nep-hea New Economics Papers
on Health Economics
Issue of 2014‒08‒25
twenty-two papers chosen by
Yong Yin
SUNY at Buffalo

  1. Impact of Out-of-Pocket Expenditures on Families and Barriers to Use of Maternal and Child Health Services in Asia and the Pacific: Evidence from National Household Surveys of Healthcare Use and Expenditures By Asian Development Bank (ADB); ; ;
  2. Competition and the Cost of Medicare’s Prescription Drug Program By Congressional Budget Office
  3. Examining the Number of Competitors and the Cost of Medicare Part D: Working Paper 2014-04 By Andrew Stocking; James Baumgardner; Melinda Buntin; Anna Cook
  4. The Effects of Prescription Drug Cost Sharing: Evidence from the Medicare Modernization Act By Douglas Barthold
  5. Does job insecurity deteriorate health? A causal approach for Europe By Caroli, Eve; Godard, Mathilde
  6. The other asian enigma: Explaining the rapid reduction of undernutrition in Bangladesh: By Headey, Derek D.; Hoddinott, John F.; Ali, Disha; Tesfaye, Roman; Dereje, Mekdim
  7. Revisiting the relationship between nurse staffing and quality of care in nursing homes: An instrumental variables approach By Haizhen Lin
  8. Public Health Insurance Expansions and Hospital Technology Adoption By Seth Freedman; Haizhen Lin; Kosali Simon
  9. Health Effects of Containing Moral Hazard: Evidence from Disability Insurance Reform By Garcia-Gomez, Pilar; Gielen, Anne C.
  10. Income Receipt and Mortality: Evidence from Swedish Public Sector Employees By Andersson, Elvira; Lundborg, Petter; Vikström, Johan
  11. Paying the Doctor: Evidence-Based Decisions at the Point-of-Care and the Role of Fee-for-Service Incentives. By Eugene C. Rich; Timothy K. Lake; Christal Stone Valenzano; Myles M. Maxfield
  12. Paying More Wisely: Effects of Payment Reforms on Evidence-Based Clinical Decision-Making. By Timothy K. Lake; Eugene C. Rich; Christal Stone Valenzano; Myles M. Maxfield
  13. Patterns of Older Americans' Health Care Utilization Over Time. By Richard J. Manski; John F. Moeller; Haiyan Chen; Jody Schimmel; Patricia A. St. Clair; John V. Pepper
  14. Misdiagnosis: An Emerging Priority for Comparative Effectiveness Research. By Eugene C. Rich
  15. Descriptive Study of Three Disability Competent Managed Care Plans for Medicaid Enrollees. By Vanessa Oddo; Angela Gerolamo; David R. Mann; Catherine DesRoches
  16. Impacts of Waiting Periods for Home- and Community-Based Services on Consumers and Medicaid Long-Term Care Costs in Iowa. By Greg Peterson; Randy Brown; Allison Barrett; Beny Wu; Christal Stone Valenzano
  17. Impacts of an Enhanced Family Health and Sexuality Module of the HealthTeacher Middle School Curriculum. By Brian Goesling; Silvie Colman; Mindy Scott; Elizabeth Cook
  18. Welfare Implications of Learning Through Solicitation versus Diversification in Health Care By Anirban Basu
  19. Who Should Pay for Global Health, and How Much? By Carrasco, Luis R; Coker, Richard; Cook, Alex R
  20. Direct and Indirect Cost of Diabetes in Italy: a Prevalence Probabilistic Approach By Andrea Marcellusi; Raffaella Viti; Alessandra Mecozzi; Francesco Saverio Mennini
  21. Cantonal Differences in Health Care Premium Subsidies in Switzerland By Gerritzen, Berit C.; Martínez, Isabel Z.; Ramsden, Alma
  22. Age effects in mortality risk valuation By Pinto Prades, Jose Luis; Brey Sanchez, Raul

  1. By: Asian Development Bank (ADB); (Regional and Sustainable Development Department, ADB); ;
    Abstract: The burden of poor maternal, neonatal and child health (MNCH) remains unacceptably high in many developing member countries (DMCs). To understand the barriers facing households in accessing MNCH care, the ADB technical assistance project RETA-6515 analyzed data from routine national household expenditure surveys in six DMCs: Bangladesh, Cambodia, the Lao People's Democratic Republic (Lao PDR), Pakistan, Papua New Guinea, and Timor-Leste. The findings reveal not only the rich evidence base available in these surveys, but also show how healthcare costs, quality, and physical barriers play differing roles in different countries in preventing access, and how families are often impoverished by accessing needed care.
