Findings

Treatment Effect

Kevin Lewis

March 22, 2010

Analyzing National Health Reform Strategies With a Dynamic Simulation Model

Bobby Milstein, Jack Homer & Gary Hirsch
American Journal of Public Health, forthcoming

Abstract:
Proposals to improve the US health system are commonly supported by models that have only a few variables and overlook certain processes that may delay, dilute, or defeat intervention effects. We use an evidence-based dynamic simulation model with a broad national scope to analyze 5 policy proposals. Our results suggest that expanding insurance coverage and improving health care quality would likely improve health status but would also raise costs and worsen health inequity, whereas a strategy that also strengthens primary care capacity and emphasizes health protection would improve health status, reduce inequities, and lower costs. A software interface allows diverse stakeholders to interact with the model through a policy simulation game called HealthBound.

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Political Influence behind the Veil of Peer Review: An Analysis of Public Biomedical Research Funding in the United States

Deepak Hegde
Journal of Law and Economics, November 2009, Pages 665-690

Abstract:
The U.S. public biomedical research system is renowned for its peer review process that awards federal funds to meritorious research performers. Although congressional appropriators do not earmark federal funds for biomedical research performers, I argue that they support allocations for those research fields that are most likely to benefit performers in their constituencies. Such disguised transfers mitigate the reputational penalties to appropriators of interfering with a merit‐driven system. I use data on all peer‐reviewed grants by the National Institutes of Health during the years 1984-2003 and find that performers in the states of certain House Appropriations Committee members receive 5.9-10.3 percent more research funds than those at unrepresented institutions. The returns to representation are concentrated in state universities and small businesses. Members support funding for the projects of represented performers in fields in which they are relatively weak and counteract the distributive effect of the peer review process.

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The Business Cycle and Health Behaviors

Xin Xu & Robert Kaestner
NBER Working Paper, February 2010

Abstract:
In this paper, we take a structural approach to investigate the effects of wages and working hours on health behaviors of low-educated persons using variation in wages and hours caused by changes in economic activity. We find that increases in hours are associated with an increase in cigarette smoking, a reduction in physical activity, and fewer visits to physicians. More importantly, we find that most of the effects associated with changes in hours can be attributed to the changes in the extensive margin of employment. Increases in wages are associated with greater consumption of cigarettes.

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Avertable Deaths Associated With Household Income in Virginia

Steven Woolf, Resa Jones, Robert Johnson, Robert Phillips, Norman Oliver, Andrew Bazemore & Anushree Vichare
American Journal of Public Health, April 2010, Pages 750-755

Objectives: We estimated how many deaths would be averted if the entire population of Virginia experienced the mortality rates of the 5 most affluent counties or cities.

Methods: Using census data and vital statistics for the years 1990 through 2006, we applied the mortality rates of the 5 counties/cities with the highest median household income to the populations of all counties and cities in the state.

Results: If the mortality rates of the reference population had applied to the entire state, 24.3% of deaths in Virginia from 1990 through 2006 (range=21.8%-28.1%) would not have occurred. An annual mean of 12954 deaths would have been averted (range=10548-14569), totaling 220211 deaths from 1990 through 2006. In some of the most disadvantaged areas of the state, nearly half of deaths would have been averted.

Conclusions: Favorable conditions that exist in areas with high household incomes exert a major influence on mortality rates. The corollary-that health suffers when society is exposed to economic stresses-is especially timely amid the current recession. Further research must clarify the extent to which individual-level factors (e.g., earnings, education, race, health insurance) and community characteristics can improve health outcomes.

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Suboptimal provision of preventive healthcare due to expected enrollee turnover among private insurers

Bradley Herring
Health Economics, April 2010, Pages 438-448

Abstract:
Many preventive healthcare procedures are widely recognized as cost-effective but have relatively low utilization rates in the US. Because preventive care is a present-period investment with a future-period expected financial return, enrollee turnover among private insurers lowers the expected return of this investment. In this paper, I present a simple theoretical model to illustrate the suboptimal provision of preventive healthcare that results from insurers free riding off of the provision from others. I also provide an empirical test of this hypothesis using data from the Community Tracking Study's Household Survey. I use lagged market-level measures of employment-induced insurer turnover to identify variation in insurers' expectations and test for the effect of turnover on several different measures of medical utilization. As expected, I find that turnover has a significantly negative effect on the utilization of preventive services and has no effect on the utilization of acute services used as a control.

