nep-hea New Economics Papers
on Health Economics
Issue of 2011‒08‒09
nineteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Efficiency in Saving Infant Lives: the Influence of Water and Sanitation Coverage By Gustavo Ferro; Carlos A. Romero; Ignacio Castiglione,
  2. The impact of private hospital insurance on utilization of hospital care in Australia: Evidence from the national health survey By Eldridge, Damien; Koç, Cagatay; Onur, Ilke; Velamuri, Malathi
  3. Child Mental Health and Educational Attainment: Multiple Observers and the Measurement Error Problem By Johnston, David W.; Propper, Carol; Pudney, Stephen; Shields, Michael A.
  4. Informal Caring and Labour Market Outcomes Within England and Wales By Drinkwater, Stephen
  5. Parental Health and Child Schooling By Bratti, Massimiliano; Mendola, Mariapia
  6. Public Expenditures on Education and Health in Georgia before and during the Global Crisis By Maka Chitanava; Maya Grigolia; Lasha Labadze
  7. Public Expenditures on Education and Health in Belarus before and during the Global Crisis By Dmitrij Kruk; Gleb Shymanovich
  8. A model of longevity, human capital and growth By Oscar Iván AVILA MONTEALEGRE
  9. Doctors’ remuneration schemes and hospital competition in two-sided markets with common network externalities By David Bardey Helmuth Cremer Jean-Marie Lozachmeur
  10. Free Medicines thanks to Retirement: Moral Hazard and Hospitalization Offsets in an NHS By Jaume Puig-Junoy; Pilar Garcia-Gomez; David Casado-Marinc
  11. Medical Malpractice and Physician Liability Under a Negligence Rule By Wright, Donald J.
  12. A Few Special Cases: Scientific Creativity and Network Dynamics in the Field of Rare Diseases. By Massimo Riccaboni; Maria Laura Frigotto
  13. Estimation of a Health Production Function: Evidence from East-European Countries. By Bichaka Fayissa; Anca Traian
  14. Does parental disability matter to child education ? evidence from Vietnam By Cuong, Nguyen Viet; Mont, Daniel
  15. Informality and protection from health shocks : lessons from Yemen By Cho, Yoonyoung
  16. Disability, health and retirement in the United Kingdom By James Banks; Richard Blundell; Antoine Bozio; Carl Emmerson
  17. Health Insurance without Single Crossing: why healthy people have high coverage By Boone, Jan; Schottmüller, Christoph
  18. China and India as Suppliers of Affordable Medicines to Developing Countries By Tamara Hafner; David Popp
  19. Why Don't the Poor Save More? Evidence from Health Savings Experiments By Pascaline Dupas; Jonathan Robinson

  1. By: Gustavo Ferro (Instituto de Economía UADE and CONICET - FACE UADE); Carlos A. Romero (Instituto de Economía UADE - UADE); Ignacio Castiglione, (Departamento de Economía UADE - FACE)
    Abstract: In this paper, we aim to assess the relationship between water and sanitation coverage and saved infant lives. Our hypothesis is that extended coverage implies measurable results in terms of reduced infant mortality. Moreover, we suspect that with the same resources, ceteris paribus, different countries can achieve better or worst results depending on the efficiency which the resources are used. We explore the policy consequences, simulating the effects that improvements in efficiency can yield in terms of the reduction in child mortality. Our approach is first to explore with a database of Latin American countries the "production function" of survivor infants on 1,000 births. Once we identify the causal relationship with an econometric model, we estimate a production frontier with Data Envelopment Analysis in order to determine the best performers: countries which can do better with the same "inputs". Finally, we simulate the consequence of catching up to the frontier in each country. The impressive quantitative results are interesting for policy concerns, since efficiency is reconciled with equity (in the sense that the winners of the coverage increases and the health improvements are the poorer).
    Keywords: water; sanitation; health
    Date: 2011–08–01
  2. By: Eldridge, Damien; Koç, Cagatay; Onur, Ilke; Velamuri, Malathi
    Abstract: We estimate the impact of private hospital insurance on utilization of hospital care services in Australia. We employ the two-stage residual inclusion approach to address the endogeneity of private insurance. We calculate moral hazard based on a difference-of-means estimator. Our three-stage estimation framework provides evidence of selection into private hospital insurance. We find strong evidence of moral hazard when we treat hospital insurance as exogenous. After controlling for the endogeneity of hospital insurance, we find robust evidence of substitution from public to private hospital care but no evidence of ex-post moral hazard in the number of nights spent in hospital.
