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Health economics  2014;24(2):224-237.
This study aims to measure the causal effect of informal caregiving on the health and health care use of women who are caregivers, using instrumental variables. We use data from South Korea, where daughters and daughters-in-law are the prevalent source of caregivers for frail elderly parents and parents-in-law. A key insight of our instrumental variable approach is that having a parent-in-law with functional limitations increases the probability of providing informal care to that parent-in-law, but a parent-in-law’s functional limitation does not directly affect the daughter-in-law’s health. We compare results for the daughter-in-law and daughter samples to check the assumption of the excludability of the instruments for the daughter sample. Our results show that providing informal care has significant adverse effects along multiple dimensions of health for daughter-in-law and daughter caregivers in South Korea.
PMCID: PMC4201633  PMID: 24753386
informal care; caregiver health; instrumental variable estimation; Korea
Health economics  2013;22(9):1052-1070.
The quantile regression (QR) framework provides a pragmatic approach in understanding the differential impacts of covariates along the distribution of an outcome. However, the QR framework that has pervaded the applied economics literature is based on the conditional quantile regression method. It is used to assess the impact of a covariate on a quantile of the outcome conditional on specific values of other covariates. In most cases, conditional quantile regression may generate results that are often not generalizable or interpretable in a policy or population context. In contrast, the unconditional quantile regression method provides more interpretable results as it marginalizes the effect over the distributions of other covariates in the model. In this paper, the differences between these two regression frameworks are highlighted, both conceptually and econometrically. Additionally, using real-world claims data from a large US health insurer, alternative QR frameworks are implemented to assess the differential impacts of covariates along the distribution of medication adherence among elderly patients with Alzheimer’s disease.
PMCID: PMC4282843  PMID: 23616446
conditional quantile regression; unconditional quantile regression; medication adherence; medication possession ratio; Alzheimer’s disease
Health economics  2013;23(4):462-472.
In the outcomes research and comparative effectiveness research literature, there are strong cautionary tales on the use of instrumental variables (IVs) that may influence the newly initiated to shun this premier tool for casual inference without properly weighing their advantages. It has been recommended that IV methods should be avoided if the instrument is not econometrically perfect. The fact that IVs can produce better results than naïve regression, even in nonideal circumstances, remains underappreciated. In this paper, we propose a diagnostic criterion and related software that can be used by an applied researcher to determine the plausible superiority of IV over an ordinary least squares (OLS) estimator, which does not address the endogeneity of a covariate in question. Given a reasonable lower bound for the bias arising out of an OLS estimator, the researcher can use our proposed diagnostic tool to confirm whether the IV at hand can produce a better estimate (i.e., with lower mean square error) of the true effect parameter than the OLS, without knowing the true level of contamination in the IV.
PMCID: PMC4282844  PMID: 23765683
OLS; instrumental variable; bias; contamination; diagnostic
Health economics  2013;23(1):10.1002/hec.2901.
Several studies report socioeconomic inequalities in child health and consequences of early disease. However, not much is known about inequalities in health capital accumulation in the womb in response to fetal health shocks, which is essential for finding the earliest sensitive periods for interventions to reduce inequalities. We identify inequalities in birth weight accumulation as a result of fetal health shocks from the occurrence of one of the most common birth defects, oral clefts, within the first 9 weeks of pregnancy, using quantile regression and two datasets from South America and the US. Infants born at lower birth weight quantiles are significantly more adversely affected by the health shock compared to those born at higher birth weight quantiles, with overall comparable results between the South American and US samples. These results suggest that fetal health shocks increase child health disparities by widening the spread of the birth weight distribution and that health inequalities begin in the womb, requiring interventions before pregnancy.
PMCID: PMC3865137  PMID: 23339079
Child health; inequalities; disparities; quantile regression; health production; pregnancy
5.  The Dynamics of Income-related Health Inequality among US Children 
Health economics  2012;22(5):623-629.
