SELECTED FOR YOU... JANUARY 2010: books of the month - working papers

BOOKS

Comparative health policy

Blank R.H., Burau V.

Basingstoke: Palgrave Macmillan: 2010 : xiv-284 p.

This book provides a broad ranging introduction to health policies on provision, funding
and governance, in a wide range of health systems, using Australia, Germany, Japan, New Zealand,
the Netherlands, Singapore, Sweden, the UK and the USA as detailed examples throughout. Covering acute, long-term and preventative services, its analyzes the impact of variation in the relative emphasis on equity, quality and efficiency on priority setting and service provision, and assesses what lessons can be learned about the consequences of different public/private mixes, policy and funding processes (4th Cover).

Is there a doctor in the house?

Scheffler R.M.

Stanford ; Stanford University Press: 2008 : X-242 p.

This is the bedrock health care concern for Americans, encompassing as it does additional concerns about affordability, accessibility, efficiency, and specialty expertise. Richard M. Scheffler brings
an economist's insight to the question, showing how shifts in market power underlie the changes
we have seen in the health workforce and how they will affect the future availability of doctors. Predicting the "right" ratio of doctors to population in the future is only a small piece of the puzzle,
and one that has been the subject of much forecasting, and little agreement, over the past several decades. In this concise and readable analysis, the author goes beyond the guessing game
to demonstrate that today's health care system is the product of financial influences in both the policy realm and on the ground in the offices of medical centers, HMOs, insurers, and physicians throughout America. He shows how factors such as physician income, medical training costs, and new technologies affect the specialties and geographic distribution of doctors. Scheffler then brings these findings to bear on a set of predictions for the U.S.
and international physician workforce that extend five and ten years into the future. As part of his vision of tomorrow's ideal workforce, he offers a template for enhancing the efficiency and cost-effectiveness of the health care system overall.
In the groundbreaking second half of the book, the author, a health policy expert himself, tests his ideas in conversations with leading figures in health policy, medical education, health economics, and physician practice. Their unguarded give-and-take offers a window on the best thinking currently available anywhere. Finally, Scheffler combines their insights with his own to offer observations that will change the way health care's stakeholders should think about the future (4th Cover).

Health care costs : outlook and options

Inhurst R.W.

New York: Nova Sciences Publishers: 2009 : 92 p.

The U.S. political system arguably is not particularly effective at addressing gradual long-term problems such as rising health care costs and aging. But the problems caused by rising health care costs are not just long-term ones. In fact, some of them are already having significant effects on various aspects of our society. Health care costs are already reducing workers' take-home pay to a degree that is both under-appreciated and at least partially unnecessary, consuming roughly a quarter of the federal budget, and putting substantial pressure on state budgets (mostly through the Medicaid program), thereby constraining funding for other governmental priorities. Identifying and addressing inefficiencies in the nation's health care system can yield significant benefits, even in the short term, and focusing attention on those effects that are already occurring may be helpful in developing the consensus necessary to make the needed changes (4th Cover).

Capital investment for health : case studies from Europe

Rechel B., Erskine J., Dowdeswell B., Wright S., McKee M.

Copenhagen: World Health Organization, Regional Office for Europe: 2009 : 190 p.

Capital investment in European health systems has to take account of the demographic and epidemiological transitions associated with an ageing population; advances in medical technologies
and pharmaceuticals; rising public expectations; and persistent health inequalities. This volume presents 11 case studies from across Europe of capital investment in health facilities, in the form
of seven individual projects, two health systems, one corporate investor and one financing approach. They include hospitals or medical centres in the Netherlands, Norway, Sweden, Finland, Germany, Poland, and Spain, and regional planning and a financing initiative in the United Kingdom and Italy.
This book offers policy-makers, planners, architects, financiers and managers practical illustrations
of how health services can be translated into capital assets and aims to expand the evidence base
on how to improve the long-term sustainability of capital investment (4th Cover).

WORKING PAPERS

Health Insurance

The Effects of a Sick Pay Reform on Absence and on Health-Related Outcomes

Puhani P.A., Sonderhof K.

Bonn: The Institute for the Study of Labor: 2009/12 : 51 p.

