nep-hea New Economics Papers
on Health Economics
Issue of 2012‒05‒22
twenty papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. The importance of technology in the consolidation of hospital markets. The case of the United States By Mas, Nuria; Valentini, Giovanni
  2. Urban-Rural Disparities of Child Health and Nutritional Status in China from 1989 to 2006 By Liu, Hong; Fang, Hai; Zhao, Zhong
  3. Family Planning and Women's and Children's Health: Long Term Consequences of an Outreach Program in Matlab, Bangladesh By Joshi, Shareen; Schultz, T. Paul
  4. Improving the Health-Care System in Poland By Hervé Boulhol; Agnieszka Sowa; Stanislawa Golinowska; Patrizio Sicari
  5. Employment and wages of people living with HIV/AIDS By García-Gómez, Pilar; Labeaga, José M.; Oliva, Juan
  6. Does Coresidence Improve an Elderly Parent’s Health? By Meliyanni Johar; Shiko Maruyama
  7. The Dependence of Health Insurance Availability on Years Left Before Medicare By Esra Eren Bayindir; Mehmet Y. Gurdal; Ismail Saglam
  8. Are the Dimensions of Private Information More Multiple than Expected? Information Asymmetries in the Market of Supplementary Private Health Insurance in England By Karlsson, Martin; Klohn, Florian; Rickayzen, Ben
  9. Determinants of price discrimination in the acquisition of medical devices By Mercedes Vellez
  10. Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion By Melissa A. Boyle; Joanna N. Lahey
  11. Restructuring the Italian NHS: a case study of the regional hospital network By Carlo Castellana
  12. Optimal retirement consumption with a stochastic force of mortality By Huaxiong Huang; Moshe A. Milevsky; Thomas S. Salisbury
  13. Impact of the economic crisis on the Italian public healthcare expenditure By Carlo Castellana
  14. A causal analysis of mother’s education on birth inequalities By Bacci, Silvia; Bartolucci, Francesco; Pieroni, Luca
  15. Risk-Adjusted Mortality, varieties of congestion and patient satisfaction in Turkish provincial general hospitals By Davutyan, Nurhan; Bilsel, Murat; Tarcan, Menderes
  16. The Effect of Compulsory Schooling Laws on Teenage Marriage and Births in Turkey By Kirdar, Murat; Dayioglu, Meltem; Koc, Ismet
  17. Does Employer-Provided Health Insurance Constrain Labor Supply Adjustments to Health Shocks? New Evidence on Women Diagnosed with Breast Cancer By Cathy J. Bradley; David Neumark; Scott Barkowski
  18. The Impact of the 2009 Federal Tobacco Excise Tax Increase on Youth Tobacco Use By Jidong Huang; Frank J. Chaloupka, IV
  19. Counterfeit or Substandard? The Role of Regulation and Distribution Channel in Drug Safety By Roger Bate; Ginger Zhe Jin; Aparna Mathur
  20. Evaluation of a Community-based Information Campaign on Health Demand in Mali : Results from a Natural Experiment By Pauline Givord; Lucile Romanello

  1. By: Mas, Nuria (IESE Business School); Valentini, Giovanni (Bocconi University)
    Abstract: Over the last years, technology has become a key element of competition in the hospital market. At the same time, this market in the US has experienced an enormous merger activity. In this study, we analyze the role that technology can play in this consolidation wave by focusing on how it can affect a hospital´s selection of a particular target. We analyze the selection of targets in mergers that took place in the US hospital market between 1985 and 2000. Our results show that technology is an important element for the competition in the hospital market and, as such, it plays a relevant role also in M&A strategies. We find that hospitals are more likely to choose targets that complement their technological holding, specifically when these are complex technologies and with favorable cost/benefits ratios. With this, the merged entity tends to become closer to a one-stop-shop hospital.
    Keywords: hospital; technology; merger; acquisition; complexity;
    Date: 2012–03–07
  2. By: Liu, Hong (Central University of Finance and Economics); Fang, Hai (University of Colorado Denver); Zhao, Zhong (Renmin University of China)
    Abstract: This paper analyzes urban–rural disparities of China's child health and nutritional status using the China Health and Nutrition Survey data from 1989 to 2006. We investigate degrees of health and nutritional disparities between urban and rural children in China as well as how such disparities have changed during the period 1989–2006. The results show that on average urban children have 0.29 higher height-for-age z-scores and 0.19 greater weight-for-age z-scores than rural children. Urban children are approximately 40% less likely to be stunted (OR = 0.62; P < 0.01) or underweight (OR = 0.62; P < 0.05) during the period 1989-2006. We also find that the urban–rural health and nutritional disparities have been declining significantly from 1989 to 2006. Both urban and rural children have increased consumption of high protein and fat foods from 1989 to 2006, but the urban-rural difference decreased over time. Moreover, the urban-rural gap in child preventive health care access was also reduced during this period.
