Int J Health Care Finance Econ
· 2009 Dec · PMID 19148747
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Using data about births from the perinatal information system (PIS) registered in Montevideo (Uruguay), we estimated the probability of having a Caesarian section delivery, controlled by risk factors and the endogeneity...Using data about births from the perinatal information system (PIS) registered in Montevideo (Uruguay), we estimated the probability of having a Caesarian section delivery, controlled by risk factors and the endogeneity of the choice of hospital. In public hospitals in Montevideo there is a fixed payment system, but in private hospitals this procedure has to be paid for separately. In the former, there is no effect on the doctor's income if he performs a Caesarian, but in the latter there is a positive effect. Empirical evidence shows the probability of a Caesarean section increases with the age of the woman, the presence of eclampsy, pre-eclampsy, previous hypertension, previous Caesarean sections, multiple pregnancies and fetopelvic disproportion, and decreases for multiparous women and women in a public hospital. In fact, the probability of having a Caesarean section in a private institution is almost two times higher than in a public hospital (20% as against 39%). Focusing on women without risk factors, we found that the probability a Caesarian in a public hospital was 11%, but the probability in a private hospital was 25%. We conclude that the remuneration system explains an important part of this difference.
Int J Health Care Finance Econ
· 2009 Sep · PMID 19130220
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Pharmaceutical expenditures have grown rapidly in recent decades, and now total nearly 10% of health care costs. Generic drug utilization has risen substantially alongside, from 19% of scripts in 1984 to 47% in 2001, thu...Pharmaceutical expenditures have grown rapidly in recent decades, and now total nearly 10% of health care costs. Generic drug utilization has risen substantially alongside, from 19% of scripts in 1984 to 47% in 2001, thus tempering expenditure growth through significant direct dollar savings. However, generic drugs may lead to indirect savings as well if their use reduces the average price of those brand-name drugs that are still purchased. Prior work indicates that brand-name producers do not lower their prices in the face of generic competition, and our study confirms that finding. However, prior work is silent on how the mix of consumer choices between generic and brand-name drugs might affect the average price of those brand-name drugs that are purchased. We use a nationally representative panel of data on drug utilization and costs for the years 1996-2001 to examine how the share of an individual's prescriptions filled by generics (generic script share) affects his average out-of-pocket cost for brand-name drugs, and the net cost paid by the insurer. Our principal finding is that a higher generic script share lowers average brand-name prices to consumers, presumably because consumers are more likely to substitute generics when brand-name drugs would cost them more. This effect is substantial: a 10% increase in the consumer's generic script share is associated with a 15.6% decline in the average price paid for brand-name drugs by consumers. This implies that the potential cost savings to consumers from generic substitution are far greater than prior work suggests. In contrast, the percentage reduction in average brand costs to health plans is far smaller, and statistically insignificant.
Paolucci F, Prinsze F, Stam PJ
… +1 more, van de Ven WP
Int J Health Care Finance Econ
· 2009 Sep · PMID 19125326
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In this paper, we simulate several scenarios of the potential premium range for voluntary (supplementary) health insurance, covering benefits which might be excluded from mandatory health insurance (MI). Our findings sho...In this paper, we simulate several scenarios of the potential premium range for voluntary (supplementary) health insurance, covering benefits which might be excluded from mandatory health insurance (MI). Our findings show that, by adding risk-factors, the minimum premium decreases and the maximum increases. The magnitude of the premium range is especially substantial for benefits such as medical devices and drugs. When removing benefits from MI policymakers should be aware of the implications for the potential reduction of affordability of voluntary health insurance coverage in a competitive market.
Int J Health Care Finance Econ
· 2009 Sep · PMID 19110969
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The aim of this study was to examine the effects of an incentive-based remuneration system on number of individuals under supervision and on quality of public dental services in Norway. The basis for the study was a natu...The aim of this study was to examine the effects of an incentive-based remuneration system on number of individuals under supervision and on quality of public dental services in Norway. The basis for the study was a natural experiment in which all public dental officers in one county were given the opportunity to renegotiate their contract from a fixed salary contract to a combined per capita and fixed salary contract. Comprehensive data were collected before and after the change. A main finding is that the transition to an incentive-based remuneration system led to an increase in the number of individuals under supervision without either a fall in quality or a patient selection effect.
