nep-hea New Economics Papers
on Health Economics
Issue of 2012‒03‒28
eighteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Awareness and AIDS: A Political Economy Perspective By Gani Aldashev; Jean-Marie Baland
  2. Understanding the costs of care for cystic fibrosis: an analysis by age and severity. CHERE Working Paapaer 2011/1 By Kees Van Gool; Richard Norman; Martin B Delatycki; Jane Hall; John Massie
  3. The training and job decisions of nurses: the first year of a longitudinal study investigating nurse recruitment and retention. CHERE Working Paper 2012/02 By Patricia Kenny; Denise Doiron; Jane Hall; Deborah J Street; Kathleen Milton-Wildey; Glenda Parmenter
  4. The Lead Time Trade-Off: The case of health states better than death By José Luis Pinto-Prades; Eva Rodríguez-Míguez
  5. Education, Health and Mortality: Evidence from a Social Experiment By Meghir, Costas; Palme, Mårten; Simeonova, Emilia
  6. Management Roles in Innovative Technology Implementation: A Healthcare Perspective By Ljungquist, Urban
  7. The effects of rebate contracts on the health care system By Graf, Julia
  8. Improving the Health Coverage of the Rural Poor:Does Contracting Out Medical Mobile Teams Work? By Julian P. Cristia; William N. Evans; Beomsoo Kim
  9. Does Air Pollution Matter for Low Birth Weight? By Seonyeong Cho; Choongki Lee; Beomsoo Kim
  10. The Mortality of Newborns and Nurse Staffing Levels By Beomsoo Kim; Minjee Kim
  11. Money Transfer and Birth Weight: A Causal Link from Alaska By Wankyo Chung; Beomsoo Kim
  12. What doesn’t kill you makes you stronger? The Impact of the 1918 Spanish Flu Epidemic on Economic Performance in Sweden By Karlsson, Martin; Nilsson, Therese; Pichler, Stefan
  13. Mandate-Based Health Reform and the Labor Market:  Evidence from the Massachusetts Reform By Jonathan T. Kolstad; Amanda E. Kowalski
  14. Hospital competition with soft budgets By Kurt R. Brekke; Luigi Siciliani; Odd Rune Straume
  15. Can governments do it better? Merger mania and hospital outcomes in the English NHS By Gaynor, Martin; Laudicella, Mauro; Propper, Carol
  16. Long Term Impacts of Compensatory Preschool on Health and Behavior: Evidence from Head Start By Carneiro, Pedro; Ginja, Rita
  17. Life Expectancy, Labor Supply, and Long-Run Growth: Reconciling Theory and Evidence By Strulik, Holger; Werner, Katharina
  18. U.S. Health Care and Real Health in Comparative Perspective: Lessons from Abroad By Wilensky, Harold L.

  1. By: Gani Aldashev (Center for Research in the Economics of Development, University of Namur); Jean-Marie Baland (Center for Research in the Economics of Development, University of Namur; CEPR; BREADS)
    Abstract: Across African countries, prevention policies are unrelated to the prevalence of HIV/AIDS and, even in countries in which they were successful, these policies are often unstable or reversed. To explain these two puzzles, we propose a simple political economy model that examines how prevention policies and the epidemic dynamics are jointly determined. Prevention campaigns affect both citizens'behavior and their perception of the role of public policies in fighting AIDS. The behavioral changes induced by the policy, in turn, reduce the risk of infection for sexually active agents, and this creates political support for future policies. The two-way relationship between prevention policy and awareness generates two stable steady-state equilibria: high awareness/slow prevalence and low awareness/high prevalence. The low prevalence equilibrium is fragile: the economy can easily drift away towards the high prevalence rates as they also imply less active prevention policies. We then conduct an empirical analysis of the determinants of public support for HIV/AIDS policies using the 2005 Afrobarometer data. High prevalence rates translate into public support for prevention policies only in countries which carried out active prevention campaigns in the past. The proposed framework extends naturally to a large class of public health policies under which awareness partly follows from the policies themselves.