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Measuring the Impact of Health Insurance on Levels and Trends in Inequality

Richard Burkhauser & Kosali Simon
NBER Working Paper, March 2010

Abstract:
A substantial part of the inequality literature in the United States has focused on yearly levels and trends in income and its distribution over time. Recent findings in that literature show that median income appears to be stagnating with income growth primarily coming at higher income levels. But the value of health insurance is an important and growing source of economic well being for American households that is missed by focusing solely on income. In this paper we take estimates of the value of different types of health insurance received by households and add them to usual pre tax post transfer measures of income from the Current Population Survey's March Annual Demographic Supplement for income years 1995-2008 to investigate their impact on levels and trends in measured inequality. We show that ignoring the value of health insurance coverage will substantially understate the level of economic well being of Americans and its upward trend and overstate the level of inequality and its upward trend. As an application of our fuller measure of income, we consider how two provisions of current health reform proposals to expand health insurance affect the level and distribution of economic well being.

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End of life care policies: Do they make a difference in practice?

Donna Goodridge
Social Science & Medicine, April 2010, Pages 1166-1170

Abstract:
Although institutional policies related to care at the end of life (EOL) are a common feature of hospitals, there has been little examination of the ways in which these policies shape the focus and provision of care. The question asked in this study was "What effect do institutional policies relating to care at the EOL have on practice?" Data were drawn from health record reviews of 310 adults who had died in 3 acute care facilities in a major urban centre of a Western Canadian health region. Medical orders relating to care at the end of life were written for the majority of decedents, highlighting the value providers placed on care planning during this time. Relatively few providers, however, followed policy directives regarding use of care plans, terminology or documentation of discussions with patients and families about treatment plans. The findings of this study demonstrate a significant gap between institutional EOL care policies and practice in this health region, challenging institutional decision makers and front-line providers to collaborate more effectively to devise clinically relevant policies that enhance patient care at a particularly vulnerable time of life.

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Health Insurance and Worker Retention in the Construction Industry

Jaewhan Kim & Peter Philips
Journal of Labor Research, March 2010, Pages 20-38

Abstract:
Using samples of blue collar construction workers from the 1996 and 2001 SIPP, a shared frailty survival model shows that controlling for wages, occupational and demographic factors, both portable union and nonportable nonunion employer-provided health insurance increase the probability of worker retention within the construction industry. Portable union health insurance increases the probability of worker-industry retention by 30 to 41% compared to 13 to 18% for nonunion employer-provided insurance. Our research suggests that by encouraging industry retention, health insurance preserves and encourages the accumulation of human capital in a turbulent industry with high firm-and-industry-labor turnover and also may reduce worker disabilities by immediately treating medical problems. Furthermore, in the union sector of construction where health insurance is portable across signatory contractors, the problem of job-lock inefficiencies is reduced.

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Health expenditure and income in the United States

F. Moscone & E. Tosetti
Health Economics, forthcoming

Abstract:
This paper investigates the long-run economic relationship between health care expenditure and income in the US at a State level. Using a panel of 49 US States over the period 1980-2004, we study the non-stationarity and co-integration between health spending and income, ultimately measuring income elasticity of health care. The tests we adopt allow us to explicitly control for cross-section dependence and unobserved heterogeneity. Specifically, in our regression equations we assume that the error has a multifactor structure, which may capture global shocks and local spill overs in health expenditure. Our results suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in other US studies. Further, we detect significant spatial concentration in US health spending. Our broad perspective of cross-section dependence as well as the methods used to capture it give new insights on the debate over the relationship between health spending and income.

