Handbook of Health Economics, Volume 2

Front Cover......Page 1
Handbook of Health Economics......Page 4
Copyright Page......Page 5
Contents......Page 6
What Were We Looking For?......Page 18
Differences in Approaches......Page 19
How to Use Volume 2......Page 20
Acknowledgements......Page 22
1. Health Care Spending Growth......Page 24
1.1. Spending Growth in the US......Page 25
1.2. Spending Growth in Other Countries......Page 27
2. Spending Growth vs. Spending Level......Page 28
3. Technology and Spending Growth......Page 30
4.1.1. Managed Care and Spending Growth......Page 33
4.1.2. Income Effects and Spending Growth......Page 34
4.2. Models of Endogenous Technology......Page 35
5.1. Causes of Spending Growth......Page 40
5.2. Spending Growth by Insurance Type......Page 49
5.3. Spending Growth by Disease/Health Status......Page 57
6. Value of Spending Growth......Page 59
7. Conclusion......Page 60
References......Page 61
2. Causes and Consequences of Regional Variations in Health Care......Page 68
1. Introduction......Page 69
2. An Economic Model of Regional Variations in Health Care......Page 71
2.1. The Demand Side......Page 72
2.2. The Supply Side......Page 73
2.3. A Typology of Health Care Services......Page 77
3.1. Units of Measurement and Spatial Correlations......Page 80
3.2.1. Adjusting for Prices......Page 82
3.2.2. Adjusting for Differences in Health Status......Page 85
3.2.3. Adjusting for Income......Page 87
3.2.4. Regional Variation in Non-Medicare Expenditures......Page 88
3.3. Effective Care (Category I)......Page 89
3.4. Preference-sensitive Treatments with Heterogeneous Benefits (Category II)......Page 90
3.5. Supply-sensitive (Category III) Treatments with Unknown or Marginal Benefits......Page 94
4. Estimating the Consequences of Regional Variation: Geography As An Instrument......Page 98
5. Inefficiency and the Policy Implications of Regional Variations......Page 104
6. Regional Variations in Health Outcomes......Page 106
7. Discussion and Conclusion......Page 108
References......Page 109
3. The Economics of Risky Health Behaviors......Page 118
1.1. The Importance of Health Behaviors......Page 120
1.2. Trends in Health Behaviors......Page 123
1.3. Differences in Health Behaviors across Population Subgroups......Page 126
1.4. Health Economics Research on Health Behaviors......Page 131
2.1. Model of Health Capital......Page 133
2.2. Education and Health Behaviors......Page 134
2.3. Habit and Addiction......Page 135
2.3.1. Theory of Rational Addiction (TORA)......Page 137
2.3.2. Empirical Tests of Rational Addiction......Page 139
2.3.3. Less-tested Implications of TORA......Page 141
2.3.4. Rational Addiction with Learning and Uncertainty......Page 142
2.4. Price Elasticities of Health Behaviors......Page 144
2.5. Income and Health Behaviors......Page 149
2.6. The Role of Advertising......Page 151
2.7. Time Preference and Health Behaviors......Page 153
3.1. Peer Effects......Page 156
3.2. Information Constraints......Page 160
3.3. Time-inconsistent Preferences and Hyperbolic Discounting......Page 162
3.4. Cognitive Limitations and Bounded Rationality......Page 164
3.5. Non-traditional Models......Page 167
3.5.1. Brain Structure and Decision Making......Page 169
3.5.2. Behaviors Difficult to Explain using Traditional Models......Page 171
3.6.1. Full Wallets Hypothesis......Page 174
3.6.2. Macroeconomic Fluctuations and Health Behavior......Page 176
4.1. Reasons to (and not to) Conduct Cost of Behavior Studies......Page 178
4.2. Challenges to Identifying the Consequences of Health Behaviors......Page 179
4.3. Impacts on Medical Care Costs......Page 180
4.4. Impacts on Education......Page 181
4.5. Impacts on Employment......Page 183
4.6. Impacts on Income, Earnings, and Wages......Page 184
4.7. Impacts on Crime......Page 185
5.1.1. Economic Rationale for Taxation......Page 186
