Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.
Competition and quality indicators in the health care sector: empirical evidence from the Dutch hospital sector. The European Journal of Health Economics [PubMed] Published 3rd January 2017
In case you weren’t already convinced, this paper presents more evidence to support the notion that (non-price) competition between health care providers is good for quality. The Dutch system is based on compulsory insurance and information on quality of hospital care is made public. One feature of the Dutch health system is that – for many elective hospital services – prices are set following a negotiation between insurers and hospitals. This makes the setting of the study a bit different to some of the European evidence considered to date, because there is scope for competition on price. The study looks at claims data for 3 diagnosis groups – cataract, adenoid/tonsils and bladder tumor – between 2008 and 2011. The authors’ approach to measuring competition is a bit more sophisticated than some other studies’ and is based on actual market share. A variety of quality indicators are used for the 3 diagnosis groups relating mainly to the process of care (rather than health outcomes). Fixed and random effects linear regression models are used to estimate the impact of market share upon quality. Casemix was only controlled for in relation to the proportion of people over 65 and the proportion of women. Where a relationship was found, it tended to be in favour of lower market share (i.e. greater competition) being associated with higher quality. For cataract and for bladder tumor there was a ‘significant’ effect. So in this setting at least, competition seems to be good news for quality. But the effect sizes are neither huge nor certain. A look at each of the quality indicators separately showed plenty of ‘non-significant’ relationships in both directions. While a novelty of this study is the liberalised pricing context, the authors find that there is no relationship between price and quality scores. So even if we believe the competition-favouring results, we needn’t abandon the ‘non-price competition only’ mantra.
Cost-effectiveness thresholds in global health: taking a multisectoral perspective. Value in Health Published 3rd January 2017
We all know health care is not the only – and probably not even the most important – determinant of health. We call ourselves health economists, but most of us are simply health care economists. Rarely do we look beyond the domain of health care. If our goal as researchers is to help improve population health, then we should probably be allocating more of our mental resource beyond health care. The same goes for public spending. Publicly provided education might improve health in a way that the health service would be willing to fund. Likewise, health care might improve educational attainment. This study considers resource allocation decisions using the familiar ‘bookshelf approach’, but goes beyond the unisectoral perspective. The authors discuss a two-sector world of health and education, and demonstrate the ways in which there may be overlaps in costs and outcomes. In short, there are likely to be situations in which the optimal multisectoral decision would be for individual sectors to increase their threshold in order to incorporate the spillover benefits of an intervention in another sector. The authors acknowledge that – in a perfect world – a social-welfare-maximising government would have sufficient information to allocate resources earmarked for specific purposes (e.g. health improvement) across sectors. But this doesn’t happen. Instead the authors propose the use of a cofinancing mechanism, whereby funds would be transferred between sectors as needed. The paper provides an interesting and thought-provoking discussion, and the idea of transferring funds between sectors seems sensible. Personally I think the problem is slightly misspecified. I don’t believe other sectors face thresholds in the same way, because (generally speaking) they do not employ cost-effectiveness analysis. And I’m not sure they should. I’m convinced that for health we need to deviate from welfarism, but I’m not convinced of it for other sectors. So from my perspective it is simply a matter of health vs everything else, and we can incorporate the ‘everything else’ into a cost-effectiveness analysis (with a societal perspective) in monetary terms. Funds can be reallocated as necessary with each budget statement (of which there seem to be a lot nowadays).
Is the Rational Addiction model inherently impossible to estimate? Journal of Health Economics [RePEc] Published 28th December 2016
Saddle point dynamics. Something I’ve never managed to get my head around, but here goes… This paper starts from the problem that empirical tests of the Rational Addiction model serve up wildly variable and often ridiculous (implied) discount rates. That may be part of the reason why economists tend to support the RA model but at the same time believe that it has not been empirically proven. The paper sets out the basis for saddle point dynamics in the context of the RA model, and outlines the nature of the stable and unstable root within the function that determines a person’s consumption over time. The authors employ Monte Carlo estimation of RA-type equations, simulating panel data observations. These simulations demonstrate that the presence of the unstable root may make it very difficult to estimate the coefficients. So even if the RA model can truly represent behaviour, empirical estimation may contradict it. This raises the question of whether the RA model is essentially untestable. A key feature of the argument relates to use of the model where a person’s time horizon is not considered to be infinite. Some non-health economists like to assume it is, which, as the authors wryly note, is not particularly ‘rational’.