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Employer choices of family premium sharing.

In 1997, nearly two-thirds of married couples with children under age 18 were dual-earner couples. Such families may have a variety of insurance options available to them. If so, declining a high employee premium contribution may be a mechanism for one spouse to take money wages in lieu of coverage while the other spouse takes coverage rather than high wages. Employers may use these preferences and the size of premium contributions to encourage workers to obtain family coverage through their spouse. The purpose of this paper is to explore the effects of labor force composition, particularly the proportion of dual-earner couples in the labor market, on the marginal employee premium contribution (marginal EPC) for family coverage. We analyze data from the 1997-2001 Medical Expenditure Panel Survey--Insurance Component (MEPS-IC) List Sample of private establishments. We find strong evidence that the marginal EPC for family coverage is higher when there is a larger concentration of women in the workforce, but only in markets with a higher proportion of dual-earner households.

Adult↗

Reimbursing for the costs of teaching and research in Finnish hospitals: a stochastic frontier analysis.

In this study stochastic frontier cost function was used to estimate the teaching and research costs of Finnish hospitals. Predicted efficiency adjusted costs were calculated and compared to evaluate the current level of teaching and research reimbursement. The efficiency adjustment had significant impact on the marginal and average cost estimates of the teaching and research output. The results suggest that the average rate of teaching and research reimbursement should be approximately 14.6% of the total operating costs in university teaching hospitals. The main finding was that the university teaching hospitals were underfunded with respect to both research and teaching output.

Cost-Benefit Analysis↗

OBRA 1987 and the quality of nursing home care.

Because minimum government standards for quality regulate only part of the market failure, they may have unintended effects. We present a general theory of how government regulation of quality of care may affect different market segments, and test the hypotheses for the nursing home market. OBRA 1987 was a sweeping government reform to improve the quality of nursing home care. We study how the effect of OBRA on the quality of nursing home care, measured by resident outcomes, varied with nursing home profitability. Using a semi-parametric method to control for the endogenous effects of regulation, we found that this landmark legislation had a negative effect on the quality of care in less profitable nursing homes, but improved the quality in more profitable nursing homes during the initial period after OBRA. But, this legislation had no statistically significant effect in the later period when the regulation was weakly enforced.

Aged↗

Provider choice of quality and surplus.

We study the quality choices of institutional health-care providers, such as hospitals, assuming that the utility function of the key organizational decision maker includes both quality of care and financial surplus. We are primarily concerned with how changes in outside claims--particularly proportional outside claims--on the provider's financial surplus affect his choice of quality. We use the term "rate of surplus retention" to refer to the fraction of surplus remaining after deducting all such claims. Using the Arrow-Pratt coefficient of relative risk aversion as a measure of curvature of the provider's utility-from-money function, we show that increasing the surplus retention rate increases (decreases) quality if the provider's coefficient of relative risk aversion is greater than (less than) 1.

Decision Making↗

Risk selection and complementary health insurance: the Swiss approach.

To avoid risk selection, the market for complementary health insurance is usually completely separate from the market for basic health insurance. In Switzerland, however, the basic benefit package and complementary insurance are offered by the same insurer. Risk-based premiums are allowed with respect to complementary insurance. This paper compares the Swiss integration approach to the separation approach. It is shown that under the integration approach insurers cream-skim by selling complementary insurance to low risks at a discount. Nevertheless, the integration approach can be Pareto-superior if the cost savings due to the integration of basic and complementary insurance are sufficiently large.

Cost-Benefit Analysis↗

Medicare payment changes and nursing home quality: effects on long-stay residents.

The Balanced Budget Act of 1997 dramatically changed the way that Medicare pays skilled nursing facilities, providing a natural experiment in nursing home behavior. Medicare payment policy (directed at short-stay residents) may have affected outcomes for long-stay, chronic-care residents if services for these residents were subsidized through cost-shifting prior to implementation of Medicare prospective payment for nursing homes. We link changes in both the form and level of Medicare payment at the facility level with changes in resident-level quality, as represented by pressure sores and urinary tract infections in Minimum Data Set (MDS) assessments. Results show that long-stay residents experienced increased adverse outcomes with the elimination of Medicare cost reimbursement.

