MATHONNAT; Martine AUDIBERT
  16. Global Burden of Disease and Economic Growth By Martine AUDIBERT; Pascale COMBES MOTEL; Alassane DRABO
  17. Exclusive contracts in health insurance By Rahkovsky, Ilya
  18. An Empirical Analysis of the Effects of GP Competition By Pike, Chris
  19. The Other Ex-Ante Moral Hazard in Health By Mikko Packalen; Jay Bhattacharya

  1. By: Aline Bütikofer (University of Bern); Arthur Lewbel (Boston College); Shannon Seitz (Boston College)
    Abstract: Using data on elderly individuals and couples, we estimate a collective model of household consumption of a variety of goods, showing how resources are shared between husband and wife, and how this allocation is affected by retirement and health status. We identify the extent to which shared consumption of some goods by elderly married couples reduces their costs of living relative to living alone. We also identify the fraction of household resources consumed by wives versus husbands, taking this jointness of some consumption into account. The results are relevant for household bargaining models and for a variety of welfare calculations.
    Keywords: Collective household models, Bargaining models, Retirement, Aging, Health, Equivalence scales, Indifference scales, Cost of Living, Consumption, Welfare
    JEL: D13 D12 I1 D6 C30
    Date: 2010–12–15
  2. By: Jolliffe, Dean (World Bank)
    Abstract: Contrary to conventional wisdom, NHANES data indicate that the poor have never had a statistically significant higher prevalence of overweight status at any time in the last 35 years. Despite this empirical evidence, the view that the poor are less healthy in terms of excess accumulation of fat persists. This paper provides evidence that conventional wisdom is reflecting important differences in the relationship between income and the body mass index. The first finding is based on distribution-sensitive measures of overweight which indicates that the severity of overweight has been higher for the poor than the nonpoor throughout the last 35 years. The second finding is from a newly introduced estimator, unconditional quantile regression (UQR), which provides a measure of the income-gradient in BMI at different points on the unconditional BMI distribution. The UQR estimator indicates that the strongest relationship between income and BMI is observed at the tails of the distribution. There is a strong negative income gradient in BMI at the obesity threshold and some evidence of a positive gradient at the underweight threshold. Both of these UQR estimates imply that for those at the tails of the BMI distribution, increases in income are correlated with healthier BMI values.
    Keywords: overweight, obesity, body mass index, unconditional quantile regression, Foster-Greer-Thorbecke poverty measures, NHANES
    JEL: I1 I18 I32
    Date: 2010–12
  3. By: Bhalotra, Sonia R. (University of Bristol); Rawlings, Samantha (University of Bristol)
    Abstract: This paper is motivated to investigate the often neglected payoff to investments in the health of girls and women in terms of next generation outcomes. This paper investigates the intergenerational persistence of health across time and region as well as across the distribution of maternal health. It uses comparable micro-data on as many as 2.24 million children born of about 0.6 million mothers in 38 developing countries in the 31 year period, 1970-2000. Mother’s health is indicated by her height, BMI and anemia status. Child health is indicated by mortality risk and anthropometric failure. We find a positive relationship between maternal and child health across indicators and highlight non-linearities in these relationships. The results suggest that both contemporary and childhood health of the mother matter and that the benefits to the next generation are likely to be persistent. Averaging across the sample, persistence shows a considerable decline over time. Disaggregation shows that the decline is only significant in Latin America. Persistence has remained largely constant in Asia and has risen in Africa. The paper provides the first cross-country estimates of the intergenerational persistence in health and the first estimates of trends.
    Keywords: intergenerational persistence, mobility, health, developing countries, cohort trends, inequality
    JEL: I10 J11 O57
    Date: 2010–12
  4. By: George Verikios; James McCaw; Jodie McVernon; Anthony Harris
    Abstract: Early 2009 saw the emergence of an H1N1 influenza epidemic in North America that spread to eventually become a global pandemic. Previous work has suggested that pandemics can have large macroeconomic effects on highly affected regions; here we estimate what those effects might be for Australia. Our analysis applies the MONASH-Health model: a quarterly computable general equilibrium model of the Australian economy. We simulate the effects of two H1N1 epidemics; the relatively mild 2009 outbreak and also a more severe episode. The analysis supports the assertion that an H1N1 epidemic could have significant short-run macroeconomic effects.