    Keywords: HIV/AIDS, voting, public health, awareness
    JEL: I18 H51
    Date: 2012–03
  2. By: Kees Van Gool; Richard Norman (CHERE, University of Technology, Sydney); Martin B Delatycki; Jane Hall (CHERE, University of Technology, Sydney); John Massie
    Abstract: Cystic fibrosis (CF) is the most common life-shortening genetic disease, with an incidence of 1 in 2500 and carrier frequency of 1 in 25, amongst Caucasians (Welsh, Ramsey et al. 2001). With recent advances in treatment, most children with CF now can expect to survive into adulthood and life expectancy has improved considerably. CF is a progressive disease which affects many organ systems and as the disease progresses patients require more intensive health care that includes home based care and medications, along with more frequent and prolonged hospital admissions, and in around half of all cases lung transplantation.(Jason, Leah et al. 2009; Paul, Leah et al. 2009). As new and improving treatment options become available, the pattern of care will change, which will impact on the costs of treatment and on patient outcomes. For example, two of the key medications developed in the last 15 years, Pulmozyme and TOBI (not licensed for use in Australia) cost A$14,000 pa; and more sophisticated technology, such as gene-based treatments will be equally, or more expensive. Thus health care policy makers and funders will expect rigorous assessments of the cost-effectiveness of new treatments.
    Keywords: Cystic Fibrosis; costs, cost effectiveness
    JEL: I19
    Date: 2011–03
  3. By: Patricia Kenny (CHERE, University of Technology, Sydney); Denise Doiron; Jane Hall (CHERE, University of Technology, Sydney); Deborah J Street (University of Technology, Sydney); Kathleen Milton-Wildey; Glenda Parmenter
    Abstract: Understanding the employment choices and preferences of new entrants to the nursing profession is an important element in the formulation of policies for ensuring an adequate supply of nurses to meet population healthcare needs in the coming decades. A longitudinal cohort study to investigate the job preferences of nursing students and new graduates commenced in New South Wales in 2008. The study aimed to identify the relative importance of job attributes as well as factors such as age, family structure, education and health in nursesÂ’ employment choices. In addition to studying actual choices, it uses repeated discrete choice experiments (DCE) to measure preferences for job attributes and how these change after graduation and throughout the early career years. Data collection by annual online surveys commenced in September 2009 and, after one year, 530 participants had completed the first survey. This paper describes the characteristics of this cohort; it also provides an outline of the study and its methods.
    Keywords: Discrete choice experiments, nursing workforce, employment
    JEL: I1 I19 J2 J24
    Date: 2012–02
  4. By: José Luis Pinto-Prades; Eva Rodríguez-Míguez
    Abstract: The Lead Time Trade-Off (L-TTO) is a variant of the TTO method which attempts to overcome some of the problems of the most widely used method for health states worse than death (SWD). Theoretically, the new method reduces the problems detected when researchers have elicited preferences for SWD. However, several questions remain to be clarified. One of them is the influence of this new method for states better than death (SBD). This paper attempts to shed some light on this issue using a split-sample design (n=500). One subsample (n=188) was interviewed using L-TTO and the rest using the traditional TTO (T-TTO). The results show that the L-TTO produces utilities that are consistently higher than the T-TTO for SBD. Furthermore, the greater the severity, the greater is the difference between both methods. Another finding is that the L-TTO seems to produce a lower number of SWD. This effect seems to be concentrated in the most severe health states. This implies a violation of additive separability, one of the cornerstones of the QALY model. The data show that the L-TTO may be different from the T-TTO in more respects than those that were originally intended.
    Keywords: Lead TTO, states better than death, discounting.
    Date: 2011–11
  5. By: Meghir, Costas (Yale University); Palme, Mårten (Dept. of Economics, Stockholm University); Simeonova, Emilia (Tufts University and NBER)
    Abstract: We study the effect of a compulsory education reform in Sweden on adult health and mortality. The reform was implemented by municipalities between 1949 and 1962 as a social experiment and implied an extension of compulsory schooling from 7 or 8 years depending on municipality to 9 years nationally. We use detailed individual data on education, hospitalizations, labor force participation and mortality for Swedes born between 1946 and 1957. Individual level data allow us to study the effect of the education reform on three main groups of outcomes: (i) mortality until age 60 for different causes of death; (ii) hospitalization by cause and (iii) exit from the labor force primarily through the disability insurance program. The results show reduced male mortality up to age fifty for those assigned to the reform, but these gains were erased by increased mortality later on. We find similar patterns in the probability of being hospitalized and the average costs of inpatient care. Men who acquired more education due to the reform are less likely to retire early.
