Evaluating Appropriateness of Antibiotic Use for Children with Otitis Media in Rhode Island

Presenter:

Sylvia Kuo

Authors:

Sylvia Kuo, Susan Miller, James Burrill

Chair: Melayne McInnes; Discussant: TBA Mon June 5, 2006 17:15-18:45 Room 121

Background: The rapid growth in antibiotic use in the 1980s spurred concerns about the spread of antibiotic resistance. Otitis media (OM) is one of the leading indicators for outpatient antibiotic use despite the fact that it is clinically self-resolving. Additionally, most children have at least one OM episode by age 7. These factors led to evidence-based guidelines for the treatment of OM which recommend that antibiotic therapy (i.e. high-dose amoxicillin) should be the default treatment only for children under age 6 months, with use in more limited circumstances in older children. Existing studies have been restricted to either national office-based surveys or state Medicaid populations; little is known of antibiotic practices within a market despite the local nature of practice patterns and disease spread. Objectives: To assess whether antibiotic use among children with otitis media insured by Blue Cross & Blue Shield of Rhode Island (BCBSRI), the dominant insurer in the state of Rhode Island, is consistent with established evidence-based guidelines, and whether this use varies by visit or demographic characteristics.

Methodology: The study uses a cohort of children age 13 or under as of January 1, 2004 who had a diagnosis of otitis media at any time during 2004, and were continuously enrolled with BCBSRI with both medical and drug coverage. The visit-based analysis uses logistic regressions on the probability of receipt of any antibiotic, and the probability that the child receive amoxicillin given that an antibiotic was received; covariates included visit location (hospital inpatient, hospital outpatient, physician office or urgent care), insurance coverage type (PPO, HMO and Medicaid managed care), age (<6 months, 6 months - 2 years, over 2 years), and an indicator for whether the visit occurred on the weekend.

Data: Data come from BCBSRI administrative encounter and pharmacy claims in 2004. Antibiotic prescriptions filled within 2 days of an otitis-related encounter were matched to encounter data. The sample included 12,436 children, who were associated with 26,090 otitis-related encounters and 9,318 matched antibiotic prescriptions.

Results: Preliminary results show that the use of antibiotics by age is consistent with evidence-based practices; children under age 6 months are more likely to receive an antibiotic, with most children receiving the recommended antibiotic of amoxicillin. Interestingly, no differences were found by insurance coverage type. However, the likelihood of receiving an antibiotic are much higher for care provided at urgent care centers (versus physician offices or the hospital emergency room) and for visits occurring on the weekend (versus weekday).

Conclusions: Antibiotics may be used less judiciously for children with otitis media when care is sought outside of their usual source of care. Sites such as urgent care centers may have practice patterns that deviate from recommended pediatric practices because of less familiarity with both the patients themselves, and pediatric patients in general. At the same time, urgent care centers may play a role in reducing costly emergency room visits for acute visits.

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Financial Incentives and Physician Prescribing Behavior

Presenter:

Sarah Neyaz

Authors:

Sarah Neyaz, Kosali Simon, Adam Mathios

Chair: Melayne McInnes; Discussant: TBA Mon June 5, 2006 17:15-18:45 Room 121

As patents on prescription drugs expire and the threat of generics increases, pharmaceutical companies may move a drug into the over-the-counter (OTC) market to take advantage of brand recognition and maximize profits. Little research to date addressed how this change in prescription status affects the use of this drug or other drugs in its class. This purpose of this paper is to examine whether physicians change their prescribing behavior when a drug switches from prescription to OTC status, and how this varies by the insurance status of the patient and the drug class being considered.

Under a standard principal agent model, the physician’s choice of a drug for a patient’s ailment should not be influenced by its OTC vs Rx status, even though a physician authorization is required only for prescription drugs. However, a switch in regulatory status may entail a change in the cost to the patient depending on their insurance coverage. For example, an OTC version of a drug may cost more if the patient has drug insurance which would pay only for Rx medications. Physicians may also face different financial incentives in the decision to prescribe an OTC vs Rx drug, for example, if a capitated managed care contract implies that Rx drugs count negatively in the revenue equation but OTC drugs do not. Physicians may also face incentives in the decision to prescribe OTC drugs could change the probability of the patient continuing to come in for office visits. We hypothesize that under fee-for-service reimbursement, the physician may have greater incentives to recommend prescription drugs (vs OTC) relative to capitated managed care arrangements. When taking an OTC medication, patients do not have to visit their physicians repeatedly since they can purchase these drugs on their own, without physician authorization.

We propose to use micro data from the National Ambulatory Medical Survey, a nationally representative survey of patients who visit physicians, to investigate the relationship between financial incentives and prescribing patterns.

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Variations in the Prescribing Patterns of Statins for Persons Diagnosed with Dyslipidemia and CHD

Presenter:

Charlie Link

Authors:

Simon Condliffe, Charles Link

Chair: Melayne McInnes; Discussant: TBA Mon June 5, 2006 17:15-18:45 Room 121

Rationale: Events arising from coronary heart disease (CHD) are the most frequent cause of death in the US. While the onset of this condition occurs naturally with age, the identification of high cholesterol as a risk factor for CHD has prompted implementation of prevention programs, with drug therapies playing a large role. The introduction of statins in the early 1990s has provided a new and more effective treatment for lowering levels of low-density lipoproteins. Statins are promising in terms of prevention of CHD. As studies have shown for many drugs, large disparities exist across insurance types, regions of the country, and various demographic characteristics in terms of whether a patient is receiving the line of treatment recommended by clinical guidelines. That this may be the case for statins is disheartening since the technology not only exists to combat CHD through both primary and secondary prevention but also that statins are an effective treatment for all segments of the population.

Objectives: The objective of the paper is to estimate, using multinomial logit models, the prescribing patterns for statins among two groups of people, those diagnosed with CHD and dyslipidemia respectively (separate equations for each group for each of the 3 data sets). The question: Do the above-mentioned disparities exist with statins? Three databases provide several thousand observations with a host of socioeconomic and demographic information along with diagnosis information including secondary diagnoses. The first two data sets are obtained from office-based physician files (the National Ambulatory Medical Care Surveys (NAMCS)) and hospital settings (the National Hospital Ambulatory Medical Care Surveys (NHAMCS)) and provide 11 years of data, 1992 - 2002. We are in the process of running the analyses for 1996 through 2002 using the Medical Expenditure Panel Survey (MEPS). In addition to being a panel, an advantage of MEPS is that it has much richer socioeconomic data about each respondent.

Results based on NAMCS and NHAMCS: In separate samples of patients with dyslipidemia and with CHD, variations were identified across minorities, particularly for Blacks and, more drastically, regions of the US. While at times directions and magnitudes of these variations differ across data sets and medical conditions, it is evident that variations do exist. Hispanics are less likely to receive statins by 12 to 15 percent, and blacks with CHD at physicians’ offices are 7 percent less likely to receive statins. Patients may be up to 17 percent less likely to receive statins if living outside the Northeast. Medicaid patients are less likely to receive statins. Finally, as time passes patients are more likely to receive a statin, with a yearly increase of 1-5 percent.

We are currently conducting the analyses for 1996 through 2002 for the MEPS data and these will be incorporated into the paper.

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Hospital Competition, Managed Care and Mortality After Hospitalization for Medical Conditions: Evidence From Three States

Presenter:

Jeannette Rogowski

Authors:

Jeannette Rogowski, Jose Escarce, Arvind Jain

Chair: Ryan Mutter; Discussant: Lan Liang Mon June 5, 2006 17:15-18:45 Room 213

Objective: This study assessed the effect of hospital competition and HMO penetration on mortality after hospitalization for six medical conditions in California, New York and Wisconsin.

Data: Linked hospital discharge and vital statistics data were used to study adults hospitalized for myocardial infarction, hip fracture, stroke, gastrointestinal hemorrhage, congestive heart failure or diabetes. Methods: Logistic regression models were estimated with death within 30 days of admission as the dependent variable and hospital competition, HMO penetration, and hospital and patient characteristics as explanatory variables. Standard errors were corrected for clustering of admissions within hospitals using a Huber-White sandwich estimator.

Results: Higher hospital competition was associated with lower mortality in California and New York, but not Wisconsin. Higher HMO penetration was associated with lower mortality in California, but higher mortality in New York. Conclusion: In the context of the study states’ history with managed care, these findings suggest that hospitals in highly competitive markets compete on quality even in the absence of mature managed care markets. The findings also underscore the need to consider geographic effects in studies of market structure and hospital quality.

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The Impact of TennCare on Hospital Efficiency

Presenter:

Jennifer Troyer

Authors:

Jennifer Troyer, Cyril Chang

Chair: Ryan Mutter; Discussant: Michael Rosko Mon June 5, 2006 17:15-18:45 Room 213

On January 1, 1994, Tennessee implemented an innovative new health care reform plan called TennCare. The objective of TennCare was to extend health coverage to both individuals in the Medicaid population and people deemed uninsured or uninsurable. A decade later, TennCare still covers the Medicaid-eligible, individuals who are uninsurable as determined by an insurance company, and children whose individual family incomes are below 200% of the federal poverty level. TennCare services have been and continue to be offered through managed care organizations.

Several key facts point to the impact of TennCare on Tennessee hospitals. Between 1993 and 2000, occupancy rates in Tennessee hospitals fell from 47.2 percent to 42.2 percent, and the average length of stay fell from 6.1 days to 5.0 days (Tennessee Department of Health, 2002). In addition, there was a reduction in care disbursed to Medicaid patients in safety net hospitals and an increase in care disbursed to TennCare patients in non-safety net hospitals (Conover and Davies, 2000). Finally, a study sponsored by the Tennessee Hospital Association found that TennCare provided $0.58 for every dollar of inpatient care provided by hospitals (Meyer and Blumenthal, 1996.) Given the dual financial pressures caused by TennCare and the Balanced Budget Act of 1997, questions remain regarding how hospitals in Tennessee have responded to the reductions in reimbursement.

The objective of this study is to consider the effect of TennCare on the efficiency of hospitals operating in Tennessee. Toward that end, we will use information for hospitals operating in Tennessee from 1990-2001. The data allow us to examine efficiency prior to TennCare’s implementation (1990-1993), during the initial years of TennCare (1994-1996), and in subsequent years (1997-2001). Using the complete panel, we will use a multiple-output stochastic frontier approach to simultaneously examine the level of technical efficiency and the effect of key variables on technical efficiency in Tennessee hospitals. This method is appealing as it allows us to consider determinants of cost efficiency, where two groups of explanatory variables are used: 1) traditional measures of outputs, input prices, teaching status, etc. and 2) explanatory variables thought to influence efficiency, including binary variables for the pre-TennCare and post-TennCare periods described above, the proportion of TennCare patient days in the hospital, ownership type, etc. Our examination will allow us to determine the extent to which TennCare has affected hospital efficiency. In addition, we will explore the relationship between hospital inefficiency and characteristics of Tennessee hospitals.