Int J Health Care Finance Econ
· 2009 Sep · PMID 19107594
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Prospective payment schemes in health care often include supply-side insurance for cost outliers. In hospital reimbursement, prospective payments for patient discharges, based on their classification into diagnosis relat...Prospective payment schemes in health care often include supply-side insurance for cost outliers. In hospital reimbursement, prospective payments for patient discharges, based on their classification into diagnosis related group (DRGs), are complemented by outlier payments for long stay patients. The outlier scheme fixes the length of stay (LOS) threshold, constraining the profit risk of the hospitals. In most DRG systems, this threshold increases with the standard deviation of the LOS distribution. The present paper addresses the adequacy of this DRG outlier threshold rule for risk-averse hospitals with preferences depending on the expected value and the variance of profits. It first shows that the optimal threshold solves the hospital's tradeoff between higher profit risk and lower premium loading payments. It then demonstrates for normally distributed truncated LOS that the optimal outlier threshold indeed decreases with an increase in the standard deviation.
Bolin K, Lindgren A, Lindgren B
… +1 more, Lundborg P
Int J Health Care Finance Econ
· 2009 Mar · PMID 19009344
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We analysed the relative importance of individual versus institutional factors in explaining variations in the utilisation of physician services among the 50+ in ten European countries. The importance of the latter was i...We analysed the relative importance of individual versus institutional factors in explaining variations in the utilisation of physician services among the 50+ in ten European countries. The importance of the latter was investigated, distinguishing between organisational (explicit) and cultural (implicit) institutional factors, by analysing the influence of supply side factors, such as physician density and physician reimbursement, and demand side factors, such as co-payment and gate-keeping, while controlling for a number of individual characteristics, using cross-national individual-level data from SHARE. Individual differences in health status accounted for about 50% of the between-country variation in physician visits, while the organisational and cultural factors considered each accounted for about 15% of the variation. The organisational variables showed the expected signs, with higher physician density being associated with more visits and higher co-payment, gate-keeping, and salary reimbursement being associated with less visits. When analysing specialist visits separately, however, organisational and cultural factors played a greater role, each accounting for about 30% of the between-country variation, whereas individual health differences only accounted for 11% of the variation.
Int J Health Care Finance Econ
· 2009 Mar · PMID 18821013
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The Medicare Modernization Act of 2003 added a new outpatient prescription drug benefit to Medicare and increased payments to HMOs. We estimate a nested logit model of plan choice to quantify the welfare benefits from th...The Medicare Modernization Act of 2003 added a new outpatient prescription drug benefit to Medicare and increased payments to HMOs. We estimate a nested logit model of plan choice to quantify the welfare benefits from these two expansion paths. We find that the addition of stand-alone prescription drug plans was welfare improving and produced nine times as much value per government dollar as the increase in payments to HMOs. In light of these results, we suggest that HMO bidding procedures should be modified to reduce payments to HMOs by about $67 billion over the next 10 years.
van Dijk M, Pomp M, Douven R
… +4 more, Laske-Aldershof T, Schut E, de Boer W, de Boo A
Int J Health Care Finance Econ
· 2008 Dec · PMID 18709549
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Full text
AIM: To estimate the price sensitivity of consumer choice of health insurance firm. METHOD: Using paneldata of the flows of insured between pairs of Dutch sickness funds during the period 1993-2002, we estimate the sensi...AIM: To estimate the price sensitivity of consumer choice of health insurance firm. METHOD: Using paneldata of the flows of insured between pairs of Dutch sickness funds during the period 1993-2002, we estimate the sensitivity of these flows to differences in insurance premium. RESULTS: The price elasticity of residual demand for health insurance was low during the period 1993-2002, confirming earlier findings based on annual changes in market share. We find small but significant elasticities for basic insurance but insignificant elasticities for supplementary insurance. Young enrollees are more price sensitive than older enrollees. CONCLUSION: Competition was weak in the market for health insurance during the period under study. For the market-based reforms that are currently under way, this implies that measures to promote competition in the health insurance industry may be needed.