    Keywords: Health Insurance, Health Care Consumption, Moral Hazard,
    Date: 2011–06–24
  3. By: Johnston, David W. (Monash University); Propper, Carol (University of Bristol); Pudney, Stephen (ISER, University of Essex); Shields, Michael A. (University of Melbourne)
    Abstract: We examine the effect of survey measurement error on the empirical relationship between child mental health and personal and family characteristics, and between child mental health and educational progress. Our contribution is to use unique UK survey data that contains (potentially biased) assessments of each child's mental state from three observers (parent, teacher and child), together with expert (quasi-)diagnoses, using an assumption of optimal diagnostic behaviour to adjust for reporting bias. We use three alternative restrictions to identify the effect of mental disorders on educational progress. Maternal education and mental health, family income, and major adverse life events, are all significant in explaining child mental health, and child mental health is found to have a large influence on educational progress. Our preferred estimate is that a 1-standard deviation reduction in 'true' latent child mental health leads to a 2-5 months loss in educational progress. We also find a strong tendency for observers to understate the problems of older children and adolescents compared to expert diagnosis.
    Keywords: child mental health, education, Strengths and Difficulties Questionnaire, measurement error
    JEL: C30 I10 I21 J24
    Date: 2011–07
  4. By: Drinkwater, Stephen (Swansea University)
    Abstract: This paper focuses on the links between informal care provision and labour market activity at the sub-national level. Within-country analysis of this issue has been very limited to date despite the wide regional variations in informal care provision that often exist. This issue is important in the context of policy decisions in Wales and other parts of the UK because of relatively high levels of informal caring in certain areas, especially in the South Wales Valleys. In particular, given that these areas typically have the lowest economic activity and employment rates, labour market differences can be exacerbated by the provision of informal caring by people of working age. Despite the wide variations in informal care provision, it is found that labour market outcomes do not differ markedly by different care categories across spatial areas within England and Wales. However, the analysis reveals that labour market outcomes for males as well as females are heavily influenced for those who provide high levels of caring, especially in the South Wales Valleys. For example, the largest impact of caring on the probability of not working for males and for part-time work for females is seen in this area.
    Keywords: informal care provision, labour market outcomes, area variations
    JEL: J22 R23
    Date: 2011–07
  5. By: Bratti, Massimiliano (University of Milan); Mendola, Mariapia (University of Milan Bicocca)
    Abstract: Evidence on the role of parental health on child schooling is surprisingly thin. We explore this issue by estimating the short-run effects of parents’ illness on child school enrollment. Our analysis is based on household panel data from Bosnia-Herzegovina, a country whose health and educational systems underwent extensive destruction during the 1992-1995 war. Using child fixed effects to correct for potential endogeneity bias, we find that – contrary to the common wisdom that shocks to the primary household earner should have more negative consequences for child education – it is especially maternal health that makes a difference as far as child schooling is concerned. Children whose mothers self-reported having poor health are about 7 percentage points less likely to be enrolled in education at ages 15-24. These results are robust to considering alternative indicators of parental health status such as the presence of limitations in the activities of daily living and depression symptoms. Moreover, we find that mothers’ health shocks have more negative consequences on younger children and sons.
    Keywords: Bosnia and Herzegovina, children, education, parents, school, self-reported health
    JEL: I21 O15
    Date: 2011–07
  6. By: Maka Chitanava; Maya Grigolia; Lasha Labadze
    Abstract: After years of stagnation and political cataclysms, Georgia tried to recover by launching radical economic and political reforms starting in 2004. The results of the reforms appeared to be impressive. The country’s GDP has more than doubled; the total volume of bank deposits is five times what it used to be. Key international indices (Doing Business Index, Economic Freedom Index, Corruption Perception Index) have also reflected the success of the reforms. The occupation of the Georgian territories by Russia in August 2008 and the global financial crisis have significantly changed the current macroeconomic environment in Georgia. The August conflict undermined investor and consumer confidence, put pressure on public finances, damaged physical and other infrastructure and undermined the banking system with a large volume of deposit withdrawals. The deepening of the international financial crisis put further pressure on currency and foreign investments. The purpose of this paper is to consider the nature and magnitude of the impact of the global financial crisis on Georgia’s social services sector and on the country’s economy as a whole. The global financial crisis had a sharp impact on the most disadvantaged members of the society. The main objectives of the paper are to describe to what extent the education and healthcare sectors were affected in Georgia and to investigate how government policies have addressed the problems which arose due to the financial crisis.