References

Conover, Christopher J., and Hester H. Davies. The Role of TennCare in Health Policy for Low-Income People in Tennessee. Occasional Paper Number 33, The Urban Institute, February 2000.

Meyer, Gregg S., and David Blumenthal. “TennCare and Academic Medical Centers: The Lessons from Tennessee.” Journal of the American Medical Association 276 (9, September 4): 672-676.

Tennessee Department of Health, Health Statistics and Research. Joint Annual Report of Hospitals. September 2002.

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Insurance Matters: Prevalence and Costs of Potentially Preventable Hospitalizations in Tennessee by Insurance Type

Presenter:

Cyril Chang

Authors:

Cyril Chang

Chair: Ryan Mutter; Discussant: Ryan Mutter Mon June 5, 2006 17:15-18:45 Room 213

Purpose: This paper analyzes Tennessee hospital discharge records and uses insurance type as a factor to predict the likelihood of hospitalization for an ambulatory care-sensitive (ACS) condition.

Background: ACS conditions are those for which timely and effective outpatient care can potentially prevent the need for hospitalization. High incidence of preventable hospitalizations such as asthma, diabetes, hypertension and congestive heart failure may be indicative of underlying problems with access to primary care or deficiencies in outpatient care management. Analysis of preventable hospitalizations can thus provide information for health system evaluation. TennCare is Tennessee’s experimental Medicaid managed care program that began in 1994. An overarching goal of this reform model was to deliver prevention-centered longitudinal care to reduce inappropriate use of inpatient care. The resulting savings, it was theorized, could then be used to expand insurance coverage. However, the expected outcome of better use of primary care of this $8.4 billion program that covers 1 in every 4 Tennesseans has never been investigated.

Hypotheses: We will test two hypotheses. The first is that patients insured by TennCare are more likely to be admitted for ACS conditions than patients insured by other insurance types after controlling for race, age, gender, and co-morbidities. The second hypothesis is that the likelihood of ACS hospitalization varies among the different TennCare Managed Care Organizations (MCOs), with patients insured by nonprofit, academic-medical-center-affiliated MCOs having a lower likelihood of ACS hospitalization than those insured by other MCOs.

Data Sources: The primary source is the Hospital Inpatient Discharge Data System (HDDS) maintained by the Tennessee Department of Health for 1997-2002. HDDS receives information from UB-92 forms on all inpatient discharges in Tennessee. Each form contains information on patient diagnoses, procedures performed, charges, and selected patient demographics. We will also use county-level Area Resource File data to describe the environments in which patients live.

Methodology: We will use the AHRQ definition of Potentially Avoidable Hospitalizations which include those for 16 specific ACS conditions. There will be two dependent variables for each of the two hypotheses: a dummy variable with 1 signifying an ACS admission and 0 otherwise; the total charges of the admission. The key independent variable for the logistic regressions is a categorical variable representing insurance type (TennCare, Medicare, Private insurance, Self Pay, etc.). Control variables include patient demographics such as age, gender, race, patient risk strata that consist of principal and co-morbidity diagnoses, and county characteristics such as population density, percent poverty, supply of primary care physicians per 100,000 population. In the second regression analysis with the hospital charges as the dependent variable, a dummy variable representing whether the admission is for an ACS condition or not will be added.

Potential Contribution: Little is known about TennCare’s effectiveness in the provision and deployment of primary care. If significance differences in the prevalence and expenditures of primary care-sensitive hospitalizations are found between TennCare and other insurance types after controlling for confounding factors, the results will shed new light on the performance of TennCare as a model of public-sector Medicaid reform.

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An Alternative Approach to Estimating Medical Costs: The Case of Bariatric Surgery

Presenter:

Ritesh Banerjee

Authors:

Ritesh Banerjee, Nilay Shah

Chair: F. Reed Johnson; Discussant: TBA Mon June 5, 2006 17:15-18:45 Room 225

Rationale: Traditional cost accounting data are not always a good measure of resource costs for economic evaluations in health care because the fixed component of total costs is large.

Background: Price is likely to be a major factor determining the demand for discretionary medical procedures that require high out-of-pocket payments. This context allows us to evaluate firm behavior using standard economic theory.

Objectives: We estimate a cost function for Bariatric surgery without using traditional cost data.

Methodology: Our approach provides an alternative method for deriving costs when accounting data may be an unreliable estimate of true opportunity costs. We assume the market for Bariatric surgery is imperfectly competitive and that medical institutions are profit maximizers. Rosse (1970) shows how to empirically fit a cost function under these assumptions using data on price, quantity and institutional features. We estimate the cost function for Bariatric surgery using data from the National Inpatient Sample for 2003. We derive our measure of price from the reported expected payer source.

Results: Preliminary analysis reveals a mildly positively sloped marginal cost curve. This is robust to a variety of linear specifications. We find an inverse marginal cost elasticity of 0.14.

Conclusions: Rising marginal costs may be evidence of capacity constraints. However, a lack of data precludes us from controlling for other potentially important determinants of demand such as advertising, reputation effects and principal-agent issues. These may modify the estimated relationship. Typically, U-shaped marginal costs are considered evidence of large fixed costs. These are likely to be observed in time-series data for an individual firm or in a panel of firms. They may also be observed in a context where firms have different levels of “experience” in production. Our on-going analysis will use panel data from 1997-2003 to further study these factors. We believe the approach we take in this study provides a useful alternative to more commonly used techniques that may not be as appropriate in the health care industry.

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Assessment of Costs of Obtaining Improved Diabetes Outcomes by Efficient and Inefficient Patients

Presenter:

Arthur Williams

Authors:

Arthur Williams, Matthew Johnson, Sandra Bryant, Steven Smith, Teresa Christianson, Susan Bjornsen

Chair: F. Reed Johnson; Discussant: TBA Mon June 5, 2006 17:15-18:45 Room 225

Rationale: Treatment and management of chronic illness is an increasing concern as both costs of medical care rise and the number of persons with chronic illnesses grows. A better understanding is needed of the effectiveness and costs of interventions designed to improve patient control over chronic conditions.

Objectives: This study focuses on a cohort of patients (N=558) with type 2 diabetes in 1997-2004. This cohort received an intervention, UNITED Planned Care (UPC), that appeared to equalize treatment outcomes between groups of patients who were highly efficient (N=95) in managing their care and an inefficient group (N=95) who were poor managers of care in 1997 and 2004. The objective of this study is to measure the provider costs of equalizing the performance of the two groups on three outcomes: HbgA1c, LDL, and SBP.

Methodology: Provider costs of care to adult type 2 diabetes patients (N=190) enrolled in UPC will be measured for 1997-2004. Costs of the highly efficient and inefficient groups of patients will be compared. Data to measure utilization and costs are in the UPC database and the Olmsted County Healthcare Expenditure and Utilization Database (OCHEUD).

The provider costs to be measured are a) the costs of services and resources from UPC utilized by patients and b) the total costs of all health care and medical services utilized by patients, including hospitalization, over the seven years. Differences in costs between the two groups will be obtained and reported in both nominal and 2004 dollars.

Data Envelopment Analysis (DEA) has been used to assign efficiency classifications to UPC patients. These results have been reported at the Karolinska Institute and other venues. 95 patients on the efficiency frontier were considered very efficient managers of care, while 95 patients farthest from the frontier were considered inefficient managers of care. Input variables in the analysis included BMI, frequency of self glucose monitoring, the use of diabetes medications, statins, cardiovascular medications. Output variables included: HgbA1c, SBP, LDL, cardiovascular events; myocardial infarction, stroke, vascular procedure.

Results: Highly efficient patients had uniformly superior diabetes outcomes in 1997 compared to inefficient patients. The OR (95%CI) were 0.52 (0.42, 0.63) HgbA1c, 0.98 (0.97, 0.99) LDL, and 0.94 (0.92, 0.96) SBP. In 2004, statistical differences in diabetes outcomes between the groups had disappeared: 0.91 (0.76, 1.09) HgbA1c, 0.99 (0.98, 1.00) LDL, and 0.98 (0.97, 1.00) SBP. Patients in the low efficiency DEA group, however, remained in that group.

Conclusions: The apparent lack of efficiency improvements while outcome differences decreased suggests that the better performance of inefficient patients on the outcome measures may be due to increased inputs. We hypothesize that our study will show that a) improvements in outcomes were obtained at modest UPC cost differences but b) total health care costs were substantially higher in the inefficient group while narrowing over the seven years.

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Comparisons of Utilization and Costs among Women Veterans Obtaining Primary Care in Community Clinics and Veterans Affairs (VA) Medical Centers

Presenter:

Chuan-Fen Liu

Authors:

Chuan-Fen Liu, Elizabeth Yano, Scott Ransom, Matthew Maciejewski

Chair: F. Reed Johnson; Discussant: TBA Mon June 5, 2006 17:15-18:45 Room 225

Rationale: Women are one of the fastest growing segments of VA users, projected to be 10% of the total population of veteran users by 2010. About 11% of 1.6 million women veterans use the VA for some or all of their health care. The lack of awareness of the historic role women have played in the military and their numerical minority have created ethical and logistical problems in trying to create delivery systems that assure their equitable access to high quality comprehensive health services. The VA health care system has developed a system of community-based outpatient clinics (CBOCs) to complement VA Medical Centers (VAMCs) to optimize veterans’ access to primary care services.

Objectives: This study compares health care costs and utilization for women veterans seeking primary care at VAMCs and CBOCs.

Methods: Utilization and expenditure data were obtained from VA DSS Inpatient and Outpatient National Extracts (2000-01) among CBOCs (n=108; 800 women) and their affiliated VAMCs (n=78; 1,044 women) if in operation in 1999, were serving 200+ veterans, and could be tracked independently in DSS. We estimated utilization using negative binomial models and costs using generalized linear models, controlling for patient characteristics, and adjusting for sampling-weights and intracluster-correlation.

Results: Women using CBOCs were older (53 vs 48), had lower service-related disability (15% vs 21%), and were more likely to be a new patient (23% vs 18%) than women using VAMCs (p<0.0001). CBOC patients were less likely to use outpatient services, including specialty care, laboratory, radiology, and other services than VAMC patients (p<0.0001). There was no significant difference in the number of primary care visits between VAMC and CBOC patients; however, VAMC patients had significantly higher primary care costs than CBOC patients due to higher costs-per-primary care visit ($180 vs $118). CBOC patients had significantly lower total outpatient costs (-832, p<0.0001) and total costs (-$894, p<0.0001) than VAMC patients.