    Keywords: Causal effects of education; Compulsory schooling laws; Comprehensive school reforms; Education reform; Returns to schooling;
    JEL: I12 I18 I21
    Date: 2012–03–14
  6. By: Ljungquist, Urban (CSIR, Blekinge Inst of Technology)
    Abstract: The purpose with this paper is to categorise dynamic capability in technology innovation implementation from various management role perspectives. <p>The findings contribute to existing research of strategic change and healthcare management from an empirical case study based on interviews and archival documents. <p>Three organisational management roles (top, local, and ad hoc) are linked to the dynamic capability framework. Identifies an organisational paradox that puts undue pressure on sub-units to be high in both flexibility and consistency, which draws managerial attention to distinguish content from process of the daily activities. The analysis brings previously unexploited “common ground” to the three managerial roles, enhancing the potentials of mutual understanding and cooperation. Visualises the importance of management guidance and coordination of employee drive and enthusiasm.
    Keywords: Dynamic capability; Healthcare; Organisational chimneys; Innovation
    JEL: M10
    Date: 2012–03–08
  7. By: Graf, Julia
    Abstract: Group Purchasing Organizations (GPOs) increasingly gain in importance with respect to the supply of pharmaceutical products and frequently use multiple or exclusive rebate contracts to exercise market power. Based on a Hotelling model of horizontal and vertical product differentiation, we examine the controversy whether there exists a superior rebate scheme as far as consumer surplus, firms profits and total welfare are concerned. Accounting for horizontal and vertical differentiation, we find that firms clearly prefer multiple over exclusive rebate contracts. Contrary, there exists no rebate form that per se lowers total costs for the members of the GPOs or maximizes total welfare. --
    Keywords: GPOs,Rebate Contracts,Vertical Differentiation
    JEL: I11 L13 L42
    Date: 2012
  8. By: Julian P. Cristia (Inter-American Development Bank, NW, Washington, DC 20577); William N. Evans (Department of Economics and Econometrics, University of Notre Dame and NBER, Notre Dame, IN, 46556); Beomsoo Kim (Department of Economics, Korea University, Seoul, Republic of Korea)
    Abstract: Around six million children worldwide die from preventable causes each year. This problem is especially acute in rural areas, where low population density coupled with deficient infrastructure, weak state capacity and limited budgets although majority of new born is happening there in developing countries. Contracting-out mobile medical teams to visit regularly rural communities and provide preventive services can be an adequate solution in this context. In this paper, we estimate the impact of a large-scale program of this type in Guatemala. Results using living standard measurement surveys indicate large impacts on immunization rates for children and prenatal care provider choices. The program increased substantially the role of physician and nurses as prenatal care providers at the expense of traditional midwives. These results suggest that contracting-out mobile medical teams can produce substantial increases in health coverage in rural areas in developing countries.
    Keywords: Health coverage, rural, contracting-out, medical mobile
    JEL: I18 I12
    Date: 2012
  9. By: Seonyeong Cho; Choongki Lee; Beomsoo Kim (Department of Economics, Korea University, Seoul, Republic of Korea)
    Abstract: There is growing concern that air pollution may impact the health of newborns. This study examines this issue by considering overtime variation generated by exogenous changes in the pollution level in Korea in early 2000, when some part of Korea experienced huge drop in air pollution. We matched the census of all births from 1998 to 2008 and air pollution data in mother¡¯s residence county level. For air pollutants, we considered carbon monoxide, nitrogen dioxide, particulate matter, sulfur dioxide, and ozone levels. The mother¡¯s exposure to one ozone level above 0.12 ppm per hour during the first trimester increased the probability of low birth weight by 0.4 percentage point (0.08% of the sample mean). On the other hand, the mother¡¯s exposure to carbon monoxide or sulfur dioxide during the third trimester led to a significant but modest increase in the probability of low birth weight. The results indicate that the effects of an air pollutant on the probability of low birth weight vary according to wh en the mother is exposed to the pollutant during the pregnancy.