    Keywords: Georgia, Education, Health Care Sector, Public Service Delivery, Development During the Financial Crisis, Financial Crisis in Georgia, Georgia’s education sector, Georgia’s health sector, Georgia’s macro indicators, Financial aid
    JEL: H11 H51 H52 I11 I12 I18 I21 I22 I28
    Date: 2011
  7. By: Dmitrij Kruk; Gleb Shymanovich
    Abstract: The paper deals with the impact of the global financial crisis on public service delivery - mainly education and healthcare - in Belarus. The pre-crisis period of 2003-2008 was the most prosperous in recent history. These trends resulted in a pretty good fiscal performance. Nevertheless, the share of expenditures on education and healthcare in GDP was decreasing during the 2000s, which was a consequence of demographic trends and a number of reforms in these sectors. The global crisis hurt the Belarusian economy considerably. However, macro-indicators of the Belarusian economy looked pretty good in comparison to other countries, and the deterioration of public finance was limited. Thus, expenditures on both education and healthcare were mainly part of long-term trends and were able to avoid shock adjustments during the crisis. However, there are a number of medium and long-term threats to these public service sectors associated with the crisis agenda. This paper provides a number of policy recommendations to stave off these threats.
    Keywords: Fiscal policy, Belarus, Education financing, Health financing, Global economic crisis
    JEL: E62 H50 H51 H52 I18 I22
    Date: 2011
    Abstract: Long run economic growth and its transitional dynamics are determined in a general equilibrium model of endogenous longevity, human capital and growth. Agents in overlapping generations survive safely for the first two periods of life and face an endogenous probability of surviving for a third period. Given this probability, each agent maximizes her expected lifetime utility choosing consumption, and the quantity of resources destined to her child’s education and health. Human capital accumulation depends on education and health expenditures and on parent’s human capital. The model produces two kinds of equilibriums, one with high life expectancy, human capital and GDP, and the other with low high life expectancy, human capital and GDP. These predictions accord with the empirical evidence on demographic transitions and development.
    Date: 2010–11–03
  9. By: David Bardey Helmuth Cremer Jean-Marie Lozachmeur
    Abstract: ABSTRACT: This paper uses a two-sided market model of hospital competition to study the implications of different remunerations schemes on the physicians'side. The two-sided market approach is characterized by the concept of common network externality (CNE)introduced by Bardey et al. (2010). This type of externality occurs when occurs when both sides value, possibly with di¤erent intensities, the same network externality. We explicitly introduce e¤ort exerted by doctors. By increasing the number of medical acts (which involves a costly e¤ort) the doctor can increase the quality of service o¤ered to patients (over and above the level implied by the CNE). We first consider pure salary,capitation or fee-for-service schemes. Then, we study schemes that mix fee-for-service with either salary or capitation payments. We show that salary schemes (either pure or in combination with fee-for-service) are more patient friendly than (pure or mixed)capitations schemes. This comparison is exactly reversed on the providers'side. Quite surprisingly, patients always loose when a fee-for-service scheme is introduced (pure of mixed). This is true even though the fee-for-service is the only way to induce the providers to exert e¤ort and it holds whatever the patients'valuation of this effort. In other words, the increase in quality brought about by the fee-for-service is more than compensated by the increase in fees faced by patients.