5.1.3. Extent to which Tax is Passed through to Retail Price......Page 189
5.1.4. Cross-border Shopping, Smuggling, and Excise Tax Evasion......Page 190
5.1.5. Effect of Taxes on Unhealthy Behaviors......Page 191
5.1.6. Effect of Taxes on Outcomes Subsequent to Consumption......Page 192
5.2. Cash Incentives for Healthy Behaviors......Page 193
5.3. Restrictions on Purchase or Use......Page 195
5.4. Providing Information......Page 198
5.5. Advertising Restrictions......Page 200
6. Future Directions......Page 201
6.1. Future Research using Traditional Economic Models......Page 202
6.2. Future Research using Non-traditional Models......Page 204
References......Page 205
4. Improving Health in Developing Countries: Evidence from Randomized Evaluations......Page 224
1. Introduction......Page 225
2.1. Health as Human Capital Investment......Page 229
2.2. Cost-effectiveness Analysis......Page 233
3.1. Non-excludable Public Goods......Page 235
3.2. Excludable Public Goods......Page 240
4. The Impact of Price and Convenience on Prevention Behavior Against Infectious Disease......Page 243
4.1. Evidence on Pricing and Demand for Preventive and Non-acute Care......Page 248
4.2. Distance, Convenience, and Take-up......Page 252
5.1. Conditional Cash Transfer Programs......Page 254
5.2. Small Incentive Programs......Page 259
6. Consumer Behavior, Acute Treatment, and Insurance......Page 260
6.1. Consumer Behavior and Acute Treatment......Page 261
6.2. Insurance......Page 265
7. Liquidity Constraints and Consumer Behavior......Page 267
8. Behavioral Models and Health......Page 270
8.1. Present Bias......Page 271
8.2. Deliberation Costs and Limited Attention......Page 275
8.3. Pricing and Use: Testing the Sunk Cost Fallacy Hypothesis......Page 276
8.4. Endowment Effects......Page 278
9. Information and Health Education......Page 279
9.1. General Education......Page 280
9.2. Complementarities between Education and Subsidies......Page 286
9.3. Information on Individual and Local Risk Factors......Page 287
10. Social Influences on Health Behavior......Page 292
11.1. Public Health Care......Page 296
11.2. Private Health Care......Page 299
12. Health Care Delivery and System Reform......Page 300
12.1. Paying for Provider Presence in India and Rwanda......Page 301
12.2. Contracting for Health in Post-conflict Cambodia......Page 304
12.3. Paying for Results at the Community Level......Page 306
12.4. Community Mobilization, Accountability, and Reform......Page 307
13.1.1. Women's Bargaining Position and Health......Page 309
13.1.2. Environment, Health, and Pollution......Page 316
13.2. The Impact of Health on Other Economic Variables......Page 317
14. Conclusion......Page 321
14.1. Policy Implications......Page 322
14.2. Directions for Future Research......Page 324
References......Page 327
5. Demand for Health Insurance......Page 340
1. Introduction and Overview: Health Systems With Choice of Health Insurance......Page 342
1.1. United States......Page 344
1.1.1. Financial Risk......Page 345
1.1.2. Health Insurance Contracts......Page 347
1.1.3. Buyers and Sellers in the Market for Health Insurance......Page 348
1.2. High-income Countries......Page 354
1.2.2.1. Sources of Health Insurance......Page 355
1.3.1. Financial Risk......Page 359
2. Optimal Demand-Side Cost Sharing......Page 361
2.2. Overview of Topics in Optimal Health Insurance......Page 363
2.3. Optimal Health Insurance: First-best Benchmark......Page 365
2.4. Demand Response (Moral Hazard) and a Second-best Coverage......Page 367
2.4.1. Empirical Studies of Demand Response since CZ (2000)......Page 370
2.4.2. Competitive Insurance Markets and Second-best Coverage......Page 373
2.5. Multiple Services, Cross-price Elasticity of Demand, Offsets......Page 374
2.5.1. Empirical Studies of Cross-elasticities, Offsets and the Welfare Interpretation......Page 377