    Keywords: Bangladesh; Cambodia; the Lao People's Democratic Republic; Laos; Lao PDR; Pakistan; Papua New Guinea; Timor-Leste; out-of-pocket expenditures; maternal, newborn and child health
    Date: 2012–12
  2. By: Congressional Budget Office
    Abstract: Spending for Medicare's prescription drug program (Part D) was $50 billion in 2013—about 50 percent less than CBO projected when the program was created. Lower growth rates in national drug spending and lower-than-expected enrollment primarily account for the difference. The competitive design of Part D has also constrained spending. CBO found that spending was lower in years when, and in areas of the country where, more plan sponsors competed for beneficiaries.
    JEL: I10 I11 I13 I18 I38
    Date: 2014–07–30
  3. By: Andrew Stocking; James Baumgardner; Melinda Buntin; Anna Cook
    Abstract: Most beneficiaries of Medicare's Part D prescription drug insurance choose among private drug plans to receive their coverage. This paper is the first to examine the relationship between the number of competing plan sponsors and the cost of Part D during the program's first five years. Over the period from 2006 to 2010, regional Part D markets contained between 16 and 22 plan sponsors offering stand-alone plans. Consistent with economic theory, we find that increases in the number of plan sponsors within a market were associated with lower bids and lower overhead and profits of plans in that market. For example, among stand-alone plans that were not eligible to be assigned low-income beneficiaries, we find that each additional plan sponsor entering an 18-firm market was associated with a reduction in bids for a month of basic coverage to a beneficiary of average health of 0.4 percent—or $0.33 for a plan that bid $85—which corresponds to an elasticity of -0.071. (That result is an arithmetic average across six specifications in which estimates range from $0.20 to $0.50.) Because bids are used to directly determine government spending, we estimate that an additional plan sponsor nationwide was associated with a reduction in government spending of $7 million to $17 million each year.
    JEL: I10 I11 I13 I18 I38
    Date: 2014–07–30
  4. By: Douglas Barthold
    Abstract: This paper assesses the impact of health insurance cost sharing on enrollees' preventable hospitalizations and preventive care utilization, among the elderly in the United States. Cost sharing has an important role in health insurance, where it is designed to mitigate moral hazard consumption of medical services. Such overconsumption is detrimental to the pool of enrollees, who finance the care of fellow enrollees, and to society overall, due to allocative inefficiency. A possible consequence of dissuading utilization is that individuals may choose to forego services that are perceived to be nonessential, such as preventive care. In order to evaluate this possibility, I analyze the effects of varying patient cost sharing for prescription drugs on hospitalizations from Ambulatory Care Sensitive Conditions (ACSC), which can represent a failure of preventive and outpatient care. To address endogeneity from selection and sorting of individuals into insurance plans, I aggregate data to the region-year level, and use an instrumental variables strategy. The analysis exploits exogenous variation in prescription drug cost sharing that occurred as a result of the Medicare Modernization Act of 2003, and therefore identifies causal effects of cost sharing. Results show that for the elderly in the United States, reductions in prescription drug cost sharing do not have an effect on hospitalizations related to ambulatory care sensitive conditions, or on specific types of preventive care utilization.
    Keywords: cost sharing, prescription drugs, Medicare Part D, preventive care, ambulatory care sensitive conditions
    JEL: I12
    Date: 2014–07
  5. By: Caroli, Eve; Godard, Mathilde
    Abstract: This paper estimates the causal effect of perceived job insecurity – i.e. the fear of involuntary job loss – on health in a sample of men from 22 European countries. We rely on an original instrumental variable approach based on the idea that workers perceive greater job security in countries where employment is strongly protected by the law, and relatively more so if employed in industries where employment protection legislation is more binding, i.e. in industries with a higher natural rate of dismissals. Using cross-country data from the 2010 European Working Conditions Survey, we show that when the potential endogeneity of job insecurity is not accounted for, the latter appears to deteriorate almost all health outcomes. When tackling the endogeneity issue by estimating an IV model and dealing with potential weak-instrument issues, the health-damaging effect of job insecurity is confirmed for a limited subgroup of health outcomes, namely suffering from headaches or eyestrain and skin problems. As for other health variables, the impact of job insecurity appears to be insignificant at conventional levels.