Int J Health Care Finance Econ
· 2009 Mar · PMID 18663572
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Conventional economic explanations for uninsurance should apply to all geographic regions in the United States. However, the border states of California, Arizona, New Mexico and Texas have the highest rates of uninsuranc...Conventional economic explanations for uninsurance should apply to all geographic regions in the United States. However, the border states of California, Arizona, New Mexico and Texas have the highest rates of uninsurance in the US, accounting for over 30% of the total US uninsured population. We use survey data from the fourth wave of the Border Epidemiologic Study on Aging (BESA), a survey from a predominantly Mexican American region of South Texas from 2005 to 2006, to analyze how health insurance coverage in the US is related to the use of health care services in Mexico. BESA includes data on the use of health care services in the US and Mexico. We estimate probit models to investigate the association between having insurance coverage in the US and having a regular doctor in Mexico, the independent variable of interest. Separate models are estimated with having private insurance, Medicare Part B insurance, and any type of public insurance as dependent variables. We deal with the endogeneity, due to reverse causality, of having a regular doctor in Mexico by using instrumental variables in a bivariate probit model. The instruments are dental care utilization in Mexico and a variable measuring frequently visiting Mexico. The results show that competition from Mexico lowers the demand for health insurance coverage in the US side of the border.
Int J Health Care Finance Econ
· 2009 Mar · PMID 18604606
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We model physicians as health care professionals who care about their services and monetary rewards. These preferences are heterogeneous. Different physicians trade off the monetary and service motives differently, and t...We model physicians as health care professionals who care about their services and monetary rewards. These preferences are heterogeneous. Different physicians trade off the monetary and service motives differently, and therefore respond differently to incentive schemes. Our model is set up for the Norwegian health care system. First, each private practice physician has a patient list, which may have more or less patients than he desires. The physician is paid a fee-for-service reimbursement and a capitation per listed patient. Second, a municipality may obligate the physician to perform 7.5 h/week of community services. Our data are on an unbalanced panel of 435 physicians, with 412 physicians for the year 2002, and 400 for 2004. A physician's amount of gross wealth and gross debt in previous periods are used as proxy for preferences for community service. First, for the current period, accumulated wealth and debt are predetermined. Second, wealth and debt capture lifestyle preferences because they correlate with the planned future income and spending. The main results show that both gross debt and gross wealth have negative effects on physicians' supply of community health services. Gross debt and wealth have no effect on fee-for-service income per listed person in the physician's practice, and positive effects on the total income from fee-for-service. The higher income from fee-for-service is due to a longer patient list. Patient shortage has no significant effect on physicians' supply of community services, a positive effect on the fee-for-service income per listed person, and a negative effect on the total income from fee for service. These results support physician preference heterogeneity.
Int J Health Care Finance Econ
· 2008 Dec · PMID 18597172
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The importance of the physician-patient relationship for the health care market is beyond controversy. Recent work emphasizes a two-sided asymmetric information relationship between physician and patient. In contrast to...The importance of the physician-patient relationship for the health care market is beyond controversy. Recent work emphasizes a two-sided asymmetric information relationship between physician and patient. In contrast to most work looking only at the physician's perspective, our paper concentrates on the patient's view. Estimation results support the hypotheses that physician consultation and health relevant behavior are not stochastically independent. In the recursive bivariate probit model, patient's health relevant behavior has a significant influence on the probability of a physician visit. This means that health care demand and not only the contact decision is determined by both, patient and physician.