We estimate and decompose income-related inequality in child health in the US and analyze its dynamics using the income-related health mobility index recently introduced by Allanson et al., 2010. Data come from the 1997, 2002, and 2007 waves of the Child Development Supplement (CDS) of the Panel Study of Income Dynamics (PSID). The findings show that income-related child health inequality remains stable as children grow up and enter adolescence. The main factor underlying income-related child health inequality is income itself, although other factors, such as maternal education, also play a role. Decomposition of income-related health mobility indicates that health changes over time are more favorable to children with lower initial family incomes vs. children with higher initial family incomes. However, offsetting this effect, our findings also suggest that changes in income ranking over time are positively related to children’s subsequent health status.
PMCID: PMC4240021  PMID: 22514158
inequality; child health; income-related health inequality; income-related health mobility; health inequality
Health economics  2013;10.1002/hec.2938.
Market-based solutions are often proposed to improve health care quality; yet evidence on the role of competition in quality in non-hospital settings is sparse. We examine the relationship between competition and quality in home health care. This market is different from other markets in that service delivery takes place in patients’ homes, which implies low costs of market entry and exit for agencies. We use 6 years of panel data for Medicare beneficiaries during the early 2000s. We identify the competition effect from within-market variation in competition over time. We analyze three quality measures: functional improvements, the number of home health visits, and discharges without hospitalization. We find that the relationship between competition and home health quality is nonlinear and its pattern differs by quality measure. Competition has positive effects on functional improvements and the number of visits in most ranges, but in the most competitive markets, functional outcomes and the number of visits slightly drop. Competition has a negative effect on discharges without hospitalization that is strongest in the most competitive markets. This finding is different from prior research on hospital markets and suggests that market-specific environments should be considered in developing polices to promote competition.
PMCID: PMC3858441  PMID: 23670849
competition; quality of care; home health care markets
7.  Measuring the Displacement and Replacement of Government Health Expenditure 
Health Economics  2013;23(2):129-140.
Research assessing the relationship between government health expenditure and development assistance for health channeled to governments (DAHG) has not considered that this relationship may depend on whether DAHG is increasing or decreasing. We explore this issue using general method of moments estimation and a panel of financial flows data spanning 119 countries and 16 years. Our primary concern is how DAHG affects government health expenditure as source (GHES). We disaggregate the average effect of DAHG and separately identify the effects of increases versus decreases in DAHG. We find that a $1 year-over-year increase in DAHG leads to a $0.62 (90% confidence interval (CI): 0.15, 1.09) decrease in GHES, whereas a $1 year-over-year decrease in DAHG does not have an effect on GHES that is statistically different from zero (CI: −0.67, 1.17). Simulation shows that the displacement of GHES between 1995 and 2010 reduced total government health expenditure by $152.8 billion (CI: 46.9, 277.6). Moreover, the irregular disbursement of DAHG reduced total government expenditure by $96.9 billion (CI: 0.5, 212.4). Thus, this research shows that health aid is fungible and highlights the cost of displacement and erratic aid disbursement.
PMCID: PMC4229065  PMID: 24327240
government health expenditure; development assistance; aid fungibility; crowding out; displacement; additionality
8.  Willingness-to-Pay to Avoid the Time Spent and Discomfort Associated with Screening Colonoscopy 
Health economics  2010;19(10):1193-1211.
The screening colonoscopy process requires a considerable amount of time and some discomfort for patients.
We sought to use willingness-to-pay (WTP) to value the time required and the discomfort associated with screening colonoscopy. In addition, we aimed to explore some of the differences between and potential uses of the WTP and the human capital methods.
Subjects completed a diary recording time and a questionnaire including WTP questions to value the time and discomfort associated with colonoscopy. We also valued the elapsed time reported in the diaries (but not the discomfort) using the human capital method.
110 subjects completed the study. Mean WTP to avoid the time and discomfort was $263. Human capital values for elapsed time were greater. Linear regressions showed that WTP was influenced most by the difficulty of the preparation, which added $147 to WTP (p=0.03).
WTP values to avoid the time and discomfort associated with the screening colonoscopy process were substantially lower than most of the human capital values for elapsed time alone. The human capital method may overestimate the value of time in situations that involve an irregular, episodic series of time intervals, such as preparation for or recovery after colonoscopy.