    Keywords: job insecurity; health; instrumental variables
    Date: 2014–07
  6. By: Headey, Derek D.; Hoddinott, John F.; Ali, Disha; Tesfaye, Roman; Dereje, Mekdim
    Abstract: South Asia has long been synonymous with persistent and unusually high rates of child undernutrition—the so-called Asian enigma. Yet contrary to this stereotype, Bangladesh has managed to sustain a rapid reduction in the rate of child undernutrition for at least two decades. In this paper we aim to understand the sources of this unheralded success with the aspiration of deriving policy-relevant lessons from Bangladesh’s experience. To do so we employ a regression analysis of five rounds of Demographic and Health Surveys covering the period from 1997 to 2011.
    Keywords: Nutrition, Health, malnutrition, Undernutrition, Education, Hygiene, family planning, Health services, Children, Maternal and child health,
    Date: 2014
  7. By: Haizhen Lin (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: This paper revisits the relationship between nurse staffing and quality of care in nursing homes using an instrumental variables approach. Most prior studies rely on cross-sectional evidence, which renders causal inference problematic and policy recommendations inappropriate. We exploit legislation changes regarding minimum staffing requirements in eight states between 2000 and 2001 as exogenous shocks to nurse staffing levels. We find that registered nurse staffing has a large and significant impact on quality of care, and that there is no evidence of a significant association between nurse aide staffing and quality of care. A comparison of the IV estimation to the OLS estimation of the first-difference model suggests that ignoring endogeneity would lead to an underestimation of how nurse staffing affects quality of care in nursing homes.
    Keywords: nurse staffing, quality of care, minimum staffing requirements, instrumental variables
    JEL: I10 I18
    Date: 2014–01
  8. By: Seth Freedman (School of Public and Environmental Affairs, Indiana University); Haizhen Lin (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Kosali Simon (School of Public and Environmental Affairs, Indiana University)
    Abstract: This paper explores the effects of public health insurance expansions on hospitals’ decisions to adopt medical technology. Specifically, we test whether the expansion of Medicaid eligibility for pregnant women during the 1980s and 1990s affects hospitals’ decisions to adopt neonatal intensive care units (NICUs). While the Medicaid expansion provided new insurance to a substantial number of pregnant women, prior literature also finds that some newly insured women would otherwise have been covered by more generously reimbursed private sources. This leads to a theoretically ambiguous net effect of Medicaid expansion on a hospital’s incentive to invest in technology. Using American Hospital Association data, we find that on average, Medicaid expansion has no statistically significant effect on NICU adoption. However, we find that in geographic areas where more of the newly Medicaid-insured may have come from the privately insured population, Medicaid expansion slows NICU adoption. This holds true particularly when Medicaid payment rates are very low relative to private payment rates. This finding is consistent with prior evidence on reduced NICU adoption from increased managed-care penetration. We conclude by providing suggestive evidence on the health impacts of this deceleration of NICU diffusion, and by discussing the policy implications of our work for insurance expansions associated with the Affordable Care Act.
    JEL: I11 I13 I18
    Date: 2014–05
  9. By: Garcia-Gomez, Pilar (Erasmus University Rotterdam); Gielen, Anne C. (Erasmus University Rotterdam)
    Abstract: We exploit an age discontinuity in a Dutch disability insurance (DI) reform to identify the health impact of stricter eligibility criteria and reduced generosity. Women subject to the more stringent rule experience greater rates of hospitalization and mortality. A €1,000 reduction in annual benefits leads to a rise of 4.2 percentage points in the probability of being hospitalized and a 2.6 percentage point higher probability of death more than 10 years after the reform. There are no effects on the hospitalization of men subject to stricter rules but their mortality rate is reduced by 1.2 percentage points. The negative health effect on females is restricted to women with low pre-disability earnings. We hypothesize that the gender difference in the effect is due to the reform tightening eligibility particularly with respect to mental health conditions, which are more prevalent among female DI claimants. A simple back-of-the-envelope calculation shows that every dollar reduction in DI is almost completely offset by additional health care costs. This implies that policy makers considering a DI reform should carefully balance the welfare gains from reduced moral hazard against losses not only from less coverage of income risks but also from deteriorated health.
    Keywords: disability insurance, moral hazard, health, mortality, regression discontinuity
    JEL: I14 H53 I38
    Date: 2014–08
  10. By: Andersson, Elvira (Lund University); Lundborg, Petter (Lund University); Vikström, Johan (IFAU)
    Abstract: In this paper, we study the short-run effect of salary receipt on mortality among Swedish public sector employees. By exploiting variation in pay-days across work-places, we completely control for mortality patterns related to, for example, public holidays and other special days or events coinciding with paydays and for general within-month and within-week mortality patterns. We find a dramatic increase in mortality on the day salaries arrive. The increase is especially pronounced for younger workers and for deaths due to activity-related causes such as heart conditions and strokes. Additionally, the effect is entirely driven by an increase in mortality among low income individuals, who are more likely to experience liquidity constraints. All things considered, our results suggest that an increase in general economic activity upon salary receipt is an important cause of the excess mortality.