    Keywords: urban-rural disparities, health and nutritional status, child, China
    JEL: I14 I15
    Date: 2012–04
  3. By: Joshi, Shareen (Georgetown University); Schultz, T. Paul (Yale University)
    Abstract: The paper analyzes the impact of an experimental maternal and child health and family-planning program that was implemented in Matlab, Bangladesh in 1977. Village data from 1974, 1982 and 1996 suggest that program villages experienced extra declines in fertility of about 17%. Household data from 1996 confirm that this decline in "surviving fertility" persisted for nearly two decades. Women in program villages also experienced other benefits: lower child mortality, improved health status, and greater use of preventive health inputs. Some benefits also diffused beyond the boundaries of the program villages into neighboring comparison villages. These program effects are robust to the inclusion of individual, household, and community characteristics. This paper concludes that the benefits of this reproductive and child health program in rural Bangladesh have many dimensions extending well beyond fertility reduction, which do not appear to dissipate after two decades.
    Keywords: program evaluation, health and women's work, health and development, family planning, fertility, Bangladesh
    JEL: O12 J13 I12 J16
    Date: 2012–05
  4. By: Hervé Boulhol; Agnieszka Sowa; Stanislawa Golinowska; Patrizio Sicari
    Abstract: Since the transformation following the Communist era, Poland has matched improvements in health outcomes of the most developed OECD countries, although without catching up the ground lost during the 1970s and 1980s. The health status of the population remains relatively poor, although after controlling for per capita income health outcomes are only slightly below the OECD average. The Polish health-care system is characterised by low spending, a heavily regulated public system with a stringent budget constraint, restricted sub-national government autonomy and a thin private insurance market. Heavy out-of-pocket payments and long waiting lists generate inequalities in access to care. The most pressing issues to be addressed concern: easing the substantial limitations in access to care; reducing persistent inequalities; carefully designing new private health insurance; better coordinating among major public actors; improving hospital management; strengthening the gate-keeping function played by generalists; and developing a comprehensive long-term-care strategy. This Working Paper relates to the 2012 OECD Economic Review of Poland (<P>Améliorer le système de soins de santé en Pologne<BR>Depuis qu’elle a opéré sa transformation post-communiste, la Pologne a enregistré des progrès comparables à ceux des pays de l’OCDE les plus développés dans le domaine de la santé, sans toutefois parvenir à regagner le terrain perdu au cours des années 70 et 80. L’état de santé de la population reste relativement mauvais même si, après contrôle du revenu par habitant, les indicateurs de santé ne sont que légèrement inférieurs aux moyennes de l’OCDE. Le système de santé de la Pologne se caractérise par de faibles dépenses, un système public fortement réglementé et assujetti à des contraintes budgétaires strictes, une autonomie limitée des autorités infrarégionales et un marché de l’assurance privée peu développé. Les dépenses élevées laissées à la charge des patients et les longues listes d’attente engendrent des inégalités d’accès aux soins. Les priorités les plus pressantes sont les suivantes : alléger les lourdes restrictions d’accès aux soins ; réduire les inégalités persistantes ; mettre en place de nouvelles formules d’assurance-maladie privée soigneusement conçues ; mieux coordonner les principaux acteurs publics ; améliorer la gestion des hôpitaux ; renforcer la fonction de filtrage des médecins généralistes ; et élaborer une stratégie complète en matière de soins de longue durée. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Pologne 2012 (
    Keywords: Poland, pharmaceuticals, health care system, hospitals, physicians, health-care insurance, waiting lists, Pologne, système de santé, médicaments, hôpitaux, assurance médicale, listes d’attente, docteurs
    JEL: I1
    Date: 2012–05–10
  5. By: García-Gómez, Pilar (Erasmus School of Economics, Erasmus University Rotterdam); Labeaga, José M. (UNU-MERIT/MGSoG, Maastricht University, and UNED, Madrid); Oliva, Juan (Universidad de Castilla – La Mancha)
    Abstract: The therapeutic advances that have taken place since the mid 1990s have profoundly affected the situation of people living with HIV/AIDS, not only in terms of life expectancy and quality of life but also socio-economically. This has numerous effects on different aspects of the patients' life and, especially, on their working life. We analyse in this paper labour force participation and wages of people living with HIV/AIDS in Spain. We select a control group from the general population. We find that the employment probability decreases by 16.4 percentage points among asymptomatic HIV patients, by 22.5 percentage points among symptomatic HIV patients, and as much as by 41.3 percentage points if the person is in the AIDS phase. In addition, wages of HIV patients are from 9 to 34 per cent (if infected by Intravenous Drug Use) lower. Gender, educational attainment, unearned income, HIV clinical indicators and number of household members are the main determinants of the employment probability of HIV patients. On the other hand, wages do not play a significant role in employment decisions of these individuals.