Aged↗

Price vs. quantity in health insurance reimbursement.

While "integrated" systems regulate the quantity of health services, "Bismarckian" systems regulate their price. This paper compares the consumers' allocations implemented within the two reimbursement systems. In the model, illness has a negative impact on labor productivity while public insurance is financed through income tax. Consumers have private information with respect to a parameter which can be interpreted as heterogeneity either in intensity of their preferences for treatment or in the type of illness. The social planner may be constrained to adopt uniform insurance plans, or may be free to choose self selecting plans. The analysis of uniform plans shows that Bismarckian systems dominate integrated systems from the social welfare point of view; whereas the opposite ranking holds with self-selecting plans.

Consumer Behavior↗

Market structure and technology: evidence from the Italian National Health Service.

Sutton (1991, Sunk costs and market structure. Cambridge: MIT Press; 1998, Technology and market structure. Cambridge: MIT Press) theorised that industries evolve into distinct market configurations in terms of concentration, depending upon product homogeneity and whether R&D or advertising are relevant relative to set-up costs. This paper tests the existence of such a relationship between technological profiles and market structure empirically, using the health care services provided by the Italian National Health Service as the specific economic framework. Our results support the empirical predictions made by Sutton. In particular, in markets where the technological intensity is low the lower bound to concentration converges monotonically to zero when the market size increases, for any level of product homogeneity. Conversely, in markets where the technological intensity is high the lower bound of concentration converges to some positive (non-zero) value when market size increases, while the lower bound increases (from zero) when the level of product homogeneity increases.

Biomedical Technology↗

The impact of government decentralization on county health spending for the uninsured in California.

We analyze Program Realignment, California's 1991 policy of decentralizing control of health, mental health, and social services, from the state to the counties. Drawing from the economics literature on intergovernmental transfers and using data constructed for this study, we analyze the impact of Realignment on uninsured health spending. We find a change in the pattern of spending on indigent health services by counties following decentralization. Our results suggest, however, that county-level governments maintain a level of commitment to social-service spending that recent studies indicate may be lacking at the state level.

California↗

Severity of illness and the welfare effects of moral hazard.

The extent to which the moral hazard caused by health insurance represents economic inefficiency has been the subject of much debate. This paper incorporates health status in a model of moral hazard, and finds that seriously ill patients are likely to exhibit greater moral hazard than healthier patients but the proportion of moral hazard that is inefficient declines with the severity of illness. Because of these competing tendencies, the cost of resource misallocation is parabolic in the severity of illness. The effect of the consumer's initial wealth endowment is also considered.

Efficiency↗

Cost-effectiveness of a community-level HIV risk reduction intervention for women living in low-income housing developments.

We conducted a cost-effectiveness analysis of a multi-site community-level HIV prevention trial that enrolled women living in 18 low-income housing developments in 5 U.S. cities. A mathematical model of HIV transmission was used to estimate the number of HIV infections averted and quality-adjusted life years (QALYs) saved by the community-level intervention, based on data obtained from community-wide sexual behavior surveys at baseline and 12-month follow-up. Results indicated that the intervention prevented approximately 1 infection per 3500 women reached by the intervention, at a total cost of 174,845 dollars. The cost per QALY saved by the intervention was 37,433 dollars and the cost per HIV infection averted was 732,072 dollars. The community-level intervention was moderately cost-effective in comparison with other HIV prevention programs for at-risk women. Synergistic approaches to HIV prevention that combine community-level sexual norm change interventions with more intensive risk reduction programs for high-risk women are needed. EDITORS' STRATEGIC IMPLICATIONS: The authors present a promising and efficient community-level HIV prevention approach, with effects beyond the limited scope of individual or small group interventions. This paper represents an example of how an analysis of cost-effectiveness can provide policymakers with information needed for difficult decisions about prevention resource allocations.

Adult↗

The sociobiologic integrative model (SBIM): enhancing the integration of sociobehavioral, environmental, and biomolecular knowledge in urban health and disparities research.

