nep-hea New Economics Papers
on Health Economics
Issue of 2011‒04‒09
fifteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. A Fuzzy Approach to the Measurement of Leakages for North American Health Systems By Paul Makdissi; Myra Yazbeck; Hugo Goldeboeuf
  2. Health and Well-Being in the Crisis By Askitas, Nikos; Zimmermann, Klaus F.
  3. Productivity or discrimination? An economic analysis of excess-weight penalty in the Swedish labor market By Dackehag, Margareta; Gerdtham, Ulf-G; Nordin, Martin
  4. Who Takes Advantage of Free Flu Shots? Examining the Effects of an Expansion in Coverage By Carman, K.G.; Mosca, I.
  5. The Role of Desicion Making Processes in the Correlation between Wealth and Health By Binswanger, J.; Carman, K.G.
  6. Water and sanitation to reduce child mortality : the impact and cost of water and sanitation infrastructure By Gunther, Isabel; Fink, Gunther
  7. How economic growth and rational decisions can make disaster losses grow faster than wealth By Hallegatte, Stephane
  8. The relationship between baseline health and longitudinal costs of hospital use. By Wouterse, B.; Meijboom, B.R.; Polder, J.J.
  9. Physician Density in a Two-Tiered Health Care System By Gächter, Martin; Schwazer, Peter; Theurl, Engelbert; Winner, Hannes
  10. Auctions versus Negotiations: Evidence from Public Procurement in the Italian Healthcare Sector By Mercedes Vellez
  11. How Payment Systems Affect Physicians' Provision Behaviour – An Experimental Investigation By Heike Hennig-Schmidt; Reinhard Selten; Daniel Wiesen
  12. Quality and quantity: the role of social interactions in individual health By Damiano, Fiorillo; Fabio, Sabatini
  13. The Effects of Alcohol Policies in Reducing Entry Rates and Time Spent in Foster Care By Sara Markowitz; Alison Evans Cuellar; Ryan M. Conrad; Michael Grossman
  14. Physician Response to Pay-for-Performance: Evidence from a Natural Experiment By Jinhu Li; Jeremiah Hurley; Philip DeCicca; Gioia Buckley
  15. Economics of Individualization in Comparative Effectiveness Research and a Basis for a Patient-Centered Health Care By Anirban Basu

  1. By: Paul Makdissi (Department of Economics, University of Ottawa, Ottawa, ON); Myra Yazbeck (Department of Epidemiology Biostatics and Occupational Health, McGill University, Montreal, PQ Canada); Hugo Goldeboeuf (Department of Economics, University of Ottawa, Ottawa, ON)
    Abstract: This paper uses a fuzzy-fuzzy stochastic dominance approach to compare patients' leakages in the Canadian and the U.S health care systems. Leakages are defined in terms of individuals who are in bad health and could not have access to health care when needed. To carry this comparison we rely on the assumption that Canada is a strong counterfactual for the U.S. We first develop a class of fuzzy leakages indices and incorporate them in a stochastic dominance framework to derive the dominance criterion. We then use the derived criterion to perform inter-country comparisons on the global level. To provide more insight, we decompose the analysis with respect to gender, ethnicity, income and education. Intra-country comparisons reveal the presence of income based leakage inequalities in both countries yet, gender, ethnic and education based disparities appear to be present in the U.S only. As for inter-country comparison, results are in general consistent with the hypothesis that leakages are less important under the Canadian health care system.
    Keywords: Health care resources, Fuzzy sets, Leakage
    JEL: D63 I18 I19
    Date: 2011
  2. By: Askitas, Nikos (IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: The internet has become an important data source for the Social Sciences because these data are available without lags, can be regarded as involuntary surveys and hence have no observer effect, can be geo-labeled, are available for countries across the globe and can be viewed in continuous time scales from the micro to the macro level. The paper uses internet search data to document how the great economic crisis has affected people’s well-being and health studying the US, Germany and a cross section of the G8 countries. We investigate two types of searches which capture self-diagnosis and treatment respectively: those that contain the words ’symptoms’ and ’side effects’. Significant spikes for both types of searches in all three areas (US, Germany and the G8) are found, which are coincident with the crisis and its contagion timeline. An array of due diligence checks are performed and a number of alternative hypotheses are excluded to confirm that the search spikes imply an increase in malaise.
