Handbook of Health Economics, Volume 2

1149 Pages·2012·15.206 MB·English

by  Mark V. Pauly, Thomas G McGuire, Pedro Pita Barros

VOLUMETWO
H
ANDBOOK OF
HEALTH ECONOMICS
INTRODUCTIONTOTHESERIES
The aim of the Handbooks in Economics series is to produce Handbooks for various branches of
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alsopossiblesupplementaryreadingsforadvancedcoursesforgraduatestudentsineconomics.
KENNETHJ.ARROWandMICHAELD.INTRILIGATOR
VOLUMETWO
H
ANDBOOK OF
HEALTH ECONOMICS
Edited by
MARK V. PAULY
THOMAS G. M GUIRE
C
PEDRO P. BARROS
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11 12 13 14 15 10 9 8 7 6 5 4 3 2 1
CONTENTS
Preface xvii
Acknowledgements xxi
1. Health CareSpending Growth 1
MichaelE.Chernew,JosephP.Newhouse
1. Introduction 2
1.1. SpendingGrowthintheUS 2
1.2. SpendingGrowthinOtherCountries 4
2. SpendingGrowthvs.SpendingLevel 5
3. TechnologyandSpendingGrowth 7
4. ModelsofSpendingGrowth 10
4.1. ModelswithExogenousTechnology 10
4.2. ModelsofEndogenousTechnology 12
5. EmpiricalEvidence 17
5.1. CausesofSpendingGrowth 17
5.2. SpendingGrowthbyInsuranceType 26
5.3. SpendingGrowthbyDisease/HealthStatus 34
6. ValueofSpendingGrowth 36
7. Conclusion 37
References 38
2. Causes and Consequences of Regional Variations in Health Care 45
JonathanSkinner
1. Introduction 46
2. AnEconomicModelofRegionalVariationsinHealthCare 48
2.1. TheDemandSide 49
2.2. TheSupplySide 50
2.3. Atypologyofhealthcareservices 54
3. EmpiricalEvidenceonGeographicVariationsinExpendituresandUtilization 57
3.1. UnitsofMeasurementandSpatialCorrelations 57
3.2. HealthCareExpenditures 59
3.3. EffectiveCare(CategoryI) 66
3.4. Preference-sensitiveTreatmentswithHeterogeneousBenefits(CategoryII) 67
3.5. Supply-sensitive(CategoryIII)TreatmentswithUnknownor
MarginalBenefits 71
v
vi Contents
4. EstimatingtheConsequencesofRegionalVariation:GeographyAsAnInstrument 75
5. InefficiencyandthePolicyImplicationsofRegionalVariations 81
6. RegionalVariationsinHealthOutcomes 83
7. DiscussionandConclusion 85
References 86
3. The Economicsof Risky Health Behaviors 95
JohnCawley,ChristopherJ.Ruhm
1. Introduction 97
1.1. TheImportanceofHealthBehaviors 97
1.2. TrendsinHealthBehaviors 100
1.3. DifferencesinHealthBehaviorsacrossPopulationSubgroups 103
1.4. HealthEconomicsResearchonHealthBehaviors 108
2. TheTraditionalEconomicApproachtoStudyingHealthBehaviors 110
2.1. ModelofHealthCapital 110
2.2. EducationandHealthBehaviors 111
2.3. HabitandAddiction 112
2.4. PriceElasticitiesofHealthBehaviors 121
2.5. IncomeandHealthBehaviors 126
2.6. TheRoleofAdvertising 128
2.7. TimePreferenceandHealthBehaviors 130
3. AlternativeApproachestoStudyingHealthBehaviors 133
3.1. PeerEffects 133
3.2. InformationConstraints 137
3.3. Time-inconsistentPreferencesandHyperbolicDiscounting 139
3.4. CognitiveLimitationsandBoundedRationality 141
3.5. Non-traditionalModels 144
3.6. Short-termEffects 151
4. EconomicConsequencesofHealthBehaviors 155
4.1. Reasonsto(andnotto)ConductCostofBehaviorStudies 155
4.2. ChallengestoIdentifyingtheConsequencesofHealthBehaviors 156
4.3. ImpactsonMedicalCareCosts 157
4.4. ImpactsonEducation 158
4.5. ImpactsonEmployment 160
4.6. ImpactsonIncome,Earnings,andWages 161
4.7. ImpactsonCrime 162
5. StrategiesforModifyingHealthBehaviors 163
5.1. TaxesandSubsidies 163
5.2. CashIncentivesforHealthyBehaviors 170
5.3. RestrictionsonPurchaseorUse 172
Contents vii
5.4. ProvidingInformation 175
5.5. AdvertisingRestrictions 177
5.6. DefaultsandChoiceArchitecture 178
6. FutureDirections 178
6.1. FutureResearchusingTraditionalEconomicModels 179
6.2. FutureResearchusingNon-traditionalModels 181
References 182
4. ImprovingHealth inDeveloping Countries: Evidence from Randomized
Evaluations 201
MichaelKremer,RachelGlennerster
1. Introduction 202
2. ConceptualFrameworkforHouseholdDecisionMaking 206
2.1. HealthasHumanCapitalInvestment 206
2.2. Cost-effectivenessAnalysis 210
3. ExternalitiesandPublicGoods 212
3.1. Non-excludablePublicGoods 212