Conclusions: CBOC women receive comparable primary care, but fewer specialty and ancillary services than those at VAMCs. CBOC patients appear to be healthier, while CBOCs also offer fewer required services than their VAMC counterparts. Access to evidence-based clinical services is critical to the health of female veterans. VA care should differ only for patient-related factors, not in facility-specific service availability, provider knowledge or expertise, or logistic challenges for veterans. Given the rapidly expanding female patient population, further research is required to assure that veteran women are offered appropriate access to high quality and gender-sensitive care at both CBOCs and VAMCs.

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The Effect of Maternal Education on Fertility and Infant Health: Evidence From School Entry Policies

Presenter:

Heather Royer

Authors:

Heather Royer, Justin McCrary

Chair: Katherine Swartz; Discussant: Dahlia Remler Mon June 5, 2006 17:15-18:45 Room 226

This paper uses age-at-school-entry policies to identify the effect of maternal education on fertility and infant health. In particular, we exploit the fact that the year in which a child starts school is a discontinuous function of exact date of birth. For example, in California and Texas, our two study states, children must be 5 years old on December 1st (California) or September 1st (Texas) in the year in which they begin kindergarten. As a consequence of these policies, children born within one or two days of one another enter school at different ages and have different levels of education throughout school enrollment. Because individuals born near in time are likely similar, any differences in education at motherhood for individuals born near these entry dates are arguably exogenous. The crux of our identification strategy is to compare fertility and infant health outcomes for mothers born just prior to, and just subsequent to, the school entry date, and to relate the magnitude of these differences to the maternal education discontinuity.

Our analysis points to five key conclusions:

1. School entry policies have a significant impact on schooling at motherhood: one-fourth of young Texas mothers born after the school entry date have a year less education than they otherwise would, had they been born before the entry date. For California, our estimate is one-seventh of a year. These education discontinuities are estimated precisely, with a t-ratio over 20 for Texas and over 8 for California.
2. Maternal education does not significantly impact fertility: women born just before and after the school entry date are equally likely to become mothers, and these women give birth at similar ages.
3. Maternal education does not significantly impact infant health: women born just before and after the entry date give birth to children of similar health endowment, as proxied by birth weight, prematurity, and rate of infant mortality.
4. Maternal education does improve mating market outcomes: women born just after the entry date have younger and lesser educated mates than women born just before.
5. The research design is valid: women born just before and after the entry date have similar characteristics at their own birth, and their grandparents have similar attributes.

Given the fourth effect on mate quality, our infant health results are particularly surprising, as the combined effect of the direct impact of mother’s schooling and the indirect impact of her mate’s quality is zero in terms of infant health. Assortative mating effects would have been expected to lead to important infant health differences, even if maternal education were unimportant in isolation.

Our findings suggest that school entry policies manipulate primarily the education of young women at risk of dropping out of school. For these women, education may play a limited role in fertility and child investment.

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Do Abortion Restrictions Affect Child Fatal Injury? A Longitudinal Analysis

Presenter:

Bisakha Sen

Authors:

Bisakha Sen, Martha Wingate

Chair: Katherine Swartz; Discussant: Martha Bailey Mon June 5, 2006 17:15-18:45 Room 226

Rationale: The 1973 Supreme Court decision on Roe v. Wade gave American women the constitutional right to terminate a pregnancy via abortion. Subsequently, many states have placed restrictions on abortion access, like denying public funding for abortion, requiring parental consent or notification for minors, and mandating waiting periods. Previous research has indicated that legalizing abortion reduced the prevalence of children living in poverty, in single-parent households, infant mortality, and child abuse. Analogously, it is probable that abortion restrictions would increase these and related phenomena.

Objectives: The objective of this study is to explore the association of state abortion restrictions to two child outcomes - fatal injuries from violence/homicide and fatal injuries from unintentional causes/accidents. The underlying logic is that abortion restrictions are likely to increase the number of ‘unwanted’ births - leading to child physical abuse and neglect, and also increase the number of births to women with inadequate resources and abilities to protect their children from harm.

Methodology: The study utilizes National Center for Health Statistics (NCHS) data over 1981-2001 on deaths to children aged <1 years to 5 years, where the ICD code shows cause of death to be violence or unintentional injury. The data includes information on states of death and birth. This is linked to state-level cross-sectional time-series data on the following abortion restrictions: enforced parental consent laws and parental notification laws, absence of public funding for abortion (barring cases of rape and incest), and mandatory waiting periods. Additional controls include the number of bordering states with no parental involvement law in effect, abortion-provider availability per 1000 women, state poverty rate, percentage of population in rural areas, per capita alcohol consumption, maximum monthly AFDC payments for family of 3, and existence of ‘family cap’ laws. The main hypothesis is that existence of abortion restrictions in the state and year of birth will be associated with subsequent increases in child fatal injury due to violence and due to unintentional causes. The study employs count data models with state and year fixed effects to control for unobserved heterogeneity, and further uses fatal injury rates among young adults from the same causes to control for time-variant state level unobservables. The analyses are done separately for white and black children.

Preliminary Results: Preliminary results using NCHS fatal injury data aggregated over the 0-4 year age-group (available from WISQAR, Centers for Disease Control & Prevention) show that parental consent laws are associated with increases in violence-resultant fatal injury rates for white children, less so for black children; no public funding and mandatory waiting periods are associated with increases in unintentional fatal injury rates for black children. The results are robust to a variety of specification tests. This study is particularly relevant at this time, since recent changes in the U.S. Supreme court have raised questions about the future of abortion rights. It is important from a public policy perspective to understand the effects of existing abortion restrictions so as to gauge what the effects of future restrictions might be.

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Demand for the Influenza Vaccine among the Elderly

Presenter:

Padmaja Ayyagari

Authors:

Padmaja Ayyagari

Chair: Katherine Swartz; Discussant: Steven Pizer Mon June 5, 2006 17:15-18:45 Room 226

This study examines the determinants of influenza vaccine demand among the elderly U.S. population and it’s effect on the cost and usage of care. The analysis is done using data from the Medicare Current Beneficiary Survey (MCBS). In contrast to other studies that use a non-representative sample and are cross-sectional in nature, MCBS data is a panel and a representative sample of the Medicare population. Influenza or complications arising from it are responsible for a large number of hospitalizations and deaths among the elderly and as such, vaccinations have large potential benefits. I examine the following determinants of demand: the price of the vaccine to the individual which depends on insurance coverage, demographics such as age, race, gender, education and income, family composition such as whether the person lives alone or not, health conditions including chronic ones (e.g, asthma) that may be complicated by influenza. I also examine the effect of an individual’s expectation about the risk of infection. These individual expectations depend on the prevalence of the disease as well as on the individual’s own past experience with the flu and the vaccine on demand. Heterogeneity in expectations could give rise to differences in demand among individuals who are similar in other aspects. This project also studies the effect of getting a flu shot on hospitalizations and on payments by Medicare. I use the fact that Medicare Part B started covering flu shots in 1993 to identify the price elasticity of demand. This is likely to induce demand among part B beneficiaries but not among those with only part A coverage. While, the induced demand would increase payments by Medicare, vaccination itself might reduce hospitalizations and other medical care use. Vaccinations also affect mortality and in turn the cost of care conditional on survival. Thus, the exact impact on Medicare costs and medical care use is not clear without an empirical analysis.

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Determinants of growth in prescription drug expenditures

Presenter:

Nilay Shah

Authors:

Nilay Shah, John Mullahy, Maureen Smith, David Vanness

Chair: Randall Ellis; Discussant: Allen Goodman Mon June 5, 2006 17:15-18:45 Room 235

Rationale: Over the last decade there has been a large growth in prescription drug expenditures in the United States. Spending on drugs more than tripled between 1993 and 2003, increasing from $51 billion to $179 billion (in 2003$). There is an increasing interest in understanding the factors affecting the growth in prescription drug expenditures as their impact on public and private healthcare budgets continues to increase.

Objectives: This study seeks to evaluate the role of changing population characteristics on the growth in prescription drug expenditures between 1997/1998 and 2001/2002.

Methodology: Using data from the Medical Expenditure Panel Survey (MEPS), we employ non-linear extensions of the Oaxaca-Blinder regression-based decomposition method to attribute the sources of growth in prescription drug expenditures. These methods decompose the total observed growth in expenditures into growth attributable to changes in population characteristics (covariates) and growth attributable to the changes in expenditure structure associated with population characteristics (parameter estimates). We implement the decomposition analysis using generalized linear models. Analyses are weighted reflecting both the sample design of the MEPS to represent the non-institutionalized, civilian, U.S. population and survey non-response.

Results: Total annual prescription drug expenditures almost doubled between 1997/1998 and 2001/2002, increasing from $73 billion to $143 billion. Average per capita expenditures grew by more than 70 percent, increasing from $292 to $501. Annual per capita prescription fills increased by 2 prescriptions per person per year. All major therapeutic classes and drug classes saw a significant growth in total annual prescription drug expenditures between 1997/1998 and 2001/2002. More than 40 percent of the growth in expenditures between these time periods can be attributed to changing population characteristics. Much of this growth can be attributed to the increasing prevalence of chronic conditions and “aging” of the population. Specifically, increase in prevalence for hyperlipidemia, hypertension, allergic rhinitis, psychiatric conditions (such as psychoses and schizophrenia) and gastroesophageal reflux disease explained 23 percent of the growth in prescription drug expenditures.

Conclusions: Our analyses found a significant growth in prescription drug expenditures in the U.S. between 1997/1998 and 2001/2002. We also observed significant growth in expenditures for all demographic characteristics, as well as, all major therapeutic classes for prescription drugs. These analyses revealed that a significant portion of the growth in prescription drug expenditures may be attributed to the changing prevalence of chronic disease in the U.S. population. These findings have important policy implications for future expenditures, especially with the projected demographic changes in the U.S. population.

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Costs and Outcomes of Chiropractic Treatment for Low Back Pain: Evidence from the US and Australia

Presenter:

Allan Brown

Authors:

Allan Brown, Doug Angus, Stella Chen, Zhiliu Tang, Sarah Milne, Juergen Pfaff, Huimin Li, Shaila Mensinkai

Chair: Randall Ellis; Discussant: Karen Eggleston Mon June 5, 2006 17:15-18:45 Room 235

Issue: Low back pain (LBP) is a common and costly medical problem in industrialized countries. It is experienced by 70% to 80% of adults at some time during their lives. There is uncertainty about the clinical and cost effectiveness of chiropractic care for LBP relative to standard medical treatment or physical therapy.