    Keywords: general equilibrium, H1N1 influenza, pandemics
    JEL: C68 E37 I18
    Date: 2011–12
  5. By: Jun Zhou (Wirtschaftspolitische Abteilung, University of Bonn)
    Abstract: There have long been claims that compensations for noneconomic damages are random because tort law does not provide clear guidance regarding these compensations. I investigate, in both settled and tried medical malpractice cases, whether noneconomic damage payments are arbitrary and what determines the probability and size of these payments. I find that payments for noneconomic damages are not completely random. They vary, in predictable ways, with observable characteristics of the case. The data suggest similar patterns in non-medical malpractice cases. I end by discussing the implications of my findings for the debate on the efficiency and rationale of noneconomic damage compensation.
    JEL: K13 K32 K41
    Date: 2010–12
  6. By: Madden, D
    Abstract: Using the nationally representative Slan dataset we calculate concentration indices for the incidence of obesity for men and women. We finder higher concentration indices for women than for men, but we also find that concentration indices fell between 2002 and 2007. However this appears to be owing to an increased incidence of obesity amongst better off people rather than decreased obesity amongst the less well-off. A decomposition of the concentration indices suggest that the greatest contribution to the gradient comes from the combination of lower rates of obesity amongst those with 3rd level education and their higher income.
    Keywords: Obesity; Body Mass Index; Concentration Index; decomposition
    JEL: I12 I31 I32
    Date: 2010–09
  7. By: Jusot, F;; Tubeuf, S;; Trannoy, T;
    Abstract: Among inequalities in health, those which are explained by circumstances during childhood or parents' characteristics are recognized as inequalities of opportunities in health and are considered as the most unfair. Tackling health inequalities in later life and improving the underlying socioeconomic determinants for older people is at the core of the European Union healthy-ageing strategy. We use the 2004 Survey on Health Ageing and Retirement in Europe and examine the influence of social and family background on the probability of reporting a good self-assessed health in adulthood using logistic models in ten European countries. The comparison of the odds ratios associated with family background without and with adjustment for individual educational level and occupation allows assessing the direct influence of family background and its influence through the determination of individual social status. Using the Gini index, we evaluate the magnitude of inequalities of opportunities in health, regardless of the mechanism of transmission and consider it in comparison with several indicators of economic and sanitary conditions. Inequalities of opportunity are more marked in Mediterranean and Germanic countries than in Nordic and Benelux countries. For instance, they are twice more important in Spain than in Sweden. Whereas they are mainly explained by social reproduction in most countries a direct effect of fathers' occupation on adult health remains in Belgium, Germany, Italy and Spain. There are country-specific protective social backgrounds: son of agricultural workers in Belgium, and son of technicians or fathers in armed forces in Spain. Parents' longevity has a significant protective effect on adult health. Differences in inequalities of opportunities in health between European countries emphasize the importance of policies reducing either social reproduction or intergenerational reproduction of health.
    Keywords: Europe; equality of opportunity; inequality in health; intergenerational transmission; older adults; Gini index
    JEL: D63 I12
    Date: 2010–10
  8. By: Janoes, A;; Rice, N;; Robone, S;; Rosa Dias, P;
    Abstract: The World Health Report 2000 proposed three fundamental goals for health systems encompassing population health, health care finance and health systems responsiveness. Each of the goals incorporates both an efficiency and equity dimension. While inequalities in population health and health care finance have motivated two important strands of research, inequalities in responsiveness have received less attention in health economics. This paper examines inequality and polarisation in responsiveness, bridging this gap in the literature and contributing towards an integrated analysis of health systems performance. It uses data from the World Health Survey to measure and compare inequalities in responsiveness across 25 European countries. In order to respect the inherently ordinal nature of the responsiveness data, median-based measures of inequality and polarisation are employed. The results suggest that, in the face of wide differences in the health systems analysed, there exists large variability in inequalit in responsiveness across countries.
