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The time trade-off: a note on the effect of lifetime reallocation of consumption and discounting.

This paper considers the extent to which responses to time trade-off (TTO) questions can provide unbiased estimates of ratios of individual marginal rates of substitution (MRS) of wealth for risk of various health state impairments relative to the corresponding MRS for risk of death. It is shown that if there is reallocation of lifetime consumption and/or discounting of future utilities, then a TTO response that is not adjusted for these effects will unambiguously overestimate the ratios of individual MRS. While the effect of reallocation is likely to be very small, discounting can lead to significant overestimation, the magnitude of which depends in part upon the severity of the health state impairment.

Bias↗

Adverse selection and the purchase of Medigap insurance by the elderly.

This study uses data on 8561 elderly respondents from the 1991 Medicare Current Beneficiary Survey to examine adverse selection in the supplemental private insurance market. Logit models of supplemental insurance choices provided modest but mixed evidence of self-selection on the basis of observable health status. Wealth had a strong influence on coverage. Two part models of Medicare utilization and expenditures showed that beneficiaries with individually purchased policies had higher total, part B and physician expenditures than those with employer-provided policies, even after controlling for observable differences, suggesting adverse selection. Results were similar for basic and more comprehensive policies.

Aged↗

The demand for cocaine by young adults: a rational addiction approach.

This paper applies the rational addiction model to the demand for cocaine by young adults in the Monitoring the Future panel. The price of cocaine is added to this survey from the Drug Enforcement Administration's System to Retrieve Information from Drug Evidence. Results suggest that annual participation and frequency of use given participation are negatively related to the price of cocaine. In addition, current participation (frequency) is positively related to past and future participation (frequency). The long-run price elasticity of total consumption (participation multiplied by frequency given participation) of -1.35 is substantial.

Adolescent↗

Measurement of consumer-patient preferences using a hybrid contingent valuation method.

This study introduces a hybrid, two-stage, contingent valuation method applied to asthma treatment. Respondents are initially offered a choice between hypothetical medications, implying a tradeoff between safety and efficacy. Stage two elicits willingness to pay (WTP) for an improvement along a single risk dimension. Estimates of the value of asthma control based on the initial risk tradeoff stage range from approximately US$1400 to US$2100 per year, assuming a US $6 million value of life. Analysis of the second-stage WTP responses yield estimates for the value of a statistical life of approximately US$9 million and for asthma control of approximately US$2200 per year.

Asthma↗

Cost-sharing and pharmaceutical utilisation and expenditure in Russia.

This paper presents estimates of the impact of exemption status, and other socio-economic variables, on pharmaceutical use in Russia. Estimates are derived from a newly collected household survey covering around four thousand households. Separate results for a zero-inflated negbin model of utilisation of prescriptions and for a two-part model of the overall level of household expenditure on pharmaceuticals are presented. Full exemption from prescription charges is shown to increase the utilisation of prescription items and reduce the probability of the households incurring drug expenditure.

Cost Sharing↗

The redistributive effect of health care finance in twelve OECD countries.

The OECD countries finance their health care through a mixture of taxes, social insurance contributions, private insurance premiums and out-of-pocket payments. The various payment sources have very different implications for both vertical and horizontal equity and on redistributive effect which is a function of both. This paper presents results on the income redistribution consequences of the health care financing mixes adopted in twelve OECD countries by decomposing the overall income redistributive effect into a progressivity, horizontal inequity and reranking component. The general finding of this study is that the vertical effect is much more important than horizontal inequity and reranking in determining the overall redistributive effect but that their relative importance varies by source of payment. Public finance sources tend to have small positive redistributive effects and less differential treatment while private financing sources generally have (larger) negative redistributive effects which are to a substantial degree caused by differential treatment.

Cross-Cultural Comparison↗

The willingness to pay for wait reduction: the disutility of queues for cataract surgery in Canada, Denmark, and Spain.

We estimate demand curves for a one month reduction in waiting time for cataract surgery based on survey data collected in 1992 in Manitoba, Barcelona, and Denmark. Patients answered, "Would you be willing to pay [Bid, B] to reduce your waiting time for cataract surgery to less than one month?" Controlling for SES and visual status, Barcelonan patients have greater WTP for shortened waiting time than the Danes and Manitobans. We estimate the value (in 1992 $) of lost consumer surplus due to the cataract surgery queue at $128 per patient in Manitoba, $160 in Denmark, and $243 in Barcelona.

Aged↗

The cost of prescription medicines to patients.

The study compares the cost-sharing (co-payment) arrangements for prescribed medicines in a sample of EU countries. Through a set of typical prescription scenarios, the cost burden to individual patients of prescriptions are examined, in the context of drug price, and from the perspective of therapeutic need. The cost to patients of medicines is consistently lower in some, and higher in other, countries, regardless of the type of prescription charge system. Fixed charge systems, as opposed to graduated co-payment systems, are obviously more likely to lead to similar charges for the treatment of comparable clinical conditions, but depending on the level of the charge, can result in the patient paying a higher charge than the price of the drug to the health organisation. Exemption from charges for prescription medicines, commonly relate to clinical condition and level of income. Some systems also have age-related criteria and apply ceilings to the total prescription cost burden borne by the patient. The impact on patient costs of specific policy formulations is discussed and a proposal is made for cost convergence for comparable therapies. The method used in this study may also provide a route for investigating model systems prior to implementation.