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The Economic Burden Of Diabetes

Timothy Dall, Yiduo Zhang, Yaozhu Chen, William Quick, Wenya Yang & Jeanene Fogli
Health Affairs, February 2010, Pages 297-303

Abstract:
New research provides revised comprehensive estimates that suggest that the U.S. national economic burden of pre-diabetes and diabetes reached $218 billion in 2007. This estimate includes $153 billion in higher medical costs and $65 billion in reduced productivity. The average annual cost per case is $2,864 for undiagnosed diabetes, $9,975 for diagnosed diabetes ($9,677 for type 2 and $14,856 for type 1), and $443 for pre-diabetes (medical costs only). For each American, regardless of diabetes status, this burden represents a cost of approximately $700 annually. These results underscore the urgency of better understanding how prevention and treatment strategies may or may not help reduce costs.

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Does Prescription Drug Adherence Reduce Hospitalizations and Costs?

William Encinosa, Didem Bernard & Avi Dor
NBER Working Paper, January 2010

Abstract:
We estimate the impact of diabetic drug adherence on hospitalizations, ER visits, and hospital costs, using insurance claims from MarketScan(r) employer data. However, it is often difficult to measure the impact of drug adherence on hospitalizations since both adherence and hospitalizations may be correlated with unobservable patient severity. We control for such unobservables using propensity score methods and instrumental variables for adherence such as drug coinsurance levels and direct-to- consumer-advertising. We find a significant bias due to unobservable severity in that patients with more severe health are more apt to comply with medications. Thus, the relationship between adherence and hospitalization will be underestimated if one does not control for unobservable severity. Overall, we find that increasing diabetic drug adherence from 50% to 100% reduced the hospitalization rate by 23.3% (p=0.02) from 15% to 11.5%. ER visits are reduces by 46.2% (p=.04) from 17.3% to 9.3%. While such an increase in adherence increases diabetic drug spending by $776 a year per diabetic, the annual cost savings for averted hospitalizations are $886 per diabetic, a cost offset of $110 (p=0.02), or $1.14 per $1 spent on drugs.

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Socioeconomic Disparities in Health in the United States: What the Patterns Tell Us

Paula Braveman, Catherine Cubbin, Susan Egerter, David Williams & Elsie Pamuk
American Journal of Public Health, April 2010, Pages S186-S196

Objectives: We aimed to describe socioeconomic disparities in the United States across multiple health indicators and socioeconomic groups.

Methods: Using recent national data on 5 child (infant mortality, health status, activity limitation, healthy eating, sedentary adolescents) and 6 adult (life expectancy, health status, activity limitation, heart disease, diabetes, obesity) health indicators, we examined indicator rates across multiple income or education categories, overall and within racial/ethnic groups.

Results: Those with the lowest income and who were least educated were consistently least healthy, but for most indicators, even groups with intermediate income and education levels were less healthy than the wealthiest and most educated. Gradient patterns were seen often among non-Hispanic Blacks and Whites but less consistently among Hispanics.

Conclusions: Health in the United States is often, though not invariably, patterned strongly along both socioeconomic and racial/ethnic lines, suggesting links between hierarchies of social advantage and health. Worse health among the most socially disadvantaged argues for policies prioritizing those groups, but pervasive gradient patterns also indicate a need to address a wider socioeconomic spectrum-which may help garner political support. Routine health reporting should examine socioeconomic and racial/ethnic disparity patterns, jointly and separately.

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Are cardiovascular diseases bad for economic growth?

Marc Suhrcke & Dieter Urban
Health Economics, forthcoming

Abstract:
We assess the impact of cardiovascular disease (CVD) mortality on economic growth, using a dynamic panel growth regression framework taking into account potential endogeneity problems. In the worldwide sample we detect a non-linear influence of working age CVD mortality rates on growth across the per capita income scale. Splitting the sample (according to the resulting income threshold) into low- and middle-income countries, and high-income countries, we find a robust negative contribution of increasing CVD mortality rates on subsequent five-year growth rates in the latter sample. Not too surprisingly, we find no significant impact in the low- and middle-income country sample.

