nep-hea New Economics Papers
on Health Economics
Issue of 2015‒06‒05
eighteen papers chosen by
Yong Yin
SUNY at Buffalo

  1. How Health Plan Enrollees Value Prices Relative to Supplemental Benefits and Service Quality By Christian Bünnings; Hendrik Schmitz; Harald Tauchmann; Nicolas R. Ziebarth
  2. Does Experience Rating Improve Obstetric Practices? Evidence From Geographical Discontinuities in Italy By Sofia Amaral-Garcia; Paola Bertoli; Veronica Grembi
  3. Physician competition and the provision of care: evidence from heart attacks By Dunn, Abe; Shapiro, Adam Hale
  4. The Dynamic Effects of Obesity on the Wages of Young Workers By Pinkston, Joshua
  5. Performance-Based Financing, Motivation and Final Output in the Health Sector: Experimental Evidence from the Democratic Republic of Congo By Elise Huillery; Juliette Seban
  6. Is globalization really good for public health? General considerations and implications for the Arab world By Tausch, Arno
  7. The effect of changes in the statutory minimum working age on educational, labor and health outcomes By Sergi Jiménez-Martín; Judit Vall; Elena del Rey
  8. The acceptance of priority criteria in health care: international evidence By Ahlert, Marlies; Pfarr, Christian
  9. Socioemotional Skills, Education, and Health-Related Outcomes of High-Ability Individuals By Peter Savelyev; Kegon Tan
  10. Communication Problems? The Role of Parent-child Communication for the Subsequent Health Behavior of Adolescents By Daniel Avdic; Tugba Büyükdurmus
  11. The Quantity and Quality Adjustment of Births when Having More is Not Subsidized: the Effect of the TANF Family Cap on Fertility and Birth Weight By Ho-Po Crystal Wong
  12. Physician Practice Style and Patient Health Outcomes: The Case of Heart Attacks By Janet Currie; W. Bentley MacLeod; Jessica Van Parys
  13. Upcoding: Evidence from Medicare on Squishy Risk Adjustment By Michael Geruso; Timothy Layton
  14. Coming to work while sick: An economic theory of presenteeism with an application to German data By Hirsch, Boris; Lechmann, Daniel S. J.; Schnabel, Claus
  15. Three essays on schooling and health in Indonesia. Assessing the effects of family planning on fertility and of supply-side education programmes on BMI, schooling attainment, and wages By Pettersson, Gunilla
  16. Does Retirement Change Lifestyle Habits? By MOTEGI Hiroyuki; NISHIMURA Yoshinori; TERADA Kazuyuki
  17. Innovative Development of Medical Organizations in Reforming of the Health Care System By Generalov, A; Yashina, E; Sorokoletov, P
  18. Optimal Information Transmission By Wei Ma

  1. By: Christian Bünnings; Hendrik Schmitz; Harald Tauchmann; Nicolas R. Ziebarth
    Abstract: This paper empirically assesses the relative role of health plan prices, service quality and optional benefits in the decision to choose a health plan. We link representative German SOEP panel data from 2007 to 2010 to (i) health plan service quality indicators, (ii) measures of voluntary benefit provision on top of federally mandated benefits, and (iii) health plan prices for almost all German health plans. Mixed logit models incorporate a total of 1,700 health plan choices with more than 50 choice sets for each individual. The findings suggest that, compared to prices, health plan service quality and supplemental benefits play a minor role in making a health plan choice.
    Keywords: Fee-for-service; capitation; mixed payment systems; physician altruism; laboratory experiment
    JEL: D12 H51 I11 I13
    Date: 2015–03
  2. By: Sofia Amaral-Garcia; Paola Bertoli; Veronica Grembi
    Abstract: Using data from 2002 to 2009 inpatient discharge records on deliveries in the Italian region of Piedmont, we assess the impact of an increase in malpractice pressure on obstetric practices, as identified by the introduction of experience-rated malpractice liability insurance. Our identification strategy exploits the exogenous location of public hospitals in court districts with and without schedules for noneconomic damages. We perform difference-in- differences and difference-in-discontinuities analyses. We find that the increase in medical malpractice pressure is associated with a decrease in the probability of performing a C-section from 2.3 to 3.7 percentage points (7% to 11.6% at the mean value of C-section) with no consequences for a broadly defined measure of complications or neonatal outcomes. We show that these results are robust to the different methodologies and can be explained by a reduction in the discretion of obstetric decision making rather than by patient cream skimming.
