nep-hea New Economics Papers
on Health Economics
Issue of 2011‒09‒05
nine papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Doctors' remuneration schemes and hospital competition in two-sided markets with common network externalities By Bardey, David; Cremer, Helmuth; Lozachmeur, Jean-Marie
  2. Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion By Melissa A. Boyle; Joanna N. Lahey
  3. Losers and Losers: Some Demographics of Medical Malpractice Tort Reforms By Friedson, Andrew I.; Kniesner, Thomas J.
  4. Competition and Post-Transplant Outcomes in Cadaveric Liver Transplantation under the MELD Scoring System By Paarsch, Harry J.; Segre, Alberto M.; Roberts, John P.; Halldorson, Jeffrey B.
  5. The Impact of Pay Increases on Nurses' Labour Market: A Review of Evidence from Four OECD Countries By James Buchan; Steven Black
  6. The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets By M. Keith Chen
  7. Health insurance and precautionary saving: a structural analysis By Hsu, Minchung
  8. The provision of public universal health insurance: impacts on private insurance, asset holdings and welfare By Minchung, Hsu; Junsang, Lee
  9. The Effects of Housing and Neighborhood Conditions on Child Mortality By Brian A. Jacob; Jens Ludwig; Douglas L. Miller

  1. By: Bardey, David (University of Rosario (Bogota, Colombia) and Toulouse School of Economics); Cremer, Helmuth (Toulouse School of Economics (IDEI and GREMAQ-CNRS)); Lozachmeur, Jean-Marie (Toulouse School of Economics (IDEI and GREMAQ-CNRS))
    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 different intensities, the same network externality. We explicitly introduce e¤ort exerted by doctors. By increasing the number of medical acts (which involves a costly effort) the doctor can increase the quality of service offered to patients (over and above the level implied by the CNE). We fi…rst 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 providersside. 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 patientsvaluation 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.
    JEL: D41 L11 L12
    Date: 2011–02
  2. By: Melissa A. Boyle (Department of Economics, College of the Holy Cross); Joanna N. Lahey (Department of Economics, Texas A&M University)
    Abstract: Although government expansion of health insurance to older workers leads to labor supply reductions for recipients, there may be spillover effects on the labor supply of affected spouses who are not covered by the programs. In the simplest model, health insurance on the job is paid for in terms of lower compensation on the job. Receiving health insurance exogenous to employment is akin to a positive income shock for the household, causing total household labor supply to drop. However, it is not clear within the household whether this decrease in labor supply will be borne by both spouses or by a specific spouse. We use a mid-1990s expansion of health insurance for U.S. veterans to provide evidence on the effects of expanding health insurance availability on the labor supply of spouses. Using data from the Current Population Survey, we employ a difference-in-differences strategy to compare the labor market behavior of the wives of older male veterans and non-veterans before and after the VA health benefits expansion to test the impact of public health insurance on these spouses. Our findings suggest that although household labor supply may decrease because of the income effect, the more flexible labor supply of wives allows the wife’s labor supply to increase, particularly for those with lower education levels.
    Keywords: Health Economics, Labor force participation
    JEL: I11 I18 H51 J26
    Date: 2011–08
  3. By: Friedson, Andrew I. (Syracuse University); Kniesner, Thomas J. (Syracuse University)
    Abstract: Our research examines individual differences in the effects of medical malpractice tort reforms on pre-trial settlement speed and settlement amounts by age and most likely settlement size. Findings of note include that, unlike previously assumed, both absolute and percentage losses from tort reform are small for infants in an asset value sense and that the prime-aged working population is the group most negatively affected by tort reform. Maximum entropy quantile regressions highlight the robustness of our conclusions and reveal that the settlement losses most informative for policy evaluation differ greatly from mean regression estimates.
    Keywords: medical malpractice, tort reform, Texas closed claims, damage caps, quantile regression, maximum entropy
    JEL: C21 I18
    Date: 2011–08
  4. By: Paarsch, Harry J.; Segre, Alberto M.; Roberts, John P.; Halldorson, Jeffrey B.
    Abstract: Previous researchers have modelled the decision to accept a donor organ for transplantation as a Markov decision problem, the solution to which is often a control-limit optimal policy: accept any organ whose match quality exceeds some health-dependent threshold; otherwise, wait for another. When competing transplant centers vie for the same organs, the decision rule changes relative to no competition; the relative size of competing centers affects the decision rules as well. Using center-specific graft and patient survival-rate data for cadaveric adult livers in the United States, we have found empirical evidence supporting these predictions.