    Keywords: income, mortality, health, consumption, liquidity constraints, permanent income hypothesis
    JEL: D91 H31 H55 I10 I12 I38
    Date: 2014–08
  11. By: Eugene C. Rich; Timothy K. Lake; Christal Stone Valenzano; Myles M. Maxfield
    Abstract: This article dvelops a framework for understanding how financial and nonfinancial incentives can complicate point-of-care decision making by physicians, leading to the over- or under-use of health care services. The analysis highlights contributing factors that promote and impede evidence-based decision making, using examples from the “Choosing Wisely†program. The authors discuss how the existing fee-for-service payment system can contribute to the problems of over- and under-testing, diagnosis, and treatment.
    Keywords: Comparative Effectiveness Research, Evidence-Based Decision-Making, Incentive, Physician Payment Reform
    JEL: I
    Date: 2013–05–30
  12. By: Timothy K. Lake; Eugene C. Rich; Christal Stone Valenzano; Myles M. Maxfield
    Abstract: This article reviews the recent research, policy, and conceptual literature on the effects of payment policy reforms on evidence-based clinical decision making by physicians at the point of care. Payment reforms include recalibration of existing fee structures in fee-for-service, pay-for-quality, episode-based bundled payments and global payments. The authors review the advantages and disadvantages of these reforms in terms of their effects on physicians’ and patients’ use of evidence in clinical decisions related to the diagnosis, testing, treatment, and management of disease. They conclude with a recommended pathway for improving payment incentives to better support evidence-based decision making.
    Keywords: Comparative Effectiveness Research, Evidence-Based Decision-Making, Incentive, Physician Payment Reform
    JEL: I
    Date: 2013–05–30
  13. By: Richard J. Manski; John F. Moeller; Haiyan Chen; Jody Schimmel; Patricia A. St. Clair; John V. Pepper
    Abstract: This study examined the use of physician, inpatient hospital, home health, and outpatient surgery for Americans more than 50 years of age. The study found that overall health and changes in health are more strongly correlated with seeking and using health care over time than financial status or changes to one’s financial status.
    Keywords: Health Care Utilization, Older Americans, Health Insurance Coverage, Health
    JEL: I
    Date: 2013–07–30
  14. By: Eugene C. Rich
    Abstract: This article discusses the implications of diagnostic errors for comparative effectiveness research (CER). It notes the potential role of CER studies for improving diagnosis and treatment decisions and the value of expanding the CER agenda to address misdiagnosis.
    Keywords: Comparative Effectiveness Research, Misdiagnosis, Mdthods Research, Health
    JEL: I
    Date: 2013–11–30
  15. By: Vanessa Oddo; Angela Gerolamo; David R. Mann; Catherine DesRoches
    Keywords: Managed Care Plans, Medicaid Enrollees, Disability, Health
    JEL: I J I
    Date: 2014–01–30
  16. By: Greg Peterson; Randy Brown; Allison Barrett; Beny Wu; Christal Stone Valenzano
    Keywords: Home and Community Based Services, Medicaid, Long-Term Care, Iowa
    JEL: I
    Date: 2014–01–30
  17. By: Brian Goesling; Silvie Colman; Mindy Scott; Elizabeth Cook
    Keywords: HealthTeacher, Sexuality, Pregnancy Prevention, Family Health
    JEL: I
    Date: 2014–05–16
  18. By: Anirban Basu
    Abstract: This paper uses Roy’s model of sorting behavior to study welfare implication of current health care data production infrastructure that relies on solicitation of research subjects. We show that due to severe adverse-selection issues, directionality of bias cannot be established and welfare may decrease due to new data. Direct diversification of treatment receipt may solve these issues but is infeasible. Unifying Manski’s work diversified treatment choice under ambiguity and Heckman’s work on estimating heterogeneous treatment effects, the paper proposes a new infrastructure based on temporary diversification of access that resolves the prior issues and can identify nuanced effect heterogeneity.
    JEL: C01 C9 D6 I1 I18
    Date: 2014–08
  19. By: Carrasco, Luis R; Coker, Richard; Cook, Alex R
    Abstract: Roman Carrasco and colleagues propose a "cap and trade" system for global health involving a cost-effectiveness criterion and a DALY global credit market, mirroring global carbon emission permits trading markets to mitigate climate change.