Objective: To systematically review the evidence on clinical effectiveness, comparative cost, and cost-effectiveness of chiropractic for LBP.

Methodology: The comparators for chiropractic treatment of LBP were conventional medicine and physical therapy. A search strategy was developed for existing systematic reviews of clinical effectiveness, supplemented by a literature search of new RCTs since the end of 2002. Non-RCTs were also covered. A search strategy was also developed for the review of economic evidence. Qualitative analysis was performed on the included effectiveness studies and economic studies. A cost comparison analysis was done using results of the economic review. Quality of the included studies was assessed using the Oxman Guyatt Scale, Jadad Scale, Newcastle Ottawa Quality Assessment Scale, and a quality check for cost studies.

Results: For the effectiveness review, our selection criteria were met by eighteen systematic reviews, and four trials published after the reviews were completed. Ten studies were identified in the economic review. Four were cost comparisons and six were cost consequence studies. Nine were from the US and one was from Australia.

Conclusions: Chiropractic for LBP is similar in effectiveness to standard medical care and physical therapy. The higher quality reviews did not find significant differences in effectiveness. There is no clear cost advantage for any of the three methods studied. In terms of improving lost time from work, chiropractic care was similar to physical therapy; and as effective as or better than standard medical care.

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Is the price of cancer treatment falling?

Presenter:

Alexandra Constant

Authors:

Alexandra Constant, Marie-Chantal Benda, Ruolz Ariste, Charles Mallory

Chair: Randall Ellis; Discussant: Tzu-chun Kuo Mon June 5, 2006 17:15-18:45 Room 235

Rationale: Cancer care represents one of the most costly sectors of the medical care. Rapidly rising costs form medical care pose a crisis of “sustainability” of publicly funded health care systems. With rapidly evolving medical technology, it is unclear whether price increases or greater utilization is responsible for more of the increase in health care system costs.

Objectives: The goal of the study is to assess the impact of changing technology for cancer treatments on health care costs to distinguish price changes from quality/quantity changes.

Methodology: We estimate two types of price indexes: a service price index (SPI) that reflects the price of particular treatments over time, and a cost-of-living index (COLI) which measures an outcome-adjusted cost of treating a specific health problem and reflects price variations by discounting any technological/quality effects. The two indexes are estimated for the period 1995/96 and 2001/02 by combining data on cancer patients admitted to hospitals participating in the Ontario Case Costing Initiative (OCCI) with death data from the Canadian Cancer Registry (CCR).

Results: Hospital cost per patient increased slightly in Ontario for lung, breast, prostate and colorectal cancer. The SPI rose at an average annual rate of 2.0%. However, taking into account health outcomes from better health care technology, it is clear that the price of cancer treatment is falling rapidly. The COLI fell by 9.2% annually. Although cancer prevalence is increasing, more effective treatments are helping to hold costs down.

Conclusions: Recognition of the cost drivers in the total medical cost is important, as policy implications would vary. Given that cost increases are attributable to the wider use of more effective treatments there is a net social benefit associated with the expenditure increase. This study supports the growing international evidence that costs of care for some diseases are falling.

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Accounting for changes in morbidity among the non-elderly in the U.S.

Presenter:

Kumiko Imai

Authors:

Kumiko Imai, Edward Gregg, Yiling Cheng, Ping Zhang

Chair: Jeffrey Pyne; Discussant: David Cutler Mon June 5, 2006 17:15-18:45 Room 309

Background and objective: Evidence suggests that disability among the elderly in the U.S. has declined by 1-2 percent per year during the past several decades, but it is unclear whether disability has also decreased among the non-elderly population. The purpose of this paper is two-fold: (1) to estimate trends in morbidity among the non-elderly using more recent national surveillance data; (2) to determine if changes in disease severity or disease prevalence are responsible for these trends.

Methodology: We used data from the National Health Interview Survey (NHIS), a yearly nationally representative probability sample of the non-institutionalized U.S. population. We estimated trends in disability among individuals aged 18-64 using the 1997-2004 NHIS, and conducted decomposition analysis to determine the degree to which these changes are influenced by changes in prevalence of chronic diseases (including cardiovascular disease, diabetes, and hypertension) and changes in disease severity. Disability was defined as having personal-care or routine-needs limitations. We also looked at the proportion of individuals whose self-reported health is poor or fair. The analysis used a complex sample survey method with controls for age, sex, race/ethnicity, employment, and education.

Results: The data show that disability among the non-elderly population increased over 20 percent between 1997 and 2004 (2.2% in 1997; 2.4% in 2004). The proportion of individuals whose self-reported health status was fair or poor also rose over 14 percent during the same period (9.1% in 1997; 10.4% in 2004). It is estimated that the increased prevalence of cardiovascular disease, hypertension and diabetes among those aged 45-64 accounts for about 15 percent of the increase in disability and 20 percent of the lower self-reported status. There is little evidence of increased severity among individuals with these conditions.

Conclusions: Our study found that, after accounting for demographic and socioeconomic changes, disability among the non-elderly has increased in the past several years. The proportion of those who report poor or fair health status has also risen. The results also show that, in contrast to what has been suggested for the elderly, increased chronic disease prevalence accounts almost all of worsening disability and self-reported health status. The findings highlight the importance of primary prevention of chronic diseases in reducing morbidity among the middle-aged population.

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Exercise? May be another time: The Cost of Sedentary Life Styles

Presenter:

Nazmi Sari

Authors:

Nazmi Sari

Chair: Jeffrey Pyne; Discussant: Jeffrey Pyne Mon June 5, 2006 17:15-18:45 Room 309

Physical inactivity, one of the major health issues in the modern world, is estimated to cause 1.9 million premature deaths worldwide annually. Globally, it is identified as a cause of 10 to 16 percent of breast cancer, colon cancers, and diabetes, and about 22 percent of ischemic heart disease. Therefore, physical inactivity is a major contributor to the rising healthcare costs. Only in the USA estimated healthcare cost due to physical inactivity was around $75 billion in 2000. In Canada, physical inactivity accounts for about 6 percent of total healthcare costs. Although the level of inactivity showed a decrease from 62 percent in 1994 to 56 percent in 2001, two-thirds of Canadians aged 25 to 55 are not physically active enough to meet the guidelines for sufficient physical activity set out in the Canada’s Physical Activity Guide. Therefore, physical inactivity continues to be a burden on collectively funded health insurance system of Canada.

Physical activity improves health status and has the potential to reduce disability days and utilization of expensive healthcare services. Increase in healthcare costs can be controlled with health promotion efforts aimed at changing life styles of individuals. Such health promotion efforts have the potential of increasing life satisfaction and at the same time saving money for the society.

This area of research has been neglected by economists, and the estimates provided above are based on the cost of illness studies. These studies do not consider impacts of choices made now on future resources; therefore estimates are not calculated by taking lifetime costs and benefits into account. The aim of this paper is to estimate the healthcare costs and productivity loss due to sedentary life styles, and to calculate the lifetime cost savings if inactive people would instead be active throughout their life. We, therefore, estimate implied benefits from a health promotion program aimed to change life styles of inactive people.

The paper uses the Canadian Community Health Survey 2.1, which includes population level information on health determinants, health status and healthcare utilization. The sample size is approximately 130,000 Canadians and provides information at the level of provincial health regions. The dependent variables are non-negative count of health service utilizations and disability days. The sample mean and standard deviation are quite different, suggesting that the over-dispersion can cause a downward bias in the standard errors resulting from Poisson estimation. At the same time, the dependent variables take zero for a significant proportion of the sample. As a solution, we use zero inflated Poisson and/or Negative Binomial models.

Our results show that physically inactive people use more healthcare services compared to the active group. The range varies from 18 to 78 percent depending on the type of care. And the same pattern is true for disability days, around 43 percent more for inactive group. After obtaining estimates from the regression analysis, we estimate implied savings under the assumption that inactive people will become active throughout their life.

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Adult Body Mass Index as a Determinant of All-Cause Mortality in the United States: 2000 - 2003

Presenter:

Albert Okunade

Authors:

Albert Okunade, Rose Rubin

Chair: Jeffrey Pyne; Discussant: Nazmi Sari Mon June 5, 2006 17:15-18:45 Room 309

Medical care and the social science disciplines, together with global bodies (e.g., The UN Food and Agriculture Organization, and The World Health Organization) concerned with human health conditions, agree that the rising obesity epidemic (the US, worldwide) and related ill-health outcomes (e.g., discounted quality of life, atrophied labor productivity, preventable mortality and morbidity) are increasingly problematic. The resource costs of unhealthy Body Mass Index (BMI) increasingly individuals and the society (US DHHS, Healthy People 2010. Washington, DC: USGPO, November 2000). The BMI, a number adjusting adult body weight (in lbs. or kgs.) for height (in ft. or m.), classifies individuals as ‘not overweight/obese’ (BMI< 24.9), ‘overweight’ (25 30). The wider human health and medical literature increasingly links specific-cause and all-cause mortality to unhealthy BMI values. During 1990 and 2000, poor diet and physical inactivity ranked second, next to tobacco, as the second leading actual causes of death in the US (National Center for Chronic Disease Prevention and Health Promotion, 2000). Heart disease, cancer, and stroke, the three leading causes of US deaths, are positively correlated with the conditions of being overweight and obese. Obesity has been linked to almost all causes of death and morbidity, including chronic respiratory diseases and diabetes (respectively, also the 4th and 6th leading cause of deaths in the US in 2000).

Therefore, the goal of this study is to construct an econometric model linking all-cause mortality to the status of ‘overweight’ and ‘obese’ separately, as measured by BMI. Data are taken from the Behavioral Risk Factor Surveillance System, for the four years 2000, 2001, 2002, and 2003 (for which BMI data are consistently reported). Data of the 50 US states and the District of Columbia are modeled. Separate regression models linking all-cause mortality to ‘not overweight/ obese’, ‘overweight’, and ‘obese’ adult BMI, controlling for a set of independent other effects (e.g., per capita income, race/ethnic classification, number of toxic waste sites on location, others). Annual and panel regression model estimation first tested for, confirmed, and adjusted the model for the skewed data distribution of all-cause mortality per 100,000 people, and then modeled it as a Box-Cox power-transformed response to symmetry. Separate regression models of the BMI effects of mortality are reported for each year, and for the panel of years. Specific intervention policies are linked with the effect of BMI on mortality to assess their effectiveness. This paper concludes on the effectiveness of the various health promotion and disease prevention programs in specific US states, and reflects on the differences in health and economic consequences of unhealthy BMI for the ‘overweight’ and ‘obese’ in the US, from 2000 to 2003.