PMCID: PMC4174545  PMID: 19725018
Willingness-to-pay; contingent valuation method; health economics methods; colorectal cancer
9.  The Motives of Intergenerational Transfer to the Elderly Parents in China: Consequences of High Medical Expenditure 
Health economics  2013;23(6):631-652.
The support for the elderly is facing big challenges with the problem of population aging. Transfers from adult children could partly insure elderly parents against low income and high medical expenditure. There are two main motives for transfers in the literature, namely altruism and exchange. Using data from a new household survey of people aged 45 and above in China, we estimate the transfer derivatives with the adjustment of medical expenditure in elderly parents’ income. We find a large negative impact of adjusted income on transfers at the lower end of income distribution, which is consistent with the altruistic motive. Evidence on the exchange motive is found only for sons, but not for daughters. In addition, there is evidence on the “exchange-for-service” motive, which interprets transfer as a payment to parents’ family services, such as taking care of grandchildren.
PMCID: PMC4160912  PMID: 23681718
Transfer derivatives; Medical expenditure; Retirement; Family insurance; China
10.  How do physician assessments of patient preferences for colorectal cancer screening tests differ from actual preferences? A comparison in Canada and the United States using a stated-choice survey 
Health economics  2009;18(12):1420-1439.
Patient preferences can affect colorectal cancer screening test use. We compared utility-based preferences for alternative CRC screening tests from a stated-preference discrete-choice survey of the general population and physicians in Canada and the United States.
General population respondents (Canada, n=501; US, n=1087) participated in a survey with twelve choice scenarios and nine CRC screening test attributes. Physicians (n=100, both Canada and US) reported expected patient preferences. We estimated relative importance of attributes using bivariate probit regression analysis and calculated willingness-to-pay for various CRC screening tests.
In 28% and 31% of scenarios, Canadian and US respondents, respectively, chose no screening over a hypothetical test. Canadian (45%) and US (46%) physicians expected patients to choose no screening more often.
For all groups the most important attribute was sensitivity, but physicians’ perception of patients’ preferences are significantly different from actual preferences. Other key attributes are those related to test performance or the testing process. Fecal DNA, colonoscopy, and virtual colonoscopy were the most preferred tests by all groups, but respondents were willing-to-pay more than physicians predicted.
Physicians’ perception of patients’ preferences are quite different from those of the general population. However, among general population and physicians, Canadian and US preferences were similar.
PMCID: PMC3964796  PMID: 19191268
colorectal cancer; screening; willingness-to-pay; discrete-choice; stated-preference
11.  Voluntary private health insurance among the over fifties in Europe◊ 
Health economics  2012;22(3):289-315.
Using data from SHARE (Survey of Health, Ageing and Retirement in Europe), we investigate the determinants of voluntary private health insurance (VPHI) among the over fifties in eleven European countries, and their effects on health care spending. Firstly, we find that the main determinants of VPHI are different in each country, reflecting differences in the underlying health care systems, but in most countries education levels and cognitive abilities have a strong positive effect on holding a VPHI policy. We also analyse the effect of holding a voluntary additional health insurance policy on out-of-pocket (OOP) health care spending. We adopt a simultaneous-equations approach to control for self-selection into VPHI policy holding and find that only in the Netherlands VPHI policyholders have lower OOP spending than the rest of the population while in some countries (Italy, Spain, Denmark and Austria) they spend significantly more. This could be due to increased utilisation but also to cost-sharing measures adopted by the insurers in order both to counter the effects of moral hazard and to keep adverse selection under control.
PMCID: PMC3423472  PMID: 22315160
Voluntary private health insurance; Out-of-pocket expenditures; SHARE
Health economics  2011;20(3):323-330.