2.6. Health Insurance to Correct Consumer Mistakes in Demand for Health Care......Page 379
2.6.1. Evidence for Consumer Misappreciation of Benefits......Page 381
2.6.2. Competitive Insurance Markets and Consumer Mistakes......Page 382
3. Supply-Side Policies and Demand-Side Coverage......Page 383
3.1. Supply-side Policies......Page 384
3.1.1. Evidence on the Effects of Supply-side Cost Sharing on Use and Cost......Page 385
3.1.2. Supply-side Policies and Demand Response to Insurance......Page 387
3.2. Demand-side Cost Sharing and Selective Contracting......Page 389
3.2.1. Insurance Coverage and Demand Response Convey Market Power to Health Plan Even with Just One Seller......Page 390
3.2.2. Selective Contracting with Multiple (Drug) Sellers......Page 392
3.2.3. Evidence on Selective Contracting......Page 395
4.1. “Price” and “Quantity Demanded” of Health Insurance......Page 396
4.2.1. Individual Purchasing has Higher Transaction Costs......Page 398
4.2.2. Competition and Choice Increase Efficiency of Markets......Page 399
4.2.3. Consumer Premiums may not Lead to Efficient Sorting......Page 400
4.2.4. Inefficiencies from Adverse Selection can be Reduced by Restricting Choice......Page 402
4.2.6. How Good are Consumers at Making Choices of Health Insurance?......Page 403
4.2.7. Weighing the Advantages and Disadvantages of Choice—Does Employer-based Health Insurance Constitute a Market Test?......Page 405
4.2.8. Structuring Choice in Exchanges as Part of Health Care Reform......Page 406
4.3. Premium Setting and Fairness......Page 408
5. Final Comments......Page 409
References......Page 410
6. Who Ordered That? The Economics of Treatment Choices in Medical Care......Page 420
1. Introduction......Page 421
1.1. Overview of Variations in Medical Care......Page 423
1.2. Gray Area of Medicine......Page 425
1.3.1. Benevolent Physician......Page 426
1.3.2. Physician as an Imperfect Agent......Page 427
2.1. Price and Income Effects: Theory......Page 429
2.2. Empirical Evidence on Price and Income Effects......Page 430
2.3. Preferences......Page 433
3. Supply-Side Drivers of Clinical Decisions......Page 434
3.1. Profits versus Patients......Page 435
3.2. Payment Systems and Supplier-induced Demand......Page 436
3.3. Physician Specialization and Training......Page 438
3.4. Defensive Medicine......Page 441
4. Situational Factors......Page 442
4.1. Availability Heuristic......Page 443
4.2. Framing, Choice, and Risk......Page 444
4.4. Channel Factors......Page 445
4.5. Resource/Capability Factors......Page 446
References......Page 448
7. Theoretical Issues Relevant to the Economic Evaluation of Health Technologies......Page 456
1.1. The Rationale for Economic Evaluation of Health Technologies......Page 457
1.1.1. Market Failures......Page 458
1.2. Institutional Contexts for CEA......Page 459
2.1. Introduction......Page 460
2.2. Overview of the CEA Framework......Page 461
2.3. Scope of the Analysis (Perspective)......Page 463
2.4. Measuring Effectiveness in CEA......Page 465
2.5. The Measurement of Costs in CEA......Page 468
2.6.2. Mathematical Modeling......Page 470
3. Theoretical Foundations of CEA......Page 471
3.1. Individual Utility Maximization and Cost-effectiveness......Page 472
3.1.1. Lifetime Utility Maximization......Page 473
3.2. A Mathematical Programming Perspective......Page 475
3.3. Heterogeneity......Page 477
3.4. Divisibility......Page 478
3.5. Uncertainty......Page 480
3.6. Value of Information Analysis......Page 481
4. Continuing Debates in CEA......Page 482
4.1. Perspective......Page 483
4.2. Equity (Distributional) Considerations......Page 485
4.3. Joint Costs/Benefits......Page 487
4.4. Time Horizon and Discounting......Page 488
5. Concluding Comments......Page 489
References......Page 490
8. Cost Effectiveness and Payment Policy......Page 494
2.1. The QALY in Cost-effectiveness Analysis......Page 495
