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PubMed2006

A microeconometric analysis of Canadian health care utilization.

Understanding health care utilization is important to design efficient and effective health systems. Toward this end, we develop a relatively simple and intuitively appealing microeconometric framework to analyse health care utilization and illustrate its use with recent Canadian microdata. We find that health care utilization consists of distinct stochastic processes requiring the use of two stochastic regression models. In particular, the latent class modelling framework is the superior statistical framework if the data permit modelling unobserved heterogeneity and overdispersion. In many instances, results differ for the classes of high and low users of health care services.

Adolescent↗
PubMed2006

Sometimes more equal than others: how health inequalities depend on the choice of welfare indicator.

In recent years, a large body of empirical work has focused on measuring and explaining socio-economic inequalities in health outcomes and health service use. In any effort to address these questions, analysts must confront the issue of how to measure socioeconomic status. In developing countries, socioeconomic status has typically been measured by per capita consumption or an asset index. Currently, there is only limited information on how the choice of welfare indicators affect the analysis of health inequalities and the incidence of public spending. The purpose of this paper is to illustrate the potential sensitivity of the analysis of health related inequalities to how socioeconomic status is measured. Using data from Mozambique, the paper focuses on five key health service indicators, and tests whether measured inequality (concentration index) in health service utilization differs depending on the choice of welfare indicator. The paper shows that, at least in some contexts, the choice of welfare indicator can have a large and significant impact on measured inequality in utilization of health services. In consequence, we can reach very different conclusions about the 'same' issue depending on how we define socioeconomic status. The paper also provides some tentative conclusions about why and in what contexts health inequalities can be sensitive to the choice of living standards measure. The results call for more clarity and care in the analysis of health related inequalities, and for explicit recognition of the potential sensitivity of findings to the choice of welfare measure. The results also point at the need for more careful research on how different dimensions of SES are related, and on the pathways by which the respective different dimensions impact on health related variables.

Adolescent↗
PubMed2006

Performance-based budgeting in the public sector: an illustration from the VA health care system.

This paper estimates frontier cost functions for US Department of Veterans Affairs (VA) hospitals in FY2000 that are consistent with economic theory and explicitly account for cost differences across patients' risk, level of access to care, quality of care, and hospital-specific characteristics. Results indicate that on average VA hospitals in FY2000 operate at efficiency levels of 94%, as compared to previous studies on US private sector hospitals that average closer to 90% efficient. Using these cost frontiers, management systems potentially could be implemented to enhance the equitable allocation of the VA medical care global budget and systematically distribute funds across hospitals and networks. The paper also provides recommendations to improve the efficiency of delivering health care services applicable to public sector organizations.

Benchmarking↗
PubMed2006

In defence of societal sovereignty: a comment on Nyman 'the inclusion of survivor consumption in CUA'.

Whether to include or exclude consumption costs and costs of unrelated illnesses in economic evaluation is not a technical issue which may be answered by reference to individuals alone and the consistency of the treatment of individual costs and benefits. In the context of a publicly funded health service the relevant costs and benefits may differ from those normally included in evaluation studies. Specifically, the social welfare function is likely to exclude benefits which would result in preferential care for wealthier members of society. But this conclusion must be established by analysis of social, not individual, values.

Cost-Benefit Analysis↗
PubMed2006

Some indicators of socio-economic status may not be reliable and use of indices with these data could worsen equity.

Socio-economic status (SES) indices are increasingly being used to characterise (in)equity, with the assumption that SES indices are reliable. However, the accuracy of such SES indices is questionable if they are unreliable. We examined the inter-rater and test-retest reliability of a range of indicators commonly used to generate SES indices as well as the composite SES indices. Results from research in southeast Nigeria showed considerable variation, with some indicators having only low to moderate reliability (reliability coefficients 0.25-0.77). Inter-rater and test-retest reliability of SES indices was 0.63 in both cases. Many households were misclassified because of the unreliable SES indices. Analyses of the distribution of resources based on such indicators could lead to inaccuracies in benefit incidence estimates and policy decisions based on low to moderately reliable SES indicators could worsen equity in access to and use of resources. Greater rigour is needed in conceptualising as well as undertaking SES measurements.

Humans↗
PubMed2006

Federalism and regional health care expenditures: an empirical analysis for the Swiss cantons.

Switzerland (7.2 million inhabitants) is a federal state composed of 26 cantons. The autonomy of cantons and a particular health insurance system create strong heterogeneity in terms of regulation and organisation of health care services. In this study we use a single-equation approach to model the per capita cantonal expenditures on health care services and postulate that per capita health expenditures depend on some economic, demographic and structural factors. The empirical analysis demonstrates that a larger share of old people tends to increase health costs and that physicians paid on a fee-for-service basis swell expenditures, thus highlighting a possible phenomenon of supply-induced demand.

Delivery of Health Care↗
PubMed2006

Measurement of informal care: an empirical study into the valid measurement of time spent on informal caregiving.