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Does Practice make Perfect? Evidence from Cardiac Surgery

Presenter:

Subramaniam Ramanarayanan

Authors:

Subramaniam Ramanarayanan

Chair: Didem Bernard; Discussant: Bill Encinosa Mon June 5, 2006 17:15-18:45 Room 313

Background: A number of studies in the health economics literature document the presence of a correlation between provider (hospital and individual physician) volume and patient outcomes for a variety of procedures. However, few studies attempt to translate this correlation into a well established causal relationship between procedure volume and outcome. It is important to unambiguously determine causality, as the two hypotheses have contrasting implications for policy.

Contributions: This study makes a contribution to the literature by using a novel instrumental variables technique to rule out alternate explanations (the “selective referral” hypothesis) and arrive at a consistent estimate of the impact of individual learning-by-doing on quality. The use of individual (surgeon) level data also allows me to test whether skills acquired by surgeons are equally effective across hospitals.

Data: The data for this study come from the Hospital Inpatient Data Files provided by the Florida Agency for Health Care Administration (AHCA) for the years 1994-2003. I restrict my analysis to Coronary Artery Bypass Grafts (CABG) performed in this period.

Methodology: The volume term in a regression of outcomes on provider volume is endogenous if one takes into account the fact that physicians of higher quality (i.e. with better outcomes) attract more patients. An ideal instrument should help explain variation in physician procedure volume, but have no causal relationship with physician quality (i.e. outcomes of a physician’s patients). This paper uses physician exit as an exogenous identifier. The estimation strategy works as follows: if a hospital has a set of practicing surgeons, and one of them exits for exogenous reasons (say retirement) at time t, this leads to an exogenous increase in volume for the remaining physicians at time t, as the volume of the exiting physician at time t-1 gets redistributed among the remaining physicians at time t. Assuming this shock to physician volume is not correlated with unobservable determinants of physician quality, I can use it to estimate the impact of provider volume on patient outcomes.

Findings: First-stage regression results indicate that the instrument is strongly correlated with the endogenous predictor variable. The second-stage results reveal that a one-unit increase in physician procedure volume leads to a statistically significant decline in mortality of .03 percentage points, which translates to nearly a 1% drop in mortality. This is indicative of a strong learning-by-doing effect. Also, learning is not firm-specific: a one-unit increase in physician volume at any hospital has equal impact on mortality at all hospitals where the physician operates.

Conclusions: The proposed instrument helps to unambiguously establish the presence of a learning-by-doing effect for individual surgeons in CABG procedures. The findings are in favor of federal and state regulations that support consolidation of providers.

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The Migration of Highly-Skilled Workers: The Case of Physicians

Presenter:

Pierre Leger

Authors:

Pierre Leger, Benoit Dostie

Chair: Didem Bernard; Discussant: Jim Walker Mon June 5, 2006 17:15-18:45 Room 313

The international migration of medical professionals has garnered much media attention of late in many countries. Although many reports have been alarming, a casual look at the data suggests that the brain drain may not be an important issue, as only a small proportion of physicians migrate internationally each year. Governments have, nevertheless, been preoccupied by issues of migration. This is because, from a public-policy perspective, it is not only the number of individuals who migrate that is of interest, but also who in particular migrates (and, in the case of intra-country migration, where they migrate to). If those who migrate are the relatively high-skilled or productive, then simply looking at net migration to determine the impact of migration may be misleading.

The goals of this paper are threefold. First, we wish to contribute to the general literature on the fundamental drivers of international and interprovincial mobility of highly-skilled workers. Second, we wish to uncover the link between observable and unobservable skills and the propensity to migrate. Finally, we wish to contribute to the recent empirical literature on the Borjas (1987) hypothesis, which posits that individuals sort according to skill levels and regional returns to these skills, by considering not only observable skills (as in the previous literature) but also unobservable skills (which has not, to our knowledge, been considered before).

In order to do so, we focus on the migration patterns of Canadian physicians (using a 10 year panel). We choose this particular group for several reasons. First, physicians (especially specialists) are often singled out, in Canada, as a highly-educated group who frequently experience both international and interprovincial migration. Furthermore, focusing on physicians allows us to study the migration decisions of a relatively homogenous set of workers in terms of formal education. Finally, Canadian physicians are generally paid on a fee-for-service (i.e., a fee-per-consultation) basis. Thus, wage rates (or fees) can be considered exogenous to both observable and unobservable individual characteristics as they reflect exclusively the physician’s specialty and province of practice. Consequently, we can use the physician’s total billings as a measure of his or her output and offer a precise definition of a highly-skilled physician: a physician who has greater billings (i.e., has a greater output of health-care services) than would otherwise be predicted by their observable characteristics and the exogenous wage-rate they face.

We first estimate a model which allow us to uncover whether or not individuals who earn more than would otherwise be predicted by their observable characteristics (i.e., are highly-skilled according to our definition) are also those who are more likely to migrate. We then turn to the impact of destination-specific characteristics (particularly earning differentials) on the choice of physician location. Finally, we examine whether differences in the returns to observed human capital and unobserved skills across different province are an important factor in physician mobility.

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Is Entry Efficient? Lessons from Cardiac Surgery

Presenter:

Jonathan Kolstad

Authors:

David Cutler, Robert Huckman, Jonathan Kolstad

Chair: Didem Bernard; Discussant: TBA Mon June 5, 2006 17:15-18:45 Room 313

By regulating entry into services with substantial fixed costs, certificate of need (CON) regulation has been viewed as a means of combating fears of a “medical arms race”, in which hospital markets would experience excess capacity and increased costs due to non-price competition between providers. Further, a common view in the health economics literature has been that there is a positive relationship between a surgeon’s volume (in aggregate or at a specific hospital) and his or her outcomes. If this is the case, entry limitations may improve quality to the extent they increase the volume per surgeon at a specific hospital.

We develop a model suggesting a different view of the role of entry on firm level competition. Instead of identical surgeons, our model is based on a distribution of surgeon quality both generally and at a firm-specific level. In this setting, hospital competition on the basis of both quality and quantity theoretically could be welfare enhancing without increasing quantity supplied. This would occur if free entry changes the contracting between hospitals and surgeons possessing heterogeneous levels of skill so as to create a more efficient distribution of surgeon skill across hospitals.

We provide empirical tests of the model using data from Pennsylvania for coronary artery bypass grafts (CABG) procedures performed between 1993 and 2003, both before and after the lifting of the statewide CON law in 1996. One critique of CON repeal is that it might encourage more surgeons to split their time across multiple hospitals, thereby reducing the benefits of hospital-specific volume-outcome effects. We find that, during the CON period in Pennsylvania, splitting appears to reduce surgeon performance. In the post-CON period, however, volume-outcome effects remain but are no longer firm specific, suggesting that splitting time between hospitals was not detrimental to outcomes. Specifically, the repeal of CON encouraged hospitals to compete more aggressively for higher quality surgeons; these high-quality surgeons accordingly split their time across institutions without reductions in performance. We are also able to test whether entry induced demand and find that entry was not associated with increases in CABG volume at a market level. In total, we find that the repeal of CON in Pennsylvania improved welfare without increasing the quantity of surgeries performed.

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A New Explanation for Differential Trends in Infant Mortality by Race

Presenter:

Authors:

Ellen Meara, David M. Cutler, Seth Richards

Chair: David Meltzer; Discussant: Anna Aizer Mon June 5, 2006 17:15-18:45 Room 325

Racial disparities in the rate of infant mortality have been documented throughout the 20th century in the United States. Despite progress in reducing black white differentials in the late 1960s, the gap between black and white infant mortality has again increased in the past two decades. The ratio of black to white infant mortality is higher now than at any point in the past century. We consider explanations for this trend. We estimate that two thirds of this adverse shift in relative black infant mortality relates to greater improvement in survival for whites of any birth weight. We further argue that the faster improvement for white infants stems from biased technological innovation. Because research and investment tends to favor the leading causes of death overall, medical advances that improve infant mortality automatically favor infants from the majority group. In support of our hypothesis, we document that between 1983 and 1998 1) mortality declines are greatest for causes of infant mortality that were most prevalent in 1983 2) mortality declines increase with the level of research devoted to a given cause of death; and 3) both initial mortality rates and measures of technological innovation are positively related to the increase in relative black mortality during this period. Our theory also draws support from case studies of particular causes such as respiratory distress syndrome. Our findings suggest that even in the absence of disparities in access to medical care or discrimination in the medical system, racial disparities in infant mortality can increase as medical technology improves.

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Causes and Consequences of the Increase in Treated Disease Prevalence

Presenter:

David Howard

Authors:

David H. Howard, Susan Busch

Chair: David Meltzer; Discussant: Christopher J. Ruhm Mon June 5, 2006 17:15-18:45 Room 325

The proportion of the population treated for major medical conditions, including heart disease, diabetes, cancer, and mental illness, increased rapidly during the 1990s. We document these trends using data from the Medical Expenditure Panel Survey and Medicare claims data and show that increases in treated prevalence are responsible for a large share of the growth in health care spending. We then review evidence for and against the following explanations for increases in treated prevalence: changes in risk factors, availability of new medical technology, changes in the market structure of treatment provision (i.e. approval of new on-patent drug treatments), and the rise of a “culture of early diagnosis” in medicine. We find that obesity explains a substantial share of treated prevalence increases (34% for diabetes, 71% for high blood pressure, 10% for back problem, etc.), but large residuals remain for most conditions. We conclude that improvements in technology combined with an increasing emphasis in medicine on early detection are responsible for most of the increases. Understanding the impact of technology on incentives to diagnose new cases is important for explaining the mechanism by which medical technology increases health care costs.

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Chronic Disease and Trends in Severe Disability in Working Age Populations

Presenter:

Jay Bhattacharya

Authors:

Jay Bhattacharya, Kavita Choudhry, Darius Lakdawalla

Chair: David Meltzer; Discussant: Zhou Yang Mon June 5, 2006 17:15-18:45 Room 325

Recent work has shown that rates of severe disability, measured by the inability to perform basic activities of daily living, have been rising in working age populations. We examine the extent to which chronic disease trends can explain these disability trends. Our primary findings are that for 30 to 45 year-old populations between 1984 and 1996: (1) disability prevalence fell dramatically among the non-chronically ill; (2) rising obesity prevalence explains about 40% of the rise in disability attributable to trends chronic illness; and (3) rising disability prevalence among the chronically ill explains about 60% of the rise in disability attributable to trends in chronic illness.