Willingness-to-pay (WTP) estimates derived from discrete-choice experiments (DCEs) generally assume that the marginal utility of income is constant. This assumption is consistent with theoretical expectations when costs are a small fraction of total income. We analyze the results of five DCEs that allow direct tests of this assumption. Tests indicate that marginal utility often violates theoretical expectations. We suggest that this result is an artifact of a cognitive heuristic that recodes cost levels from a numerical scale to qualitative categories. Instead of evaluating nominal costs in the context of a budget constraint, subjects may recode costs into categories such as ‘low’, ‘medium’, and ‘high’ and choose as if the differences between categories were equal. This simplifies the choice task, but undermines the validity of WTP estimates as welfare measures. Recoding may be a common heuristic in healthcare applications when insurance coverage distorts subjects’ perception of the nominal costs presented in the DCE instrument. Recoding may also distort estimates of marginal rates of substitution for other attributes with numeric levels. Incorporating ‘cheap talk’ or graphic representation of attribute levels may encourage subjects to be more attentive to absolute attribute levels.
PMCID: PMC3918954  PMID: 20217834
willingness to pay; discrete-choice experiments; decision heuristics; treatment cost
13.  Mortality and Morbidity Risks and Economic Behavior 
Health economics  2012;22(2):132-143.
There are theoretical reasons to expect that high risk of mortality or morbidity during young adulthood decreases investment in human capital. However, investigation of this hypothesis is complicated by a variety of empirical challenges, including difficulties in inferring causation due to omitted variables and reverse causation. For example, to compare two groups with substantially different mortality rates, one typically has to use samples from different countries or time periods, making it difficult to control for other relevant variables. Reverse causation is important because human capital investment can affect mortality and morbidity. To counter these problems, we collected data on human capital investments, fertility decisions, and other economic choices of people at risk for Huntington’s disease. Huntington’s disease is a fatal genetic disorder that introduces a large and exogenous risk of early mortality and morbidity. We find a strong negative relation between mortality and morbidity risks and human capital investment.
PMCID: PMC3349765  PMID: 22308067
Health; Mortality; Human Capital
14.  Health Service Use among the Previously Uninsured: Is Subsidized Health Insurance Enough?* 
Health economics  2011;21(10):10.1002/hec.1780.
While it has been shown that gaining Medicare coverage at age 65 increases health service use among the uninsured, difficulty in changing habits or differences in characteristics of previously uninsured compared to insured individuals may mean that the previously uninsured continue to use the health care system differently from others. This study uses Medicare claims data linked to two different surveys – the National Health Interview Survey and the Health and Retirement Study - to describe the relationship between insurance status before age 65 and the use of Medicare-covered services beginning at age 65. Although we do not find statistically significant differences in Medicare expenditures or number of hospitalizations by previous insurance status, we do find that individuals who were uninsured before age 65 continue to use the health care system differently from those who were privately insured. Specifically, they have 16% fewer visits to office-based physicians, while making 18% and 43% more visits to hospital emergency and outpatient departments, respectively. A key question for the future may be why the previously uninsured appear to continue to use the health care system differently from the previously insured. This question may be important to consider as health coverage expansions are implemented.
PMCID: PMC3886823  PMID: 22945812
Medicare; health care spending; uninsured
15.  Genetic Information, Obesity, and Labor Market Outcomes 
Health economics  2008;17(9):10.1002/hec.1383.
Economists have argued that obesity may lead to worse labor market outcomes, especially for women. Empirical methods to test this hypothesis have not thus far adequately controlled for the endogeneity of obesity. We use variation in genotype to predict variation in phenotype (obesity). Genetic information from specific genes linked to obesity in the biomedical literature provides strong exogenous variation in the body mass index, and thus can be used as instrumental variables. These genes predict swings in weight of between 5 and 20 pounds for persons between five and six feet tall. We use additional genetic information to control for omitted variables correlated with both obesity and labor market outcomes. We analyzed data from the third wave of the Add Health data set, when respondents are in their mid-twenties. Results from our preferred models show no effect of obesity on the probability of employment or on wages, for either men or women. This paper shows the potential of using genetic information in social sciences.
PMCID: PMC3852680  PMID: 18615836
16.  Towards a More Universal Approach in Health Valuation 
Health economics  2011;20(7):10.1002/hec.1650.