Int J Health Care Finance Econ
· 2009 Mar · PMID 18592374
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Compared to other industrialized countries, the U.S. spends most of all on health care. Nonetheless, the U.S. ranks relatively low on health care indicators. This paradox has been already known for decades. For example,...Compared to other industrialized countries, the U.S. spends most of all on health care. Nonetheless, the U.S. ranks relatively low on health care indicators. This paradox has been already known for decades. For example, the turning point comparing the U.S. and Canada was in 1972. Health expenditure as a percentage of GDP was higher in Canada than in the USA from 1960 until 1972. Since 1972 expenditure on health care has been higher in the U.S. than in Canada (OECD 2005a, Health data 2005, fourteenth OECD electronic database on health systems, date of release June 2005, last update 04/26/2005). The present study integrates the dispersed literature on spending and health care rankings and adds some statistical analysis to these studies. The evaluation of different factors influencing health care expenditure in the U.S. relative to other countries is restricted to a comparison with Canada. The U.S. and Canada are two countries that are sufficiently similar to make comparisons useful. The comparison of factors influencing health care expenditure in the U.S. and Canada in 2002 reveals that health care expenditure in the U.S. is higher than in Canada mainly due to administration costs, Baumol's cost disease and pharmaceutical prices. It is not primarily inefficiency in health care production but the dominant prevalence for free choice and own responsibility that explains the paradox of high expenditure on health care and low ranking on health care indicators.
Int J Health Care Finance Econ
· 2008 Sep · PMID 18587643
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Previous analyses of families with high health care expenditure burdens have ignored the potentially mitigating effects of tax subsidies. This analysis uses data from the Medical Expenditure Panel Survey (MEPS) to fill t...Previous analyses of families with high health care expenditure burdens have ignored the potentially mitigating effects of tax subsidies. This analysis uses data from the Medical Expenditure Panel Survey (MEPS) to fill this gap. A range of health expenditure burden measures are computed, with and without tax subsidies, showing the impact that tax subsidies have on both the prevalence and magnitude of high health care spending burdens among the nonelderly.
Int J Health Care Finance Econ
· 2008 Sep · PMID 18568435
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For an individual insurance firm offering supplementary private health insurance, a model is developed to decompose market performance in terms of insurer profits. For the individual contract, the model specifies the con...For an individual insurance firm offering supplementary private health insurance, a model is developed to decompose market performance in terms of insurer profits. For the individual contract, the model specifies the conditions under which adverse selection, cream skimming, and moral hazard occur, shows the impact of information on contracting, and the profit contribution. Contracts are determined by comparing willingness to pay for insurance with the individual's risk position, and information on both sides of the market. Finally, performance is aggregated up to the total market. The model provides a framework to explain the attractiveness of supplementary markets to insurers.
Int J Health Care Finance Econ
· 2008 Dec · PMID 18568434
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The ability of a prospective payment system to ensure an optimal level of both quality and cost reducing activities in the hospital industry has been stressed by Ma (Ma, J Econ Manage Strategy 8(2):93-112, 1994) whose an...The ability of a prospective payment system to ensure an optimal level of both quality and cost reducing activities in the hospital industry has been stressed by Ma (Ma, J Econ Manage Strategy 8(2):93-112, 1994) whose analysis assumes that decisions about quality and costs are made by a single agent. This paper examines whether this result holds when the main decisions made within the hospital are shared between physicians (quality of treatment) and hospital managers (cost reduction). Ma's conclusions appear to be relevant in the US context (where the hospital managers pay the whole cost of treatment). Nonetheless, when physicians partly reimburse hospitals for the treatment cost as it is the case in many European countries, we show that the ability of a prospective payment system to achieve both objectives is sensitive to the type of interaction (simultaneous, sequential or joint decision-making) between the agents. Our analysis suggests that regulation policies in the hospital sector should not be exclusively focused on the financing system but should also take the interaction between physicians and hospital managers into account.
Int J Health Care Finance Econ
· 2008 Dec · PMID 18568433
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Between 1997 and 2000 the Australian government introduced three policy reforms that aimed to increase private health insurance coverage and reduce public hospital demand. The first provided income-based tax incentives;...Between 1997 and 2000 the Australian government introduced three policy reforms that aimed to increase private health insurance coverage and reduce public hospital demand. The first provided income-based tax incentives; the second gave an across-the-board 30% premium subsidy; and the third introduced selective age-based premium increases for those enrolling after a deadline. Together the reforms increased enrolment by 50% and reduced the average age of enrollees. The deadline appeared to induce consumers to enroll now rather than delay. We estimate a model of individual insurance decisions and examine the effects of the reforms on the age and income distribution of those with private cover. We interpret the major driver of the increased enrollment as a response to a deadline and an advertising blitz, rather than a pure price response.