2.2. Cost Effectiveness versus Cost/Benefit Analysis......Page 497
3.1. CEA in Principle—Decision Rules......Page 499
3.2. Cost Effectiveness in Practice......Page 502
3.3. Application Under Conditions of Uncertainty......Page 504
3.4. Generating Information for Economic Analyses and Policy......Page 505
4. Application to Payment and Coverage Policy......Page 507
4.1. Beyond the Cost-effectiveness Ratio......Page 515
References......Page 517
9. Competition in Health Care Markets......Page 522
1.1. Market Environment......Page 524
2. Entry, Exit, and Technology Investments by Providers......Page 534
2.1. Structural Estimates of the Dynamic Behavior of Providers......Page 538
2.2. Reduced Form Studies of Dynamic Behavior of Providers......Page 540
2.2.1. The Impact of the Introduction of New Classes of Providers......Page 544
3.1. A Model of Hospital Insurer Negotiation......Page 547
3.2. Estimating the Impact of Hospital Market Power on Price......Page 556
3.2.1. Reduced-form Estimates......Page 557
3.2.2. Estimates of the Impact of Consummated Mergers on Price......Page 560
3.2.3. Results from Structural and Semi-structural Approaches......Page 567
3.2.4. Not-for-profit Firm Behavior......Page 573
3.2.5. Impact of Hospital Mergers on Costs......Page 574
3.3.1. Antitrust Developments in the US......Page 575
3.3.2. Competition Policy towards Health Care in OECD Countries......Page 581
4. Hospital Competition and Quality......Page 582
4.1. Hospital Choice of Quality......Page 583
4.2. Administratively Set Prices......Page 584
4.2.1. Spillovers......Page 587
4.2.2. Non-profit Maximizing Behavior......Page 588
4.3. Market Determined Prices......Page 589
4.4. Econometric Studies of Hospital Competition and Quality......Page 591
4.4.1. Studies with Administered Prices......Page 593
4.4.2. Studies with Market Determined Prices......Page 603
4.4.3. Studies of the Volume–Outcome Relationship......Page 616
4.5. Summary......Page 619
5.1. Introduction......Page 620
5.2. Empirical Studies......Page 621
5.2.1. Studies of the Impacts of Competition......Page 622
5.2.2. Studies of the Elasticity of Demand for Health Insurance......Page 630
5.3. Summary......Page 632
6.1. Introduction......Page 633
6.2. Empirical Studies of Physician Services Markets......Page 634
6.2.1. Studies of Entry and Market Structure......Page 637
6.2.2. Studies of Pricing Conduct......Page 638
7.1.1. Vertical Restraints—Theory......Page 642
7.1.2. A Model of Vertical Integration and Hospital Prices......Page 644
7.1.3. Empirical Evidence on Vertical Restraints......Page 646
7.2. Health Care Providers and Monopsony Power......Page 647
8. Summary and Conclusions......Page 649
References......Page 650
10. Health Care Markets, Regulators, and Certifiers......Page 662
1. Introduction......Page 663
2.1. Non-competitive Markets......Page 664
2.2. Health Insurance and Moral Hazard......Page 665
2.4. Intrinsic Motivation and Altruism......Page 666
2.5. Quality Assurance Mechanisms......Page 667
3.1. Theoretical Effects of Health Care Competition: The Structure, Conduct, and Performance Paradigm......Page 669
3.2. Empirical Studies of the Effects of Competition on Costs and Prices......Page 672
3.3. Studies of Competition and Quality......Page 677
3.4. Competition and Antitrust......Page 681
4.1. Optimal Price Regulation......Page 686
4.2. Regulated Prices and Quality......Page 687
4.3. Empirical Evidence on Regulated Prices......Page 688
5. Third Party Information Disclosure......Page 691
5.1. Defining and Reporting Quality......Page 692
5.2. Do Health Care Organizations Fully Disclose Quality?......Page 696
5.3. Does Disclosure Improve Consumer Choice?......Page 697
5.4. Does Disclosure Improve Quality?......Page 700
5.5. Matching......Page 702
5.6. Pay for Performance......Page 703
5.7. Conclusion......Page 706