    Keywords: experience rating; difference-in-discontinuities; scheduled damages; medical liability insurance; C-sections;
    JEL: K13 K32 I13
    Date: 2015–05
  3. By: Dunn, Abe (U.S. Bureau of Economic Analysis); Shapiro, Adam Hale (Federal Reserve Bank of San Francisco)
    Abstract: We study the impact of competition among physicians on service provision and patients’ health outcomes. We focus on cardiologists treating patients with a first time heart attack treated in the emergency room. Physician concentration has a small, but statistically significant effect on service utilization. A one-standard deviation increase in cardiologist concentration causes a 5 percent increase in cardiologist service provision. Cardiologists in more concentrated markets perform more intensive procedures, particularly, diagnostic procedures—services in which the procedure choice is more discretionary. Higher concentration also leads to fewer readmissions, implying potential health benefits. These findings are potentially important for antitrust analysis and suggest that changes in organizational structure in a market, such as a merger of physician groups, not only influences the negotiated prices of services, but also service provision.
    Date: 2015–05
  4. By: Pinkston, Joshua
    Abstract: This paper considers effects of body mass on wages in the years following labor market entry. The preferred models allow current wages to be affected by both past and current body mass, as well as past wages, while also addressing the endogeneity of body mass. I find that a history of severe obesity has a large negative effect on the wages of white men. White women face a penalty for a history of being overweight, with additional penalties for both past and current BMI that begin above the threshold for severe obesity. Furthermore, the effects of past wages on current wages imply that past body mass has additional, indirect effects on wages, especially for white women.
    Keywords: BMI; Obesity; Wages; Discrimination; Dynamic Panel Data Models
    JEL: I1 J31 J7
    Date: 2015–05–08
  5. By: Elise Huillery (ECON - Département d'économie - Sciences Po); Juliette Seban (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)
    Abstract: Performance-based financing becomes a common strategy to improve health sector quality. The findings of this paper imply that performance-based financing should take motivational effects and levels of provider capacity into account. Using a field experiment in the Democratic Republic of Congo, we find that financial incentives led to more effort from health workers on rewarded activities, without deterring effort on non-rewarded activities. We also find a shift from intrinsic to extrinsic motivation. Finally, the increased effort by health workers proved unsuccessful and led to a reduction in revenue, suggesting that health workers lacked the capacity to develop appropriate strategies to perform.
    Date: 2014–10
  6. By: Tausch, Arno
    Abstract: Background: A positive assessment of the role of globalization as a driver of a good public health performance has been the result of major new studies in the field. But the present re-analysis shows that neo-liberal globalisation has resulted in increasing inequality, which in turn negatively affects global health performance. This conclusion is valid on a global level but it also holds for the majority of the Arab countries, which are currently undergoing very dramatic political and social transformations, which have fundamental repercussions for the Western world. Methods: Standard IBM/SPSS OLS regressions and partial correlations with cross-national and time series aggregate, freely available data. The article also re-analysed the data, provided by Mukherjee N. and Krieckhaus J. Globalization and Human Well-Being. International Political Science Review, March 2012; vol. 33, 2: pp. 150-170. Results: We can show that different types of globalization processes affect public health performance differently. The absence of restrictions (direct effects on the availability of pharmaceuticals) and the free flow of information (direct effects on the availability of scientific information in medicine and the free movement for members of the medical profession) have the biggest impact on infant mortality reduction, while actual foreign capital flows and personal contacts have less influence on reducing infant mortality rates. The “de-composition” of the available data suggests that for most of the time period of the last four decades, globalization inflows even implied an aggregate deterioration of public health, quite in line with recent prominent public health research studies by Cornia, de Vogli, and other studies, referred to in this article. Conclusions: Globalization leads to increased inequality, and this, in turn, to a deteriorating public health performance. This is relevant for the health planners in the Middle Eastern region as well. The region witnessed a sharp increase in globalization in recent years. We show the validity of our conclusion also with an annual time series data analysis for 99 countries. In only 19 of 99 nations (i.e. 19.1%) globalization actually preceded an improvement in the public health performance. Far from falsifying the globalization critical research, our essay shows the basic weaknesses of the new “pro-globalization” literature in the public health profession.
