nep-hea New Economics Papers
on Health Economics
Issue of 2019‒07‒15
24 papers chosen by
Nicolas R. Ziebarth
Cornell University

  1. The Health Impacts of Hospital Delivery Practices By David Card; Alessandra Fenizia; David Silver
  2. Place-Based Drivers of Mortality: Evidence from Migration By Amy Finkelstein; Matthew Gentzkow; Heidi L. Williams
  3. Losing Insurance and Behavioral Health Hospitalizations: Evidence from a Large-scale Medicaid Disenrollment By Johanna Catherine Maclean; Sebastian Tello-Trillo; Douglas Webber
  4. How do Humans Interact with Algorithms? Experimental Evidence from Health Insurance By Kate Bundorf; Maria Polyakova; Ming Tai-Seale
  5. The Affordable Care Act’s Effects on Patients, Providers and the Economy: What We’ve Learned So Far By Jonathan Gruber; Benjamin D. Sommers
  6. The Long-Term Effects of Childhood Exposure to the Earned Income Tax Credit on Health Outcomes By Braga, Breno; Blavin, Fredric; Gangopadhyaya, Anuj
  7. Accounting for the Impact of Medicaid on Child Poverty By Sanders Korenman; Dahlia K. Remler; Rosemary T. Hyson
  8. The Long-Term Impact of Children's Disabilities on Families By Gunnsteinsson , Snaebjorn; Steingrimsdottir , Herdis
  9. Are patient-regarding preferences stable? Evidence from a laboratory experiment with physicians and medical students from different countries By Wang, Jian; Iversen, Tor; Hennig-Schmidt, Heike; Godager, Geir
  10. Do physicians care about patients' utility? Evidence from an experimental study of treatment choices under demand-side cost sharing By Ge, Ge; Godager, Geir; Wang, Jian
  11. Valuing EQ-5D-Y health states using a discrete choice experiment: do adult and adolescent preferences differ? By Mott, D.J; Shah, K.K; Ramos-Goñi, J.M; Devlin, N.J; Rivero-Arias, O.
  12. Can Policy Affect Initiation of Addictive Substance Use? Evidence from Opioid Prescribing By Daniel W. Sacks; Alex Hollingsworth; Thuy D. Nguyen; Kosali I. Simon
  13. The Effects of Traditional Cigarette and E-Cigarette Taxes on Adult Tobacco Product Use By Michael F. Pesko; Charles J. Courtemanche; Johanna Catherine Maclean
  14. How Effective Are Pictorial Warnings on Tobacco Products? New Evidence on Smoking Behaviour Using Australian Panel Data By Kühnle, Daniel
  15. The Effects of Multispecialty Group Practice on Health Care Spending and Use By Laurence C. Baker; M. Kate Bundorf; Anne Beeson Royalty
  16. More Hospital Choices, More C-sections: Evidence from Chile By Ramiro de Elejalde; Eugenio Giolito
  17. Education and Gender Differences in Mortality Rates By Cristina Bellés-Obrero; Sergi Jiménez-Martín; Judit Vall Castello
  18. A cross-sectional examination of the impact of health shocks on wealth: Evidence from English Panel data By Ashok Thomas; Aditya Kumar
  19. Strategic Sorting: The Role of Ordeals in Health Care By Zeckhauser, Richard
  20. Exposure to Pollution and Infant Health: Evidence from Colombia By Dolores de la Mata; Carlos Felipe Gaviria Garces
  21. Time to Care? The Effects of Retirement on Informal Care Provision By Björn Fischer; Kai-Uwe Müller
  22. Identification of a Class of Health-Outcome Distributions under a Common Form of Partial Data Observability By John Mullahy
  23. Incorporating inequality aversion in health-care priority setting By Costa-I-Font, Joan; Cowell, Frank
  24. Are Quality-Adjusted Medical Prices Declining for Chronic Disease? Evidence from Diabetes Care in Four Health Systems By Karen Eggleston; Brian K. Chen; Chih-Hung Chen; Ying Isabel Chen; Talitha Feenstra; Toshiaki Iizuka; Janet Tinkei Lam; Gabriel M. Leung; Jui-fen Rachel Lu; Beatriz Rodriguez-Sanchez; Jeroen N. Struijs; Jianchao Quan; Joseph P. Newhouse

  1. By: David Card; Alessandra Fenizia; David Silver
    Abstract: Hospital treatment practices vary widely, often with little connection to the medical needs of patients. We assess the impact of these differences in the context of childbirth. We focus on low-risk first births, where c-section rates vary enormously across hospitals, and where policymakers have focused much of their attention in calls for reducing unnecessary c-sections. We find that proximity to hospitals with high c-section rates leads to more cesarean deliveries, fewer vaginal births after prolonged labor, and higher average Apgar scores. Infants born in these hospitals are less likely to be readmitted in the year after birth, but more likely to visit the emergency department for a respiratory-related problem. They also have lower mortality rates, driven by a reduction in the joint probability of prolonged labor and subsequent death. A stylized cost benefit analysis suggests that re-allocating births to high c-section hospitals could lead to net social benefits.