    Keywords: Air Pollution, Ozone, Carbon Monoxide, Sulfur Dioxide, Nitrogen Dioxide, Low Birth Weight
    Date: 2012
  10. By: Beomsoo Kim (Department of Economics, Korea University, Seoul, Republic of Korea); Minjee Kim
    Abstract: This study analyzed the effect of nurse/patient ratio on health outcomes, as measured by death, by measuring the impact of weekend births when nurse staffing is low. Methods. The 2002 Linked Birth/Infant Death Detail Data of the National Center for Health Statistics was used for analysis. The sample was restricted to vaginal births without induction and stimulation. We found lower number of births during weekends, which may mean that women having children at these times might have more urgent or difficult births, and that these variables were unaccounted for in the data. We used birth weight as a proxy measure of unobserved health condition at birth when we performed the regression on death within a certain number of days after birth.
    Date: 2012
  11. By: Wankyo Chung (School of Business, Hallym University, Chuncheon, Republic of Korea); Beomsoo Kim (Department of Economics, Korea University, Seoul, Republic of Korea)
    Abstract: Richer and more educated individuals are known to live longer than poorer and less educated ones. This paper employs the first two years distribution of Alaska Permanent Fund Dividend and examines health outcomes of their newborns. The results indicate that income has a significant positive effect on birth weight but that its magnitude is modest. An income shock in the amount of $3,465 increases birth weight by 13 grams, but does not show any significant impact on low birth weight. We find substantially decreased female labor supply among pregnant women but no significant response of prenatal care.
    Keywords: Birth Weight, Income, Labor Supply
    JEL: I12 I18
    Date: 2012
  12. By: Karlsson, Martin; Nilsson, Therese; Pichler, Stefan
    Abstract: We study the impact of the 1918 influenza pandemic on economic performance in Sweden. The pandemic was one of the severest and deadliest pandemics in human history, but it has hitherto received only scant attention in the economic literature – despite important implications for modern-day pandemics. In this paper, we exploit seemingly exogenous variation in incidence rates between Swedish regions to estimate the impact of the pandemic. Using difference-in-differences and high-quality administrative data from Sweden, we estimate the effects on earnings, capital returns and poverty. We find that the pandemic led to a significant increase in poverty rates. There is also relatively strong evidence that capital returns were negatively affected by the pandemic. On the other hand, we find robust evidence that the influenza had no discernible effect on earnings. This finding is surprising since it goes against most previous empirical studies as well as theoretical predictions.
    Keywords: Spanish Flu; Difference-in-Differences
    Date: 2012–03–16
  13. By: Jonathan T. Kolstad (Wharton School, University of Pennsylvania); Amanda E. Kowalski (Cowles Foundation, Yale University)
    Abstract: We model the labor market impact of the three key provisions of the recent Massachusetts and national “mandate-based" health reforms: individual and employer mandates and expansions in publicly-subsidized coverage. Using our model, we characterize the compensating differential for employer-sponsored health insurance (ESHI) -- the causal change in wages associated with gaining ESHI. We also characterize the welfare impact of the labor market distortion induced by health reform. We show that the welfare impact depends on a small number of sufficient statistics" that can be recovered from labor market outcomes. Relying on the reform implemented in Massachusetts in 2006, we estimate the empirical analog of our model. We find that jobs with ESHI pay wages that are lower by an average of $6,058 annually, indicating that the compensating differential for ESHI is only slightly smaller in magnitude than the average cost of ESHI to employers. Because the newly-insured in Massachusetts valued ESHI, they were willing to accept lower wages, and the deadweight loss of mandate-based health reform was less than 5% of what it would have been if the government had instead provided health insurance by levying a tax on wages.
    Keywords: Individual mandate, Employer mandate, Health reform, Labor market
    JEL: I11 I28
    Date: 2012–03
  14. By: Kurt R. Brekke (Department of Economics and Centre and Health Economics Bergen, Norwegian School of Economics); Luigi Siciliani (Department of Economics and Centre for Health Economics, University of York, Heslington); Odd Rune Straume (Department of Economics, University of Minho)
    Abstract: We study the incentives for hospitals to provide quality and expend cost-reducing effort when their budgets are soft, i.e., the payer may cover deficits or confiscate surpluses. The basic set up is a Hotelling model with two hospitals that differ in location and face demand uncertainty, where the hospitals run deficits (surpluses) in the high (low) demand state. Softer budgets reduce cost efficiency, while the effect on quality is ambiguous. For given cost efficiency, softer budgets increase quality since parts of the expenditures may be covered by the payer. However, softer budgets reduce cost-reducing effort and the profit margin, which in turn weakens quality incentives. We also find that profit confiscation reduces quality and cost-reducing effort. First best is achieved by a strict no-bailout and no-profit-confiscation policy when the regulated price is optimally set. However, for suboptimal prices a more lenient bailout policy can be welfare improving.