6. Concluding Remarks......Page 707
References......Page 708
11. Health Care Spending Risk, Health Insurance, and Payment to Health Plans......Page 714
1. Variation in Health Care Spending Between Persons and Over Time......Page 715
1.1. Cross-sectional Variation across Individuals......Page 718
1.1.1. Observable Individual Characteristics which Explain Expenditure Variation......Page 719
1.1.2. How Much Variation is Predictable by Consumers?......Page 720
1.1.3. How Much Variation is Predictable by Insurers and Regulators?......Page 721
1.2. Persistence in Health Expenditures......Page 723
1.3. Implications......Page 724
2. Insurance Market Equilibrium with Risk Variation and Rating Variation: Market Equilibrium Benchmarks......Page 725
2.1.2. Costly Information......Page 726
2.1.3. Impact of Other Insurance and Medical Care Demand Determinants......Page 727
2.2.2. Wilson–Spence–Miyazaki Equilibrium......Page 728
2.2.3. Equilibrium with Managed Care Plans......Page 729
2.2.4. Asymmetric Information on Total Coverage......Page 730
2.3.1. Reclassification Risk......Page 731
2.3.2. Insurance Features to Deal with Reclassification Risk: Guaranteed Renewability......Page 732
2.3.3.1. United States......Page 734
2.3.3.2. Germany......Page 735
3.1. Group Insurance Model and Theory......Page 736
3.2. Group Insurance and Current-period Risk......Page 737
3.2.1. Worker Sorting and Wage Incidence......Page 738
3.2.2. Premium Differentials, Efficiency, and Firm Objectives......Page 739
3.3. Group Insurance and Risk Variation Over Time......Page 742
4. Public Policy Toward Risk Variation......Page 743
4.1.2. Administrative Costs Associated with Risk Variation and Methods of Reducing Them......Page 745
4.2. Regulation for Equity in Insurance Markets with Risk Variation......Page 746
4.3. Government Intervention in Practice......Page 747
4.3.2. Person-specific Transfers to High Risks......Page 748
4.3.3. Person-specific Insurance Programs for High Risks......Page 749
4.3.4. Insurance Market Regulation......Page 750
4.3.5. Risk Adjustment......Page 751
4.3.5.1. Defining Risk Adjustment......Page 753
4.3.5.2. Risk Adjustment Methods......Page 755
4.3.5.3. The Regulator's Perspective......Page 757
4.3.5.4. Risk Adjustment and Efficiency......Page 758
4.3.5.5. Recent Developments in the Practice of Risk Adjustment......Page 759
4.3.5.5.2. Germany......Page 760
4.3.5.5.3. Netherlands......Page 762
4.3.5.5.4. The United States......Page 763
5.1. Risk Variation and the Demand for Insurance......Page 766
5.2. Empirical Evidence on the Functioning of Insurance Markets......Page 767
5.3. Empirical Methods Used to Examine Risk Selection......Page 768
5.4.1.1. Risk Selection into Coverage......Page 772
5.4.1.2. Risk Selection among Health Plans......Page 773
5.4.2. Private Insurance Supplementing Public Coverage......Page 775
6.1. Risk Variation and Insurance Pricing to Consumers: Bonus-Malus Systems, Discounts for Good Health Practices......Page 777
7.1. Risk Variation in a Model of Public Choice: Will the Healthy People Outvote the Sick?......Page 778
References......Page 779
12. Markets for Pharmaceutical Products......Page 786
1. Introduction......Page 787
2.1. Safety and Efficacy......Page 788
2.3. Restrictions on Marketing, Prescribing, and Dispensing......Page 791
3. Basic Facts on Pharmaceutical Expenditures and Prices......Page 792
4.1.1. Drug Development and Production......Page 795
4.1.2. Organizational Forms......Page 797
4.1.3. R&D Productivity......Page 800
4.1.4. Incentives for Innovation......Page 804
4.2.1. Market Definitions......Page 809
4.2.2. Estimates of Pharmaceutical Demand......Page 810
4.2.3. Buyer Power......Page 813
5.1.1. US......Page 815
5.1.2. Other Countries......Page 818
5.2. Biologic Drugs and Biosimilars......Page 820
5.3. Parallel Trade......Page 821
5.4. Strategic Responses by Originators......Page 822
