nep-hea New Economics Papers
on Health Economics
Issue of 2018‒05‒07
seventeen papers chosen by
Yong Yin
SUNY at Buffalo

  1. Multimarket Contact in Health Insurance: Evidence from Medicare Advantage By Haizhen Lin; Ian M. McCarthy
  2. London Fog: A Century of Pollution and Mortality, 1866-1965 By W. Walker Hanlon
  3. How the Reformulation of OxyContin Ignited the Heroin Epidemic By William N. Evans; Ethan Lieber; Patrick Power
  4. Adoption and Learning Across Hospitals: The Case of a Revenue-Generating Practice By Adam Sacarny
  5. Ambulance Utilization in New York City after the Implementation of the Affordable Care Act By Charles Courtemanche; Andrew Friedson; Daniel I. Rees
  6. Habit formation, obesity, and cash rewards By Augurzky, Boris; Bauer, Thomas K.; Reichert, Arndt R.; Schmidt, Christoph M.; Tauchmann, Harald
  7. Does price competition damage healthcare quality? By Anne-Fleur Roos; Eddy van Doorslaer; Owen O'Donnell; Erik Schutt; Marco Varkevisser
  8. Hospital Competition under Pay-for-Performance: Quality, Mortality and Readmissions By Domenico Lisi; Luigi Siciliani; Odd Rune Straume
  9. Smoking, Obesity, and Labor Market Outcomes: Evidence from Japan By MORIKAWA Masayuki
  10. Economic success and sustainability in pharmaceutical sector: a case of Indian SMEs By José Niño-Amézquita; Fedor Legotin; Oleg Barbakov
  11. Competition in health care markets: treatment volume and quality By Boone, Jan
  12. The Future Prospect of the Long-term Care Insurance in Japan By Ryuta Ray Kato
  13. Mortality from Nestlé’s Marketing of Infant Formula in Low and Middle-Income Countries By Jesse K. Anttila-Hughes; Lia C.H. Fernald; Paul J. Gertler; Patrick Krause; Bruce Wydick
  14. A Systematic Review of Vertical Integration and Quality of Care, Efficiency, and Patient-Centered Outcomes By Rachel M. Machta; Kristin A. Maurer; David J. Jones; Michael F. Furukawa; Eugene C. Rich
  15. Care Coordination for Children with Special Needs in Medicaid: Lessons from Medicare By Kate A. Stewart; Katharine W.V. Bradley; Joseph S. Zickafoose; Rachel Hildrich; Henry T. Ireys; Randall S. Brown
  16. When Do Employers Provide Accommodations to Employees with Health Problems? Qualitative Evidence from Arkansas By Katie Morrison; Rayna Thornton; Alix Gould-Werth; Yonatan Ben-Shalom
  17. Competition and Equity in Health Care Markets By Luigi Siciliani; Odd Rune Straume

  1. By: Haizhen Lin; Ian M. McCarthy
    Abstract: Many industries, including health insurance, are characterized by a handful of large firms that compete in multiple geographic markets. Such overlap across markets, defined as multimarket contact (MMC), may facilitate tacit collusion and thus reduce the intensity of competition. We examine the effects of MMC on health insurance prices and quality using comprehensive data on the Medicare Advantage (MA) market from 2008 through 2015. Our estimation strategy exploits two plausibly exogenous changes to MMC: 1) a merger-induced change in MMC due to consolidations in other markets; and 2) reimbursement policy changes in which benchmark rates were increased in a subset of markets, encouraging additional entry into those markets and therefore affecting MMC even in markets otherwise unaffected by the policy itself. Across a range of estimates and alternative measures of MMC, our results consistently support the mutual forbearance hypothesis, where we find that prices are significantly higher and quality significantly lower as MMC increases. These results suggest MMC as one potential channel through which cross-market mergers and acquisitions could soften competitiveness in local markets.
    JEL: I11 L11
    Date: 2018–04
  2. By: W. Walker Hanlon
    Abstract: This study provides new evidence on the impact of air pollution in London over the century from 1866-1965. To identify weeks with elevated pollution levels I use new data tracking the timing of London's famous fog events, which trapped emissions in the city. These events are compared to detailed new weekly mortality data. My results show that acute pollution exposure due to fog events accounted for at least one out of every 200 deaths in London during this century. I provide evidence that the presence of infectious diseases of the respiratory system, such as measles and tuberculosis, increased the mortality effects of pollution. As a result, success in reducing the infectious diseases burden in London in the 20th century reduced the impact of pollution exposure and shifted the distribution of pollution effects across age groups.