    Keywords: Hospital competition; Soft budgets; Quality; Cost efficiency
    JEL: I11 I18 L13 L32
    Date: 2012
  15. By: Gaynor, Martin; Laudicella, Mauro; Propper, Carol
    Abstract: The literature on mergers between private hospitals suggests that such mergers often produce little benefit. Despite this, the UK government has pursued an active policy of hospital mergers, arguing that such consolidations will bring improvements for patients. We examine whether this promise is met. We exploit the fact that between 1997 and 2006 in England around half the short term general hospitals were involved in a merger, but that politics means that selection for a merger may be random with respect to future performance. We examine the impact of mergers on a large set of outcomes including financial performance, productivity, waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity. Given that mergers reduce the scope for competition between hospitals the findings suggest that further merger activity may not be the appropriate way of dealing with poorly performing hospitals
    Keywords: event study; Hospital mergers; political influence; quality
    JEL: I11 I18 L13 L32
    Date: 2012–02
  16. By: Carneiro, Pedro; Ginja, Rita
    Abstract: This paper provides new estimates of the medium and long-term impacts of Head Start on the health and behavioral problems of its participants. We identify these impacts using discontinuities in the probability of participation induced by program eligibility rules. Our strategy allows us to identify the effect of Head Start for the set of individuals in the neighborhoods of multiple discontinuities, which vary with family size, state and year (as opposed to a smaller set of individuals neighboring a single discontinuity). Participation in the program reduces the incidence of behavioral problems, serious health problems and obesity of male children at ages 12 and 13. It also lowers depression and obesity among adolescents, and reduces engagement in criminal activities for young adults.
    Keywords: Behavior Problems; Early Childhood
    JEL: C21 I28 I38
    Date: 2012–02
  17. By: Strulik, Holger; Werner, Katharina
    Abstract: We set up a three-period overlapping generation model in which young individuals allocate their time to schooling and work, healthy middle aged individuals allocate their time to leisure and work and their income to consumption and savings for retirement, and old age individuals live off their savings. The three period setup allows us to distinguish between longevity and active life expectancy (i.e. the expected length of period 1 and 2). We show that individuals optimally respond to a longer active life by educating more and, if the labor supply elasticity is high enough, by supplying less labor. We calibrate the model to US data and show that the historical evolution of increasing education and declining labor supply can be explained as an optimal response to increasing active life expectancy. We integrate the theory into a unified growth model and reestablish increasing life expectancy as an engine of long-run economic development.
    Keywords: longevity, active life expectancy, education, hours worked, economic growth
    JEL: E20 I25 J22 O10 O40
    Date: 2012–03
  18. By: Wilensky, Harold L.
    Abstract: Among the 19 rich democracies I have studied for the past 40 years, the United States is odd-man-out in its health-care spending, organization, and results. The Obama administration might therefore find lessons from abroad helpful as it moves toward national health insurance. In the past hundred years, with the exception of the U.S., the currently rich democracies have all converged in the broad outlines of health care. They all developed central control of budgets with financing from compulsory individual and employer contributions and/or government revenues. All have permitted the insured to supplement government services with additional care, privately purchased. All, including the United States, have rationed health care. All have experienced a growth in doctor density and the ratio of specialists to primary-care personnel. All evidence a trend toward public funding. Our deviance consists of no national health insurance, a huge private sector, a very high ratio of specialists to primary-care physicians and nurses, and a uniquely expensive (non)system with a poor cost-benefit ratio. The cure: increase the public share to more than 65% from its present level of 45%. In regards to funding the transition cost and the permanent cost of guaranteed universal coverage: no rich democracy has funded national health insurance without relying on mass taxes, especially payroll and consumption taxes. Whatever we do to begin, broad-based taxes will be the outcome. Three explanations of "why no national health insurance in the U.S.?" are examined.
    Keywords: Political Science
    Date: 2011–05–01

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