    Keywords: Globalization, Infant Mortality, Inequality, Arab countries
    JEL: F5 I3
    Date: 2015–05–21
  7. By: Sergi Jiménez-Martín; Judit Vall; Elena del Rey
    Abstract: In this paper we explore the effects of a labor market reform that changed the statutory minimum working age in Spain in 1980. In particular, the reform raised the statutory minimum working age from 14 to 16 years old, while the minimum age for attaining compulsory education was kept at 14 until 1990. To study the effects of this change, we exploit the different incentives faced by individuals born at various times of the year before and after the reform. We show that, for individuals born at the beginning of the year, the probabilities of finishing both the compulsory and the post-compulsory education level increased after the reform. In addition, we find that the reform decreases mortality while young (16-25) for both genders while it increases mortality for middle age women (26-40). We provide evidence to proof that the latter increase is partly explained by the deterioration of the health habits of affected women. Together, these results help explain the closing age gap in life expectancy between women and men in Spain.
    Date: 2015–06
  8. By: Ahlert, Marlies; Pfarr, Christian
    Abstract: Social health care systems around the world are inevitably confronted with the scarcity of resources and the resulting distributional challenges. Prioritization is applied in almost all countries, implicitly or explicitly, and shapes access to health services. We analyze and compare attitudes towards prioritization of medical treatments in a group of countries. The focus is on the criteria of age, the fact that a patient has or does not have young children or the fact that a patient is a strong smoker or a non-smoker. We use representative data from the International Social Survey Program (ISSP) of the year 2011 for nine countries (DE, US, GB, CH, NL, SE, NO, DK, AU). The empirical analysis reveals strong effects of socio-demographic factors and attitudes towards aspects of the health care system on individual’s acceptance of priority criteria. Among countries, Germans exhibit the highest aversion against priority setting whereas individuals from the US or GB are more in favor to prioritize according to the criteria smoking and age. However, a priority for patients with young children only receives support in Switzerland. Finally, we find evidence of egoistic motives for respondents’ acceptance of priority criteria.
    Keywords: health care priority setting; cultural values
    JEL: D63 D71 I14 I18
    Date: 2015–06–02
  9. By: Peter Savelyev (Vanderbilt University); Kegon Tan (University of Wisconsin-Medison)
    Abstract: We estimate the effects of education and five well-established socioemotional skills on essential life outcomes including health behaviors, health-related lifestyles, earnings, as well as general and mental health. We supplement results in papers that treat socioemotional skills as a single-dimensional variable and find important heterogeneity that a one-dimensional representation does not capture. By combining factor-analytic modeling with a powerful procedure to account for multiple-hypothesis testing, we control for the ability bias, for the measurement error in proxies of socioemotional skills, and for the family-wise error rate. We also contribute to the still controversial discussion about the causal effect of education on health-related outcomes by using alternative methods to the use of natural experiments. We use the Terman data, a unique longitudinal study.
    Keywords: college education, Big Five personality taxonomy, health behaviors, lifestyles, earnings, health, longevity
    JEL: I0 J0
    Date: 2015–05–29
  10. By: Daniel Avdic; Tugba Büyükdurmus
    Abstract: We contribute to the literature on the determinants of socioeconomic health disparities by studying how the health behavior of adolescents may arise from the degree of communication between parent and child. Parent-child communication may function as a mediator between family background and subsequent poor health behavior, potentially reconciling previous mixed evidence on the relationship between child health and social status. Using data from a unique German child health survey we construct an index of parent-child communication quality by comparing responses to statements about the children’s well-being from both children and their parents. Applying the constructed communication measure in a continuous treatment empirical framework, allowing for estimation of non-linear effects, our results show that improved parent-child communication monotonously reduces the smoking prevalence of adolescents by as much as 70%, irrespective of social background. More complex relationships are found for risky alcohol consumption and abnormal body weight.