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Hospital Ownership and Quality: A Quantitative Research Review

Presenter:

Yu-Chu Shen

Authors:

Yu-Chu Shen, Karen Eggleston, Jia Chan, Joseph Lau, Christopher Schmid

Chair: Kevin Volpp; Discussant: David Becker Mon June 5, 2006 17:15-18:45 Room 326

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A Competition Index for Differentiated Products Oligopoly with an Application to Hospitals

Presenter:

Yaa Akosa Antwi

Authors:

Yaa Akosa Antwi, Martin Gaynor, William B Vogt

Chair: Kevin Volpp; Discussant: Frank Sloan Mon June 5, 2006 17:15-18:45 Room 326

We develop a competition index for differentiated products oligopoly and apply it to assessing the impact of concentration on price in hospital markets in California. Our index, which we term LOCI, is bounded between zero and one and increases with the competitiveness of a market. We use 1992-1995 hospital data from California to estimate the impact of concentration on price using our new concentration measure. We find that on average, hospital prices decrease significantly as markets are more competitive. A hypothetical merger that decreases the number of firms from 3 to 2 leads to a price increase of $800, or 16%. The estimated average demand elasticity for hospital services is -3.55. Government hospitals face a less elastic demand of -3.14 than all ownership types. Demand elasticity for for-profit and not-for-profit hospitals is -4.5 and -3.25 respectively.

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Regulatory Exploitation and the Market for Corporate Control

Presenter:

Leemore Dafny

Authors:

Leemore Dafny, David Dranove

Chair: Kevin Volpp; Discussant: Robert Town Mon June 5, 2006 17:15-18:45 Room 326

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Medicare and Disparities in Mental Health Treatment and Outcomes

Presenter:

Sandra Decker

Authors:

Sandra L. Decker, Judith Shinogle, Donald Cherry

Chair: Sherry Glied; Discussant: Carole Gresenz Mon June 5, 2006 17:15-18:45 Room 332

Mental health disorders may affect up to half of all Americans, and can result in substantial lost productivity and premature death. Although most mental disorders are treatable using medication and other therapies, most sufferers do not get help. One reason may be due to incomplete health insurance coverage. In particular, approximately 13 percent of Americans lack any kind of health insurance coverage before the age of 65, a fraction that is even higher for minorities and individuals living in areas with low socioeconomic status. Turning age 65 and becoming Medicare eligible results in a significant improvement in mental health insurance coverage for Americans who are uninsured before the age of 65. (For most individuals age 65 and over, Medicare Part A covers psychiatric hospitalizations, while Medicare Part B covers 80% of outpatient visits for psychiatric medication management and 50% of approved charges for psychotherapy.) The effect of this improvement on the use of mental health services and on mental health will be tested using data from the National Ambulatory Medicare Care Survey (NAMCS), 1989, 1990, 1995-1996, and 1999-2003. The analysis estimates differences in mental health treatment by race and socioeconomic status of resident zip code both before and after age 65. Dependent variables will include the probability of a mental health visit among psychiatrists and primary care practitioners, as well as differences in the prescribing of psychotropic drugs including antidepressants, antipsychotics, and central nervous system (CNS) stimulants. Disparities in mental health treatment before and after age 65 also are examined using data on emergency room visits from the National Hospital Ambulatory Medical Care Survey (NHAMCS), psychiatric hospitalizations from the National Hospital Discharge survey, and suicide rates from vital statistics.

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Return to Work or Receipt of SSDI: Competing Risks Model for those with Mental Health Disability

Presenter:

Judith Shinogle

Authors:

Judith Shinogle, David S. Salkever

Chair: Sherry Glied; Discussant: Pinka Chatterji Mon June 5, 2006 17:15-18:45 Room 332

Previous research examining employees with long term disability found that health benefita may affect the probability of returning to work as well as duration of claims. This previous research failed to examine the disabled worker applying and receiving Social Security Disability Insurance (SSDI). We fill this void by examining how the relationship between health benefits, other fringe benefits, disability management practices and employer characteristics affect the employee on long term disability insurance’s return to work compared to receiving SSDI. Disability claims data, employer benefit data and surveyed information on disability management from 116 employers insured for long term disability from one large insurer. Data was analyzed using bivariate probit and competing risk models. For the competing risk models, unordered failure events of different types were assumed. The two types of failures in the models were 1) Return to work or 2) Receive Social Security. These models allowed the baseline hazard to vary by failure type but constrain the coefficients to be the same across each failure type. These models assumed that each failure event can only occur once per subject. Next, we allowed the coefficients to vary by each failure type and incorporated unobserved heterogeneity of the individual through the use of frailty models. Preliminary results found that disability insurance characteristics such as the ratio of benefits to wages increase duration on private disability insurance as well as increase time to receipt of SSDI, while certain management principles lengthened claim duration. Availability of short term disability (formal or informal) increases duration on private disability insurance while supervisor involved in short term disability and ability to change jobs decreases duration. Health plan characteristics, such as having a mental health carve out or fee for service, decrease the likelihood of returning to work as well as receipt of SSDI, while having a high deductible for mental health insurance increased duration on private disability insurance. Employer disability management practices that decrease the barriers to work lowered the time the employee was on long term disability insurance. On the other hand restrictive health benefits, such as high deductibles could increase this duration and certain health plans such as mental health carve outs may decrease duration on private disability insurance and shorten time to receipt of SSDI. Policy makers and benefits providers should be cognizant of the interaction between health and disability benefits.

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How Do Youth with Mental Health Disorders Fare in the Juvenile Justice System?

Presenter:

Alison Evans Cuellar

Authors:

Alison Evans Cuellar, Pinka Chatterji

Chair: Sherry Glied; Discussant: Sherry Glied Mon June 5, 2006 17:15-18:45 Room 332

Several studies have documented that youth with emotional and substance use disorders are overrepresented in the juvenile justice system. Whether youth with mental health problems receive harsher treatment in the juvenile justice system compared to similar youth without mental health problems has been the subject of public policy concern, but there have been few systematic, empirical tests of this claim. Using data from a nationally representative sample of adolescents, this study assesses whether youth who use substances or have emotional disorders are sanctioned more heavily than other youth by the juvenile justice system, controlling for the youths’ crime and criminal history. This study uses data from the National Longitudinal Study of Adolescent Health (AddHealth) and offers several distinct advantages over existing research: First, it relies on data from a large, national sample of youth increasing the generalizability of the findings. Second, youth in the sample are first interviewed in the community rather than in institutions increasing the interpretability of the results and allowing us to address the question of bias in the juvenile justice system. Finally, AddHealth data allow for the inclusion of important control variables, such as delinquency history, emotional and substance abuse disorders, as well as demographic, education, and community variables. We apply conceptual and empirical methods that have been used to analyze disparities in health care. The performance and suitability of propensity score and rank and replace methods are assessed in this context. We also demonstrate the importance of the correlation between poor mental health and educational outcomes. Preliminary results of this study find evidence of bias in the justice system, particularly against youth with substance abuse and ADHD disorders.

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The Impact of DCA on the Use and Effectiveness of Statin Drugs

Presenter:

David Bradford

Authors:

W. David Bradford, Andrew N. Kliet, Paul J. Nietert, Steven Ornstein

Chair: Ernst R. Berndt; Discussant: Mon June 5, 2006 17:15-18:45 Room 335

In August of 1997 the Food and Drug Administration (FDA) relaxed the rules governing television direct to consumer advertising (DCA) of prescription pharmaceutical products. Little is currently known about the effects of DCA for the efficient allocation of prescription drugs. In this study, we will examine how DCA affects physician prescribing patterns, courses of care, and health outcomes for patients suffering from high cholesterol (hyperlipidemia). Currently, Congress and the Food and Drug Administration are investigating whether the 1997 regulatory relaxation should be reversed. In the face of this pressure, the pharmaceutical industry has voluntarily agreed to abstain from advertising a new drug within the first six months of its release. In addition, the recent expansion of Medicare to include a prescription drug benefit has enhanced the potential of DCA to impact Federal budgets. Thus, this research, by investigating whether DCA does or does not have a pernicious effect on the efficiency of health care delivery in primary care settings, will be of high policy relevance. The primary data for this study are taken from a geographically diverse national research network of primary care practices. As of 2004, 81 practices in 32 states, with 348 physicians, are or have been network members. Currently, the entire research network database has clinical chart and demographic information on 604,111 patients, including 3.8 million prescription records. We extract a sub-set of 51,853 patients who have a diagnosis of hyperlipidemia (for years 1998 – 2004). Advertising data is collected at the level metropolitan areas, for the top 75 media markets. Brand specific advertising data is collected at the monthly-level for: local television, network television, national magazine and newspaper and local magazine and newspaper.
The first part of the paper seeks to determine the degree to which DCA affects physician patient populations. We estimate the effect of aggregate and brand-specific advertisement on the number of hyperlipidemia-related visits at the physician practice level. Estimating the effect of DCA on patient populations is a necessary first step in controlling sample selection in the patient level analysis. We then estimate the impact of DCA on a disaggregated (patient level) population. DCA may have contradictory effects on patients: it may improve efficiency of care by encouraging patients to accept and adhere to effective treatments; on the other hand, DCA may reduce the efficiency of care by attracting patients who have only marginally severe conditions, and whose health state does not therefore have much room for improvement. To assess this, we estimate the effect of DCA on the joint the likelihood that the patient is prescribed one of the study drugs (Zocor, Pracachol or Lipitor) and the likelihood that their cholesterol levels are brought to within guidelines.

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Do Smokers Respond to Smoking Cessation Product Advertising?

Presenter:

Alan Mathios

Authors:

Rosemary Avery, Donald Kenkel, Dean R. Lillard, Alan Mathios

Chair: Ernst R. Berndt; Discussant: Mon June 5, 2006 17:15-18:45 Room 335

The welfare implications of DTC advertising of pharmaceutical products has been a hotly debated policy issue. In some markets however, the incentives of the pharmaceutical companies are well aligned with public health goals. The market for smoking cessation products is one such example. Because of their proven effectiveness, these products could be the key to meeting public health goals to reduce smoking. In other work, we demonstrate that when these products are regulated as prescription drugs, companies advertise them less. In this paper we examine whether consumers are more or less likely to try to quit smoking when they are exposed to more smoking cessation product advertising. Unlike previous research that uses data on whether individuals recall having seen advertisements, we link data on magazines people read with counts of advertisements that appeared in those magazines. Because this more objective measure relies only on accurate reports of magazine reading habits and not on accurate recall of advertising exposure, we avoid many of the measurement and identification issues associated with most research on the effects of advertising.