    Keywords: HIV/AIDS, labour supply, wages, unearned income
    JEL: I10 J20
    Date: 2012
  6. By: Meliyanni Johar (University of Technology, Sydney (UTS)); Shiko Maruyama (School of Economics, The University of New South Wales)
    Abstract: It is generally believed that intergenerational coresidence by elderly parents and adult children provides security for parents in their old age. In many countries, such intergenerational coresidence is the most common living arrangement. Using a nationally-representative dataset and a program evaluation technique that accounts for endogenous and heterogeneous treatment effects, we find robust evidence of a negative coresidence effect, contrary to the popular belief. The unintended adverse effect on parental health has significant implications for future informal care policies, given that coresidence is expected to remain the primary form of old age security in the foreseeable future.
    Keywords: intergenerational coresidence; elderly; heath; treatment effects
    JEL: I12 J1 C31
    Date: 2011–05
  7. By: Esra Eren Bayindir; Mehmet Y. Gurdal; Ismail Saglam
    Date: 2012–05
  8. By: Karlsson, Martin; Klohn, Florian; Rickayzen, Ben
    Abstract: Our study reexamines standard econometric approaches for the detection of information asymmetries on insurance markets. We claim that evidence based on a standard framework with 2 equations, which uses potential sources of information asymmetries, should stress the importance of heterogeneity in the parameters. We argue that conclusions derived from this methodology can be misleading if the estimated coefficients in such an `unused characteristics' framework are driven by different parts of the population. We show formally that an individual's expected risk from the perspective of insurance, conditioned on certain characteristics (which are not used for calculating the risk premium), can equal the population's expectation in risk - although such characteristics are both related to risk and insurance probability, which is usually interpreted as an indicator of information asymmetries. We provide empirical evidence on the existence of information asymmetries in the market for supplementary private health insurance in the UK. Overall, we found evidence for advantageous selection into the private risk pool; ie people with lower health risk tend to insure more. The main drivers of this phenomenon seem to be characteristics such as income and wealth. Nevertheless, we also found parameter heterogeneity to be relevant, leading to possible misinterpretation if the standard `unused characteristics' approach is applied.
    Keywords: Information Asymmetries; Insurance markets; Applied Econometrics
    Date: 2012–04–16
  9. By: Mercedes Vellez (Faculty of Economics, University of Rome "Tor Vergata")
    Abstract: Medical device expenditures are an important driver of the growth in health care spending and hospitals pay significantly different prices for the same medical device. This paper uses hospitals’ acquisition data to explore the determinants of price discrimination in the acquisition of medical devices across Italian hospitals considering demand factors such as institutional characteristics of the buyer, devices substitution patterns, area of localization, and purchase conditions. I find evidence that public hospital trusts and those located in northern regions are more efficient in acquiring medical devices, and that more flexibility in contracting with different device manufacturers and higher purchase volumes reduce the likelihood of paying higher prices.
    Keywords: price discrimination, hospital efficiency, medical devices, procurement
    JEL: I18 H57 C25
    Date: 2012–05–11
  10. By: Melissa A. Boyle; Joanna N. Lahey
    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.
    Date: 2012–05
  11. By: Carlo Castellana
    Abstract: One of the main issues affecting the Italian NHS is the healthcare deficit: according to current agreements between the Italian State and its Regions, public funding of regional NHS is now limited to the amount of regional deficit and is subject to previous assessment of strict adherence to constraint on regional healthcare balance sheet. Many Regions with previously uncontrolled healthcare deficit have now to plan their "Piano di Rientro" (PdR) and submit it for the approval of the Italian Ministry of Economy and Finances. Those Regions that will fail to comply to deficit constraints will suffer cuts on their public NHS financing. A smart Health Planning can make sure health spending is managed appropriately. Indeed a restructuring of the Italian healthcare system has recently been enforced in order to cope for the clumsy regional healthcare balance sheets. Half of total Italian healthcare expenditure is accounted by hospital services which therefore configure as one of the main restructuring targets. This paper provides a general framework for planning a re-engineering of a hospital network. This framework is made of economic, legal and healthcare constraints. We apply the general framework to the particular case of Puglia region and explore a set of re-engineered solutions which to different extent could help solve the difficult dilemma: cutting costs without worsening the delivery of public healthcare services.