    Keywords: well-being, symptoms, side effects, Gallup, economic crisis, financial crisis, ill-being
    JEL: C81 E32 I1 L86
    Date: 2011–03
  3. By: Dackehag, Margareta (Department of Economics, Lund University); Gerdtham, Ulf-G (Department of Economics, Lund University); Nordin, Martin (Department of Economics, Lund University)
    Abstract: Using longitudinal data, this paper investigates the penalty for excess weight in the Swedish labor market, distinguishing between the productivity and the discrimination hypotheses. We analyze employment, income, and sickness absence , using the latter as a direct measure of productivity. We find that excess weight women, but not men, experience a significant employment penalty. Both genders experience a significant income penalty for obesity. We conclude that the penalties are associated with lower productivity, primarily in terms of health. We find no evidence of discrimination.
    Keywords: Employment; income; sickness absence; obesity; overweight
    JEL: I10 I12 J23 J31
    Date: 2011–04–01
  4. By: Carman, K.G.; Mosca, I. (Tilburg University, Center for Economic Research)
    Abstract: Because of the high risk of costly complications (including death) and the externalities of contagious diseases, many countries provide free flu shots to certain populations free of charge. This paper examines the expansion of the free flu shot program in the Netherlands. This program expanded in 2008 to cover all individuals over the age of 60, instead of 65. We investigate the effectiveness of the expansion of the flu shot program and examine those factors that are likely to influence people to change their behavior. We find that the main barrier to take up of free flu shots in the Netherlands is labor force participation. Expansion of the program did little to change the behavior of those at increased risk due to co-morbidities, primarily because these individuals were already getting flu shots.
    Keywords: Preventive Health Care;Flu Shot;Dutch Policy;Coverage Expansion.
    JEL: I10 I18
    Date: 2011
  5. By: Binswanger, J.; Carman, K.G. (Tilburg University, Center for Economic Research)
    Abstract: There are many pathways explaining the relationship between socioeconomic status and health; one possibility is that some normally unobservable characteristic causes people to invest both in their financial well-being and their health. Here we consider the possibility that the decision making processes are similar across domains and that the steps individuals take to make decisions can help to explain the correlation in outcomes across domains. We focus particularly on retirement savings decisions and decisions in the health domain. Choices in both domains have long-term consequences and therefore require foresight and the ability to process complex information. Our results suggest that up to 44% of the correlation between wealth and health is due to the processes that people use to make these choices.
    Keywords: Health;Wealth;Decision Making.
    JEL: I12 D14
    Date: 2011
  6. By: Gunther, Isabel; Fink, Gunther
    Abstract: Using household survey data, this paper estimates the mortality impact of improved water and sanitation access in order to evaluate the potential contribution of water and sanitation investment toward achieving the child mortality targets defined in Millennium Development Goal 4. The authors find that the average mortality reduction achievable by investment in water and sanitation infrastructure is 25 deaths per 1,000 children born across countries, a difference that accounts for about 40 percent of the gap between current child mortality rates and the 2015 target set in the Millennium Development Goals. According to the estimates, full household coverage with water and sanitation infrastructure could lead to a total reduction of 2.2 million child deaths per year in the developing world. Combining this analysis with cost data for water and sanitation infrastructure, the authors estimate that the average cost per life-year saved ranges between 65 and 80 percent of developing countries'annual gross domestic product per capita. The results suggest that investment in water and sanitation is a highly cost-effective policy option, even when only the mortality benefits are taken into consideration. Taking into account the additional expected benefits, such as reduced morbidity, time spending, and environmental hazards, would further increase the benefit-cost ratio.