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Direct-to-Consumer Advertising, Media Publicity and Utilization of Prescription Drugs

Presenter:

Marta Wosinska

Authors:

David Bradford, Marta Wosinska

Chair: Ernst R. Berndt; Discussant: Mon June 5, 2006 17:15-18:45 Room 335

Ever since pharmaceutical companies began to communicate directly with consumers, direct-to-consumer advertising (DTCA) has been under great scrutiny from policymakers, consumer groups and health plans. A small but growing literature has found that DTCA tends to increase category demand for pharmaceuticals. At the same time, another important source of information for consumers and physicians about prescription drugs - news and popular media stories (media coverage) - has not been explored.
However, studying the effects of media coverage on the utilization of advertised prescription drugs is important for at least four reasons. First, if media coverage is correlated with DTCA expenditures, then current estimates of DTCA effects may overstate the ability of DTCA to affect demand. Second, since media coverage is not subject to regulatory oversight (and may be perceived by consumers as more objective than DTCA), the relative effectiveness of DTCA and media coverage is also important. Third, from a marketing perspective it is also possible to assign a monetary value to the firm from media coverage by assessing what advertising spending would be necessary to get the same boost in utilization that is observed from, say, one positive front page story in a national magazine on a drug. Thus the policy debate surrounding DTCA will be incomplete without an understanding of what the interactions are between media coverage and DTCA. To address these issues, we combine visit, prescription, health outcome, and demographic data on nearly 70,0000 patients (from more than 65 different primary care physician practices) in over 60 markets from 1998 through 2002 with DTCA expenditures and media coverage in those markets. We consider two product categories: Cox-2 inhibitors (for approximately 18,000 patients with osteoarthritis) and statins (for approximately 55,000 patients with hypercholesterolemia). We model changes to the flow of patients with the relevant disease categories (osteoarthritis and hypercholesterolemia) into the practices, and changes in physician prescribing patterns, as a function of class- and brand-specific DTCA, relevant media coverage, and other characteristics of the patients and clinicians.

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Health Insurance Demand Responses from New Price Structures Offered by Consumer Directed Health Plans

Presenter:

Stephen Parente

Authors:

Stephen Parente, Roger Feldman, Jean Abraham, Jon Christianson

Chair: Willard Manning; Discussant: TBA Mon June 5, 2006 15:30-17:00 Room 121

Rationale: Consumer directed health plans (CDHPs) are attracting attention from consumers, employers, and policy-makers. CDHPs are high-deductible health insurance plans coupled with a tax-advantaged account that can be used to pay for eligible medical expenses. CDHP enrollment is currently estimated at approximately three to five million covered lives.

Objectives: The purpose of this paper is to examine the effect of ‘price’ on health plan choice. More specifically, we will determine whether the health care spending account in the new CDHP designs provides an incentive for consumers to choose these plans over conventional health insurance plans; and we will estimate the extent to which the ‘donut hole’ (i.e. the gap between the account and point where insurance coverage begins) is a disincentive for health plan choice. These two ‘prices’ are largely absent from the design of traditional health insurance plans, which feature relatively low deductibles and do not have health spending accounts. The research questions of this examination are:

• How does the introduction of Consumer Directed Health Plans (CDHPs) into mainstream health insurance affect plan choice?

• Specifically, what is the impact of the account, donut hole and deductible on the own-price elasticity of CDHPs?

Methodology: This paper builds upon the plan choice estimation analysis from an earlier CDHP investigation. In that analysis, a logistic regression conditional upon the number of plan choices offered to a given employee was used. Our primary source of data for this analysis is the employee health plan choices from four large employers participating in a Robert Wood Johnson Foundation (RWJF) funded study. The data from employers represented approximately 250,000 covered lives. Each of these employers offers a CDHP along with traditional managed care plans.

Results & Implications: Early results show a positive impact of the health care spending account from which medical expenses are debited and negative responses to the new CDHP deductible developed as the difference between a traditional high deductible health plan and the consumer’s spending account. With respect to their respective elasticities, the CDHP deductible, known as the ‘donut hole,’ has a far more elastic price response than the health spending account.

We examined the price elasticities in our health plan choice model, including employee premium, health account, donut hole and coinsurance. The largest of the elasticities is for the tax-adjusted employee premium. The least elastic response is for the employee health account. An interesting finding is the greater elasticity of coinsurance compared with the donut hole, or the difference between the deductible and the health account. This result suggests that consumers have greater sensitivity to variations in coinsurance than to changes in the donut hole structure. This finding may challenge some detractors of CDHP plans who suggest consumers will not embrace a plan design with obvious increased cost sharing in the form of a large potential deductible, compared with coinsurance, a much more conventional method of cost-sharing.

Next Steps include adding chronic illness into our plan choice and cross price elasticity estimate using a nested logit model of plan choice.

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Pent-Up Demand and the Discovery of New Health Conditions after Medicare Enrollment

Presenter:

Jody Schimmel

Authors:

Jody Schimmel

Chair: Willard Manning; Discussant: TBA Mon June 5, 2006 15:30-17:00 Room 121

Recent evidence using hospital discharge data has shown increases in many forms of medical care utilization after age 65. Other work using longitudinal data has shown that those who are uninsured prior to Medicare enrollment experience larger increases in the utilization of certain types of preventive and curative care once on Medicare than those who were continuously insured. Increases in utilization upon obtaining insurance coverage may occur because the previously uninsured have known health conditions that have not received proper treatment or because the increased use of medical care leads to the new diagnosis of conditions. The “discovery effect” refers to the latter, the knowledge one gains about individual health status upon obtaining access to medical care. This effect predicts that increases in utilization after Medicare will lead to more new diagnoses among those who lacked insurance coverage before age 65 than those who had coverage.

Longitudinal data from the 1992-2004 waves of the Health and Retirement Study (HRS) are used to follow a panel of individuals as they progress from ages 56-61 to Medicare enrollment at age 65 and then for several years after age 65. At each interview, HRS respondents are asked whether a doctor has ever told them that they have: a heart condition, a lung condition, high blood pressure, diabetes, cancer, stroke, or arthritis. Because the discovery effect occurs as a result of increased medical care utilization, it is expected that the incidence of new diagnoses will be higher in the years immediately following Medicare enrollment. In order to test the discovery effect hypothesis, Cox models with time-varying covariates are used to assess the differential rate of diagnosis after age 65 by insurance status prior to Medicare.

Results in this paper indicate that the increased utilization experienced after age 65 by those who were uninsured prior to Medicare leads to an elevated hazard of diagnosis (relative to the insured) for virtually every chronic condition considered, for both men and women. The magnitudes of these effects are clinically meaningful; differential increases after Medicare are between 20% and 400% larger among the previously uninsured compared to the insured. These effects are particularly strong for men with heart conditions and for women with lung conditions or cancer. Estimates from Cox models also show that the previously uninsured are less likely to be diagnosed compared to those who were insured in the years prior to Medicare.

The additional diagnoses of chronic conditions among the previously uninsured after age 65 confirms that the uninsured are sicker than the insured, and that lack of access to medical care while uninsured results in untimely diagnoses. Though the uninsured are sicker, they have lower levels of chronic conditions prior to Medicare enrollment due to this lack of diagnosis. Thus, judging the relative health of the uninsured by considering only the presence of chronic conditions in a cross-section is a poor way to assess relative health status and will make the uninsured look healthier than they actually are.

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The Impact of an Increase in KCHIP Premiums on Insurance Coverage of Kentucky Children

Presenter:

James Marton

Authors:

James Marton

Chair: Willard Manning; Discussant: TBA Mon June 5, 2006 15:30-17:00 Room 121

The state of Kentucky has been very successful in implementing a health insurance program for low income, uninsured children under the guidelines established by the State Children’s Health Insurance Program (SCHIP) which was created by the Balanced Budget Act of 1997 under Title XXI of the Social Security Act.

Since its inception, the Kentucky Children’s Health Insurance Program (KCHIP) has not charged any premium for this insurance coverage. For many reasons it has become more difficult for Kentucky to finance the KCHIP program in its current form. The recent recession has caused state tax revenue to fall nationwide. At the same time, there has been acceleration in the growth of KCHIP spending. Nationwide growth in CHIP spending can be attributed to causes such as enrollment increases, increases in the cost of prescription drugs, and provider payment increases. An additional constraint on the state’s ability to maintain its KCHIP program is that Congress reauthorized federal funding at a lower level starting in July 2003. Finally, as other states build their CHIP programs, the federal money available for redistribution will decrease. For these reasons, the state of Kentucky began in December 2003 charging a $20 monthly premium for families with children covered by KCHIP with income levels between 151% and 200% of the federal poverty level (FPL). This service category is known as KCHIP III.

The purpose of this paper is to examine the impact of the introduction of this premium on enrollment durations in KCHIP III. Do children in KCHIP III exit the program more rapidly after the premium was introduced? A Cox proportional hazards model of KCHIP III duration will be estimated with the policy change modeled as a time varying covariate which is equal to 0 prior to the December 2003 and equal 1 afterwards. A similar model can be estimated for KCHIP II (coverage for children with family income between 100% and 150% FPL) enrollment. Because children in KCHIP II do not have to pay any premiums, they are a naturally provided control group.

In order to isolate the effect of non-payment of the premium as a potential exit route from KCHIP III, movements to and between other state level insurance programs, such as KCHIP II and Medicaid, are controlled for. Exits for other reasons, such as aging out of the program or moving out of the state are also controlled for.

Preliminary results suggest that children were 4 times as likely as in a typical month to exit KCHIP III if they remain enrolled until the premium is introduced. The average exit probability in a typical month in the sample is 9%. The preliminary results also show large effects of yearly recertification on exiting. Non-white children have a greater chance of exiting when compared to white children and children covered under managed care KCHIP III have a greater chance of exiting when compared to those covered under fee for service KCHIP III.

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Selection and the Effect of Prenatal Smoking

Presenter:

Angela Fertig

Authors:

Angela Fertig

Chair: Phil Cook; Discussant: TBA Mon June 5, 2006 15:30-17:00 Room 213

Author. Angela Fertig (afertig@uga.edu). College of Public Health and Carl Vinson Institute of Government, University of Georgia.

Title: Selection and the Effect of Prenatal Smoking

Rationale: A large number of studies find that smoking during pregnancy is associated with poor infant health outcomes. However, there is an on-going debate about the extent to which this association is causal. It is difficult to determine whether these poor health outcomes are the result of prenatal smoking or are also attributable to characteristics of the mother which are correlated with prenatal smoking.

Objectives: The objective of this paper is to examine the importance of selection on the effect of prenatal smoking by comparing the effect sizes across groups whose selection varies.