    Keywords: Child health; health behavior; communication; intergenerational transmission; socioeconomic inequality; continuous treatment effect
    JEL: C31 D83 I12 I14
    Date: 2015–04
  11. By: Ho-Po Crystal Wong (West Virginia University, College of Business and Economics)
    Abstract: I examine whether the family cap policy that reduces or eliminates incremental welfare benefits for additional births born to mothers already on welfare would affect both the quantity and quality of births in terms of birth weight. I find that the family cap produces very pronounced effect on reducing out of wedlock birth and low birth weight rates among teenagers. The evidence suggests that the family cap policy might not just produce a deterrent effect on non-marital childbearing but also a quality effect on birth: those births that actually occur are endowed with better health in terms of birth weight.
    Keywords: TANF, AFDC, family cap, quantity and quality of children, fertility, non-marital birth, birth weight
    JEL: J1 J12 J16 J18 K36
    Date: 2015–05
  12. By: Janet Currie; W. Bentley MacLeod; Jessica Van Parys
    Abstract: When a patient arrives at the Emergency Room with acute myocardial infarction (AMI), doctors must quickly decide whether the patient should be treated with clot-busting drugs, or with invasive surgery. Using Florida data on all such patients from 1992-2011, we decompose physician practice style into two components: The physician’s probability of conducting invasive surgery on the average patient, and the responsiveness of the physician’s choice of procedure to the patient’s condition. We show that practice style is persistent over time and that physicians whose responsiveness deviates significantly from the norm in teaching hospitals have significantly worse patient outcomes, including a 7% higher probability of death in hospitals among the patients who are least appropriate for the procedure. Our results suggest that a reallocation of invasive procedures from less appropriate to more appropriate patients could improve patient outcomes without increasing costs. Developing protocols to identify more and less appropriate patients could be a first step towards realizing this improvement.
    JEL: I11
    Date: 2015–05
  13. By: Michael Geruso; Timothy Layton
    Abstract: Diagnosis-based subsidies, also known as risk adjustment, are widely used in US health insurance markets to deal with problems of adverse selection and cream-skimming. The widespread use of these subsidies has generated broad policy, research, and popular interest in the idea of upcoding—the notion that diagnosed medical conditions may reflect behaviors of health plans and providers to game the payment system, rather than solely characteristics of patients. We introduce a model showing that coding differences across health plans have important consequences for public finances and consumer choices, whether or not such differences arise from gaming. We then develop and implement a novel strategy for identifying coding differences across insurers in equilibrium in the presence of selection. Empirically, we examine how coding intensity in Medicare differs between the traditional fee-for-service option, in which coding incentives are weak, and Medicare Advantage, in which insurers receive diagnosis-based subsidies. Our estimates imply that enrollees in private Medicare Advantage plans generate 6% to 16% higher diagnosis-based risk scores than the same enrollees would generate under fee-for-service Medicare. Consistent with a principal-agent problem faced by insurers attempting to induce their providers to upcode, we find that coding intensity increases with the level of vertical integration between insurers and the physicians with whom they contract. Absent a coding inflation correction, our findings imply excess public payments to Medicare Advantage plans of around $10 billion annually. This differential subsidy also distorts consumers' choices toward private Medicare plans and away from fee-for-service Medicare.
    JEL: H42 H51 I1 I13 I18
    Date: 2015–05
  14. By: Hirsch, Boris; Lechmann, Daniel S. J.; Schnabel, Claus
    Abstract: Presenteeism, i.e. attending work while sick, is widespread and associated with significant costs. Still, economic analyses of this phenomenon are rare. In a theoretical model, we show that presenteeism arises due to differences between workers in (healthrelated) disutility from workplace attendance. As these differences are unobservable by employers, they set wages that incentivise sick workers to attend work. Using a large representative German data set, we test several hypotheses derived from our model. In line with our predictions, we find that bad health status and stressful working conditions are positively related to presenteeism. Better dismissal protection, captured by higher tenure, is associated with slightly fewer presenteeism days, whereas the role of productivity and skills is inconclusive.