Cost Sharing↗

On hypothetical bias and calibration in cost-benefit studies.

Despite a sound foundation in economic welfare theory, willingness to pay (WTP) has not been used as a measure of benefits in economic evaluations of health and health care to the same extent as in other fields. Some have suggested that this is due to non-economists' reluctance to placing dollar values on the benefits of health care. However, another potential reason could be uncertainties about the validity of the WTP measure. In this paper, we outline the bias problems with the WTP method, and specifically focus on hypothetical bias; i.e. whether the WTP from hypothetical elicitation methods overstates the real WTP or not. This is done by examining the literature in this field, with emphasis on economic experiments where there is a greater possibility for comparison. The findings are that hypothetical WTP in general significantly overestimates real WTP, but that calibration methods to reduce or eliminate this difference are currently being developed. We conclude that while the area is still very much under development, there seem to be reasons to view the use of cost-benefit analysis as a reasonable alternative to the more common cost-effectiveness analysis.

Calibration↗

Willingness to pay for mammography: item development and testing among five ethnic groups.

The goal of this study was to develop a willingness to pay (WTP) question for mammography that is appropriate for low income, ethnically-diverse women. Through qualitative research with 50 low income women of five ethnic groups we developed both a WTP question and a willingness to travel question (WTT). After being refined through interviews with 41 women, these questions were pilot tested on a random sample of 52 low income, ethnically-diverse women in the San Francisco area. Results show that the concepts underlying WTP and WTT were culturally appropriate to the five ethnicities in this study. Analyses generally confirm the validity of the WTP and WTT questions. As expected, WTP was associated with household income, perceived risk of cancer, and knowledge that one needs a mammogram even after a clinical breast examination. Despite the small samples, WTP varied among the ethnic groups. Additionally, WTT was moderately correlated with the natural log of WTP (r = 0.58, P < 0.001). These questions are now in use in a larger clinical trial and future analyses will explore willingness to pay and willingness to travel within and across the ethnic groups.

Breast Neoplasms↗

Scope and scale insensitivities in a contingent valuation study of risk reductions.

A contingent valuation study asking willingness to pay (WTP) for reducing the overall death risk as well as the risk for fatal and non-fatal injuries in road traffic accidents was performed in Sweden 1998. Different sub-samples were used to test for scale (different risk reductions) and scope (different outcomes) effects, existence of which implies that a respondent is capable of differentiating a WTP-answer accordingly. The results indicated that respondents needed some reference point for their valuation. For instance, dependent samples showed, contrary to independent ones, a significant difference between WTP of dying from any cause and in a traffic accident for the same relative but different absolute risk reduction. Regarding non-fatal traffic accidents, tests were performed comparing valuation of risk reductions for injuries with different outcomes but identical baseline risks and relative risk reductions. Similar to the case above, dependent samples differentiated their WTP and were willing to pay significantly more for a severe injury than for a slight one, which was not the case for independent samples.

Accidents, Traffic↗

The impact of changes in private health expenditure on New Zealand households.

The proportion of New Zealand's total health expenditure financed by the public sector has fallen from 87% in 1983/84 to 77% in 1997/98 in real per capita terms. In the paper, we firstly describe changes in private health expenditure in New Zealand and compare these changes with trends in private and public health expenditure in a number of OECD countries. Secondly, we find that in New Zealand, there have been increases in both out-of-pocket payments and membership of private health insurance funds over the period from 1983/84 to 1997/98. We analyze the relationship between out-of-pocket expenditure, insurance expenditure, and household income across income deciles and across time. We find that out-of-pocket payments are regressive but the regressivity did decline in 1993/94 in response to a government initiative to improve the targeting of government subsidies towards lower income households.

Australia↗

Public attitudes towards patient payments in Bulgarian public health care sector: results of a household survey.

This paper analyses the attitudes towards patient payments in the Bulgarian public health care sector. The analysis is based on results of a household survey conducted in the region of Varna (the third largest city in Bulgaria) between May and June 2000. The data are collected through interviews based on a standardised questionnaire and are analysed by non-parametric statistical procedures. The results show that the majority of the respondents accept to pay for public health care services if these services are provided with good quality and quick access. On average, charges for primary and dental care receive higher approval than charges for hospital services. A large percentage of the sample disagrees with charges related to actual service cost or service quality and nearly all respondents consider a ceiling on payments appropriate. According to the majority of the interviewed, the charges should be retained at the place of service provision. The sample shows strong support for an extensive system of exemptions from payments.

Adult↗

Does willingness to pay vary by race/ethnicity? An analysis using mammography among low-income women.