    Keywords: Global Health, Health economics
    JEL: I10 I14 I18
    Date: 2013–02–19
  20. By: Andrea Marcellusi (CEIS University of Rome "Tor Vergata"); Raffaella Viti (CEIS University of Rome "Tor Vergata"); Alessandra Mecozzi (Lazio Region pharmacist DPC Pharmaceutical Regulatory); Francesco Saverio Mennini (CEIS University of Rome "Tor Vergata")
    Abstract: Introduction: Diabetes Mellitus (DM) is a chronic-degenerative disease associated with a high risk of chronic complications and co-morbidities. However, very few data are available on the associated cost. The objective of this study is to identify the available information on the epidemiology of the disease and estimate the average annual cost incurred by the National Health Service (NHS) and society for the treatment of diabetes in Italy. Methods: A probabilistic prevalence Cost of Illness model was developed in order to calculate an aggregate measure of the economic burden associated with the disease, in terms of direct medical costs (drugs, hospitalizations, monitoring and adverse events) and indirect costs (absenteeism and early retirement). A systematic review of the literature was conducted to determine both the epidemiological and economic data. Furthermore, a one-way and probabilistic sensitivity analysis with 5,000 Monte Carlo simulations was performed, in order to test the robustness of the results and define a 95% CI. Results: The model estimated a prevalence of 2.6 million of patients under drug therapies in Italy. The total economic burden of diabetic patients in Italy amounted to € 20.3 billion/year (95% CI 95%: € 18.61 - € 22.29 billion), 54% of which are associated with indirect costs (95% CI :€ 10.10 - € 11.62 billion) and 46% with direct costs only (95% CI: € 8.11 - € 11.06 billion). Conclusions: This is the first study being conducted in Italy aimed at estimating direct and indirect cost of diabetes with a probabilistic prevalence approach. As it might be expected, the lack of information involves that the real burden of Diabetes is partly underestimated, especially with regard to indirect costs. However, this is a useful approach for policy makers, in order to understand the economic implications of the diabetes treatment in Italy. Running head: Cost of Illness of Diabetes in Italy
    Keywords: cost of illness; diabetes mellitus; direct cost; indirect cost; Italy
    JEL: I19
    Date: 2014–08–05
  21. By: Gerritzen, Berit C.; Martínez, Isabel Z.; Ramsden, Alma
    Abstract: We study health care premium subsidies in the Swiss cantons in order to understand the reasons behind the substantial cross-cantonal variation in households' premium load, i.e., the share of disposable income that is spent on premiums after the subsidy. Cantons' financial situation is of particular interest in this regard, because the premium subsidies aim at reducing the premium load for lower income groups in order to ensure universal access to health care at affordable costs. Thus, variation in premium load is meant to reflect underlying differences between cantons in health care and overall living costs, or different preferences of the electorate with regards to social policy, but not budgetary considerations of cantons. We develop a premium subsidy calculation model based on cantonal regulations and apply it to households in the Swiss Household Panel to assess the effect of cantonal budget tightness on households' premium load from 2004-2012. Our analysis is based on panel regression methods and a difference-in- differences model in order to take into account unobserved heterogeneity and simultaneity concerns. The results indicate that there is a significant and negative relationship between the budget of a canton and the premium load of households
    Keywords: Health care premium subsidies, equity, health care financing, fiscal federalism, budget constraint, Switzerland.
    JEL: H51 H72 H75 I14 I18
    Date: 2014–07
  22. By: Pinto Prades, Jose Luis (Glasgow Caledonian University, Glasgow, Scotland); Brey Sanchez, Raul (University Pablo de Olavide, Sevilla, Spain)
    Abstract: We provided more evidence on the functional relationship between willingness to pay for risk reductions and age (the senior discount). We overcome many of the limitations of previous literature that has dealt with this problem, namely, the influence of the assumptions used in statistical models on the final results. Given our large sample size (n=6024) we can use models that are very demanding on sample size. We show that all models predict the same inverse U-shaped relationship between WTO for risk reductions and age. We use several models, parametric (linear, cuadratic, dummies), semi-nonparametric and non-parametric. Results are consistent under all the different models. We also compare the marginal and the total approach and we show that they provide similar results. However, we also overcome one of the limitations of the total approach, that is, it includes the effects of all socioeconomic characteristics that are correlated with age. Given our sample size, we compare age groups that are similar in education and income. We observe that the seniority effect is only present for low income people.
    Keywords: 2014-04
    Date: 2014–04

This nep-hea issue is ©2014 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.