    Date: 2012–05
  12. By: Huaxiong Huang; Moshe A. Milevsky; Thomas S. Salisbury
    Abstract: We extend the lifecycle model (LCM) of consumption over a random horizon (a.k.a. the Yaari model) to a world in which (i.) the force of mortality obeys a diffusion process as opposed to being deterministic, and (ii.) a consumer can adapt their consumption strategy to new information about their mortality rate (a.k.a. health status) as it becomes available. In particular, we derive the optimal consumption rate and focus on the impact of mortality rate uncertainty vs. simple lifetime uncertainty -- assuming the actuarial survival curves are initially identical -- in the retirement phase where this risk plays a greater role. In addition to deriving and numerically solving the PDE for the optimal consumption rate, our main general result is that when utility preferences are logarithmic the initial consumption rates are identical. But, in a CRRA framework in which the coefficient of relative risk aversion is greater (smaller) than one, the consumption rate is higher (lower) and a stochastic force of mortality does make a difference. That said, numerical experiments indicate that even for non-logarithmic preferences, the stochastic mortality effect is relatively minor from the individual's perspective. Our results should be relevant to researchers interested in calibrating the lifecycle model as well as those who provide normative guidance (a.k.a. financial advice) to retirees.
    Date: 2012–05
  13. By: Carlo Castellana
    Abstract: The global financial crisis, beginning in 2008, took an historic toll on national economies around the world. Following equity market crashes, unemployment rates rose significantly in many countries: Italy was among those. What will be the impact of such large shocks on Italian healthcare finances? An empirical model for estimating the impact of the crisis on Italian public healthcare expenditure is presented. Based on data from epidemiological studies related to past economic crisis, the financial impact is estimated to be comparable to the healthcare deficit of Italian Regions (EUR 3-5 bn). According to current agreements between the Italian State and its Regions, public funding of regional National Health Services (NHSs) is limited to the amount of regional deficit and is subject to previous assessment of strict adherence to constraint on regional healthcare balance-sheet. Those Regions that will fail to comply to balance-sheet constraints will suffer cuts on their public NHS financing with foreseeable bad consequences for the health of their regional population. The current crisis could be a good timing for a large-scale re-engineering of the Italian NHS, probably the only way for self-sustainability of the public system.
    Date: 2012–05
  14. By: Bacci, Silvia; Bartolucci, Francesco; Pieroni, Luca
    Abstract: We propose a causal analysis of the mother’s educational level on the health status of the newborn, in terms of gestational weeks and weight. The analysis is based on a finite mixture structural equation model, the parameters of which have a causal interpretation. The model is applied to a dataset of almost ten thausand deliveries collected in an Italian region. The analysis confirms that standard regression overestimates the impact of education on the child health. With respect to the current economic literature, our findings indicate that only high education has positive consequences on child health, implying that policy efforts in education should have benefits for welfare.
    Keywords: birthweight; finite mixtures; intergenerational health trasmission; latent class model; structural equation models
    JEL: J13 I12 I21 C30
    Date: 2012–04–12
  15. By: Davutyan, Nurhan; Bilsel, Murat; Tarcan, Menderes
    Abstract: Abstract: We analyze the operational performance of 330 Turkish provincial general hospitals. To help improve performance on both input and output space, we adopt a directional distance approach. We treat a mortality based variable as “bad output”. Congested hospitals are those for whom the switch from strong to weak disposability of mortality is costly. Thus we are able to address the “quality or adequacy of care” issue. We identify congested hospitals using 3 different direction vectors and derive the associated congestion inefficiency scores. For each case, we show these scores are negatively related to patient satisfaction. We separate congested hospitals into two groups: (i) those requiring uniform sacrifice of good outputs and/or extra inputs in order to reduce mortality, and (ii) those that do not. The latter ones free up some inputs in addition to requiring extra amounts of other inputs and/or produce more of some outputs but less of others as the price of reducing mortality. The first group can be said to operate at “capacity” whereas the latter can be said to display “negative marginal productivity”. Patient dissatisfaction is demonstrably higher in the latter group of hospitals, whereas mortality reduction is positively related to patient satisfaction in “capacity constrained” hospitals. The first group is more likely to be located in emigrating whereas the second one in immigrating regions.