    JEL: D22 I11 I18 J13
    Date: 2019–06
  2. By: Amy Finkelstein; Matthew Gentzkow; Heidi L. Williams
    Abstract: We estimate the effect of current location on elderly mortality by analyzing outcomes of movers in the Medicare population. We control for movers' origin locations as well as a rich vector of pre-move health measures. We also develop a novel strategy to adjust for remaining unobservables, based on the assumption that the relative importance of observables and unobservables correlated with movers' destinations is the same as the relative importance of those correlated with movers' origins. We estimate substantial effects of current location. Moving from a 10th to a 90th percentile location would increase life expectancy at age 65 by 1.1 years, and equalizing location effects would reduce cross-sectional variation in life expectancy by 15 percent. Places with favorable life expectancy effects tend to have higher quality and quantity of health care, less extreme climates, lower crime rates, and higher socioeconomic status
    JEL: H51 I1 I11
    Date: 2019–06
  3. By: Johanna Catherine Maclean; Sebastian Tello-Trillo; Douglas Webber
    Abstract: We study the effects of losing insurance on behavioral health – mental health and substance use disorder (SUD) – community hospitalizations. We leverage variation in public insurance coverage eligibility offered by a large-scale and unexpected Medicaid disenrollment in Tennessee. Losing insurance decreased SUD-related hospitalizations but mental illness hospitalizations were unchanged. Use of Medicaid to pay for behavioral health, mental illness and SUD, hospitalizations declined post-disenrollment. Mental illness hospitalization financing shifted to private insurance, Medicare, and patients, while SUD treatment financing shifted entirely to patients. We also investigate the implications of reliance on data that is not representative at the level of the treatment variable and propose a possible solution.
    JEL: I1 I11 I18
    Date: 2019–06
  4. By: Kate Bundorf; Maria Polyakova; Ming Tai-Seale
    Abstract: Algorithms increasingly assist consumers in making their purchase decisions across a variety of markets; yet little is known about how humans interact with algorithmic advice. We examine how algorithmic, personalized information affects consumer choice among complex financial products using data from a randomized, controlled trial of decision support software for choosing health insurance plans. The intervention significantly increased plan switching, cost savings, time spent choosing a plan, and choice process satisfaction, particularly when individuals were exposed to an algorithmic expert recommendation. We document systematic selection - individuals who would have responded to treatment the most were the least likely to participate. A model of consumer decision-making suggests that our intervention affected consumers’ signals about both product features (learning) and utility weights (interpretation).