The incorporation of informal care into economic evaluations of health care is troublesome. The debate focuses on the valuation of time spent on informal caregiving, while time measurement, a related and may be even a more important issue, tends to be neglected. Valid time measurement is a necessary condition for the valuation of informal care. In this paper, two methods of time measurement are compared and evaluated: the diary, which is considered the gold standard, and the recall method, which is applied more often. The main objective of this comparison is to explore the validity of the measurement of time spent on providing informal care. In addition, this paper gives empirical evidence regarding the measurement of joint production and the separation between 'normal' housework and additional housework due to the care demands of the care recipients. Finally, the test-retest stability for the recall method is assessed. A total of 199 persons giving informal care to a heterogeneous population of care recipients completed the diary and the recall questionnaire. Corrected for joint production, informal caregivers spent almost 5.8 h a day on providing informal care. If one assumes that respondents take into account joint production when completing the recall questionnaire, the recall method is a valid instrument to measure time spent on providing informal care compared to the diary. Otherwise, the recall method is likely to overestimate the time spent on providing informal care. Moreover, the recall method proves to be unstable over time. This could be due to learning effects from completing a diary.

Aged↗
PubMed2006

A Bayesian approach to analysing the cost-effectiveness of two primary care interventions aimed at improving attendance for breast screening.

AIMS: To assess the cost-effectiveness of two primary care interventions, a letter and a flag, aimed at improving attendance for breast screening among (i) all women invited for breast screening and (ii) non-attenders. METHODS: A probabilistic decision analytic model was developed using Markov chain Monte Carlo simulation implemented in WinBUGS. The model was populated using economic and effectiveness data collected alongside two randomised controlled trials. RESULTS: For all women invited, the incremental cost-effectiveness ratio (ICER) for the letter compared with no intervention is 27 pounds per additional attendance, and the ICER for the combined letter and flag intervention compared to the letter alone is 171 pounds. The corresponding ICERs for non-attenders are 41 pounds and 90 pounds. The flag intervention is an inefficient option in both settings. A large proportion of the costs fall on the practices (25-67%), depending on the intervention and target population. The total costs incurred do not, however, seem prohibitive. Expected value of perfect information suggests that there is greater value in carrying out further research on the intervention implemented among all women invited for breast screening rather than on non-attenders. CONCLUSIONS: The flag intervention alone does not appear to be an efficient option. The choice between the letter and both interventions combined is subjective, depending on the willingness to pay for an additional screening attendance.

Bayes Theorem↗
PubMed2006

Does non-profit health insurance reduce financial burden? Evidence from the Vietnam Living Standards Survey Panel.

Many low-income countries are implementing non-profit medical insurance to increase access to health services, especially among low-income households, and to raise additional revenue for financing public health services. This paper estimates the effect of insurance on out-of-pocket health expenditures using the Vietnam Living Standards Surveys for 1993 and 1998 and appropriate models for panel data. Our findings suggest that health insurance reduces health expenditure when unobserved heterogeneity is accounted for. Failure to capture unobserved heterogeneity produces contrary results that are consistent with previous cross-sectional studies in the literature. Health insurance is found to reduce out-of-pocket expenditure between 16 and 18% and the reduction in expenditure is more pronounced for individuals with lower incomes. At mean income, the effect of health insurance is to reduce health expenditures between 28 and 35%.

Cost of Illness↗
PubMed2006

Non-linearity in the cost-effectiveness frontier.

Conventional cost-effectiveness decision rules rely on the assumptions that all health care programmes are divisible and exhibit constant returns to scale for a homogeneous population; hence, the path between adjacent programmes on a cost-effectiveness frontier must be linear. In this paper we build a framework to analyse non-linear 'expansion' paths. We model the impact of two key sources of non-linearity: economies of scale or scope in the production of health care; and prioritisation of patients who are most likely to benefit from more expensive and more effective treatments. We conclude that the expansion path might be linear, convex or concave, depending on the situation. The path might also exhibit vertical discontinuity due to fixed costs or horizontal discontinuity due to indivisibility. The efficiency of resource allocation might be improved by empirical estimation of expansion paths. We discuss the advantages and disadvantages of this approach compared with a standard stratified analysis.

Cost-Benefit Analysis↗
PubMed2006

Measuring the effect of husband's health on wife's labor supply.

A sizable proportion of women remain married well into late life and an increasing proportion of them participate in the labor force. Since women tend to marry men older than themselves and men tend to experience serious illnesses at younger ages than women, women frequently witness declining health in their husbands. This is likely to affect a wife's labor-leisure trade-off in offsetting ways. Prior studies have not sought to disentangle the effect of a husband's poor health on his wife's reservation wage from the income effect of his ill health. We argue that, if we control for husband's earnings, the coefficient of husband's health in models of his wife's labor force participation (and hours of work) will reflect, in part, her preference over whether to decrease her labor supply to provide health care for her husband or whether to instead increase it to purchase this care in the market. However, husband's earnings are likely to be endogenous in these models due to unobserved characteristics common to husbands and wives. We find that the estimated effect of husband's health depends on whether we instrument for husband's earnings and on the health measure used. This is indicative of the importance of using a variety of health measures and controlling for husband's earnings, and their endogeneity, in future research on the effect of husband's health on wife's labor supply.