    Keywords: Directional distance; bad outputs; hospital quality
    JEL: D21 I11
    Date: 2012–03–12
  16. By: Kirdar, Murat; Dayioglu, Meltem; Koc, Ismet
    Abstract: This paper estimates the impact of the extension of compulsory schooling in Turkey from 5 to 8 years—which increased the 8th grade completion rate for women by 30 percentage points—on marriage and birth outcomes of teenage women in Turkey. We find that increased compulsory schooling years reduce the probability of teenage marriage and births for women substantially, and these effects persist well beyond the new compulsory schooling years: the probability of marriage by age 18 falls by more than 4 percentage points and the probability of giving birth by age 19 falls by more than 4.5 percentage points for the earliest cohorts affected by the policy. In addition, the new policy increases the time to first-birth after marriage. We find conclusive evidence that longer compulsory schooling years have human capital effects on the time to first-birth, as well as incarcertation effects on teenage marriage; there is also suggestive evidence for human capital effects on teenage marriage.
    Keywords: Teenage marriage; Teenage births; Education; Compulsory Schooling Policy; Regression-Discontunity
    JEL: J13 I21 I28 J12 D10
    Date: 2012–05–10
  17. By: Cathy J. Bradley; David Neumark; Scott Barkowski
    Abstract: Employment-contingent health insurance creates incentives for ill workers to remain employed at a sufficient level (usually full-time) to maintain access to health insurance coverage. We study employed married women, newly diagnosed with breast cancer, comparing labor supply responses to breast cancer diagnoses between women dependent on their own employment for health insurance and women with access to health insurance through their spouse’s employer. We find evidence that women more dependent on their own job for health insurance reduce their labor supply by less after a diagnosis of breast cancer – the estimate difference is about 5.5 to 7 percent. Women’s subjective responses to questions about working more to maintain health insurance are consistent with the conclusions from observed behavior.
    JEL: J2
    Date: 2012–05
  18. By: Jidong Huang; Frank J. Chaloupka, IV
    Abstract: This study examined the impact of the 2009 federal tobacco excise tax increase on the use of cigarettes and smokeless tobacco products among youth using the Monitoring the Future survey, a nationally representative survey of 8th, 10th, and 12th grade students. The results of this analysis showed that this tax increase had a substantial short-term impact. The percentage of students who reported smoking in the past 30 days dropped between 9.7% and 13.3% immediately following the tax increase, depending on model specifications, and the percentage of students who reported using smokeless tobacco products dropped between 16% and 24%. It is estimated that there would have been approximately 220,000 – 287,000 more current smokers and 135,000 – 203,000 more smokeless tobacco users among middle school and high school students (age 14 – 18) in the United States in May 2009 had the federal tax not increased in April 2009. The long-term projected number of youth prevented from smoking or using smokeless tobacco that resulted from the 2009 federal tax increase could be much larger given the resulting higher tobacco prices would deter more and more children from initiating smoking and smokeless tobacco use over time.
    JEL: I10 I18
    Date: 2012–04
  19. By: Roger Bate; Ginger Zhe Jin; Aparna Mathur
    Abstract: Using 1437 samples of Ciprofloxacin from 18 low-to-middle-income countries, we aim to understand the role that regulation and distribution channel have played in signaling and ensuring drug safety. According to the World Health Organization, some poor quality drugs are deliberately and fraudulently mislabeled with respect to identity or source while others can have incorrect quantities of active ingredient as a result of manufacturing error or poor storage. Given the difficulty to prove “intent to deceive”, we classify poor quality drugs as counterfeit if they fail a visual check or contain zero correct active ingredient, and as substandard if they pass the visual check and contain some but less than 80% of the correct active ingredient. Following the Global Pharma Health Fund e.V. Minilab® protocol, we find 9.88% of samples are poor quality and 41.5% of the failures are counterfeits. Both product registration and chain affiliation of retailers are strong indicators of higher probability to pass in the Minilab test and higher retail price. Conditional on quality failures, chain affiliation is more likely to indicate substandard while product registration with local government is more likely to indicate counterfeit. In other words, registered products are more likely to be targeted by counterfeiters. Furthermore, substandard drugs are priced much lower than comparable generics in the same city but counterfeits offer almost no discount from the targeted genuine version. These findings have important implications for both consumers and policy makers.
    JEL: D8 I15 I18 L15 L51
    Date: 2012–05
  20. By: Pauline Givord (CREST); Lucile Romanello (CREST, Sciences Po)
    Keywords: primary health care demand, demand side barriers, vaccination campaign, natural experiment
    JEL: I18 H51 O55 C1
    Date: 2011–06

This nep-hea issue is ©2012 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.