3.2. ExcludablePublicGoods 217
4. TheImpactofPriceandConvenienceonPreventionBehaviorAgainst
InfectiousDisease 220
4.1. EvidenceonPricingandDemandforPreventiveandNon-acuteCare 225
4.2. Distance,Convenience,andTake-up 229
4.3. PricingandTargeting 231
5. Incentives 231
5.1. ConditionalCashTransferPrograms 231
5.2. SmallIncentivePrograms 236
6. ConsumerBehavior,AcuteTreatment,andInsurance 237
6.1. ConsumerBehaviorandAcuteTreatment 238
6.2. Insurance 242
7. LiquidityConstraintsandConsumerBehavior 244
8. BehavioralModelsandHealth 247
8.1. PresentBias 248
8.2. DeliberationCostsandLimitedAttention 252
8.3. PricingandUse:TestingtheSunkCostFallacyHypothesis 253
8.4. EndowmentEffects 255
8.5. Learningvs.PriceAnchoring:Long-termImplicationsof
FreeDelivery 256
9. InformationandHealthEducation 256
9.1. GeneralEducation 257
9.2. ComplementaritiesbetweenEducationandSubsidies 263
9.3. InformationonIndividualandLocalRiskFactors 264
viii Contents
10. SocialInfluencesonHealthBehavior 269
11. HealthCareSupplyintheDevelopingWorld:Background 273
11.1. PublicHealthCare 273
11.2. PrivateHealthCare 276
12. HealthCareDeliveryandSystemReform 277
12.1. PayingforProviderPresenceinIndiaandRwanda 278
12.2. ContractingforHealthinPost-conflictCambodia 281
12.3. PayingforResultsattheCommunityLevel 283
12.4. CommunityMobilization,Accountability,andReform 284
13. InteractionsbetweenHealthandBroaderSocio-EconomicVariables 286
13.1. ImpactofEconomicandSocialFactorsonHealth 286
13.2. TheImpactofHealthonOtherEconomicVariables 294
14. Conclusion 298
14.1. PolicyImplications 299
14.2. DirectionsforFutureResearch 301
References 304
5. Demand for Health Insurance 317
ThomasG.McGuire
1. IntroductionandOverview:HealthSystemsWithChoiceof
HealthInsurance 319
1.1. UnitedStates 321
1.2. High-incomeCountries 331
1.3. Middle-incomeCountries 336
2. OptimalDemand-SideCostSharing 338
2.1. OptimalHealthInsuranceBasicswithnoMoralHazard 340
2.2. OverviewofTopicsinOptimalHealthInsurance 340
2.3. OptimalHealthInsurance:First-bestBenchmark 342
2.4. DemandResponse(MoralHazard)andaSecond-bestCoverage 344
2.5. MultipleServices,Cross-priceElasticityofDemand,Offsets 351
2.6. HealthInsurancetoCorrectConsumerMistakesinDemandforHealthCare 356
3. Supply-SidePoliciesandDemand-SideCoverage 360
3.1. Supply-sidePolicies 361
3.2. Demand-sideCostSharingandSelectiveContracting 366
4. StructuringChoiceofHealthInsurance 373
4.1. “Price”and“QuantityDemanded”ofHealthInsurance 373
4.2. ArgumentsForandAgainstChoiceinHealthInsurance 375
4.3. PremiumSettingandFairness 385
5. FinalComments 386
References 387
Contents ix
6. Who Ordered That? The EconomicsofTreatment Choices in MedicalCare 397
AmitabhChandra,DavidCutler,ZiruiSong
1. Introduction 398
1.1. OverviewofVariationsinMedicalCare 400
1.2. GrayAreaofMedicine 402
1.3. Demand(Patients)andSupply(Doctors) 403
2. HeterogeneityInDemand 406
2.1. PriceandIncomeEffects:Theory 406
2.2. EmpiricalEvidenceonPriceandIncomeEffects 407
2.3. Preferences 410
3. Supply-SideDriversofClinicalDecisions 411
3.1. ProfitsversusPatients 412
3.2. PaymentSystemsandSupplier-inducedDemand 413
3.3. PhysicianSpecializationandTraining 415
3.4. DefensiveMedicine 418
4. SituationalFactors 419
4.1. AvailabilityHeuristic 420
4.2. Framing,Choice,andRisk 421
4.3. StatusQuoandConfirmationBias 422
4.4. ChannelFactors 422
4.5. Resource/CapabilityFactors 423
5. Conclusion 425
References 425
7. Theoretical Issues Relevant tothe Economic Evaluationof
Health Technologies 433
DavidO.Meltzer,PeterC.Smith
1. Introduction 434
1.1. TheRationaleforEconomicEvaluationofHealthTechnologies 434
1.2. InstitutionalContextsforCEA 436
2. StandardApproachestoMethodologicalIssuesinCost-Effectiveness
Analysis 437
2.1. Introduction 437
2.2. OverviewoftheCEAFramework 438
2.3. ScopeoftheAnalysis(Perspective) 440
2.4. MeasuringEffectivenessinCEA 442
2.5. TheMeasurementofCostsinCEA 445
2.6. ApplyingCEA 447
3. TheoreticalFoundationsofCEA 448
3.1. IndividualUtilityMaximizationandCost-Effectiveness 449