    Date: 2011–08–01
  10. By: Jaume Puig-Junoy (Universitat Pompeu Fabra, and Research Centre for Economics and Health (CRES), Barcelona, Spain); Pilar Garcia-Gomez (Erasmus School of Economics, Erasmus University Rotterdam, Rotterdam, The Netherlands); David Casado-Marinc (Institut d'Avaluacio de Polítiques Publiques (IVALUA), Barcelona, Spain)
    Abstract: This paper examines the impact of coinsurance exemption for prescription medicines applied to elderly individuals in Spain after retirement. To evaluate this coinsurance change we use a rich administrative dataset that links pharmaceutical consumption and hospital discharge records for the full population aged 58 to 65 in January 2004 covered by the public insurer in a Spanish region and we follow them until December 2006. We use a difference-in-differences strategy and exploit the eligibility age for Social Security to control for the endogeneity of the retirement decision. Our most conservative results show that the uniform exemption from pharmaceutical copayment granted to retired people in Spain increases the consumption of prescription medicines on average by 9.5%, total pharmaceutical expenditure by 15.2% and the costs borne by the insurer by 47.5%, without evidence of any offset effect in the form of reduced hospitalization. The impact is concentrated among individuals who were consumers of medicines for acute and other non-chronic diseases with a previous coinsurance rate in the range 30% to 40%.
    Keywords: pharmaceuticals; cost sharing; hospitalization offsets; health care expenditure
    JEL: G22 I18 J14
    Date: 2011–07–29
  11. By: Wright, Donald J.
    Abstract: A model of costly medical malpractice claims, based on Bayes Rule, is developed to examine the effects of physicians being liable for actual damage under a negligence rule. This model is consistent with empirical evidence concerning the pattern of claims. It is shown that compensating actual damage does not provide physicians with appropriate incentives to spend the second best optimal amount of time with patients or to treat the second best optimal number of patients. As a result, too much medical malpractice occurs relative to the second best social optimum.
    Keywords: Liability; Medical Malpractice
    Date: 2011–03
  12. By: Massimo Riccaboni; Maria Laura Frigotto
    Abstract: We develop a model of scientific creativity and test it in the field of rare diseases. Our model is based on the results of an in-depth case study of the Rett syndrome. Archival analysis, bibliometric techniques and expert surveys are combined with network analysis to identify the most creative scientists. First, alternative measures of generative and combinatorial creativity are compared. Then, we generalize our results and present a stochastic model of socio-semantic network evolution. The model predictions are tested with multiple networks of rare disease specialties. We find that new scientific collaborations among experts in a field enhance combinatorial creativity. Instead, high entry rates of novices are negatively related to generative creativity. By extending the set of useful concepts, creative scientists gain in centrality. At the same time, by increasing their centrality in the scientific community, scientists can replicate and generalize their results, thus contributing to a scientific paradigm.
    JEL: C63 L14 L26 L65 O31 O33
    Date: 2011–03
  13. By: Bichaka Fayissa; Anca Traian
    Abstract: The purpose of this study is to estimate a health production function for the 13 East European countries including Belarus, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia and Ukraine. Using panel data from 1997 to 2005 on a diverse array of economic, demographic, environmental, and lifestyles factors as inputs, we analyze a health production function at the macro level in order to determine the most efficient way of allocating limited resources for improving the overall health status of countries in the sample. To control for individual country heterogeneity, we employ panel analytic methods of fixed effects, random effects, and Arellano – Bond estimator. The results indicate that economic growth as measured by GDP per capita growth, investment in human capital formation, and residence in urban areas significantly reduce infant mortality and thus improve the health status of countries in the sample. These findings are useful, not only for serving as background for health care policy decisions, but also for a better understanding of the factors that affect the health condition of the region.
    Keywords: Health Status, Eastern European Countries, Fixed-Effects, Random-Effects, Arellano-Bond estimator
    JEL: I12 I20
    Date: 2011–07
  14. By: Cuong, Nguyen Viet; Mont, Daniel
    Abstract: This paper examines the effect of parental disability on school enrollment and educational performance for children in the 2006 Vietnam Household Living Standards Survey. Results from instrumental-variables regressions indicate that children of parents with a disability have a lower enrollment rate in primary and secondary school of about 8 percentage points: 73 percent compared with 81 percent. However, the association of parental disability with educational performance is small and not statistically significant. The conclusion of the paper is that to achieve the Millennium Development Goal of universal primary school as well as increased coverage of secondary education, the government should have policies and programs that either directly support the education of children with disabled parents and/or have policies that support disabled adults, thus lessening the incentive for their children not to attend school.