Employment↗
PubMed2006

Longitudinal analysis of censored medical cost data.

This paper applies the inverse probability weighted (IPW) least-squares method to estimate the effects of treatment on total medical cost, subject to censoring, in a panel-data setting. IPW pooled ordinary-least squares (POLS) and IPW random effects (RE) models are used. Because total medical cost might not be independent of survival time under administrative censoring, unweighted POLS and RE cannot be used with censored data, to assess the effects of certain explanatory variables. Even under the violation of this independency, IPW estimation gives consistent asymptotic normal coefficients with easily computable standard errors. A traditional and robust form of the Hausman test can be used to compare weighted and unweighted least squares estimators. The methods are applied to a sample of 201 Medicare beneficiaries diagnosed with lung cancer between 1994 and 1997.

Aged↗
PubMed2006

Scale of interest versus scale of estimation: comparing alternative estimators for the incremental costs of a comorbidity.

We investigate how the scale of estimation in risk-adjustment models for health-care costs affects the covariate effect, where the scale of interest for the covariate effect may be different from the scale of estimation. As an illustrative example, we use claims data to estimate the incremental costs associated with heart failure within one year subsequent to myocardial infarction. Here, the scale of interest for the effect of heart failure on costs is additive. However, traditional methods for modeling costs use predetermined scale of estimation - for example, ordinary least squares (OLS) regression assumes an additive scale while log-transformed OLS and generalized linear models with log-link assume a multiplicative scale of estimation. We compare these models with a new flexible model that lets the data determine the appropriate scale of estimation. We use a variety of goodness-of-fit measures along with a modified Copas test to assess robustness, lack of fit, and over-fitting properties of the alternative estimators. Biases up to 19% in the scale of interest are observed due to the misrepresentation of the scale of estimation. The new flexible model is found to appropriately represent the scale of estimation and less susceptible to over-fitting despite estimating additional parameters in the link and the variance functions.

Bias↗
PubMed2006

Job displacement and stress-related health outcomes.

We investigate whether job loss as the result of displacement causes hospitalization for stress-related diseases which are widely thought to be associated with unemployment. In doing this, we use much better data than any previous investigators. Our data are a random 10% sample of the male population of Denmark for the years 1981-1999 with full records on demographics, health and work status for each person, and with a link from every working person to a plant. We use the method of 'matching on observables' to estimate the counter-factual of what would have happened to the health of a particular group of displaced workers if they had not in fact been displaced. Our results indicate unequivocally that being displaced in Denmark does not cause hospitalization for stress-related disease. An analysis of the power of our test suggests that even though we are looking for a relatively rare outcome, our data set is large enough to show even quite small an effect if there were any. Supplementary analyses do not show any causal link from displacement or unemployment to our health outcomes for particular groups that might be thought to be more susceptible.

Adult↗
PubMed2006

Empirical implications of response acquiescence in discrete-choice contingent valuation.

The use of discrete-choice contingent valuation (CV) to elicit individuals' preference, expressed as maximum willingness-to-pay (WTP), although primarily developed in environmental economics, has been popular in the economic evaluation of health and healthcare. However, a concern with this method is the potential for 'over-estimating' WTP values due to the presence of response acquiescence, or 'yea-saying' bias. Based on a CV survey conducted to estimate physicians' valuation of clinic computerization, the extent of such bias was estimated from a within-sample open-ended valuation question following the respondents' discrete choice response. Analysis of this data suggests that not only was response acquiescence an issue, but also that the parametric estimation of mean and median WTP, the most common approach to estimating WTP from discrete-choice data, would potentially magnify such bias (to various degrees depending on the distributional assumptions applied). The possible extent of CV design versus analysis in discrete-choice methods therefore warrants further exploration.

Choice Behavior↗
PubMed2006

The economics of diagnosis.

Any population can be divided into two groups, one with the presence of a given disease or condition, and the other without. Diagnosis consists of using tests to sort the population into these groups. Diagnostic tests use a threshold value of a diagnostic variable to distinguish between disease-positive and disease-negative individuals. The analysis of error in diagnostic tests has typically been undertaken using receiver-operator characteristic (ROC) curves. More recently, economic value of information (VOI) methods have characterised the costs and consequences of testing. This paper develops a new method for economic test evaluation, which we call ROTS analysis. The ROTS curve plots the costs and effects of changing test thresholds, in cost-effectiveness space. We illustrate the use of our method with a worked example, and show how it can answer three key questions: (1) Is there any test that is worth doing? (2) What is a test's optimum operating point in terms of sensitivity and specificity? (3) If two tests are available, which is best? We contrast the merits of our method with those of established ROC and VOI analysis. We argue that ROTS analysis more clearly reveals the link between changing test thresholds and the cost-effectiveness of different treatments.

Cost-Benefit Analysis↗