    Keywords: Health systems; responsiveness; Ordered response data; Inequality; Polarisation
    JEL: I28 D63
    Date: 2010–10
  9. By: Robone, S;; Rice, N;; Smith, P;
    Abstract: This paper investigates the influence of aggregate country-level characteristics on health system responsiveness, using data on 62 countries present in the World Health Survey. While evidence exists on variations in reported levels of health system responsiveness across countries, the literature is sparse on the determinants of responsiveness, particularly of system wide characteristics (World Health Report, 2000). We attempt to bridge this gap in the literature by considering simultaneously several plausible country-level characteristics as potential determinants of health system responsiveness. These characteristics refer to the way health care systems are organised and funded, the socio-demographic traits of the populations served and the economic, cultural and institutional characteristics of countries. We pay particular attention to the role of health care expenditures per capita while controlling for potential confounding factors. Data on responsiveness and socio-demographic characteristics of respondents are taken from the World Health Survey, a survey launched by the World Health Organization in 2001. Information on the country-level characteristics are obtained from the United Nations Development Program (UNDP), the World Value Survey and the Polity IV Project database. The empirical analysis is performed by adopting a two step procedure. First, we increase the crosscountry comparability of the data by adjusting for variation in the way survey respondents rate an objective level of responsiveness using the hierarchical ordered probit (hopit) model. Secondly, we investigate the influence of health spending per capita and other country characteristics on the adjusted country-level measures of responsiveness. Our results suggest that the most relevant determinants of responsiveness appear to be health expenditure per capita, health care expenditure in the public sector and population levels of education.
    Keywords: Health systems responsiveness; Anchoring vignettes; Health care expenditures
    Date: 2010–11
  10. By: Chai Cheng, T;; Vahid, F;
    Abstract: This paper examines the determinants of hospital stay intensity, the decision to seek hospital care as a public or private patient and the decision to purchase private hospital insurance. We describe a theoretical model to motivate the simultaneous nature of these decisions. For the empirical analysis, we develop a simultaneous equation econometric model that accommodates the count data nature of length of stay and the binary nature of the patient type and insurance decisions. The model also accounts for the endogeneity of the patient type and insurance binary variables. The results suggest that there is some weak evidence of endogeneity between the decision to purchase insurance and the intensity of hospital use. We do not ¯nd signi¯cant moral hazard effects of private hospital insurance on the intensity of private hospital care. The results also indicate that the length of hospital stay for private patients is shorter than for public patients.
    Keywords: Demand for Hospital Care; Private Hospital Insurance; Public Private Mix; Moral Hazard
    JEL: I11 H42 C31 C15
    Date: 2010–10
  11. By: Darden, M
    Abstract: This research discusses results obtained through formulation and estimation of a dynamic stochastic model that captures individual smoking decision making, health expectations, and longevity over the life cycle. The standard rational addiction model is augmented with a Bayesian learning process about the health marker transition technology to evaluate the importance of personalized health information in the decision to smoke cigarettes. Additionally, the model is well positioned to assess how smoking, and smoking cessation, impacts morbidity and mortality outcomes while taking into consideration the potential for dynamic selection of smoking behaviors. This research also provides a novel approach to the empirical construction of the theoretically common “smoking stock” that facilitates the estimation of investment and depreciation parameters. The structural parameters are estimated using rich longitudinal health and smoking data from the Framingham Heart Survey: Offspring Cohort. Results suggest that there exists heterogeneity across individuals in the pathways by which smoking effects health. Furthermore, upon smoking, the estimated parameters suggest a positive reinforcement effect and a negative withdrawal effect, both of which encourage future smoking. The paper also presents evidence of health selection in smoking behavior that, when not modeled, may cause an overstatement of the effect of smoking on morbidity and mortality. Finally, personalized health marker information is not found to significantly influence smoking behavior relative to chronic health shocks themselves.
    Date: 2010–10
  12. By: Jiménez-Rubio, D;
    Abstract: In this study I use improved data of fiscal decentralization to re-examine the hypothesis that shifts towards more fiscal decentralization would be accompanied by improvements in population health on a panel of 19 OECD countries. The advantage of the new measure of decentralization is that it reflects better than previous measures the existence of autonomy in the decision making authority of lower tiers of government, a crucial issue in the decentralization process. The results based on panel data estimation techniques robust to heteroskedasticity and autocorrelation show that fiscal decentralization has a substantial and positive effect on health outcomes over the period studied. However, I find that conventional measures of decentralization tend to over-estimate the magnitude of the effect.
