SELECTED FOR YOU... APRIL 2008: books of the month - working papers

All the Selected for you


Fads, fallacies and foolishness in medical care : management and policy

Marmor T.R.

Hackensack : World Scientific : 2007 : 10-159 p.

No one misses the onslaught of claims about reforming modern medical care. How doctors should be paid, how hospitals should be paid or governed, how much patients should pay when sick in co-payments, how the quality of care could be improved, and how governments and other buyers could better control the costs of care — all find expression in the explosion of medical care conference proceedings, op-eds, news bulletins, journal articles, and books.

This collection of articles takes up a key set of what the author regards as particularly misleading fads and fashions — developments that produce a startling degree of foolishness in contemporary discussions of how to organize, deliver, finance, pay for and regulate medical care services in modern industrial democracies.

The policy fads addressed include the celebration of explicit rationing as a major cost control instrument, the belief in a "basic package" of health insurance benefits to constrain costs, the faith that contemporary cross-national research can deliver a large number of transferable models, and the notion that broadening the definition of what is meant by health will constitute some sort of useful advance in practice.


A second opinion : Rescuing America's Health Care

Arnold S., Relman M.D., Lenne R.C.

New York : Public Affairs : 2007 : 17 p+210 p.

The U.S. healthcare system is failing. It is run like a business, increasingly focused on generating income for insurers and providers rather than providing care for patients. It is supported by investors and private markets seeking to grow revenue and resist regulation, thus contributing to higher costs and lessened public accountability. Meanwhile, forty-six million Americans are without insurance. Health care expenditures are rising at a rate of 7 percent a year, three times the rate of inflation. Dr. Arnold Relman is one of the most respected physicians and healthcare advocates in his country. This book, based on sixty years' experience in medicine, is a clarion call not just to politicians and patients but to the medical profession to evolve a new structure for healthcare, based on voluntary private contracts between individuals and not-for-profit, multi-specialty groups of physicians. Physicians would be paid mainly by salaries and would submit no bills for their services. All health care facilities would be not-for-profit. The savings from reduced administrative overhead and the elimination of billing fraud would be enormous. Healthcare may be our greatest national problem, but the provocative, sensible arguments in this book will provide a catalyst for change.


Health Care reform now : a prescription for change

Halvorson G.

San Francisco : Jossey-Bass : 2007 : 15 p+361 p.
The United States spends more money on health care than any other country, yet 50 million Americans roll the dice everyday without health insurance. General Motors spends more on health care than on steel and Starbucks spends more on health care than on coffee. Amazingly, medical-related troubles are the number one reason for personal bankruptcy in the U.S. Health care reform is a pivotal campaign issue, debated by presidential candidates and opinion leaders. Health industry veteran George C. Halvorson, Chairman and CEO of Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals, is an acknowledged thought leader on this topic. Kaiser Permanente is the nation's largest integrated health plan, serving more than 8.7 million members. Halvorson is also the Board President for the International Federation of Health Plans, an association of 75 independent health plans from 25 countries, giving him a unique perspective from which to offer a solution. The book discusses the critical need for universal health care and offers a passionate yet rational way to solve this country's health care crisis.


An introduction to efficiency and productivity analysis

Coelli T.J., Prasada Rao D.S., O'Donnell C.J., Battese G.E.

New York : Springer Verlag : 2005 : 17 p.+349 p

The second edition of An Introduction to Efficiency and Productivity Analysis is designed to be a general introduction for those who wish to study efficiency and productivity analysis. The book provides an accessible, well-written introduction to the four principal methods involved: econometric estimation of average response models; index numbers, data envelopment analysis (DEA); and stochastic frontier analysis (SFA). For each method, a detailed introduction to the basic concepts is presented, numerical examples are provided, and some of the more important extensions to the basic methods are discussed. Of special interest is the systematic use of detailed empirical applications using real-world data throughout the book.