    Keywords: liver transplantation, competition, optimal stopping
    JEL: C14 I12 L1
    Date: 2011–08
  5. By: James Buchan; Steven Black
    Abstract: Nurses are usually the most numerous professionals in the healthcare workforce, and their contribution is a core component in attaining the policy objectives of improved productivity, quality of care and effectiveness in the health sector. The recent global economic crisis, and its related impacts on health sector funding and health labour market dynamics, has reinforced these policy priorities. This report reviews the impact of pay increases on nurses’ labour market indicators. It presents background data on trends in the numbers of nurses and the remuneration of nurses in OECD countries; summarises the limited evidence base on pay and labour market behaviour; reports on four case study countries where a significant pay raise was awarded to at least some categories of nurses in recent years in response to perceived labour market challenges – the United Kingdom (UK), New Zealand, Finland and the Czech Republic – using a variety of indicators to illustrate impact; and concludes with key points for policy makers. There has been variable growth in nurses’ employment levels in OECD countries in recent years, and nurses’ pay rates, in comparison to other earnings in national economies, vary markedly across OECD countries. The country case studies in this report highlight that there were several main drivers for the implementation of a pay rise for nurses, and also identified a range of possible indicators that can be used to assess the impact of changes to nurses’ pay. The main impetus for a pay increase came from: labour market concerns (geographic or specialty shortages), which were reported in all four countries; pay equity issues (New Zealand and the UK); structural changes in the pay systems (e.g., increased flexibility) (Finland, New Zealand and the UK); attempts to improve organizational productivity and the quality of care (UK); and improving international pay competitiveness (Czech Republic after EU accession). The review concludes by arguing that how nurses are paid - as well as how much they are paid – is an issue worthy of more detailed examination. While the same policy drivers exist in most OECD countries, nurses’ pay systems are very different. The findings suggest that, in the short term at least, the pay increases in the four countries contributed to an increase in the potential “new” supply of entrants to nurse education; the effect on those already in work is more difficult to assess, as their behaviour is also impacted by the complex interaction of other aspects, such as working environment and working conditions, career possibilities, and individuals' priorities.<BR>Le personnel infirmier est habituellement la catégorie la plus nombreuse des professionnels de santé, et leur contribution joue un rôle essentiel dans l’atteinte des objectifs d’amélioration de la productivité, de la qualité des soins et de l’efficacité dans le secteur de la santé. La crise économique mondiale récente, et ses impacts sur le financement des dépenses de santé et sur la dynamique du marché du travail dans ce secteur, est venue renforcer ces objectifs. Ce rapport examine l’impact des augmentations de salaire sur les indicateurs du marché du travail du personnel infirmier. Il présente des données de base sur les tendances concernant le nombre d’infirmières et leur rémunération dans les pays de l’OCDE ; résume les résultats des travaux de recherche disponibles sur les liens entre la rémunération des infirmières et les comportements sur le marché du travail ; présente de façon plus détaillée quatre études de cas de pays (Royaume-Uni, Nouvelle-Zélande, Finlande et République tchèque) où des augmentations significatives de salaire ont été octroyées à au moins certaines catégories d’infirmières et analyse l’impact de ces augmentations en utilisant différents indicateurs ; et conclut par quelques points clés à l’attention des décideurs politiques. La croissance de l’emploi du personnel infirmier a été variable au cours des dernières années dans les pays de l’OCDE, et les salaires des infirmières, en comparaison avec le salaire moyen dans chacun des pays, varient fortement d’un pays à l’autre, Les études de cas présentées dans ce rapport mettent en évidence plusieurs facteurs ayant entraîné une augmentation significative des salaires des infirmières dans les quatre pays en question, et identifient une série d’indicateurs susceptibles d’être utilisés pour mesurer l’impact de ces augmentations. Les principaux moteurs de ces augmentations de salaire sont venus : d’inquiétudes concernant le marché du travail dans les quatre pays (des pénuries sur le plan géographique ou au niveau de certaines spécialités) ; de questions entourant l’équité salariale (Nouvelle-Zélande et Royaume-Uni) ; des changements structurels dans les systèmes de paiements, notamment la mise en place d’une plus grande flexibilité (Finlande, Nouvelle- Zélande et Royaume-Uni) ; de tentatives d’amélioration de la productivité et de la qualité des soins (Royaume-Uni) ; et de l’amélioration de la compétitivité internationale des salaires (République tchèque après son entrée dans l’UE). Une des conclusions de ce rapport est que non seulement le niveau moyen de rémunération des infirmières mais aussi les méthodes de paiement mériteraient des études plus approfondies. Ces méthodes de paiement varient fortement d’un pays à l’autre alors que les mêmes défis se posent dans la plupart des pays. Les résultats des études de cas suggèrent qu’au moins à court terme, les augmentations de salaire des infirmières dans les quatre pays ont contribué à accroitre le nombre de personnes intéressées à étudier et travailler dans ce domaine. Il est toutefois difficile d’évaluer l’impact que ces augmentations ont eu sur les infirmières déjà sur le marché du travail, étant donné que leur comportement est aussi affecté par de nombreux facteurs tel que l’environnement et les conditions de travail ainsi que les priorités individuelles.