By polling individual responses to hypothetical scenarios, valuation studies estimate population preferences toward health on a quality-adjusted life year (QALY) scale. The scenarios typically involve trade-offs in time (time trade-off [TTO]), risk (standard gamble [SG]), or number of persons affected (person trade-off [PTO]). This paper revisits the QALY assumptions and provides a coherent health econometric approach that unites TTO, SG, and PTO techniques under a common estimator. The proposed approach avoids the use of ratio statistics in QALY estimation and the common convention of arbitrarily changing trade-off responses. As an example, 34% of the TTO responses from the seminal Measurement and Valuation of Health (MVH) study were changed in the original UK analysis, which led to substantially lower QALY estimates. As a general rule, if the original estimate is less than 0.5 QALYs, add 0.25 QALYs to get the new estimates.
PMCID: PMC3819815  PMID: 20677328
QALY; Time Trade-off; Health-related Quality of Life
Health economics  2011;21(11):1318-1335.
Individuals can react to financial stress in a variety of ways, such as reducing discretionary spending or engaging in risky behaviors. This paper investigates the effect of changing macroeconomic conditions (measured by the unemployment rate in the state of residence) on one type of risky behavior: excessive alcohol consumption. Using unique and recent panel data from Waves 1 and 2 of the National Epidemiological Survey of Alcohol and Related Conditions (NESARC) and estimating fixed-effects models, we find that changes in the unemployment rate are positively related to changes in binge drinking, alcohol-involved driving, and alcohol abuse and/or dependence. Some differences are present among demographic groups, primarily in the magnitude of the estimated effects. These results contradict previous studies and suggest that problematic drinking may be an indirect and unfortunate consequence of an economic downturn.
PMCID: PMC3515868  PMID: 21913282
alcohol consumption; economic downturn; unemployment rate; fixed-effects estimation
18.  Proximity to death and participation in the long-term care market 
Health economics  2009;18(8):867-883.
The extent to which increasing longevity increases per capita demand for long-term care depends on the degree to which utilization is concentrated at the end of life. We estimate the marginal effect of proximity to death, measured by being within two years of death, on the probabilities of nursing home and formal home care use, and we determine whether this effect differs by availability of informal care —i.e. marital status and co-residence with an adult child. The analysis uses a sample of elderly aged 70+ from the 1993-2002 Health and Retirement Study. Simultaneous probit models address the joint decisions to use long-term care and co-reside with an adult child. Overall, proximity to death significantly increases the probability of nursing home use by 50.0 percent and of formal home care use by 12.4 percent. Availability of informal support significantly reduces the effect of proximity to death. Among married elderly, proximity to death has no effect on institutionalization. In conclusion, proximity to death is one of the main drivers of long-term care use, but changes in sources of informal support, such as an increase in the proportion of married elderly, may lessen its importance in shaping the demand for long-term care.
PMCID: PMC3786420  PMID: 18770873
Proximity to death; long-term care; informal care
19.  Is there empirical evidence for decreasing returns to scale in a health capital model? 
Health economics  2012;21(9):1080-1100.
We estimate a health investment equation, derived from a health capital model that is an extension of the well-known Grossman model. Of particular interest is whether the health production function has constant returns to scale, as in the standard Grossman model, or decreasing returns to scale, as in the Ehrlich-Chuma model and extensions thereof. The model with decreasing returns to scale has a number of theoretically and empirically desirable characteristics that the constant returns model does not have. Although our empirical equation does not point-identify the decreasing returns to scale curvature parameter, it does allow us to test for constant versus decreasing returns to scale. The results are suggestive of decreasing returns and in line with prior estimates from the literature. But when we attempt to control for the endogeneity of health by using instrumental variables, the results become inconclusive. This brings into question the robustness of prior estimates in this literature.
PMCID: PMC3412934  PMID: 22628203
health investment; lifecycle model; Grossman model; optimal control
20.  A Health Production Model with Endogenous Retirement 
Health economics  2012;22(8):883-902.