In recent years, there have been a number of excellent advance-level books published on performance measurement. This book, however, is the first systematic survey of performance measurement with the express purpose of introducing the field to a wide audience of students, researchers, and practitioners. Indeed, the 2nd Edition maintains its uniqueness: (1) It is a well-written introduction to the field. (2) It outlines, discusses and compares the four principal methods for efficiency and productivity analysis in a well-motivated presentation. (3) It provides detailed advice on computer programs that can be used to implement these performance measurement methods. The book contains computer instructions and output listings for the SHAZAM, LIMDEP, TFPIP, DEAP and FRONTIER computer programs. More extensive listings of data and computer instruction files are available on the book's website: (


Health Insurance

Supplemental health insurance and equality of access in Belgium

Schokkaert E., Van Ourti T., De Graeve D., Lecluyse A., Van de Voorde C.

Lewen : Catholic University of Leuven : 2007/08 : 39 p.

It has been suggested that the unequal coverage of different socio-economic groups by supplemental insurance could be a partial explanation for the inequality in access to health care in many countries. We analyse the situation in Belgium, a country with a very broad coverage in compulsory social health insurance and where supplemental insurance mainly refers to extra-billing in hospitals. We find that this institutional background is crucial for the explanation of the effects of supplemental insurance. We find no evidence of adverse selection in the coverage of supplemental health insurance, but strong effects of socio-economic background. A count model for hospital care shows that supplemental insurance has no significant effect on the number of spells, but a negative effect on the number of nights. This is in line with patterns of socio-economic stratification that have been well documented for Belgium. It is also in line with the regulation on extra-billing protecting patients in common rooms. For ambulatory care, we find a positive effect of supplemental insurance on visits to a dentist and on number of spells at a day centre but no effect on visits to a GP, on drugs consumption and on visits to a specialist.

Universal public health insurance and private coverage: externalities in health care consumption

Glied S.A.

Cambridge : NBER : 2008/03 : 25 p.

Inequality in access to health care services, through private purchase, appears to pose policy challenges greater than inequality in other spheres. This paper explores how inequality in access to health care services relates to social welfare. I examine the sources of private demand for health insurance and the ramifications of this demand for health, for patterns for government spending on health care services, and for individual and social well-being. Finally, I evaluate the implications of a health tax as a response to the externalities of health service consumption, and provide a rough measure of the tax in the context of the Canadian publicly-financed health care system.


Do waiting times reduce hospital costs?

Siciliani L., Stanciole A., Jacob R.

York : University of York : 2007/08 : 32 p.

Using a sample of 137 hospitals over the period 1998-2002 in the English National Health Service, we estimate the elasticity of hospital costs with respect to waiting times. Our cross-sectional and panel-data results suggest that at the sample mean (103 days), waiting times have no significant effect on hospital, costs or, at most, a positive one. If significant, the elasticity of cost with respect to waiting time from our cross-sectional estimates is in the range 0.4-1. The elasticity is still positive but lower in our fixed-effects specifications (0.2-0.4). In all specifications, the effect of waiting time on cost is non-linear, suggesting a U-shaped relationship between hospital costs and waiting times: the level of waiting time which minimises total costs is always below ten days.

Health inequalities

Social influence and neighbourhood effects in the health care market

Montefiori M., Resta M.

Genoa : University of Genoa : 2008/01 : 21 p.

This work is intended to analyze the market for health care through a computational approach based on unsupervised neural networks. The paper provides a theoretical framework for a computational model that relies on Kohonen's self organizing maps (SOM), arranged into two layers: in the upper layer the competition dynamics of health care providers is modelled, whereas in the lower level patients behaviour is monitored. Interactions take place both vertically between the layers (in a bi–directional way), and horizontally, inside each level, exploiting neighbourhood features of SOM: signals move vertically from hospitals to patients and vice-versa, but they also spread out sideward, from patient to patient, and from hospital to hospital. The result is a new approach addressing the issue of hospital behaviour and demand mechanism modelling, which conjugates a robust theoretical implementation together with an instrument of deep graphical impact.