6.1. International Prices......Page 824
6.2.1. Private Sector......Page 833
6.2.2. Public Sector......Page 834
6.2.2.1. Medicaid......Page 835
6.2.2.2. Medicare......Page 836
6.2.2.3. Other......Page 837
7. Marketing of Pharmaceuticals in the United States......Page 838
8. Conclusion......Page 841
References......Page 842
13. Intellectual Property, Information Technology, Biomedical Research, and Marketing of Patented Products......Page 848
1. Introduction......Page 849
2.1. Legal Exclusivity......Page 851
2.2. Regulatory Exclusivity......Page 853
2.3. Corporate Secrecy......Page 854
3. Market Exclusivity and the Incentives to Innovate......Page 855
3.2. Empirical Evidence on the Simple Theory......Page 856
3.2.1.1. Price Regulation and Innovation......Page 857
3.2.1.2. Market Size, Public Policies, and Innovation......Page 859
3.2.2. Supply of Innovation Investment......Page 860
3.2.2.1. Supply-side Public Policies and Pharmaceutical R&D......Page 861
3.2.2.2. Current Period Revenues and the Supply of Innovation Investments......Page 862
3.3.2. Patent Breadth......Page 864
3.3.3.1. Hatch-Waxman Challenges......Page 866
3.3.4. Critiques of the Patent Mechanism......Page 867
3.4. Cost Effectiveness and Innovation......Page 870
4.1. The Simple Normative Theory of Market Exclusivity and Innovation......Page 871
4.2.2. Cumulative Innovation......Page 874
4.2.3. Implications of Health Insurance......Page 875
4.3. Political Economic Analysis......Page 876
4.4.1. The Innovation Process for Medical Devices......Page 877
4.4.3. Safety Regulation in the Medical Device Context......Page 878
5.1. Pharmaceutical Marketing......Page 879
5.1.2. Alternative Theories of Marketing......Page 880
5.1.2.2. Persuasive Advertising......Page 881
5.1.3. Empirical Studies of Marketing and Pharmaceutical Demand......Page 882
5.2. Network Externalities and the Development of Health Care IT......Page 883
5.3. Personalized Medicine and the Development of Diagnostic Testing......Page 884
6.1. Rewards for Inventors......Page 885
6.2. Subsidies for Inventors......Page 886
6.3. Health Insurance and Two-part Pricing......Page 887
6.5.1. Vaccines......Page 889
6.5.2. Health Care IT......Page 890
References......Page 891
14. Medical Workforce......Page 896
1. Introduction......Page 897
2.1. Supply of Labor......Page 898
2.2. The Demand for Labor......Page 900
2.3. Equilibrium......Page 901
3.1. Rationale for Government Intervention in Medical Labor Markets......Page 902
3.2. Licensing, Certification, and Accreditation: Objectives and Implications......Page 904
3.3. Subsidizing Medical Education......Page 912
3.4. Rates of Return to Medical Training and Specialization......Page 913
3.5. Economics of Professional and Specialty Associations......Page 915
3.7. Physician Specialty Choice......Page 918
3.8. Physicians’ Geographic Location Decisions......Page 920
3.9. Nurses’ Labor Supply......Page 921
3.10. Physicians’ Labor Supply......Page 922
3.11. Shortages and Surpluses of Medical Labor: Cyclicality and Persistence......Page 924
4. Labor Demand Topics......Page 927
4.1. Factor Demand: Own- and Cross-price Elasticity Estimates......Page 928
4.2. Reimbursement, Politics, and Government Regulation......Page 930
4.2.1. Reimbursement Methods......Page 931
4.2.2. Input Wage Regulation......Page 932
4.3. The Organizational Form of Firms: Why Do Physicians Form Groups?......Page 934
4.4. Human Resource Management in Health Care......Page 939
4.5. Motivated Agents......Page 941
References......Page 942
15. Public and Private Sector Interface......Page 950
1. Introduction......Page 951
1.2. Plan of the Chapter......Page 954
2.1. A Tale of Two Margins......Page 957
2.1.1. The First Margin......Page 958
2.1.2. The Second Margin......Page 959
2.1.3. Insurance......Page 961
2.2. Funding......Page 962
2.2.1. Political Economy......Page 963