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The Relationship Between Health and Growth: When Lucas Meets Nelson-Phelps

Philippe Aghion, Peter Howitt & Fabrice Murtin
NBER Working Paper, March 2010

Abstract:
This paper revisits the relationship between health and growth in light of modern endogenous growth theory. We propose a unified framework that encompasses the growth effects of both the rate of improvement of health and the level of health. Based on cross-country regressions over the period 1960-2000, where we instrument for both variables, we find that a higher initial level and a higher rate of improvement in life expectancy both have a significantly positive impact on per capita GDP growth. Then, restricting attention to OECD countries, we find supportive evidence that only the reduction in mortality below age forty generates productivity gains, which in turn may explain why the positive correlation between health and growth in cross-OECD country regressions appears to have weakened since 1960.

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Health care expenditure and income in the OECD reconsidered: Evidence from panel data

Badi Baltagi & Francesco Moscone
Economic Modelling, forthcoming

Abstract:
This paper reconsiders the long-run economic relationship between health care expenditure and income using a panel of 20 OECD countries observed over the period 1971-2004. In particular, the paper studies the non-stationarity and cointegration properties between health care spending and income. This is done in a panel data context controlling for both cross-section dependence and unobserved heterogeneity. Cross-section dependence is modelled through a common factor model and through spatial dependence. Heterogeneity is handled through fixed effects in a panel homogeneous model and through a panel heterogeneous model. Our findings suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in previous studies.

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The association between heart disease mortality and geographic access to hospitals: County level comparisons in Ohio, USA

Takashi Yamashita & Suzanne Kunkel
Social Science & Medicine, April 2010, Pages 1211-1218

Abstract:
Greater distance to health care facilities is associated with poorer health care service utilization, yet little is known about how the ‘decay effect' of distance influences the outcome of heart disease that requires frequent medical care. Heart disease has been a leading cause of death in the United States for a last few decades, even with significant improvements in treatment and management. In this study, we examined the association between physical distance to hospitals and heart disease mortality. The geographic information system (GIS) approach was taken to integrate, visualize and analyze data from multiple sources. Hospitals in the state of Ohio were geocoded and zonal statistics were computed to quantify geographical access to hospitals at the level of Ohio's 88 counties. Whereas the results of bivariate analysis showed a significant association between distance to hospitals and heart disease mortality, this relationship was not significant when accounting for socioeconomic and socio-demographic factors. This study demonstrates the usefulness of visualized health data and makes a case for further research on associations between disease outcomes and access to health care services.

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Ability, Learning and the Career Path of Cardiac Specialists

Erin Johnson
University of California Working Paper, November 2009

Abstract:
There is a large literature in economics on the role of learning by employers in labor markets. This paper applies insights from this literature to the referral relationship between primary care physicians (PCPs) and cardiac specialists in medicine to study the nature and strength of the quality incentives specialists face. I present a model of the referral relationship with public learning by PCPs about specialist quality. The model makes three predictions for specialists' careers: first, under learning by PCPs lower quality specialists will be more likely to drop out of practice over time; second, specialists will sort across markets based on quality; and third, PCPs will seek to allocate higher risk patients to higher quality doctors as quality becomes known. I test these predictions using the universe of Medicare claims filed by cardiac specialists in the U. S. from 1996-2005. Specifically, I compare careers of higher and lower quality specialists using a new measure of specialist quality that is robust to nonrandom patient sorting. The evidence suggests some degree of learning by PCPs: lower quality specialists are significantly more likely to drop out of the labor market and to change geographic markets over time. For young cohorts, learning also results in improved sorting of patients to providers based on risk characteristics over time. However, conditional on remaining in a local market, specialists' procedure volumes and charges do not respond to quality.

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Doctor Behaviour under a Pay for Performance Contract: Treating, Cheating and Case Finding?

Hugh Gravelle, Matt Sutton & Ada Ma
Economic Journal, February 2010, Pages F129-F156

Abstract:
The UK National Health Service introduced a pay for performance scheme for primary care providers in 2004/5. The scheme rewarded providers for the proportion of eligible patients who received appropriate treatment. Eligible patients were those who had been reported by the provider as having the relevant disease minus those they exception reported as not suitable for treatment. Using rich provider level data, we find that differences in reported disease rates between providers, and differences in exception rates both between and within providers, suggest gaming. Faced with ratio performance indicators, providers acted on denominators as well as numerators.


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