We evaluate the effects of a reduction in sick pay from 100 to 80% of the wage. Unlike previous literature, apart from absence from work, we also consider effects on doctor/hospital visits and subjective health indicators. We also add to the literature by estimating both switch-on and switch-off effects, because the reform was repealed two years later. We find a two-day reduction in the number of days of absence. Quantile regression reveals higher point estimates (both in absolute and relative terms) at higher quantiles, meaning that the reform predominantly reduced long durations of absence. In terms of health, the reform reduced the average number of days spent in hospital by almost half a day, but we cannot find robust evidence for negative effects on health outcomes or perceived liquidity constraints.

The Effects of Expanding the Generosity of the Statutory Sickness Insurance System

Ziebarth N.R., Karlsson M.

Berlin: DIW: 2009/1 : 32 p.

In 1999, in Germany, the statutory sick pay level was increased from 80 to 100 percent of foregone earnings for sickness episodes of up to six weeks. We show that this reform has led to an increase in average absence days of about 10 percent or one additional day per employee, per year. The estimates are based on SOEP survey data and parametric, nonparametric, and combined matching-regression difference-in-differences methods. Extended calculations suggest that the reform might have increased labor costs by about €1.8 billion per year and might have led to the loss of around 50,000 jobs.

A Natural Experiment on Sick Pay Cuts, Sickness Absence, and Labor Costs

Ziebarth N.R., Karlsson M.

Berlin: DIW: 2009/1 : 37 p.

This study estimates the reform effects of a reduction in statutory sick pay levels on various outcome dimensions. A federal law reduced the legal obligation of German employers to provide 100 percent continued wages for up to six weeks per sickness episode to 80 percent. This measure increased the ratio of employees having no days of absence by about 7.5 percent. The mean number of absence days per year decreased by about 5 percent. The reform might have reduced total labor costs by about e1.5 billion per year which might have led to the creation of around 50,000 new jobs.

Health Expenditures

The Impact of Comparative Effectiveness Research on Health and Health Care Spending

Basu A., Philipson T.J.

Cambridge: NBER: 2010/01 : 36 p.

Public subsidization of technology assessments in general, and Comparative Effectiveness Research (CER) in particular, has received considerable attention as a tool to simultaneously improve patient health and lower the cost of health care. However, little conceptual and empirical understanding exists concerning the quantitative impact of public technology assessments such as CER. This paper analyses the impact of CER on health and medical care spending interpreting CER to shift the demand for some treatments at the expense of others. We trace out the spending and health implications of such demand shifts in private- as well as subsidized health care markets. In contrast to current wisdom, our analysis implies that CER may well increase spending and adversely affect patient health, particularly when treatment effects are heterogeneous across patients. We simulate these economic effects for antipsychotics that are among the largest drug classes of the US Medicaid program and for which CER has been conducted by means of the CATIE trial in 1999. Using conservative estimates, we find that if Medicaid would have eliminated coverage for the least cost-effective treatments of the CATIE trial then under homogeneous effects, it would save about 90% of the $1.3B Medicaid class sales annually in non-elderly adult patient with schizophrenia. However, taking into account the observed heterogeneity in treatment effects, it would incur a loss of health valued annually at about 98% of class spending and thus a net loss of about 8% of annual class spending.

On The Rise of Health Spending and Longevity

Fonseca R., Michaud P.C. Galama T., Kapteyn A.

Bonn: The Institute for the Study of Labo : 2009/12: 49 p.

We use a calibrated stochastic life-cycle model of endogenous health spending, asset accumulation and retirement to investigate the causes behind the increase in health spending and life expectancy over the period 1965-2005. We estimate that technological change along with the increase in the generosity of health insurance may explain independently 53% of the rise in health spending (insurance 29% and technology 24%) while income less than 10%. By simultaneously occurring over this period, these changes may have lead to a "synergy" or interaction effect which helps explain an additional 37% increase in health spending. We estimate that technological change, taking the form of increased productivity at an annual rate of 1.8%, explains 59% of the rise in life expectancy at age 50 over this period while insurance and income explain less than 10%.

Why is there such a gap between health expenditures and outcomes in Norway compared to Finland?

Melberg H.O.

Oslo: HERO: 2009: 23 p.