    Keywords: Fiscal decentralization; health outcomes; OECD countries; panel data
    JEL: I12 H77
    Date: 2010–11
  13. By: Sukumar Vellakkal; Shikha Juyal; Ali Mehdi (Indian Council for Research on International Economic Relations)
    Abstract: This study attempted to evaluate the working of the Central Government Health Scheme (CGHS) and Ex-servicemen Contributory Health Scheme (ECHS) by assessing patient satisfaction as well as the issues and concerns of empanelled private healthcare providers. The study is based on a primary survey of 1,204 CGHS and 640 ECHS principal beneficiaries, 100 empanelled private healthcare providers and 100 officials of the schemes across 12 Indian cities. We have found that patients are reasonably well satisfied with the healthcare services of both empanelled private healthcare providers and the dispensaries-polyclinics but are relatively more satisfied with the former than the latter. We also found that beneficiaries are willing to pay more for better quality services. Though the schemes provide comprehensive healthcare services, the beneficiaries incur some out-of- pocket health expenditure while seeking healthcare. Furthermore, beneficiaries are not in favour of the recent proposal to replace the schemes with health insurance for several reasons. The empanelled private healthcare providers are dissatisfied with the terms and conditions of empanelment, especially the low tariffs for their services as compared to prevailing market rates and the delays in reimbursements from the schemes. We suggest that appropriate efforts be undertaken to enhance the quality of healthcare service provided in the dispensaries-polyclinics of the CGHS and ECHS as well as to address the issues and concerns of empanelled private healthcare providers to ensure better healthcare delivery and for a long-term, sustainable public-private partnership.
    Keywords: CGHS, ECHS, patient satisfaction, willingness to pay, empanelled private healthcare providers
    JEL: H30 H51 H53 I19
    Date: 2010
  14. By: Tilak Abeysinghe; Jiaying Gu (Singapore Centre for Applied and Policy Economics)
    Abstract: The link between mental stress and cancer is still a belief, not a well established scientific fact. Scientists have relied largely on opinions of cancer stricken patients to establish a link between stress and cancer. Such opinion surveys tend to produce contradictory statistical inferences. Although it is difficult to conduct scientific experiments on humans similar to those on animals, human history is replete with “experiments” that have caused enormous stress on some human populations. The objective of this exercise is to draw evidence from one such massive experiment, the Cultural Revolution in China. Cancer data from Shanghai analyzed through an age period cohort technique show very strong evidence in support of the hypothesis that mental stress causes cancer.
    Keywords: cultural revolution, cancer, stress, health economics
    JEL: I10
    Date: 2010
  15. By: Yong HE (Centre d'Etudes et de Recherches sur le Développement International); Jacky MATHONNAT (Centre d'Etudes et de Recherches sur le Développement International); Martine AUDIBERT (Centre d'Etudes et de Recherches sur le Développement International)
    Abstract: 1989-2006 is a period of the start and the end of deregulation of Chinese health care sector and of disintegration of rural cooperative insurance system. During this period, the government health policy has turned healthcare providers all alike into profit seeking entities. Face to perverse effects, by 2003, Chinese government begun to restore rural cooperative insurance system. From CHNS data source, we constitute two samples: 89-93 and 04-06 with respectively 2117 and 2594 rural patients surveyed roughly in the same villages in 9 Chinese provinces to compare their health choice behaviors with the evolution of price, income, distance, insurance, age, and regional inequality. Using Mixed Multinomial Logit (MMNL) estimations, we have obtained three main results. First, even in both periods there is clear price effect, in 04-06 it tends to be weaker, and heterogeneity in price preference has increased. This corresponds well the fact that between the two periods price level has significantly increased and price variation reduced. Second, there is a stronger negative distance effect and heterogeneity in 2004-06, while in 89-93 this negative impact was lower and absent for providers farther than 10km. One interpretation is the existence of a substitution effect: when patients have less possibility to discriminate providers by price, they increase their preference in choice by distance. Third, while, wealth effect exists in some choices in 89-93, it becomes absent in 04-06. Explanations may be that one the one hand both supply side and demand side conditions on health care have been improved even, to less extent though, for the poor, and on the other hand, health care is necessary goods and is price inelastic. But meanwhile, we observed catastrophic effect for the poor: the poorer patients have their share of consumption in income more decreased after health care.