Disentangling the myriad determinants of disease, within the context of urban health or health disparities, requires a transdisciplinary approach. Transdisciplinary approaches draw on concepts from multiple scientific disciplines to develop a novel, integrated perspective from which to conduct scientific investigation. Most historic and contemporary conceptual models of health were derived either from the sociobehavioral sciences or the biomolecular sciences. Those models deriving from the sociobehavioral sciences generally lack detail on involved biological mechanisms whereas those derived from the biomolecular sciences largely do not consider socioenvironmental determinants. As such, advances in transdisciplinary characterizations of health in complex systems like the urban environment or health disparities may be impeded. This paper suggests a sociobiologic organizing model that encourages a multilevel, integrative perspective in the study of urban health and health disparities.

Causality↗

Toward a comprehensive biomechanical injury cost model.

The proposed biomechanical injury cost model utilizes surrogate-based injury assessment functions to predict the probability of occurrence and the probable cost of specific injuries to the head, thorax, abdomen, and lower extremities. The resulting probability cost is a function of the number, location, and severity of injuries. As more precise injury assessment functions and more accurate cost estimates become available, the model will become an effective tool for comparing and classifying different injury patterns.

Abbreviated Injury Scale↗

A procedure for allocating a safety improvement budget among treatment types.

Highway agencies often have to decide how to allocate a road safety budget among different safety treatments. While some of the traditional resource allocation procedures can provide information to assist in making this decision, they are not tailor-made for this specific problem. In particular, uncertainty in accident frequency estimates can lead to difficulties if the procedure is inherently deterministic. A procedure is presented for using recent safety estimation theory and benefit-cost analysis to accommodate uncertainty in accident frequency estimates while addressing the specific decision-making problem at hand. In the procedure, a site can be treated if the difference between the safety benefit and the treatment cost--the net benefit--is large enough. Recognizing that safety benefits vary across sites and treatment types, the procedure allows a budget to be allocated to different programmes but ensures that the smallest net benefit--the net marginal benefit threshold--is the same for all programmes. The procedure estimates the number and costs of sites for each treatment type for which the net benefit exceeds a specific threshold that is adjusted such that the total treatment cost is in line with the available budget. While this methodology can be useful for agencies responsible for road safety improvements, the data requirements could pose a problem for some jurisdictions. A further difficulty is that the computations required are extensive, particularly in cases where uncertainty to other data items requires the use of sensitivity analysis. To facilitate these computations, a computer programme is available from the authors.

Accidents, Traffic↗

Bioeconomic dynamics of a fishery modeled as an S-system.

A bioeconomic model of a single species fishery is developed by using a realistic catch-rate function and assuming that a regulatory agency controls exploitation of the fishery by imposing a suitable tax on the catch. The existence of a nontrivial steady state and its stability are examined. The optimal harvesting policy is discussed from the viewpoints of variational calculus and control theory. The fishery is then modeled as an S-system by following the recasting techniques of Savageau and Voit. Numerical examples of the optimal control curves and the yield-effort curves are obtained by executing the ESSYNS algorithm.

Fisheries↗

The cost of treatment dropout in depression. A cost-benefit analysis of fluoxetine vs. tricyclics.

In this study, we tried to estimate the economic potential benefit of the use of fluoxetine (PROZACR 20 mg, Lilly) versus tricyclic antidepressants (TCAs) in depression of mild to moderate intensity. Fluoxetine has demonstrated, in controlled studies, significantly lower rates of side-effects and treatment dropout than TCAs while showing similar efficacy. Treatment dropout, especially at an early stage of the therapy, can have profound consequences, including excessive lengthening of the depressive episode, symptomatic relapse, increase of repeated days out of work, even suicides or suicide attempts. We estimated the expected cost of treatment dropout using a Delphi expert panel. We then computed the economic benefit of fluoxetine by combining the dropout cost and the differential rate of total treatment dropout between fluoxetine and TCAs, as found in clinical trials. We thus showed that a 8 week fluoxetine could be beneficial to society provided society values a year of human life above a threshold varying from French Francs 23.800 to FF8.600 (respectively, about US$4500 and 1600) depending on the type of depression. As these values are extremely low compared to those found in the literature, we concluded that an apparently costly innovation such as fluoxetine may induce short-term financial savings for society.

Antidepressive Agents, Tricyclic↗