Chris Sampson’s journal round-up for 27th February 2017

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.

Does it pay to know prices in health care? American Economic Journal: Economic Policy Published February 2017

In the US, people in need of health care have to pay for it – or for insurance to cover it – without knowing in advance how much said health care actually costs. Weird, right? Instinctively, it feels as if people really ought to be able to find out. However, if knowing prices in advance doesn’t actually affect consumption, maybe we can say it really doesn’t matter. Well, we can’t. As this new study shows, having access to price information affects consumer choices. There’s plenty of price dispersion to make this potentially important: in this study’s dataset, a move from the 90th to the 50th percentile is on average associated with a price drop of 35%. The data relate to 387,774 procedures for 6,208 people working for a corporate client of a price information firm. Access to this service was staggered for different employees, creating the potential for experimental investigation. The principal strategy is difference-in-differences regression analysis. Access to the price information service was associated with prices around 1.6% lower on average. For primary care – which might be less price sensitive – and for complex cases where lots of procedures are taking place, the effect is weakened. The results seem robust to matching and other tests. The author is able to provide further insight by showing that access to price information increases the probability of seeing a new doctor by 14%. And when an instrumental variable approach is used to assess the price reduction specifically for people who searched for price information and then received a procedure within 30 days, the reduction in price reaches a whopping 17%. This suggests that the average impact of a 1.6% reduction could be a lot higher if people searched for price information more frequently. The fact that they don’t is likely due to a particular kind of moral hazard being at play. Moral hazard in search occurs when people have no incentive to search for cheaper services. The author goes on to show that in any given week an individual is around 90% less likely to search if they have already met their deductible, and that this translates into an elasticity of search propensity to the proportion out-of-pocket expense of approximately 1.8. We mustn’t forget the other side of the welfare coin here. What if people are choosing lower quality care in order to save money, or foregoing it altogether? Looking at the rate of follow-through after searches and bringing in hospital quality data seems to show that this isn’t a concern here. This group of people aren’t representative of the general population so it may be that access to prices is only valuable to certain groups. Nevertheless, this paper tells us a lot about the importance of price information and in particular the special kind of moral hazard that can arise in the presence of comprehensive insurance coverage.

Mitigating the consequences of a health condition: The role of intra- and interhousehold assistance. Journal of Health Economics Published 20th February 2017

There’s a lot of research around the effect that an individual’s health problem can have on their immediate family, both in terms of the overspill in quality of life impacts and the costs of satisfying need for health care. However, large panel data research can be limited because the data can’t connect non-coresident family members. This study considers informal insurance and consumption smoothing within families beyond the current household. The data come from the Panel Study of Income Dynamics, with 7,578 individuals and around 33,000 household years from 2001-2011. The panel follows offspring after they leave a household, facilitating the identification of genetically linked families. Participants are asked whether they suffer from 11 different health problems and, if they do, the extent to which it limits their daily activities. The data also include information on different categories of spending, including health. The analysis involves regression that accounts for individual fixed effects and looks at the impact of a change in health status on consumption. If a household is fully insured, changes in health status should not affect non-health expenditures. The analysis focuses on the impact of severe limitations, which are reported at some point by 1,321 people. Such a change in health status was associated with a reduction in annual working hours of around 20%, corresponding to $5000 for men and $2800 for women. Additionally, household health expenditures increased by $479 on average. The notion of complete insurance facilitating consumption smoothing appears to fail, with a decline in consumption of around 10%. Partial insurance smoothes roughly half the loss. Households with formal insurance exhibit a much smaller reduction in consumption. A key finding is that being married may facilitate consumption smoothing to the extent of full insurance, while unmarried couples take a bigger hit. Home equity seems to play an important role in this dynamic, with married couples more likely to remortgage in response to a health shock. Married couples also receive more in social security transfers. Unmarried couples, it seems, have to turn to non-coresident family members instead and are 50% more likely to use this channel than married couples. Male children are more likely to use their own home equity to support their parents, while female children tend to reduce their own consumption. This study identifies a lot of interesting relationships and divergent strategies for consumption smoothing that warrant further investigation.