    JEL: I15 N3 Q53
    Date: 2018–04
  3. By: William N. Evans; Ethan Lieber; Patrick Power
    Abstract: We attribute the recent quadrupling of heroin death rates to the August, 2010 reformulation of an oft-abused prescription opioid, OxyContin. The new abuse-deterrent formulation led many consumers to substitute to an inexpensive alternative, heroin. Using structural break techniques and variation in substitution risk, we find that opioid consumption stops rising in August, 2010, heroin deaths begin climbing the following month, and growth in heroin deaths was greater in areas with greater pre-reformulation access to heroin and opioids. The reformulation did not generate a reduction in combined heroin and opioid mortality—each prevented opioid death was replaced with a heroin death.
    JEL: I1 I11
    Date: 2018–04
  4. By: Adam Sacarny
    Abstract: Performance-raising practices tend to diffuse slowly in the health care sector. To understand how incentives drive adoption, I study a practice that generates revenue for hospitals: submitting detailed documentation about patients. After a 2008 reform, hospitals could raise their Medicare revenue over 2% by always specifying a patient’s type of heart failure. Hospitals only captured around half of this revenue, indicating that large frictions impeded takeup. Exploiting the fact that many doctors practice at multiple hospitals, I find that four-fifths of the dispersion in adoption reflects differences in the ability of hospitals to extract documentation from physicians. Hospital adoption is robustly correlated with generating survival for heart attack patients and using inexpensive survival-raising standards of care. Hospital-physician integration and electronic medical records also influence adoption. These findings highlight the potential for institution-level frictions, including agency conflicts, to explain variations in health care performance across providers.
    JEL: D22 I1 L2 O31 O33
    Date: 2018–04
  5. By: Charles Courtemanche; Andrew Friedson; Daniel I. Rees
    Abstract: Expanding insurance coverage could, by insulating patients from having to pay full cost, encourage the utilization of arguably unnecessary medical services. It could also eliminate (or at least diminish) the need for emergency services through increasing access to preventive care. Using publicly available data from New York City for the period 2013-2016, we explore the effect of the Affordable Care Act (ACA) on the volume and composition of ambulance dispatches. Consistent with the argument that expanding insurance coverage encourages the utilization of unnecessary medical services, we find that, as compared to dispatches for more severe injuries, dispatches for minor injuries rose sharply after the implementation of the ACA. By contrast, dispatches for pre-labor pregnancy complications decreased as compared to dispatches for women in labor.
    JEL: I11 I13 I18
    Date: 2018–04
  6. By: Augurzky, Boris; Bauer, Thomas K.; Reichert, Arndt R.; Schmidt, Christoph M.; Tauchmann, Harald
    Abstract: This paper examines weight loss and the formation of healthy habits through cash rewards in the context of a multi-phase randomized controlled trial involving 700 obese individuals. We find effects of monetary incentives for weight loss of up to EUR 300 on body weight during all experimental phases, including a period of a year and a half following the exposure to the financial rewards. We also find effects on healthy behavior during this follow-up phase. After the initial incentive period, we additionally provided participants who had lost a substantial amount of weight with monetary rewards of up to EUR 500. These had only short-term effects on body weight and healthy behavior. We argue that our findings are best explained by monetarily incentivized participants having formed healthy habits by the time the experiment ended and that only the speed of the transition to the new (health) equilibrium was affected by the additional rewards. Contrary to the pessimistic perspective presented in earlier empirical research on habit formation, our results suggest that a simple program relying on weight loss rewards can result in long-term health behavioral change.
    Keywords: field experiment,obesity,healthy behavior,habit formation,sustainability,monetary incentives
    JEL: I12 I18 D03 C93
    Date: 2018
  7. By: Anne-Fleur Roos (ESHPM, Erasmus University Rotterdam); Eddy van Doorslaer (ESHPM, Erasmus University Rotterdam); Owen O'Donnell (Erasmus University Rotterdam, University of Macedonia); Erik Schutt (ESHPM, Erasmus University Rotterdam); Marco Varkevisser (ESHPM, Erasmus University Rotterdam)
    Abstract: One of the reasons why regulators are hesitant about permitting price competition in healthcare markets is that it may damage quality when information is poor. Evidence on whether this fear is well-founded is scarce. We provide evidence using a reform that permitted Dutch health insurers and hospitals to freely negotiate prices for elective procedures. Unlike previous research that has relied on indicators of the quality of urgent treatments, we take advantage of the plausible absence of selection bias in our setting to identify the effect on quality of non-acute hip replacements. Using administrative data on all admissions to Dutch hospitals, we find no evidence that increased exposure to price competition reduces quality measured by readmission rates, despite the lack of publicly available information on this outcome. In fact, there is evidence of a temporary, positive impact on quality. Our estimated null effect over the full post-liberalization period is robust.