As part of a population-based intervention to improve periodic mammogram screening, we examined WTP for mammography in five ethnic groups. Through random digit dialing, we contacted households in low-income census tracts of Alameda County, California (San Francisco Bay area). Women who met the ethnicity, age and cancer-free eligibility criteria were invited to participate. For the baseline assessment, women were surveyed over the phone in their preferred language. Of the 1465 surveyed women, 499 identified themselves as African-American, 199 were Chinese, 167 were Filipino, 300 were Latina, and 300 were non-Hispanic white. Bivariate and multivariate analysis showed that WTP varied significantly by ethnicity (P<0.05). We also found that when Filipino and Chinese women had a female relative with breast cancer, they were willing to pay less money for a mammogram. African-American, Latino, and non-Hispanic white women, however, were willing to pay more money for a mammogram if a female relative had had breast cancer. This ethnic difference, when there is a familial link to breast cancer, needs further study as it has implication for genetic testing. Nevertheless, WTP studies that do not account for ethnic differences may be overstating net benefits to society.

California↗

Understanding informal payments for health care: the example of Bulgaria.

INTRODUCTION: Throughout the 1990s, in response to funding deficits, out-of-pocket payment has grown as a share of total expenditure in countries in transition. A clear policy response to informal payments is, however, lacking. The current study explores informal payments in Bulgaria within a conceptual framework developed by triangulating information using a variety of methodologies. OBJECTIVE: To estimate the scale and determinants of informal payments in the health sector of Bulgaria and to identify who benefits, the characteristics and timing of payments, and the reasons for paying. DESIGN: Data were derived from a national representative survey of 1547 individuals complemented by in-depth interviews and focus groups with over 100 respondents, conducted in Bulgaria in 1997. Informal payments are defined as a monetary or in-kind transaction between a patient and a staff member for services that are officially free of charge in the state sector. RESULTS: Informal payments are relatively common in Bulgaria, especially if in the form of gifts. Informal cash payments are universal for operations and childbirth, clear-cut and life-threatening procedures, in hospitals or elite urban facilities or well-known physicians. Most gifts were given at the end of treatment and most cash payments-before or during treatment. Wealthier, better educated, younger respondents tend to pay more often, as a means of obtaining better-quality treatment in a de facto two-tier system. Since the transition, informal payments had become frequent, explicit, solicited by staff, increasingly in cash, and less affordable. Informal payments stem from the low income of staff, patients seeking better treatment; acute funding shortages; and from tradition. Attitudes to informal payments range from strongly negative (if solicited) to tolerant (if patient-initiated), depending on the circumstances. CONCLUSIONS: The study provides important new insights into the incidence and nature of informal payments in the health sector in Bulgaria. Payments were less than expected, very complex, organised in a chaotic, although adaptive, system, and relatively equitable. The timing of payment and the presence of compulsion is a key factor in distinguishing between informal payments given in gratitude or as a bribe, and the latter are seen as problematic, needing to be addressed. Paying informally appeared to be a product of socio-economic reality rather than culture and tradition. The study showed that the principle of comprehensive free coverage existing in Bulgaria until 1989 has been significantly eroded. Initiating a public debate on informal payments is important in a health care reform process that purports to increase accountability.

Bulgaria↗

The economic impact of malaria in Africa: a critical review of the evidence.

Information on the economic burden of malaria in Africa is needed to target interventions efficiently and equitably, and to justify investment in research and control. A standard method of estimation has been to sum the direct costs of expenditure on prevention and treatment, and the indirect costs of productive labour time lost. This paper discusses the many problems in using such data to reflect the burden to society or the potential benefits from control. Studies have generally focussed on febrile illness, overestimating the burden of uncomplicated malaria, but underestimating the costs of severe illness, other debilitating manifestations, and mortality. Many use weak data to calculate indirect costs, which fail to account for seasonal variations, the difference between the average and marginal product of labour, and the ways households and firms 'cope' in response to illness episodes. Perhaps most importantly, the costs of coping mechanisms in response to the risk of disease are excluded, although they may significantly affect productive strategies and economic growth. Future work should be rooted in a sound understanding of the health burden of malaria and the organisation of economic activities, and address the impact on the productive environment, and epidemiological and socio-economic geographical variation.

Adaptation, Psychological↗

The reliability and validity of willingness to pay surveys for reproductive health pricing decisions in developing countries.

This paper examines the reliability, theoretical and predictive validity of willingness to pay (WTP) surveys for setting prices for reproductive health services in developing countries. Four country applications were conducted; the surveys used similar elicitation methods (a series of three closed-ended questions to cover the range of target prices, followed by a single open ended question to elicit maximum WTP) and samples of current or potential users of family planning, gynecology, and prenatal care services. In all four applications, respondents were able to understand WTP questions and responded with high levels of internal consistency. Evidence supporting theoretical validity was also found in all surveys. Higher income and more highly motivated users had higher WTP than lower income and less motivated users. Predictive validity was assessed in one study. Services utilization predicted by a WTP survey was compared with actual post-price increase utilization. Adding WTP to information already possessed by program managers resulted in a threefold increase in ability to predict utilization change as a result of a price increase, and in nearly half of cases predicted percent change in utilization was within 10% of observed change. WTP surveys when used for reproductive services price setting appear reliable and valid, and improve a program manager's ability to predict client responses to price changes.

Attitude to Health↗