Handling missing data in within-trial cost-effectiveness analysis: a review with future recommendations. PharmacoEconomics – Open Published 9th February 2017

If you conduct trial-based cost-effectiveness analyses then chances are that at some point you’ve had to go and figure out how to deal with all that missing data. There are a handful of quality papers out there that offer guidance. If we all followed their advice then we’d be doing a decent job of it. This new paper demonstrates that we aren’t all doing a good job of it and offers fresh guidance. The paper starts by outlining the ‘principled’ approach to handling missing data. Essentially it means being sensible with the data, considering the most appropriate statistical model and describing assumptions about the missing data mechanism. Imputation methods that can support this principled approach are briefly discussed. The authors present a quality evaluation scheme, which can be used to assess the appropriateness of methods adopted in a study and the completeness of reporting. It makes recommendations with respect to the description of missing data, the methods used to handle it and the limitations associated with the study. The quality evaluation scheme can be used to score and rank papers from A-E. This is what the authors go on to do, with a systematic review including 81 eligible papers. A previous review found complete case analysis to be the most popular base case method adopted. In 2009-2015, multiple imputation became the most frequently used base case method, though complete case analysis remains common and many studies are still unclear about the methods adopted. Most articles did not describe any robustness analysis, reporting only the base case approach to missing data. Many articles were classified as the lowest quality (E), though this has improved over time. The authors demonstrate that their proposed grading system is associated with the strength of the assumptions in the adopted methods. If you’re engaged in trial-based economic evaluation, you ought to read this paper.

Credits

Sam Watson’s journal round-up for 18th July 2016

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.

Mortality inequality: the good news from a county-level approach. Journal of Economic Perspectives [RePEcPublished Spring 2016

Research on mortality trends always focuses on the bad news. For example, in a well publicized article Anne Case and Angus Deaton report on finding significant increases in mortality for middle-aged white non-Hispanic men and women in the US.  (Although this article did attract some criticism for bias due to aggregation of age groups.) This essay by Janet Currie and Hannes Schwandt takes an altogether different line: it suggests that there is good news on the whole. Examining life expectancy at birth it is shown that mortality inequality between rich and poor counties declined significantly between 1990 and 2010. However, mortality rates and inequality in life expectancy have shifted a lot less for older age groups – a factor many previous ‘bad news’ type studies have focussed on. One explanation for such a trend is that there has been more smoking cessation in wealthier areas.The authors conclude then that for the youngest people, inequality is likely to remain low, while for older generations positive health behaviours such as smoking cessation are also likely to spread, improving inequality in mortality. However, one might suggest such conclusions are overly optimistic. Poverty and low socio-economic status have a complex relationship with health; reductions in mortality at lower ages may create a survivor bias so that the overall cohort has worse health on average now as those in poor health who may have died a number of years ago now survive to older ages. Nevertheless, Currie and Schwandt are right to suggest that policy makers should be made aware that improvements in mortality are possible and that evidence such as this should be used to mobilise efforts to improve the health of high risk groups.

The tax-free year in Iceland: A natural experiment to explore the impact of a short-term increase in labor supply on the risk of heart attacks. Journal of Health Economics [PubMedPublished 23rd June 2016

In 1987, owing to a change in the tax system in Iceland, no-one had to pay income tax. As a result labour supply increased substantially, which provides a neat natural experiment. In this study, the authors aim to examine whether increased labour market participation increases the risk of acute myocardial infarction (AMI). There is a growing literature of the relationship between macroeconomic conditions and health; a seminal article was Christopher Ruhm’s 2000 study that showed that economic downturns are associated with decreases in the overall mortality rate. However, the mechanisms that mediate such an effect remain elusive. Using panel data on individuals from 1982-92 linked to data on coronary events the authors show an increase in the risk of AMI in both 1987 and 1988 among men. However, some of the results seem improbably large, e.g. a 149% increase in the probability of AMI among self-employed men aged 45-64. While taken as a whole I think the evidence does suggest an increase in AMI risk in 1987, I was left with a number of questions: why no individual effect in the specification?; could the errors be serially correlated?; why wasn’t an instrumental variable approach used if the motivation is that the 1987 policy exogenously shifted labour market participation?; aside from having lower average risk, is there any reason to separately analyse men and women? These results also contradict an earlier study, also from Christopher Ruhm, that showed unemployment was associated with increases in deaths from coronary heart disease. At the very least, this study shows us that we just don’t really understand the complex interplay between economy, society, and health.

Gender roles and medical progress. Journal of Political Economy [RePEcPublished 3rd May 2016

Over the past century female labour market participation has improved as restrictive female gender roles have shifted and technological innovations have reduced the burden of many tasks traditionally assigned to women. Ha-Joon Chang posits that the invention of the washing machine was a more important invention than the internet in the way it revolutionised the labour market. This paper argues that the reduction in maternity conditions as a result of medical progress over the 20th century had a significant impact on female labour market participation. Indeed, they estimate that medical progress can account for 50% of the rise in female labour market participation between 1930 and 1960.

Photo credit: Antony Theobald (CC BY-NC-ND 2.0)