    JEL: D1 D12 D8 D81 D82 D83 D9 D90 D91 G22 H51 I13
    Date: 2019–06
  5. By: Jonathan Gruber; Benjamin D. Sommers
    Abstract: As we approach the tenth anniversary of the passage of the Affordable Care Act, it is important to reflect on what has been learned about the impacts of this major reform. In this paper we review the literature on the impacts of the ACA on patients, providers and the economy. We find strong evidence that the ACA’s provisions have increased insurance coverage. There is also a clearly positive effect on access to and consumption of health care, with suggestive but more limited evidence on improved health outcomes. There is no evidence of significant reductions in provider access, changes in labor supply, or increased budgetary pressures on state governments, and the law’s total federal cost through 2018 has been less than predicted. We conclude by describing key policy implications and future areas for research.
    JEL: H3 H51 I13 I18
    Date: 2019–06
  6. By: Braga, Breno (Urban Institute); Blavin, Fredric (Urban Institute); Gangopadhyaya, Anuj (Urban Institute)
    Abstract: The Earned Income Tax Credit (EITC) is a central component of the U.S. safety net, benefiting about 27 million families. Using variation in the federal and state EITC, this paper evaluates the long-term impact of EITC exposure during childhood on the health of young adults. We find that an additional $100 in the average annual EITC exposure between ages 0 and 18 increases the likelihood of reporting very good or excellent health by 2.7 percentage points and decreases the likelihood of being obese by 1.0 percentage point between ages 22 and 27. Direct program transfers, increases in pre-tax family earnings, and increases in health insurance coverage are channels through which the EITC improves health.
    Keywords: children, health outcomes, EITC
    JEL: H24 I12 I14
    Date: 2019–06
  7. By: Sanders Korenman; Dahlia K. Remler; Rosemary T. Hyson
    Abstract: US Census Bureau poverty measures do not include an explicit need for health care or insurance nor do they consider health insurance benefits to be resources. Consequently, they cannot measure the direct impact of health insurance benefits on poverty. This paper reviews conceptual and practical considerations in incorporating health benefits and needs into poverty measures. We analyze the advantages and disadvantages of various approaches including variants of the Official Poverty Measure (OPM); the Supplemental Poverty Measure (SPM); using a threshold with medical out-of-pocket (MOOP) expenditures; a Medical Care Expenditure Risk (MCER) Index; willingness to pay (WTP) for Medicaid; and the Health-Inclusive Poverty Measure (HIPM; Korenman and Remler 2016). We present estimates of Medicaid’s impacts on child poverty, based on the HIPM. This paper was prepared as a background paper for the Committee on Building an Agenda to Reduce the Number of Children in Poverty by Half in 10 Years, of the Board of Children, Youth and Families of the National Academy of Sciences. The paper was submitted in October 2017 and embargoed until the release of the Committee’s report, A Roadmap to Reducing Child Poverty, in March of 2019.
    JEL: H51 H53 I13 I14 I32
    Date: 2019–06
  8. By: Gunnsteinsson , Snaebjorn; Steingrimsdottir , Herdis (Department of Economics, Copenhagen Business School)
    Abstract: Childhood disability is a major health shock that affects parents early in their working life. We estimate its impact on parents’ career trajectories, their balance sheets, and major life decisions using detailed register data from Denmark. To identify the causal effect of childhood disability we use an event study approach, where we control for a rich set of pre-birth variables and focus on conditions that have no or weak associations with socioeconomic determinants. We find that having a child with a disability has strong negative impact on mothers’ earnings. The effect is persistent and the wage penalty appears to grow over time. Fathers’ earnings are also affected but the impact is notably smaller. We find that both parents are less likely to be employed in the long run and are less likely to ascend to top executive positions. The long-term structure of the household is also affected as subsequent fertility is lower and partnership dissolution is more common. Finally, despite this financial shock, long term net worth of families is not affected or may be positively affected, potentially due to help from government transfers and lower cost associated with having fewer other children, or due to a stronger savings motive for the long term care of the disabled child.