    Keywords: Empirical approach, health care demand, mixed logit model, insurance, China
    JEL: C25 I18 I11
    Date: 2010
  16. By: Martine AUDIBERT (Centre d'Etudes et de Recherches sur le Développement International); Pascale COMBES MOTEL (Centre d'Etudes et de Recherches sur le Développement International); Alassane DRABO
    Abstract: Relationships between health and economic prosperity or economic growth are difficult to assess. The direction of the causality is often questioned and the subject of a vigorous debate. For some authors, diseases or poor health had contributed to poor growth performances especially in low-income countries. For other authors, the effect of health on growth is relatively small, even if one considers that investments which could improve health should be done. It is argued in this paper that commonly used health indicators in macroeconomic studies (e. g. life expectancy, infant mortality or prevalence rates for specific diseases such as malaria or HIV/AIDS) imperfectly represent the global health status of population. Health is rather a complex notion and includes several dimensions which concern fatal (deaths) and non-fatal issues (prevalence and severity of cases) of illness. The reported effects of health on economic growth vary accordingly with health indicators and countries included in the analyses. The purpose of the paper is to assess the effect of a global health indicator on growth, the so-called disability-adjusted life year (DALY) that was proposed by the World Bank and the WHO in 1993. Growth convergence equations are run on 159 countries over the 1999-2004's period, where the potential endogeneity of the health indicator is dealt for. The negative effect of poor health on economic growth is not rejected thus reinforcing the importance of achieving MDGs.
    Keywords: Disease Global Burden, DALYs, economic growth, macroeconomic health impact, cross-country analysis
    JEL: E22 E24 I10 I18 O47
    Date: 2010
  17. By: Rahkovsky, Ilya
    Abstract: Competition between insurance companies for employees of a firm often increases the prices and reduces the availability of high-quality health plans offered to employees. An insurance company can reduce competition by signing an exclusive contract, which guarantees that the company is the only insurance provider. The study assesses whether exclusive contracts can alleviate the negative consequences of competition. Using the nation-wide survey of employers, I find that exclusive insurers charged 39-42 less for a unit of insurance quality than non-exclusive insurers. Furthermore, I find that the pattern of insurance quality dispersion is consistent with the exclusive insurers offering more high quality plans.
    Keywords: health insurance; exclusive contract; subsidy; vertical restraint; signaling
    JEL: I11 D86 G22 L42 J32
    Date: 2010–12–15
  18. By: Pike, Chris
    Abstract: We analyse the relationship between the quality of a GP practice in England and the degree of competition that it faces (as indicated by the number of nearby rival GP practices). We find that those GP practices that are located close to other rival GP practices provide a higher quality of care than that provided by GP practices that lack competitors. This higher level of quality is observed firstly in an indicator of clinical quality (referrals to secondary care for conditions that are treatable within primary care), and secondly in an indicator of patient observed quality (patient satisfaction scores obtained from the national GP patient survey). The association between increased competition and higher quality is found for GP practices located within 500 metres of each other. However it would appear that the magnitude and geographic scope of the relationship are constrained by restrictions upon patient choice. As a result the findings presented here may only reflect a fraction of the potential benefits to patients from increased choice and competition.
    Keywords: General Practice; Primary care; Competition; Quality
    JEL: I11 L32 L1
    Date: 2010–08–01
  19. By: Mikko Packalen (Department of Economics, University of Waterloo); Jay Bhattacharya (Stanford University School of Medicine)
    Abstract: It is well known that pooled insurance coverage can induce a form of ex-ante moral hazard: people make inefficiently low investments in self-protective activities. This paper identifies another ex-ante moral hazard that runs in the opposite direction: it causes people to choose inefficiently high levels of self-protection. This other ex-ante moral hazard arises through the impact that self-protective activities have on the reward for innovation. Lower levels of self-protection and the associated chronic conditions and behavioral patterns such as obesity, smoking, and malnutrition increase the incidence of many diseases for an individual. This increases the individual's consumption of treatments to those diseases, which increases the reward for innovation that an innovator receives. By the induced innovation hypothesis, which has broad empirical support, the increase in the reward for innovation in turn increases the rate of innovation, which benefits all consumers. As individuals do not take these positive externalities on the innovator and other consumers into account when deciding the level of self-protective activities, they each invest an inefficiently high level in self-protective activities. In the quantitative part of our analysis we show that for obesity the magnitude of this positive innovation externality roughly coincides with the magnitude of the negative Medicare-induced health insurance externality of obesity. The other ex-ante moral hazard that we identify can thus be as important as the ex-ante moral hazard that has been a central concept in health economics for decades. The quantitative finding also implies that the current Medicare-induced subsidy for obesity is approximately optimal. Thus the presence of this obesity subsidy is not a sufficient rationale for "soda taxes", "fat taxes" or other penalties on obesity.
    JEL: I10 I18 D62 H23
    Date: 2010–12

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