    Keywords: Population Policies,Town Water Supply and Sanitation,Urban Water Supply and Sanitation,Water Supply and Sanitation Governance and Institutions,Wastewater Treatment
    Date: 2011–03–01
  7. By: Hallegatte, Stephane
    Abstract: Assuming that capital productivity is higher in areas at risk from natural hazards (such as coastal zones or flood plains), this paper shows that rapid development in these areas -- and the resulting increase in disaster losses -- may be the consequence of a rational and well-informed trade-off between lower disaster losses and higher productivity. With disasters possibly becoming less frequent but increasingly destructive in the future, average disaster losses may grow faster than wealth. Myopic expectations, lack of information, moral hazard, and externalities reinforce the likelihood of this scenario. These results have consequences on how to design risk management and climate change policies.
    Keywords: Natural Disasters,Hazard Risk Management,Insurance&Risk Mitigation,Labor Policies,Economic Theory&Research
    Date: 2011–03–01
  8. By: Wouterse, B. (Tilburg University); Meijboom, B.R. (Tilburg University); Polder, J.J. (Tilburg University)
    Date: 2011
  9. By: Gächter, Martin (Department of Economics and Statistics, University of Innsbruck); Schwazer, Peter (Department of Economics and Statistics, University of Innsbruck); Theurl, Engelbert (Department of Economics and Statistics, University of Innsbruck); Winner, Hannes (University of Salzburg)
    Abstract: We investigate the density of private physicians in a two-tiered health care system, i.e., one with co-existing public and private health care providers. In particular, we analyze how the densities of private and public suppliers of outpatient health care (general practitioners and specialists) are related to each other. Using a panel of 121 Austrian districts between 2002 and 2008, we find that the density of private specialists is positively associated with the density of private general practitioners, but negatively related to the density of public general practitioners. We also observe a negative relationship between the densities of private and public general practitioners and the ones of private and public specialists, indicating competitive forces between the private and the public sector of the outpatient health care provision in Austria.
    Keywords: Competition in health care markets; physician location; panel econometrics
    JEL: C23 I11 I18 L23
    Date: 2011–03–31
  10. By: Mercedes Vellez (University of Rome "Tor Vergata")
    Abstract: This paper contributes to the empirical literature on auctions and negotiations. Using healthcare facilities data on procurement contracts, I find evidence that auctions do not yield lower prices than negotiations. This result is robust to specifications tackling quality differences, endogenous participation, and the bilateral and multilateral nature of negotiated procedures. I also find evidence that late payments reduce competition and thus affect firms’ participation choices. A simple test based on Benford’s Law is used to rule out collusion among participants as a possible explanation of the results.
    Keywords: Auctions; negotiations; procurement; medical technology; competition; endogeneity; collusion.
    JEL: H57 I18
    Date: 2011–03–29
  11. By: Heike Hennig-Schmidt; Reinhard Selten; Daniel Wiesen
    Abstract: Understanding how physicians respond to incentives from payment schemes is a central concern in health economics research. We introduce a controlled laboratory experiment to analyse the influence of incentives from fee-for-service and capitation payments on physicians’ supply of medical services. In our experiment, physicians choose quantities of medical services for patients with different states of health. We find that physicians provide significantly more services under fee-for-service than under capitation. Patients are overserved under fee-forservice and underserved under capitation. However, payment incentives are not the only motivation for physicians’ quantity choices, as patients’ health benefits are of considerable importance as well. We find that patients in need of a high (low) level of medical services receive a larger health benefit under fee-for-service (capitation).