    Keywords: disability; children; child; insurance; earnings; income; labor force participation; fertility
    JEL: E24 I14 J13 J31
    Date: 2019–06–18
  9. By: Wang, Jian (Department of Health Management and Health Economics); Iversen, Tor (Department of Health Management and Health Economics); Hennig-Schmidt, Heike (Department of Health Management and Health Economics); Godager, Geir (Department of Health Management and Health Economics)
    Abstract: We quantify patient-regarding preferences by fitting a bounded rationality model to data from incentivized laboratory experiments, where Chinese medical doctors, German medical students and Chinese medical students participate. We find a remarkable stability in patient-regarding preferences when comparing subject pools and we cannot reject the hypothesis of equal patient regarding preferences in the three groups. The results suggest that health economic experiments can provide knowledge that reach beyond the student subject pool, and that knowledge on preferences of decision-makers in one cultural context can be of relevance for very different cultural contexts.
    Keywords: Laboratory experiment; Bounded rationality; Payment mechanism; Physician behavior
    JEL: C92 D82 H40 I11 J33
    Date: 2019–04–17
  10. By: Ge, Ge (Department of Health Management and Health Economics); Godager, Geir (Department of Health Management and Health Economics); Wang, Jian (Department of Health Management and Health Economics)
    Abstract: We ask whether the physician's treatment choices are affected by demand-side cost sharing. In order to identify and quantify preferences under demand-side cost sharing, we design and conduct an incentivized laboratory experiment where only medical students are recruited to participate. In our experiment we achieve saliency of all three attributes of treatment alternatives, profit, health benefit and patient consumption: The choices in the laboratory experiment determine the amount of medical treatment and the future consumption level of a real patient admitted to the nearest hospital. In our experiment we vary demand-side cost sharing while preferences and bargaining power of the patient is fixed. We estimate decision-makers' preference parameters in a variety of random utility models. We find strong evidence suggesting that the amount of demand-side cost sharing affects medical decisions.
    Keywords: Physician preferences; Demand-side cost sharing; Incentivized laboratory experiment
    JEL: C91 I11 J33
    Date: 2019–05–13
  11. By: Mott, D.J; Shah, K.K; Ramos-Goñi, J.M; Devlin, N.J; Rivero-Arias, O.
    Abstract: One of the challenges with generating an EQ-5D-Y value set is that traditional methods are cognitively demanding and may not be appropriate for younger individuals. However, asking adults to complete a valuation task from the perspective of a child/adolescent presents its own challenges. This Research Paper describes a study examining adolescent and adult responses to a discrete choice experiment (DCE) containing EQ-5D-Y health states in order to determine whether the two groups exhibit different preferences. An online survey was designed containing a DCE, which comprised 15 pairwise choices. A sample of UK adults was asked to consider the health of a 10-year-old child when completing the tasks. In contrast, a sample of UK adolescents (11-17 years) received the same survey and completed the tasks considering their own health. Mixed logit models were estimated for both samples and comparisons were made. The relative importance of the levels attached greatest disutility to level 3 in pain/discomfort (PD3) followed by anxiety/depression (AD3) in both groups. The rank-order of other levels differed, including the third-worst level - mobility (MO3) for adolescents; and usual activities (UA3) for adults. Modelling results indicate that there are significant differences in preferences between the two samples. The paper concludes that adolescents' preferences differ from those of adults taking the perspective of a child. As the adolescents were capable of completing the DCE, it is important to consider whether their preferences should be considered in decision-making.
    Keywords: Measuring and valuing outcomes
    JEL: I1
    Date: 2019–07–01
  12. By: Daniel W. Sacks; Alex Hollingsworth; Thuy D. Nguyen; Kosali I. Simon
    Abstract: Drug control policy can have unintended consequences by pushing existing users to alternative, possibly more dangerous substances. Policies that target only new users may therefore be especially promising. Using commercial insurance claims data, we provide the first evidence on a set of new policies intended to reduce opioid initiation in the form of limits on initial prescription length. We also provide the first evidence on the impact of must-access prescription drug monitoring programs (MA-PDMPs), laws that do not target new users, on initial opioid use. Although initial limit policies reduce the average length of initial prescriptions, they do so primarily by raising the frequency of short prescriptions, resulting in increases in opioids dispensed to new users. In contrast, we find that MA-PDMPs reduce opioids dispensed to new users, even though they do not explicitly set out to do so. Neither policy significantly affects extreme use such as doctor shopping among new patients, because such behavior is very rare.