    Keywords: presenteeism,absenteeism,sick leave,Germany
    JEL: I19 J22
    Date: 2015
  15. By: Pettersson, Gunilla
    Abstract: In 1969, Indonesia established a national family planning programme and total fertility has declined rapidly since but there is little consensus over the relative contribution of family planning to the observed decline. The first chapter constructs a new measure of family planning exposure to examine the role of family planning in reducing fertility. The causal effects of infant mortality is also examined based on a new instrumental variable, water supply and sanitation programme exposure, and that of schooling using father’s schooling as an instrument. The findings strongly indicate that family planning contributes to lower fertility together with reductions in infant deaths and improvements in women’s schooling, and that the effects of family planning and decreases in infant mortality are larger than that of schooling. In 2002, nearly one-in-ten men and more than one-in-five women in Indonesia were overweight and noncommunicable diseases had become the main cause of death but there exists no evidence on the causal effect of schooling on BMI for developing countries. The second chapter assesses whether more schooling causes healthier BMI in Indonesia by using two instrumental variables to capture exogenous variation in schooling. The first instrument takes advantage of the primary school construction programme (SD INPRES) in the 1970s; the second instrument is father’s schooling. Two results stand out: more schooling causes higher BMI for men and there is no causal effect of schooling on BMI for women. This chapter also provides some very preliminary evidence that the shift from blue collar to white collar and service sector occupations is one contributing factor to why more schooling increases BMI for men. The third chapter also uses the SD INPRES programme but to examine the effect of increased school supply on schooling attainment: overall, by gender, and by socioeconomic background. It also constructs a new SD INPRES programme exposure variable as an instrument for schooling to assess the causal effect of schooling on wages. The results strongly suggest that the SD INPRES programme increased schooling for men and women but that women benefited more as did individuals from less advantageous socioeconomic backgrounds. More schooling also causes higher wages and there appears to be an added positive effect for women through the additional schooling induced by the SD INPRES programme.
  16. By: MOTEGI Hiroyuki; NISHIMURA Yoshinori; TERADA Kazuyuki
    Abstract: This paper studies the effect of retirement on lifestyle habits, including drinking, smoking, exercise, and sleeping, by using panel data from the Japanese Study of Aging and Retirement (JSTAR). Rich information in JSTAR enables us to use an interesting instrumental variable to account for endogeneity. We have three contributions in this paper. This is the first paper that focuses on and investigates the mechanism of the relation between retirement and health, namely, lifestyle habits. Second, new results show that people reduce drinking after retirement and increase sleeping time on weekdays although smoking, frequency of exercise, and sleeping time on holidays seem to be unchanged. Third, controlling important factors also allows us to inspect the detailed channels between retirement and lifestyle habits. Our estimation suggests that the peer effect in the workplace may be influential mainly on drinking habits.
    Date: 2015–05
  17. By: Generalov, A (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Yashina, E (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Sorokoletov, P (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The complexity and multivariate analysis problems of financial and economic state medical institutions, forecasting and planning activities aimed at the development of its innovative, require the creation of specialized decision support tools (SPR). The paper studied and parameterization defining financial, economic and regulatory factors in their relationship with key performance indicators work diversified medical institutions at a group of federal agencies as part of the General Medical Department (LGU) Office of the President of the Russian Federation. A mathematical model of financial sustainability of health facilities, adequate conditions of health reform and methods of analysis, forecasting and planning of innovative development of diversified medical institution in the conditions of reforming using the tools of interactive simulation on the principle of "what if". Described created based on the model and software information tool - Decision Support System (DSS). The tool allows the decision maker (LPR) in interactive mode to perform the optimization of financial and operational resources, taking into account all influencing factors, simulate and evaluate the impact of macroeconomic conditions on the financial and economic stability of the institutions to carry out simulation and planning the balance of income and expenditure by type of institution provided medical services.
    Date: 2015–04
  18. By: Wei Ma (Department of Economics, University of Pretoria)
    Abstract: This paper addresses the issue of how a given piece of information should be transmitted from a better-informed doctor to an ill-informed patient. The information to be transmitted is expressed as a probability distribution on a space of the patient’s possible health states. For a formal analysis of the issue we develop a two-person dynamic game, in which the doctor sends a sequence of messages to the patient to inform him of his health state, and the patient, after receiving each message, chooses an action in an attempt to improve upon his current health status. We study some standard properties of the equilibria of this game; in particular, we show that it has a subgame perfect equilibrium.
    Keywords: Information transmission, Dynamic game theory, Subgame perfect equilibrium
    JEL: D73 D83
    Date: 2015–05

This nep-hea issue is ©2015 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.