The Health Returns to Education: What Can We Learn from Twins?

Lundborg P.

Bonn : The Institute for the Study of Labor : 2008/03 : 33 p.

This paper estimates the health returns to education, using data on identical twins. I adopt a twin-differences strategy in order to obtain estimates that are not biased by unobserved family background and genetic traits that may affect both education and health. I further investigate to what extent within-twin-pair differences in schooling correlates with within-twin-pair differences in early life health and parent-child relations. The results suggest a causal effect of education on health. Higher educational levels are found to be positively related to self-reported health but negatively related to the number of chronic conditions. Lifestyle factors, such as smoking and overweight, are found to contribute little to the education/health gradient. I am also able to rule out occupational hazards and health insurance coverage as explanations for the gradient. In addition, I find no evidence of heterogenous effects of education by parental education. Finally, the results suggest that factors that may vary within twin pairs, such as birth weight, early life health, parental treatment and relation with parents, do not predict within-twin pair differences in schooling, lending additional credibility to my estimates and to the general validity of using a twin-differences design to study the returns to education.

Effects of Weight on Children's Educational Achievement

Kaestner R., Grossman M.

Cambridge : NBER : 2008/01 : 35 p.

In this paper, we investigate the association between weight and children's educational achievement, as measured by scores on Peabody Individual Achievement Tests in math and reading, and grade attainment. Data for the study came from the 1979 cohort of the National Longitudinal Survey of Youth (NLSY), which contains a large, national sample of children between the ages of 5 and 12. We obtained estimates of the association between weight and achievement using several regression model specifications that controlled for a variety of observed characteristics of the child and his or her mother, and time-invariant characteristics of the child. Our results suggest that, in general, children who are overweight or obese have achievement test scores that are about the same as children with average weight.


Inequity In Publicly Funded Physician Care: What Is The Role Of Private Prescription Drug Insurance?

Allin S., Hurley J.

Ontario : McMaster University : 2008 : 24 p.

This study examines the impact that private financing of prescription drugs in Canada has on equity in the utilization of publicly financed physician services. The complementary nature of prescription drugs and physician service use alongside the reliance on private finance for drugs may induce an income gradient in the use of physicians. We use established econometric methods based on concentration curves to measure equity in physician utilization and its contributors in the province of Ontario. We find that individuals with prescription drug insurance make more physician visits than do those without insurance, and the effect on utilization is stronger for the likelihood of a visit than the conditional number of visits, and for individuals with no chronic conditions than those with at least one condition. Results of the equity analyses reveal the most important contributors to the pro-rich inequity in physician utilization are income and private insurance, while public insurance, which covers older people and those on social assistance, has a pro-poor effect. These findings highlight that inequity in access to and use of publicly funded services may arise from the interaction with privately financed health services that are complements to the use of public services.

The Impact of Medicare Part D on Pharmaceutical R&D

Blume- Kohout M.E., Sood N.

Cambridge : NBER : 2008/03 : 17 p.

Recent evidence suggests that Medicare Part D has increased prescription drug use among the elderly, and earlier studies have indicated that increasing market size induces pharmaceutical innovation. This paper assesses the impact of Medicare Part D on pharmaceutical research and development (R&D), using time-series data on the number of drugs in preclinical and clinical development by therapeutic class. We demonstrate that the passage of Medicare Part D was associated with significant increases in pharmaceutical R&D, especially for classes with high elderly market share.

Health and Employment

Work Disability, Health, and Incentive Effects

Borsch-Supan A.

Mannheim : Deutsche Forschungsgemeinschaft : 2007 : 26 p.

Disability insurance – the insurance against the loss of the ability to work – is a substantial part of social security expenditures in many countries. The enrolment rates in disability insurance vary strik-ingly across European countries and the US. This paper investigates the extent of, and the causes for, this variation, using data from SHARE, ELSA and HRS. We show that even after controlling for differences in the demographic structure and health status these differences remain. In turn, indicators of disability insurance generosity explain 75% of the cross-national variation. We conclude that country-specific disability insurance rules are a prime can-didate to explain the observed cross-country variation in disability insurance enrolment.