    JEL: I12 I18
    Date: 2019–06
  13. By: Michael F. Pesko; Charles J. Courtemanche; Johanna Catherine Maclean
    Abstract: We study the effects of traditional cigarette tax rate changes and e-cigarette tax adoption on use of these products among U.S. adults. Data are drawn from the Behavioral Risk Factor Surveillance System and National Health Interview Survey data over the period 2011 to 2017. Using a differences-in-differences model, we find that higher traditional cigarette taxes reduce adult traditional cigarette use and increase adult e-cigarette use, suggesting that the products are economic substitutes. E-cigarette tax adoption reduces e-cigarette use, with some heterogeneity across groups, and dilutes the own-tax responsiveness of traditional cigarettes.
    JEL: H2 I12 I18
    Date: 2019–06
  14. By: Kühnle, Daniel (University of Erlangen-Nuremberg)
    Abstract: Studies examining the introduction of pictorial warnings on cigarette packages provide inconclusive evidence due to small samples and methodological issues. We use individual-level panel data from Australia to examine the association between pictorial warnings and smoking behaviour – prevalence, quitting, initiating and relapsing. The pictorial warnings were accompanied by a reference to a smoking cessation helpline and supportive television commercials. Applying an event study framework, we show that the reform reduced smoking rates by around 4% within the first year of the policy. The effect decreases with age, is similar for men and women, and is slightly larger for low-educated compared to high-educated individuals. The reform permanently lowered smoking rates primarily due to increased quitting in the year of the reform. Thus, pictorial warnings combined with a reference to a smoking cessation helpline and supportive media campaigns are an important tobacco control measure to reduce the social costs of smoking.
    Keywords: smoking initiation, cessation, smoking, pictorial warnings, smoking relapse
    JEL: I12 I14 I18
    Date: 2019–06
  15. By: Laurence C. Baker; M. Kate Bundorf; Anne Beeson Royalty
    Abstract: U.S. physicians are increasingly joining multispecialty group practices. In this paper, we analyze how a primary care physician’s practice type – single (SSP) versus multispecialty practice (MSP) – affects health care spending and use. Focusing on Medicare beneficiaries who change their primary care physician due to a geographic move, we compare changes in practice patterns before and after the move between patients who switch practice types and those who do not. We use instrumental variables to address potential selection by patients into practice types after the move. We find that changing from a single to a multi-specialty primary care group practice decreases annual Medicare-financed per capita expenditures by about $1,600 - a 28% reduction. The effect is driven primarily by changes in hospital expenditures and is concentrated among patients with two or more chronic conditions, suggesting that MSP improves care delivery by reducing hospitalizations among relatively sick patients. The results imply that, while research has shown the potential for physician consolidation to increase prices in some settings, large multispecialty groups also have the potential to lower costs.
    JEL: I11
    Date: 2019–06
  16. By: Ramiro de Elejalde (Departamento de Economía, Universidad Alberto Hurtado); Eugenio Giolito (Departamento de Economía, Universidad Alberto Hurtado, Chile and IZA)
    Abstract: In this paper, we study the effect on cesarean rates of a policy change in Chile that decreased the cost of delivery at private hospitals for womenwith public health insurance. Using a difference-in-differences (DID) approach based on the eligibility conditions for this benefit, we find that in the first three years after the policy took effect, deliveries in private hospitals increased by 8.7 percentage points, while the probability of a C-section being performed increased by 4.6 percentage points, with negative impacts on average newborn weight and size at birth. We show that the probability of an early term birth in hospitals participating in the program is an increasing function of expected hospital demand at the time of the full-term due date. This suggests that in the absence of price incentives, hospitals use C-sections to smooth out demand over time to optimize the use of their resources.