    JEL: I10 I18 J2
    Date: 2011–08–30
  6. By: M. Keith Chen (Yale School of Management, Cowles Foundation, Yale University)
    Abstract: Languages differ dramatically in how much they require their speakers to mark the timing of events when speaking. In this paper I test the hypothesis that being required to speak differently about future events (what linguists call strongly grammaticalized future-time reference) leads speakers to treat the future as more distant, and to take fewer future-oriented actions. Consistent with this hypothesis I find that in every major region of the world, speakers of strong-FTR languages save less per year, hold less retirement wealth, smoke more, are more likely to be obese, and suffer from worse long-run health. This holds true even after extensive controls that compare only demographically similar individuals born and living in the same country. While not dispositive, the evidence does not seem to support the most obvious forms of common causation. Implications of these findings for theories of intertemporal choice are discussed.
    Keywords: Language, Time preferences, Savings behavior, Health, National savings rates
    JEL: D14 D91 E21 I10
    Date: 2011–08
  7. By: Hsu, Minchung
    Abstract: Starr-McCluer (1996) documented an empirical finding that the US households covered by health insurance saved more than those without coverage, which is inconsistent with the standard consumption-saving theory. This study provides a structural analysis and suggests that institutional factors, in particular, a social insurance (safety net) system and an employment-based health insurance system, can account for this puzzling finding. A dynamic stochastic general equilibrium model is built that incorporates these two institutions with heterogeneous agents making decisions regarding saving, labor supply and health insurance endogenously when they are young. The model, in which agents save in a precautionary manner, can generate Starr-McCluer's empirical finding and it indicates that the empirical finding is not inconsistent with the standard theory of saving under uncertainty. Counterfactual experiments are performed to provide implications for empirical analyses and illustrate the danger of empirical work without a sound theoretical background.
    Keywords: Precautionary Savings; Social Insurance; Employment-based Health Insurance
    JEL: I38 E21
    Date: 2011
  8. By: Minchung, Hsu; Junsang, Lee
    Abstract: This paper aims to investigate impacts of public provision of universal health insurance (UHI) in an environment with household heterogeneity and financial market incompleteness. Various UHI polices with both distortionary (payroll-tax) and non-distortionary (lump-sum tax) financing methods are compared to address the trade-off between risk reduction and tax distortion as well as corresponding welfare implications. We undertake a dynamic equilibrium model with endogenous insurance choice and labor supply decisions to perform quantitative analyses. The results suggest that the UHI expenditure coverage rate would be too high in most OECD countries when the distortion effect is considered. We find a clear crowding out effect on asset holdings. Implications for private health insurance (PHI) purchases when UHI is introduced depend on the pricing and the design of coverage. We find the rich are sensitive to the price of PHI, and would prefer a supplemental plan when UHI is introduced.
    Keywords: universal health insurance; complementary/supplemental health insurance
    JEL: E62 H51
    Date: 2011
  9. By: Brian A. Jacob; Jens Ludwig; Douglas L. Miller
    Abstract: In this paper we estimate the causal effects on child mortality from moving into less distressed neighborhood environments. We match mortality data to information on every child in public housing that applied for a housing voucher in Chicago in 1997 (N=11,848). Families were randomly assigned to the voucher wait list, and only some families were offered vouchers. The odds ratio for the effects of being offered a housing voucher on overall mortality rates is equal to 1.11 for all children (95% CI 0.54 to 2.10), 1.50 for boys (95% CI 0.72 to 2.89) and 0.00 for girls – that is, the voucher offer is perfectly protective for mortality for girls (95% CI 0 to 0.79). Our paper also addresses a methodological issue that may arise in studies of low-probability outcomes – perfect prediction by key explanatory variables.
    JEL: H75 I12 R38
    Date: 2011–08

This nep-hea issue is ©2011 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.