Primary health care

Doctor Behaviour under a Pay for Performance Contract: Further Evidence from the Quality and Outcomes Framework

Gravelle H., Sutton M., Ma A.

York : University of York : 2008/02 : 31 p.

Since 2003, 25% of UK general practitioners' income has been determined by the quality of their care. The 65 clinical quality indicators in this scheme (the Quality and Outcomes Framework) are in the form of ratios, with financial reward increasing linearly with the ratio between a lower and upper threshold. The numerator is the number of patients for whom an indicator is achieved and the denominator is the number of patients the practices declare are suitable for the indicator. The number declared suitable is the number of patients with the relevant condition less the number exception reported by the practice for a specified range of reasons. Exception reporting is designed to avoid harmful treatment resulting from the application of quality targets to patients for whom they were not intended. However, exception reporting also gives GPs the opportunity to exclude patients who should in fact be treated in order to achieve higher financial rewards. This is inappropriate use of exception reporting or ‘gaming'. Practices can also increase income if they are below the upper threshold by reducing the number of patients declared with a condition ( prevalence), or by increasing reported prevalence if they were above the upper threshold. This study examines the factors affecting delivered quality (the proportion of prevalent patients for indicators were achieved) and tests for gaming of exceptions and for prevalence reporting being responsive to financial incentives.

Strategic Interaction between General Practitioner and Specialists: Implications for Gatekeeping

Schaumans C.

Lewen : Catholic University of Leuven: 2008/02,39p.

We propose to estimate strategic interaction effects between general practitioners (GPs) and differ-ent specialist types to evaluate the viability threat for specialists associated to the introduction of a mandatory referral scheme. That is, we show that the specialists loss of patientele when patients can only contact them after a GP referral has important consequences for the viability of the specialist types whose entry decisions are strategic substitutes in GPs entry decisions. To estimate the strategic interaction effects, we model the entry decisions of different physician types as an equilibrium entry game of incomplete information and sequential decision making. This model permits identification of the nature of the strategic interaction effects as it does not rely on restrictive assumptions on the underlying payoff functions and allows for the strategic interaction effects to be asymmetric in sign. At the same time, the model remains computationally tractable and allows for sufficient firm heterogeneity. Our findings for the Belgian physician markets, in which there is no gatekeeping, indicate that entry decisions of dermatologists and pediatricians are strategic substitutes in the entry decisions of GPs, whereas the presence of gynecologists, ophthalmologists and throat, nose and ear-specialists has a positive impact on GP payoffs of entry. Our results thus indicate that transition costs are likely upon the implementation of gatekeeping and that these costs are mainly associated to the viability of dermatologists and pediatricians.

Health care systems

Facilitating Cross-national comparisons of indicators for patient safety at the health-system level in the OECD countries

Drösler S.

Paris : OCDE : 2008 : 239 p.

This publication was prepared to support the overall work of the OECD Health Care Quality Indicators Project in developing a set of indicators that can be used to raise questions for investigation concerning the quality of care across countries. It provides a manual to facilitate cross national comparisons of indicators for patient safety through the provision of detailed practical advice on calculating each indicator in a selected set of Patient Safety Indicators (PSI) utilising national hospital administrative databases.

The measurement and comparison of health system responsiveness

Rice N., Robone S., Smith P.C.

York : HEDG : 2008/03 : 20 p.