    Keywords: health care, provider incentives, labor and delivery
    Date: 2019–03
  17. By: Cristina Bellés-Obrero; Sergi Jiménez-Martín; Judit Vall Castello
    Abstract: We examine the gender asymmetries in mortality generated by a Spanish reform raising the legal working age from 14 to 16 in 1980. While the reform, though its effects on education, decreased mortality at ages 14-29 among men (6.3%) and women (8.9%), it increased mortality for prime-age women (30-45) by 6.3%. This last effect is driven by increases in HIV mortality, as well as by diseases of the nervous and circulatory system. All in all, these patterns help explain the narrowing age gap in life expectancy between women and men in Spain.
    Keywords: minimum working age, education, mortality, gender
    JEL: I12 I20 J10
    Date: 2019–07
  18. By: Ashok Thomas (Indian Institute of Management, Kozhikode); Aditya Kumar (Indian Institute of Management, Kozhikode)
    Abstract: The study of individuals with low wealth and in particular with intense amount of decline in wealth holdings late in life is particularly relevant for the analysis of social security and public health insurance programmes. Individuals reached retirement with substantial saving, however drained wealth rapidly; perhaps in response to unexpectedly large expenditure shocksare our subject of this study. In this study we examine health problems and associated health care expenses impose on wealth on older individuals in England. The results point out that chronic conditions both existing and new health events significantly reduce the wealth as compared to mild conditions. The age of the chronic diseases additionally has impact on wealth negatively. In particular, severe existing chronic diseases aged of more than 3 years has greater impact than severe chronic diseases associated with individuals for more than 1 year. The empirical evidence exhibit no significant changes in wealth if the individual is having a mild chronic disease irrespective of the fact that they are diagnosed more than 3 years or 1 year ago. Additional health insurance, highly educated and remaining in a marriage seems to have mitigating effect on wealth decline in older ages.
    Keywords: Elders Chronic condition, Personal Wealth
    Date: 2019–03
  19. By: Zeckhauser, Richard (Harvard Kennedy School)
    Abstract: Ordeals are burdens placed on individuals that yield no direct benefits to others. They represent a dead-weight loss. Ordeals--the most common being waiting time--play a prominent role in health care. Their goal is to direct scarce resources to recipients receiving greater value from them, hence presumed to be more willing to bear an ordeal’s burden. Ordeals are intended to prevent wasteful expenditures given that health care is heavily subsidized, yet avoid other forms of rationing, such as quotas or pricing. This analysis diagnoses the economic underpinnings of ordeals. Subsidies to nursing home versus home care illustrate.
    Date: 2019–06
  20. By: Dolores de la Mata (CAF-Development Bank of Latin America); Carlos Felipe Gaviria Garces (Universidad de Antioquia)
    Abstract: We study the impact of air pollution exposure (CO, O3 and Pm10) during pregnancy and early years of life on infant health for a sample of children attending public kinder- gartens in Bogota, Colombia. The study uses a unique database that gathers information on children health which allows to combine information of residential location of the mother with information from the city air quality monitors. To overcome endogeneity problems due to residential sorting we identify pairs of siblings in the dataset and imple- ment panel data models with mother xed e ects. Results show evidence that mothers, who are exposed to higher levels of CO and O3 during pregnancy, have a higher proba- bility of their babies being born with a low birth weight. Furthermore, a child exposed in-utero to higher levels of O3 has a higher probability of being diagnosed with a lung- related disease. Our ndings advocate for more strict environmental regulations as a way to improve human capital in developing countries.