According to the OECD Norway spends 47% more on health care per capita compared to Finland and about 30% more than the other Nordic countries. At the same time indicators of health status show that Norway is not better on important indicators of health. This raises the question of why there is such a gap between spending and outcome in Norway compared to the other Nordic countries. This paper lists a number of possible explanations and quantifies their importance. The conclusion is that higher wages may explain up to 38% of the difference between Norway and Finland and differences in staff levels explain about 25%. Data errors are difficult to quantify, but the data on in long term care suggests that it accounts for at least 20% of the difference. Diminishing or zero marginal return is a controversial explanation for the lack of difference in outcomes despite higher spending and a brief review of the literature shows conflicting evidence. Finally, the last section argue that a convincing explanation of the growth of health spending should be based on a model that takes into account the fact that health care to a large extent is provided outside the free-market and that people seems to have special moral intuitions when it comes to the provision of health services as opposed to many other goods.

Catastrophic Health Expenditure and Household Well-Being

Abul Naga H., Lamiraud K.

Bath: University of Bath: 2009: 18 p.

According to the catastrophic health expenditure methodology a household is in catastrophe if its health out-of-pocket budget share exceeds a critical threshold. We develop a conceptual framework for addressing three questions in relation to this methodology, namely: 1. Can a budget share be informative about the sign of a change in welfare? 2. Is there a positive association between a household's poverty shortfall and its health out-of-pocket budget share? 3. Does an increase in population coverage of a health insurance scheme always result in a reduction of the prevalence of catastrophic expenditures ?

Drugs and Technological Innovations

Technological adoption in health care

Barros P.P., Martinez-Giralt X.

Barcelone: Universitat de Barcelona: 2009/11: 34 p.

This paper addresses the impact of payment systems on the rate of technology adoption. We present a model where technological shift is driven by demand uncertainty, increased patients' benefit, financial variables, and the reimbursement system to providers. Two payment systems are studied: cost reimbursement and (two variants of) DRG. According to the system considered, adoption occurs either when patients' benefits are large enough or when the differential reimbursement across technologies offsets the cost of adoption. Cost reimbursement leads to higher adoption of the new technology if the rate of reimbursement is high relative to the margin of new vs. old technology reimbursement under DRG. Having larger patient benefits favours more adoption under the cost reimbursement payment system, provided that adoption occurs initially under both payment systems.

Health Status

Long Run Returns to Education: Does Schooling Lead to an Extended Old Age?

Van Kippersluis H., O'Donnell O., Van Doorslaer E.

Tilburg: Network for Studies on Pensions, Aging and Retirement : 2009/04 : (33 p.)

While there is no doubt that health is strongly correlated with education, whether schooling exerts a causal impact on health is not yet firmly established. We exploit Dutch compulsory schooling laws in a Regression Discontinuity Design applied to linked data from health surveys, tax files and the mortality register to estimate the causal effect of education on mortality. The reform provides a powerful instrument, significantly raising years of schooling, which, in turn, has a large and significant effect on mortality even in old age. An extra year of schooling is estimated to reduce the probability of dying between ages of 81 and 88 by 2-3 percentage points relative to a baseline of 50 percent. High school graduation is estimated to reduce the probability of dying between the ages of 81 and 88 by a remarkable 17-26 percentage points but this does not appear to be due to any sheepskin effects of finishing high school on mortality beyond that predicted linearly by additional years of schooling.

Health Care and Health Outcomes of Migrants: Evidence from Portugal

Pita Barros P., Medalho Pereira I.

Munich: MRPA: 2009: 64 p.

This paper studies the performance of immigrants relative to natives, in terms of their health status, use of health care services, lifestyles, and coverage of health expenditures. We base the analysis on international evidence that identified a healthy immigrant effect, complemented by empirical research on the Portuguese National Health Survey. Furthermore, we assess whether differences in health performance depend on the personal characteristics of the individuals or can be directly associated with their migration experience.

Primary health care

Gatekeeping - open door to effective medical care utilization?

Hromadkova E.

Prague: Center for Economic Research and Graduate Education. Economics Intitute: 2009/11: 45 p.