We formulate a stylized structural model of health, wealth accumulation and retirement decisions building on the human capital framework of health and derive analytic solutions for the time paths of consumption, health, health investment, savings and retirement. We argue that the literature has been unnecessarily restrictive in assuming that health is always at the “optimal” health level. Exploring the properties of corner solutions we find that advances in population health decrease the retirement age, while at the same time individuals retire when their health has deteriorated. This potentially explains why retirees point to deteriorating health as an important reason for early retirement, while retirement ages have continued to fall in the developed world, despite continued improvements in population health and mortality. In our model, workers with higher human capital invest more in health and because they stay healthier retire later than those with lower human capital whose health deteriorates faster.
PMCID: PMC3498590  PMID: 22888062
health; demand for health; health capital; medical care; labor; retirement
21.  Customization in Prescribing for Bipolar Disorder 
Health Economics  2011;21(6):653-668.
For many disorders, patient heterogeneity requires physicians to customize their treatment to each patient’s needs. We test for the existence of customization in physicians’ prescribing for bipolar disorder, using data from a naturalistic clinical effectiveness trial of bipolar disorder treatment (STEP-BD), which did not constrain physician prescribing. Multinomial logit is used to model the physician’s choice among five combinations of drug classes. We find that our observed measure of the patient’s clinical status played only a limited role in the choice among drug class combinations, even for conditions such as mania that are expected to affect class choice. However, treatment of a patient with given characteristics differed widely depending on which physician was seen. The explanatory power of the model was low. There was variation within each physician’s prescribing, but the results do not suggest a high degree of customization in physicians’ prescribing, based on our measure of clinical status.
PMCID: PMC3164906  PMID: 21506194
Bipolar disorder; pharmaceuticals; prescribing decisions; personalization
Health Economics  2011;21(6):633-652.
Reflecting drug use patterns and criminal justice policies throughout the 1990s and 2000s, prisons hold a disproportionate number of society’s drug abusers. Approximately 50% of state prisoners meet the criteria for a diagnosis of drug abuse or dependence, but only 10% receive medically based drug treatment. Because of the link between substance abuse and crime, treating substance abusing and dependent state prisoners while incarcerated has the potential to yield substantial economic benefits. In this paper, we simulate the lifetime costs and benefits of improving prison-based substance abuse treatment and post-release aftercare for a cohort of state prisoners. Our model captures the dynamics of substance abuse as a chronic disease; estimates the benefits of substance abuse treatment over individuals’ lifetimes; and tracks the costs of crime and criminal justice costs related to policing, adjudication, and incarceration. We estimate net societal benefits and cost savings to the criminal justice system of the current treatment system and five policy scenarios. We find that four of the five policy scenarios provide positive net societal benefits and cost savings to the criminal justice system relative to the current treatment system. Our study demonstrates the societal gains to improving the drug treatment system for state prisoners.
PMCID: PMC3165106  PMID: 21506193
benefits; costs; substance abuse treatment; inmates; simulation
23.  [No title available] 
PMCID: PMC3641566  PMID: 22162113
24.  Does managed care affect the diffusion of psychotropic medications? 
Health Economics  2011;21(4):428-443.
Newer technologies to treat many mental illnesses have shown substantial heterogeneity in diffusion rates across states. In this paper, I investigate whether variation in the level of managed care penetration is associated with changes in state-level diffusion of three newer classes of psychotropic medications in fee-for-service Medicaid programs from 1991-2005. Three different types of managed care programs are examined: capitated managed care, any type of managed care and behavioral health carve-outs. A fourth order polynomial fixed effect regression model is used to model the diffusion path of newer antidepressant and antipsychotic medications controlling for time-varying state characteristics. Substantial differences are found in the diffusion paths by the degree of managed care use in each state Medicaid program. The largest effect is seen through spillover effects of capitated managed care programs; states with greater capitated managed care have greater initial shares of newer psychotropic medications. The influence of carve-outs and of all types of managed care combined on the diffusion path was modest.
PMCID: PMC3138820  PMID: 21384465
diffusion; managed care; psychotropic; medication; mental health
25.  Time is up: increasing shadow price of time in primary-care office visits 
Health Economics  2011;21(4):457-476.
PMCID: PMC3223545  PMID: 21442688

Results 1-25 (53)