    Keywords: Air Pollution, Infant Health, Mother-Family Fixed Effects, Panel Data
    JEL: C33 J13 Q53
    Date: 2019–03
  21. By: Björn Fischer; Kai-Uwe Müller
    Abstract: This paper analyzes the impact of a reduction in women's labor supply through retirement on their informal care provision. Using SOEP data from the years 2001- 2016 the analysis addresses fundamental endogeneity problems by applying a fuzzy regression discontinuity design. We exploit early retirement thresholds for women in the German pension system as instruments for their retirement decision. We find significant positive effects on informal care provided by women retiring from employment at the intensive and extensive margin that are robust to various sensitivity checks. Women retiring from full-time employment, highly educated women and women providing care within the household react slightly stronger. Findings are consistent with previous evidence and underlying behavioral mechanisms. They point to a time-conflict between labor supply and informal care before retirement. Policy implications are far-reaching in light of population aging. Prevalent pension reforms that aim to increase life-cycle labor supply threaten to reduce informal care provision by women and to aggravate the existing excess demand for informal care.
    Keywords: retirement; informal care; regression discontinuity; age threshold
    JEL: J22 J13 H43
    Date: 2019
  22. By: John Mullahy
    Abstract: This paper suggests analytical strategies for obtaining informative parameter bounds when multivariate health-outcome data are partially observed in a particular yet common manner. One familiar context is where M>1 health outcomes' respective totals across N>1 time periods are observed but where questions of interest involve features—probabilities, moments, etc.—of their unobserved joint distribution at each of the N time periods. For instance, one might wish to understand the distribution of any type of unhealthy day experienced over a month but have access only to the separate totals of physically unhealthy and mentally unhealthy days that are experienced. After demonstrating methods to bound, or partially identify, such distributions and related parameters under several sampling assumptions, the paper proceeds to derive bounds on partial effects involving exogenous covariates. These results are applied in three empirical exercises. Whether the proposed bounds prove to be sufficiently narrow to usefully inform decisionmakers can only be determined in context, although it is suggested in the paper's conclusion that the issues considered in this paper are likely to become increasingly important for analysts.
    JEL: C25 I1
    Date: 2019–06
  23. By: Costa-I-Font, Joan; Cowell, Frank
    Abstract: Although measures of sensitivity to inequality are important in judging the welfare effects of health-care programmes, it is far from straightforward how to elicit them and apply them in health-care decision-making. This paper provides an overview of the literature on the measurement of inequality aversion, examines some of the features specific of the health domain that depart from the income domain, and discusses its implementation in health-system priority-setting decisions. We find evidence that individuals exhibit a preference for more equitable health distribution, but inequality aversion estimates from the literature are unclear. Unlike the income-inequality literature, standard approaches in the health economics do not follow a ‘veil-of-ignorance’ approach and elicit mostly bivariate (income-related health) inequality aversion estimates. We suggest some ideas to reduce the disconnect between the income inequality and health economics literature.
    Keywords: attitudes to inequality; inequality aversion; health; income; survey data; priority setting
    JEL: I19
    Date: 2019–06–01
  24. By: Karen Eggleston; Brian K. Chen; Chih-Hung Chen; Ying Isabel Chen; Talitha Feenstra; Toshiaki Iizuka; Janet Tinkei Lam; Gabriel M. Leung; Jui-fen Rachel Lu; Beatriz Rodriguez-Sanchez; Jeroen N. Struijs; Jianchao Quan; Joseph P. Newhouse
    Abstract: Improvements in medical treatment have contributed to rising health spending. Yet there is relatively little evidence on whether the spending increase is “worth it” in the sense of producing better health outcomes of commensurate value—a critical question for understanding productivity in the health sector and, as that sector grows, for deriving an accurate quality-adjusted price index for an entire economy. We analyze individual-level panel data on medical spending and health outcomes for 123,548 patients with type 2 diabetes in four health systems. Using a “cost-of-living” method that measures value based on improved survival, we find a positive net value of diabetes care: the value of improved survival outweighs the added costs of care in each of the four health systems. This finding is robust to accounting for selective survival, end-of-life spending, and a range of values for a life-year or, equivalently, to attributing only a fraction of survival improvements to medical care.
    JEL: H51 I10 I18
    Date: 2019–06

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