    Keywords: Physician payment system; laboratory experiment; incentives; fee-for-service; capitation
    JEL: C91 I11
    Date: 2011–03
  12. By: Damiano, Fiorillo; Fabio, Sabatini
    Abstract: The public health literature focusing on the detrimental effects of social isolation has shown that the quantity of social connections is positively correlated with individual health. Drawing on pooled cross-sectional data, we test this hypothesis on a representative sample of the Italian population. Our findings show that, besides the quantity of interactions, it is their quality – as measured by subjective satisfaction derived from relationships with friends – that works as the best predictor of health. We point out the existence of health disparities based on socio-economic status. Poorer and less educated individuals are exposed to a higher probability of reporting poor health conditions. The risk is even worse for unemployed and retired workers. This paper contributes to the literature in two substantive dimensions. This is the first empirical study of the relationship between social interactions and health in Italy. Second, we add to previous studies by carrying out the first assessment of the role of satisfaction in interpersonal relations.
    Keywords: Health; well-being; satisfaction; social interactions; social capital; family; Italy.
    JEL: Z12 I12 I18 Z13
    Date: 2011–03–22
  13. By: Sara Markowitz; Alison Evans Cuellar; Ryan M. Conrad; Michael Grossman
    Abstract: The purpose of this paper is to empirically estimate the propensity for alcohol-related policies to influence rates of entry into foster care and the length of time spent in foster care. Alcohol consumption is believed to be major contributing factor to child maltreatment, associated with an increased likelihood of abuse and longer durations once in foster care. We analyze a panel of state-level foster care entry rates over time, followed by a duration analysis of individual-level cases. The alcohol regulations of interest include beer, wine, and liquor taxes and prices, and a measure of alcohol availability. Overall, these alcohol control policies appear to have limited power to alter foster care entry rates and duration once in care. We find that higher alcohol taxes and prices are not effective in reducing foster care entry rates, however, once in foster care, the duration of stay may be influenced with higher taxes, particularly when the entry was a result of an alcohol abusing parent.
    JEL: I0 J1 K0
    Date: 2011–03
  14. By: Jinhu Li; Jeremiah Hurley; Philip DeCicca; Gioia Buckley
    Abstract: Explicit financial incentives, especially pay-for-performance (P4P) incentives, have been extensively employed in recent years by health plans and governments in an attempt to improve the quality of health care services. This study exploits a natural experiment in the province of Ontario, Canada to identify empirically the impact of pay-for-performance (P4P) incentives on the provision of targeted primary care services, and whether physicians’ responses differ by age, practice size and baseline compliance level. We use an administrative data source which covers the full population of the province of Ontario and nearly all the services provided by practicing primary care physicians in Ontario. With an individual-level data set of physicians, we employ a difference-in-differences approach that controls for both “selection on observables” and “selection on unobservables” that may cause estimation bias in the identification. We also implemented a set of robustness checks to control for confounding from the other contemporary interventions of the primary care reform in Ontario. The results indicate that, while all responses are of modest size, physicians responded to some of the financial incentives but not the others. The differential responses appear related to the cost of responding and the strength of the evidence linking a service with quality. Overall, the results provide a cautionary message regarding the effectiveness of pay-for-performance schemes for increasing quality of care.
    JEL: I18 J33
    Date: 2011–03
  15. By: Anirban Basu
    Abstract: The United States aspires to use information from comparative effectiveness research (CER) to reduce waste and contain costs without instituting a formal rationing mechanism or compromising patient or physician autonomy with regard to treatment choices. With such ambitious goals, traditional combinations of research designs and analytical methods used in CER may lead to disappointing results. In this paper, I study how alternate regimes of comparative effectiveness information help shape the marginal benefits (demand) curve in the population and how such perceived demand curves impact decision-making at the individual patient level and welfare at the societal level. I highlight the need to individualize comparative effectiveness research in order to generate the true (normative) demand curve for treatments. I discuss methodological principles that guide research designs for such studies. Using an example of the comparative effect of substance abuse treatments on crime, I use novel econometric methods to salvage individualized information from an existing dataset.
    JEL: C11 D61 I18
    Date: 2011–03

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