    Keywords: Disability,Primary Education,Gender and Law,Education For All,Youth and Governance
    Date: 2011–08–01
  15. By: Cho, Yoonyoung
    Abstract: The informal sector is generally believed to be more vulnerable to various risks due to limited access to social insurance, but little empirical evidence exists to support this statement. This paper examines the relationship between informality and protection from health risks in Yemen. The formal sector, when defined based on pension coverage, largely overlaps with public employment where the better educated, more experienced, and better informed tend to work. The results indicate that, even after accounting for socio-economic status, water supply and quality conditions, risky behavior patterns, and unobserved heterogeneity, formal sector households have better accessibility and affordability to health service. This may in part explain better health outcomes among formal households, although large heterogeneity across regions (urban/rural) exists. However, the role of the existing health insurance is found to be unclear. The findings reconfirm the importance of policies that promote universal access to health service and a risk pooling avenue delinked from employment types as well as healthy living conditions and lifestyles.
    Keywords: Health Monitoring&Evaluation,Health Systems Development&Reform,Safety Nets and Transfers,Labor Markets,Health Economics&Finance
    Date: 2011–08–01
  16. By: James Banks (Institute for Fiscal Studies and University of Manchester); Richard Blundell (Institute for Fiscal Studies and University College London); Antoine Bozio (Institute for Fiscal Studies); Carl Emmerson (Institute for Fiscal Studies)
    Abstract: <p>This paper examines changes in health and disability related transfers in the UK over the last thirty years, and describes how they are related to changes in labour force participation. The objective is to present a comprehensive description of the reforms to the institutional setting, along with available time series coming from administrative data on benefit receipt, cross-section or panel data on self-reported health and their interactions with labour force status. By providing systematic evidence on institutions and data, we hope to help future research providing a fuller picture of the trends over this period. We also present evidence on the impact of two large reforms to disability benefits in the UK.</p>
    Date: 2011–07
  17. By: Boone, Jan; Schottmüller, Christoph
    Abstract: Standard insurance models predict that people with high (health) risks have high insurance coverage. It is empirically documented that people with high income have lower health risks and are better insured. We show that income differences between risk types lead to a violation of single crossing in the standard insurance model. If insurers have some market power, this can explain the empirically observed outcome. This observation has also policy implications: While risk adjustment is traditionally viewed as an intervention which increases efficiency and raises the utility of low health agents, we show that with a violation of single crossing a trade off between efficiency and solidarity emerges.
    Keywords: health insurance; risk adjustment; single crossing
    JEL: D82 I11
    Date: 2011–08
  18. By: Tamara Hafner; David Popp
    Abstract: As countries reform their patent laws to be in compliance with the Trade Related Intellectual Property Rights Agreement, an important question is how increased patent protection will affect drug prices in low-income countries. Using pharmaceutical trade data from 1996 to 2005, we examine the role of China and India as suppliers of medicines to other middle- and low-income countries and evaluate the competitive effect of medicine imports from these countries on the price of medicines from high- income countries. We find that imports of antibiotics and unspecified medicaments from India and China significantly depress the average price of these commodities imported from high-income trading partners, suggesting that India and China are not only important sources of inexpensive medicines but also have an indirect effect by lowering prices through competition. As India is the leading supplier of medicines in Sub-Saharan Africa, this region will likely be affected most adversely.
    JEL: I10 O10 O34
    Date: 2011–07
  19. By: Pascaline Dupas; Jonathan Robinson
    Abstract: Using data from a field experiment in Kenya, we document that providing individuals with simple informal savings technologies can substantially increase investment in preventative health, reduce vulnerability to health shocks, and help people meet their savings goals. The two main barriers that keep people from saving on their own appear to be transfers to others and “unplanned expenditures” on luxury items. Providing people with a designated safe place to keep money was sufficient to overcome these barriers for the majority of individuals, through a mental accounting effect. Adding an earmarking feature reduced savings for the average individual due to the associated liquidity cost and did not help present-biased people save more. For such individuals, stronger incentives to start and continue making deposits are necessary to overcome self-control problems.
    JEL: D14 D91 O16
    Date: 2011–07

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