Sigurdsson E, Siggeirsdottir K, Jonsson H
… +3 more, Gudnason V, Matthiasson T, Jonsson BY
Int J Health Care Finance Econ
· 2008 Sep · PMID 18566886
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Total hip replacement (THR) is a common and costly procedure. The number of THR is expected to increase over the coming years. Two pathways of postoperative treatment were compared in a randomized study. Fifty patients f...Total hip replacement (THR) is a common and costly procedure. The number of THR is expected to increase over the coming years. Two pathways of postoperative treatment were compared in a randomized study. Fifty patients from two hospitals were randomized into a study group (SG) of 27 patients receiving preoperative and postoperative education programs, as well as home visits from an outpatient team. A control group (CG) of 23 patients received "conventional" rehabilitation augmented by a stay at a rehabilitation center if needed. All costs for the two groups both in hospitals and after discharge were collected and analyzed. On average total costs for the SG were $8,550 and $11,952 for the CG, a 28% cost reduction. Total inpatient costs were $5,225 for the SG and $6,515 for the CG. In a regression analysis the group difference is statistically significant. Adjusting for changes in the Oxford Hip Score gives effective costs (C/E). The ratio of the SGs C/E to the CGs is 0.60. That is a cost-effectiveness gain of 40%. A shorter hospital stay augmented with better preoperative education and home treatment appears to be more effective and costs less than the traditional in hospital pathway of treatment.
Int J Health Care Finance Econ
· 2008 Dec · PMID 18563557
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Ramsey pricing has been proposed in the pharmaceutical industry as a principle to price discriminate among markets while allowing to recover the (fixed) R&D cost. However, such analyses neglect the presence of insurance...Ramsey pricing has been proposed in the pharmaceutical industry as a principle to price discriminate among markets while allowing to recover the (fixed) R&D cost. However, such analyses neglect the presence of insurance or the fund raising costs for most of drug reimbursement. By incorporating these new elements, we aim at providing some building blocks towards an economic theory incorporating Ramsey pricing and insurance coverage. We show how coinsurance affects the optimal prices to pay for the R&D investment. We also show that under certain conditions, there is no strategic incentive by governments to set coinsurance rates in order to shift the financial burden of R&D. This will have important implications to the application of Ramsey pricing principles to pharmaceutical products across countries.
Int J Health Care Finance Econ
· 2008 Sep · PMID 18496751
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The Institute for Clinical Systems Improvement recommends reducing the number of prenatal care visits recommended for low-risk women, citing evidence from a randomized clinical trial indicating that the reduction would n...The Institute for Clinical Systems Improvement recommends reducing the number of prenatal care visits recommended for low-risk women, citing evidence from a randomized clinical trial indicating that the reduction would not adversely impact infant health. We investigate the implicit hypothesis that prenatal care resources are not distributed efficiently across high-risk and low-risk women. Using clinic-reported prenatal care and an inclusive measure of infant health, we report evidence indicating inefficient resource utilization: prenatal care only boosts infant health when mothers have specific pre-existing diagnoses, but women with high potential to benefit from care do not obtain more care than other women.
Int J Health Care Finance Econ
· 2008 Jun · PMID 18408993
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This paper elaborates on the optimal negligence standard in a world where physicians choose their level of care subject to erroneous court judgements and to the degree of supply-side cost sharing. Uncertain liability in...This paper elaborates on the optimal negligence standard in a world where physicians choose their level of care subject to erroneous court judgements and to the degree of supply-side cost sharing. Uncertain liability in malpractice lawsuits leads physicians to provide excessive and insufficient care, which results in a loss of social welfare. The standard that maximizes welfare depends on the cost share: Under traditional, close to full cost reimbursement it is lower than the first-best level of care, while under substantial supply-side cost sharing it increases and may even exceed the first best.