    Keywords: Healthcare; hospital; competition; quality; contracting
    JEL: I11 L14 L15
    Date: 2018–04–25
  8. By: Domenico Lisi (Department of Economics and Business, University of Catania); Luigi Siciliani (Department of Economics and Related Studies, University of York); Odd Rune Straume (Department of Economics/NIPE, University of Minho)
    Abstract: Health outcomes, such as mortality and readmission rates, are commonly used as indicators of hospital quality and as a basis to design pay-for-performance (P4P) incentive schemes. We propose a model of hospital behaviour under P4P where patients di§er in severity and can choose hospital based on quality. We assume that risk-adjustment is not fully accounted for and that unobserved dimensions of severity remain. We show that the introduction of P4P which rewards lower mortality and/or readmission rates can weaken or strengthen hospitalsíincentive to provide quality. Since patients with higher severity have a di§erent probability of exercising patient choice when quality varies, this introduces a selection bias (patient composition e§ect) which in turn alters quality incentives. We also show that this composition e§ect increases with the degree of competition. Critically, readmission rates su§er from one additional source of selection bias through mortality rates since quality a§ects the distribution of survived patients. This implies that the scope for counterproductive e§ects of P4P is larger when Önancial rewards are linked to readmission rates rather than mortality rates. We also show that our results are robust in the presence of public reporting, and discuss welfare implications.
    Keywords: quality; pay-for-performance; health outcomes; performance indicators; heterogeneous severity; selection bias.
    JEL: I12 I18
    Date: 2018
  9. By: MORIKAWA Masayuki
    Abstract: This study, using original survey data, presents evidence from Japan of the relationship between smoking and obesity on the one hand, and labor market outcomes and subjective well-being on the other hand. According to the results, first, after accounting for various individual characteristics, wages of both male and female smokers are significantly higher than those of non-smokers. This unexpected finding differs from those of past studies and general perception. In addition, the labor participation rate of smokers is higher than that of non-smokers. Second, there is a wage penalty for obesity only among male workers. This is also an unexpected finding, as many past studies have detected wage discounts for obese females. Third, smoking and obesity are associated with low life satisfaction and job satisfaction among females, but these relationships are weak among males.
    Date: 2018–04
  10. By: José Niño-Amézquita (Regional Center for Productivity and Innovation of Boyaca); Fedor Legotin (Ural State University of Economics); Oleg Barbakov (Tyumen Industrial University)
    Abstract: Our paper examines one of the key aspects of the organizational economics – the factors of economic success and sustainability of the pharmaceutical small and medium enterprises (SMEs) in India. Indian pharmaceutical industry is known for its high fragmentation and weak generic based R&D initiatives. The study uses inflation adjusted cross section data for 20 SMEs in the year 2013-2014 and applies OLS regression model with robust standard errors. It has found that exports, R&D expenditure, and previous year profits have exercised positive impact on SMEs' growth. The negative, yet statistically significant influence of advertising and marketing expenditure highlights the need to rethink about strategic management policies of SMEs. Our results suggest that SMEs are required to pay more attention towards the global market expansion and value creation through R&D investment, as a part of their long-term growth and survival strategy.
    Keywords: R&D,economic success,sustainability,pharmaceutical industry,economic growth
    Date: 2017–09–29
  11. By: Boone, Jan
    Abstract: This paper introduces a workhorse model to analyze the effects of provider and insurer competition in health care markets. The two contracting imperfections we focus on are the following: (i) whether or not a patient should be treated and (ii) treatment quality are both not contractible. We derive conditions under which the market can implement first best quality and volume with the optimal competition intensities. First best competition intensity is strictly positive in both markets. If there is under-investment in quality, provider competition should be increased. Increasing insurer competition tends to increase treatment volume. If the planner cannot make the provider market competitive enough, it is optimal to increase insurer competition beyond its first best level thereby creating over-treatment.