2.2.1.1. A Simple Model of the Political Economy Choice of Public–Private Mix......Page 965
2.2.2. Normative Analyses......Page 967
2.2.2.1. Funding and Redistribution: Quality and Waiting Times......Page 968
2.2.2.2. A Simple Model of Funding of Health Care with Indirect Tools for Income Redistribution......Page 969
2.2.2.3. Optimal Public Health Insurance—the Role of Correlation between Income and Morbidity......Page 971
2.2.2.4. Adverse Selection as a Driver for Public Health Insurance......Page 972
2.2.2.5. A Simple Model: Adverse Selection and the Role of Public Health Insurance......Page 973
2.2.2.6. Moral Hazard and Private Health Insurance......Page 974
2.2.2.7. A Simple Model of Welfare Reduction Due to Private Health Insurance under Moral Hazard......Page 976
2.2.2.8. The Samaritan's Dilemma......Page 977
2.2.3. Crowding Out and Crowding In......Page 978
2.2.4. Co-payments......Page 980
2.3.1.1. Price and Waiting Time as Rationing Devices......Page 982
2.3.1.2. A Simple Model of the Role of Waiting Times......Page 983
2.3.1.3. Prioritization, Cream Skimming, and Rationing Rules......Page 984
2.3.1.4. Incentives to Contain Costs......Page 985
2.3.1.5. Public Leadership in Mixed Markets......Page 986
2.3.2. Dual Practice......Page 987
2.3.2.2. A Simple Model of Quality Provision in the Presence of Dual Practice......Page 992
2.3.3. Public versus Private Providers......Page 994
2.3.4. Public–Private Partnerships......Page 997
2.3.4.1. A Simple Model of PPP and Specific Investments......Page 1002
3.1.1. Determinants of Supplementary Private Health Insurance......Page 1004
3.1.2. Crowding Out......Page 1006
3.1.3. Crowding In......Page 1008
3.2.1. Waiting Times and Choice of Provider......Page 1009
3.2.2. Access Effects Due to Private Health Insurance......Page 1011
3.2.3. Behavior Differences......Page 1012
3.2.3.1. Quality......Page 1013
3.2.3.2. Cost Efficiency......Page 1014
3.2.3.4. Incentives to Upcode......Page 1016
4. Conclusions......Page 1017
References......Page 1018
16. Equity in Health and Health Care......Page 1026
1. Introduction......Page 1027
2. An Example......Page 1028
3.1. Socioeconomic Inequalities in Health and Health Care: The Concentration Curve and Index......Page 1032
3.1.1. Principles......Page 1033
3.1.2. Measurement Issues......Page 1036
3.1.3. Developments in the Empirical Literature......Page 1039
3.2. Racial Disparities in Health Care......Page 1042
3.2.1. Principles......Page 1043
3.2.2. Empirical Applications......Page 1047
4. A More General Approach? Equality of Opportunity in Health and Health Care......Page 1049
4.1. Equality of Opportunity and Fairness in Health and Health Care......Page 1050
4.1.1. The Formal Framework of Selective Egalitarianism......Page 1052
4.1.2. Application to Health and Health Care......Page 1057
4.1.2.1. Health Care......Page 1058
4.1.2.2. Health Inequalities......Page 1063
4.1.3.1. Concentration Index......Page 1067
4.1.3.2.1. Additive Separability......Page 1069
4.1.3.2.2. The Non-separable Case......Page 1071
4.1.4. Conclusion......Page 1072
4.2. Substantive Debate: Where to Draw the Line between “Legitimate” and “Illegitimate” Inequalities?......Page 1073
4.2.1. Preference and Choice Approaches......Page 1074
4.2.1.1. The Choice Approach......Page 1075
4.2.1.2. The Preference Approach......Page 1077
4.2.2. Luck and Risk......Page 1079
4.3. Empirical Applications......Page 1081
5. Why Care About Equity in Health? Health and Well-being......Page 1089
5.1. Equity in Finance......Page 1090
5.2. Health and Well-being......Page 1093
5.2.1. Multidimensional Inequality Indices......Page 1094
5.2.2. Dominance Approaches......Page 1096
5.2.3. Welfarism: Happiness and Health......Page 1102
5.2.4. Respecting Preferences: Equivalent Income......Page 1105
6. Conclusion......Page 1108
References......Page 1109
Index......Page 1116