Measuring the performance of health systems has become a key tool in aiding decision makers to describe, analyze, compare and ultimately improve the delivery and outcomes achieved by a system. The World Health Organization's (WHO) framework for assessing performance includes three intrinsic goals of health systems, namely health improvement, fairness in financial contribution and responsiveness to user preferences. Broadly speaking health system responsiveness can be defined as the way in which individuals are treated and the environment in which they are treated, encompassing the notion of patient experience. Perhaps the most ambitious attempt to implement a cross-country comparative instrument aimed at measuring health system performance is the World Health Survey (WHS). The modules on responsiveness and health ask respondents to rate their experiences using a 5-point categorical scale (e.g. “very good” to “very bad”). A common problem with self-reported data is that individuals, when faced with the instrument, are likely to interpret the meaning of the response categories in a way that systematically differs across populations or population sub-groups. In such cases the ordinal response categories will not be cross-population comparable since they will not imply the same underlying level of the construct. Recently the method of anchoring vignettes has been promoted as a means for controlling for systematic differences across socioeconomic groups in preferences, expectations and norms when responding to survey questions. This paper applies the method of anchoring vignettes to adjust survey reports of responsiveness for reporting heterogeneity. We present preliminary results for a selected number of domains and countries to illustrate the approach and find systematic reporting by income and education, but not by age and gender. Further analysis will extend the method to a larger set of countries and domains to investigate more fully the application of the approach for international comparative analysis of health system performance.

Health Care Financing, Efficiency, and Equity

Glied S.A.

Cambridge : NBER : 2008/03 : 31 p.

This paper examines the efficiency and equity implications of alternative health care system financing strategies. Using data across the OECD, I find that almost all financing choices are compatible with efficiency in the delivery of health care, and that there has been no consistent and systematic relationship between financing and cost containment. Using data on expenditures and life expectancy by income quintile from the Canadian health care system, I find that universal, publicly-funded health insurance is modestly redistributive. Putting $1 of tax funds into the public health insurance system effectively channels between $0.23 and $0.26 toward the lowest income quintile people, and about $0.50 to the bottom two income quintiles. Finally, a review of the literature across the OECD suggests that the progressivity of financing of the health insurance system has limited implications for overall income inequality, particularly over time.

Drug addiction

Tobacco and Alcohol: Complements or Substitutes? A Structural Model Approach

Tauchmann H., Gohlmann S., Requate T., Schmidt C.M.

Bonn : The Institute for the Study of Labor : 2008/03 : 36p.

The question of whether two drugs – namely alcohol and tobacco – are used as complements or substitutes is of crucial interest if side-effects of anti-smoking policies are considered. Numerous papers have empirically addressed this issue by estimating demand systems for alcohol and tobacco and subsequently calculating cross-price effects. However, this traditional approach often is seriously hampered by insufficient price-variation observed in survey data. We therefore suggest an alternative instrumental variables approach that statistically mimics an experimental study and does not rely on prices as explanatory variables. This approach is applied to German survey data. Our estimation results suggest that a reduction in tobacco consumption results in a moderate reduction in alcohol consumption. It is shown theoretically that this implies that alcohol and tobacco are complements. Hence, we conclude that successful anti-smoking policies will not result in the unintended side-effect of an increased (ab)use of alcohol.


What Is Retirement? A Review and Assessment of Alternative Concepts and Measures

Denton F.T., Spencer B.G.

Hamilton : McMaster University : 2008/03 : 32 p.

Since the concept of retirement is prominent in both popular thinking and academic studies it would be helpful if the notion were analytically sound, could be measured with precision, and would make possible comparisons of patterns of retirement over time and among different populations. This paper reviews and assesses the many concepts and measures that have been proposed, summarizing them in groupings that reflect nonparticipation or reduced participation in the labour force, receipt of pension income, endof-career employment, self-assessed retirement, or combinations of those characteristics. It concludes that there is no agreed measure and that no one measure dominates. Instead, new measures continue to be proposed to take account of additional refinements as new data sets become available, thereby further restricting possible comparisons. The confusing array of definitions reflects the practical problem that underlies the concept of retirement: it is an essentially negative notion, a notion of what people are not doing – namely, that they are not working. A more positive approach would be to focus instead on what people are doing, including especially their involvement in non-market activities that are socially productive, even if those activities.