    Keywords: competition in health care markets; insurer competition; provider competition; treatment quality; treatment volume
    JEL: I11 I13
    Date: 2018–04
  12. By: Ryuta Ray Kato (International University of Japan)
    Abstract: This paper explores the impact of population aging on the Japanese public longterm care insurnace (LTCI) within a numerical dynamic general equilibrium model with multiple overlapping generations. The impact of three policy options, such as an increase in co-payments, an earlier starting age of contribution, and more distribution of the cost to the public sector, is also examined. The numerial results show that in the next about forty years the burdens on the first (age 65 and over) and second (age 40 to 64) groups become more than 1.7 times and more than 2.7 times as much, respectively. A relatively more increase in the burdens on the second group cannot be avaiodable, even if adjustment of the cost distribution between both groups is made every three years in the future in accordance with the schedule by the MHLW. Furthermore, in order to reduce future burdens in the LTCI, an increase in co-payments is most preferable, rather than an earlier starting age of contribution in longer duration of contribution with lower burdens every year, or a shift of the cost to the public sector followed by a very higher consumption tax.
    Keywords: Long-term Care Insurance, Population Aging, Japan, Simulation
    JEL: C68 H51 E62 H55 J16
    Date: 2017–10
  13. By: Jesse K. Anttila-Hughes; Lia C.H. Fernald; Paul J. Gertler; Patrick Krause; Bruce Wydick
    Abstract: Intensive and controversial marketing of infant formula is believed to be responsible for millions of infant deaths in low and middle-income countries (LMICs), yet to date there have been no rigorous analyses that quantify these effects. To estimate the impact of infant formula on infant mortality, we pair country-specific data from the annual corporate reports of Nestlé, the largest producer of infant formula, with a sample of 2.48 million births in 46 LMICs from 1970-2011. Our key finding is that the availability of formula increased infant mortality by 9.4 per 1000 births, 95%CI [3.6, 15.6] among mothers without access to clean water, suggesting that unclean water acted as a vector for the transmission of water-borne pathogens to infants. We estimate that the availability of formula in LIMCs resulted in approximately 66,000 infant deaths in 1981 at the peak of the infant formula controversy.
    JEL: I14 I15 O15
    Date: 2018–03
  14. By: Rachel M. Machta; Kristin A. Maurer; David J. Jones; Michael F. Furukawa; Eugene C. Rich
    Abstract: Recent evidence suggests the trend toward vertical integration will likely continue as providers respond to changing payment models and market factors.
    Keywords: delivery system, health system, hospital–physician affiliations, vertical integration
    JEL: I
  15. By: Kate A. Stewart; Katharine W.V. Bradley; Joseph S. Zickafoose; Rachel Hildrich; Henry T. Ireys; Randall S. Brown
    Abstract: As increasing numbers of children with special healthcare needs move into Medicaid managed care, health plans can improve care coordination using evidence from Medicare.
    Keywords: Medicaid, managed care, children with special healthcare needs, CSHCN
    JEL: I J
  16. By: Katie Morrison; Rayna Thornton; Alix Gould-Werth; Yonatan Ben-Shalom
    Abstract: This issue brief is the fourth in Advancing Policy to Support Workers with Disabilities, a Roosevelt House series edited by Professor Purvi Sevak that aims to objectively synthesize research that can inform policymakers and other stakeholders of the potential impacts of a range of policy changes on employment of individuals with disabilities. This brief focuses on findings from qualitative interviews with employers in Arkansas about retaining workers following disability onset.
    Keywords: SSDI, time-limited benefits, early intervention
    JEL: I J
  17. By: Luigi Siciliani (Department of Economics and Related Studies, University of York); Odd Rune Straume (Department of Economics/NIPE, University of Minho)
    Abstract: We provide a model where hospitals compete on quality under a fixed price regime to investigate (i) whether hospital competition, as measured by an increase in fixed prices or increased patient choice, increases or reduces the gap in quality between high- and low-quality hospitals, and as a result, (ii) whether competition increases or reduces (pure) health inequalities across hospitals and patient severities. The answer to the first question is generally ambiguous, but we find that the scope for competition to result in quality convergence across hospitals is larger when the marginal patient health gains from quality decrease at a faster rate. Whether competition increases health inequalities depends on the type and measure of inequality. If the patient health benefit function is not too concave in quality, health inequalities due to postcode lottery will increase (decrease) whenever competition induces quality dispersion (convergence). Competition reduces health inequalities between high- and low severity patients if patient composition effects, due to high-severity patients being more likely to exercise choice, are small. We also investigate the effect of competition on health inequalities as measured by the Gini and the Generalised Gini coefficients, and highlight differences compared to the simpler dispersion measures.
    Keywords: Hospital competition; quality; health inequalities; Gini coefficient.
    JEL: I11 I14 L13
    Date: 2018

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