We assess the ability of health insurance plans with gatekeeping restrictions to control the utilization of medical care through their infuence on the choice of the initial provider. Empirical results are based on the individual level utilization panel data from 2001-2006 Medical Expenditure Panel Survey. We find only small differences between the initial provider chosen by individuals enrolled in gatekeeping and non-gatekeeping plans. This, together with the fact that within gatekeeping plans, 21 percent of patients self-refer to specialists, imply that the intended cost-containment effect of gatekeeping, namely restricting the utilization of specialty care, is surprisingly weak.

Life Cycle Wages of Doctors - An Empirical Analysis of the Earnings of Norwegian Physicians

Fjeldvig K.

Oslo: HERO: 2009: 27 p.

We use individual panel data to estimate age earnings profiles for Norwegian physicians. Based on data covering the 1993-2006 period we find that the age earning profiles of physicians share many of the attributes of the classical Mincer function. Physician's earnings rise, but a decreasing rate, for the first 20 years after medical training; they peak between the ages of 55 and 59; and they decline slightly toward the end of the career. We observe that there will be complications when using the regular crosssectional methods because of cohort and period effects on income. Using fixed effects method therefore provides a more accurate picture of the profiles. When looking at profiles by gender we find that there are large differences between the earnings of male and female physicians, some of which can be attributed to reduced labor supply during childrearing years and some to lower investments in specialization among female doctors. We also discover differences in the profiles of physicians educated in Norway and abroad and discuss alternative explanations for this pattern.

Health care systems

Competition in Canadian Health Care Service Provision: Good, Bad or Indifferent?

Ruseski J.E.

Calgary: University of Calgary: 2009/11: 43 p.

This paper evaluates what has been learned from the recent literature on competition in health care markets in the context of expanding the role of the private sector in Alberta. The evidence does not provide a definitive answer. Competition introduced by an expanded private sector is likely to be beneficial on some measures, indifferent on others, but not likely bad.

Analysis of the Validity of the Vignette Approach to Correct for Heterogeneity in Reporting Health System Responsiveness

Rice N., Robone S., Smith P.C. York : HEDG : 2009/09 : 40 p.

Despite the growing popularity of the vignette methodology to deal with self-reported, categorical data, the formal evaluation of the validity of this methodology is still a topic of research. Some critical assumptions need to hold in order for this method to be valid. In this paper we analyse the assumption of “vignette equivalence” using data on health system responsiveness contained within the World Health Survey. We perform several tests to check the assumption of vignette equivalence. First, we use a test based on the global ordering of the vignettes. A minimal condition for the assumption of vignette equivalence to hold is that individual responses are consistent with the global ordering of vignettes. Secondly, using the HOPIT model on the pool of countries, we undertake sensitivity analyses, stratifying countries according to the Inglehart-Welzel scale and the Human Development Index. The results of this analysis are robust, suggesting that the vignette equivalence assumption is not contradicted. Thirdly, we model the reporting behaviour of the respondents through a two-step regression procedure to evaluate whether the vignettes construct is perceived by respondents in different ways. Overall, across the analyses the results do not contradict the assumption of vignette equivalence and accordingly lend support to the use of the vignette methodology when analysing self-reported data and health system responsiveness.

Health-care reform in Japan: controlling costs, improving quality and ensuring equity

Jones S.R.

Paris: OECD: 2009/12: 37 p.

Le niveau des dépenses publiques a été maintenu au-dessous de la moyenne de l'OCDE en demandant aux assurés une participation élevée aux coûts et en réduisant les tarifs médicaux. Toutefois, comme les dépenses subissent toujours des pressions à la hausse, en partie du fait du vieillissement rapide de la population, il faut procéder à des réformes pour limiter leur accroissement par le biais d'une meilleure efficacité, tout en améliorant la qualité. Il est indispensable de transférer les soins de longue durée en dehors des hôpitaux, de réformer le système de rémunération en abandonnant le paiement à l'acte, de développer l'utilisation des médicaments génériques, d'encourager un vieillissement en bonne santé et de promouvoir la restructuration du secteur hospitalier. La qualité doit être améliorée en développant l'offre de nouveaux médicaments et dispositifs médicaux efficaces. Pour financer les dépenses supplémentaires, il importe de limiter la part assumée par les salariés de manière à éviter des retombées négatives sur le marché du travail. Le Japon devra peut-être permettre encore plus la facturation groupée pour améliorer l'accès à certains traitements médicaux de pointe.