Methodology: I use three British birth cohorts where the mothers’ knowledge about the harms of prenatal smoking varied substantially. Specifically, little was known about the harms of smoking prior to the 1964 U.S. Surgeon General’s Report, nor the particular detrimental relationship between prenatal smoking and birth outcomes until the 1969 Surgeon General’s Report. Thus, mothers who smoked during pregnancies that occurred prior to these reports were a less select group than mothers who smoked during pregnancies following them. I compare the effect sizes across three British birth cohorts - those children born in 1958, 1970, and 2000 - and expect that the effect is larger for the latter two cohorts than for the earliest cohort if selection plays an important part in the measured effect.

Results: I find that the effect of prenatal smoking on low birth weight for gestational age among children born in 2000 is twice that of children born in 1958, implying that selection plays an important part in the association between smoking and birth outcomes.

Conclusions: If adverse selection is responsible for the increase in effect size, the implication is that policy interventions to discourage smoking among pregnant women may not prevent as many unhealthy births as usually reported. At the same time, the evidence presented here is further confirmation that prenatal smoking has a causal effect on birth weight conditional on gestation since I find that there is a significant effect in the absence of adverse selection.

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The Effect of Taxes and Bans on Passive Smoking

Presenter:

Francesca Cornaglia

Authors:

Francesca Cornaglia, Jerome Adda

Chair: Phil Cook; Discussant: TBA Mon June 5, 2006 15:30-17:00 Room 213

This paper evaluates the effect of excise taxes and bans on smoking in public places on the exposure to tobacco smoke of non-smokers. We use a novel way of quantifying passive smoking. We use data on cotinine concentration- a metabolite of nicotine- measured in a large population of non-smokers over time. Exploiting state and time variation across US states, we reach two important conclusions. First, excise taxes have a significant effect on passive smoking. Second, smoking bans have on average no effects on non smokers. The reason is that smokers replace smoking at banned locations with smoking in places, where non smokers are in turn more likely exposed. In particular, while bans in public transportation or in schools decrease the exposure of non smokers, bans in recreational public places can in fact perversely increase their exposure by displacing smokers to private places where they contaminate non smokers. Bans affect different social groups differently: we find that smoking bans increase the exposure of poorer individuals, while it decreases the exposure of richer individuals, leading to widening health disparities.

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The Effects of Workplace Smoking Bans on Exposure to Smoke

Presenter:

Christopher Carpenter

Authors:

Christopher Carpenter, Marianne Bitler, Madeline Zavodny, Agnes Scott

Chair: Phil Cook; Discussant: TBA Mon June 5, 2006 15:30-17:00 Room 213

Rationale: In recent years, a number of states and localities have implemented bans on smoking in private workplaces. While these bans may have the effect of reducing own smoking, much of the motivation for adopting these bans was to reduce exposure to environmental tobacco smoke (ETS). Little research has comprehensively examined this issue while also paying attention to own smoking and the effect of other policies such as cigarette taxes.

Objectives: The objective of this paper is to examine the effect of state and local smoking bans in the workplace on exposure to environmental tobacco smoke, taking account of own smoking and other policies.

Methodology: This paper will use difference-in-differences methods to examine own smoking and exposure to environmental tobacco smoke before and after imposition of state and local bans on smoking in the workplace. We will study bans in California (and possibly other states) that staggered implementation in different types of workplaces, such as restaurants and stand-alone bars. We will use data from the California Tobacco Use Surveys, the Tobacco Use supplements to the Current Population Survey, and the California Department of Health Bar Establishment Surveys. We will combine these data with contextual information on smoking bans, cigarette taxes, and other public policies toward tobacco. Our empirical models will include controls for demographic characteristics and economic conditions as well as location and time.

Results: Preliminary results indicate that statewide bans on smoking in private worksites are associated with significant increases in the likelihood that affected workers report a complete ban on smoking at their worksite. For smoking bans that cover bars and restaurants, these increases appear particularly strong for specific groups of affected workers, such as bartenders and waiters/waitresses. When completed, this project will identify the degree to which these increases in reported ban presence have reduced own smoking and exposure to ETS. Preliminary results also suggest a sizable reduction in own smoking among bartenders and waitstaff after the California bans were implemented.

Conclusions: State and local bans on smoking in private worksites are becoming increasingly popular. While reducing exposure to environmental tobacco smoke is a main motivation for adoption of these bans, little research has carefully examined the effects. Our preliminary results from California suggest that these bans have been effective at increasing the likelihood that affected workers report comprehensive smoking restrictions at their place of work. The final goal of this research-understanding the degree to which these bans have ultimately been effective at reducing ETS exposure and own smoking-is important for a comprehensive evaluation of these policies.

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The Effects of Eliminating Behavioral Health Benefits in a Medicaid Population

Presenter:

Kenneth McConnell

Authors:

Kenneth McConnell, Neal Wallace

Chair: Jose Escarce; Discussant: Ana Balsa Mon June 5, 2006 15:30-17:00 Room 225

Rationale: In response to state budget shortfalls in 2003, the Oregon Health Plan made several changes to its benefit package offered to the enrollees who were not part of the “Categorically Eligible” Medicaid population. One important change was the elimination of coverage for outpatient substance abuse treatment, including methadone treatment for heroin addiction. As other states consider cuts in their coverage of substance abuse treatment, the Oregon experience can provide evidence about the expected impact on costs and utilization.

Objectives: The objective of this paper is to compare the effect of an elimination of the substance abuse benefit on methadone users’ utilization of medical services and expenditures for those services.

Methodology: We use data on claims from members of the Oregon Health Plan who were subject to the cuts in their benefit package. We selected individuals who were enrolled in the plan for at least six months before and after the 2003 benefit changes. 381 methadone users and 15,713 non-users were identified through the claims data. Following Hirano, Imbens, and Ridder, we used matching with an estimated propensity score to evaluate the difference-in-differences in outcomes between methadone users and non-users. We estimated the change in office visits to physicians, emergency department visits, and hospital admissions, and expenditures for these services.

Results: After the elimination of substance abuse treatment benefits, visits and expenditures for physician services and emergency services showed significant increases after the substance abuse benefit was eliminated. Inpatient admissions increased, but at a rate that was less than the control group.

Conclusions: Our results suggest that the elimination of outpatient substance abuse benefits increased expenses associated with emergency departments and office visits. Elimination of substance abuse programs may not be a effective method of reducing expenditures for Medicaid programs.

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Cost-effectiveness of paying drug users to abstain

Presenter:

Todd Olmstead

Authors:

Jody Sindelar, Todd Olmstead, Nancy Petry

Chair: Jose Escarce; Discussant: Anthony Lo Sasso Mon June 5, 2006 15:30-17:00 Room 225

We analyze the cost-effectiveness of a novel approach to treating drug abuse that pays drug users not to use drugs. In this approach, drug users in treatment programs are tested and paid small incentives when they abstain from using specific drugs. The standard approach of such a Contingency Management (CM) approach is to pay fixed increments on an escalating basis. The CM under study is a lower cost prize-based version of in which instead of earning fixed awards, the successful patient draws chips from an urn. The chips indicate whether or not a prize has been won and the exact prize. The prize value and probability of winning each type of prize can be varied so that the expected value of payments can be varied. With increased abstinence, the patient gets to take more draws and the number of draws increases at an escalating rate to encourage longer term abstinence.

The effectiveness data were obtained from the Motivational Incentives-Drug Free Clinics study conducted in the context of the National Drug Abuse Treatment Clinical Trials Network. Patient outcome measures include total number of stimulant-negative urine samples provided and longest duration of confirmed stimulant abstinence. The cost data were obtained via surveys sent to the eight participating psychosocial drug abuse treatment clinics. Patients (N = 412) were randomly assigned within each clinic to usual care (UC) or usual care plus contingency management (CM). Clinic costs included: counseling, patient drug testing, and administration of the incentives component (value of prizes, administrative time to draw prizes, and administrative time to inventory, shop, and stock prizes).

Results are presented for the incremental cost-effectiveness ratios (ICERs) of CM relative to UC for all sites combined, as well as for each site separately. A special emphasis of this cost-effectiveness analysis was on the multi-site nature of the trial and the interpretation of the site differences. The study determined that the ICER for an additional stimulant-negative urine sample was $131 per additional negative urine sample for all sites combined, and ranged by site from $74 to $252 across the sites. The ICERs for lengthening the longest duration of confirmed stimulant abstinence by one week were also varied across the sites. In addition, scatterplots of the bootstrapped replicates and the corresponding acceptability curves were presented to illustrate the uncertainty inherent in the incremental cost-effectiveness ratios (ICERs) and to provide policy relevant interpretation of the ICERs. The overall and site-by-site scatterplots of the ICERs and the acceptability curves are provided. We discuss external data that can be brought to bear regarding the policy interpretation of the ICERs, e.g. what is the value gained in terms of crimes and spread of disease averted by lengthening longest duration of abstinence and a greater number of negative drug urine tests? We also discuss a variety of policy, implementation and equity issues regarding the wider spread adoption of this novel treatment.

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The Impact of Adolescent Perceptions of the Future on Substance Abuse

Presenter:

Elizabeth Vigdor

Authors:

Elizabeth Vigdor

Chair: Jose Escarce; Discussant: David Bishai Mon June 5, 2006 15:30-17:00 Room 225

Background: Understanding how perceptions of uncertainty and risk affect behavior is important for the economic analysis of substance abuse and for designing and targeting prevention efforts. This is particularly relevant for adolescents, who may be more likely to deviate from the classical rational choice model of economics by misperceiving risk and future uncertainty.

Objective: The primary hypothesis is that some adolescents have mistaken perceptions about future uncertainty that affect the likelihood that they use illicit drugs. If an adolescent is overly pessimistic, that is, her belief that an event will transpire is much greater than the actuarial likelihood of the event occurring, her expected future utility will be lower . Therefore we would expect her to be more likely to engage in activities with potential adverse consequences for the future, such as illicit drug use.

Methods: We used the 1997 National Longitudinal Survey of Youth (NLSY-97) to examine marijuana utilization as a function of perceptions of future risk, controlling for demographic characteristics and other social and environmental factors. The sample was restricted to adolescents who did not use marijuana at Wave 1. Outcome variables were initiation of marijuana use by Wave 4 and frequency of use at Wave 4. Perceptions of future risk were measured using self-reported chances of dying within the next year and before age 20. The actuarial probability of dying within this time frame was calculated from Social Security life tables.

Results: Approximately 30 percent of wave 1 respondents reported a probability of dying within 1 year of 0, which is the correct response in expectation. Adolescents who overestimated their risk of dying in 1 year were significantly more likely to initiate marijuana use by wave 4 than similar adolescents who assessed the risk of death more accurately (26.8% vs. 21.8% for death within 1 year), and significantly more likely to smoke marijuana on a regular basis at Wave 4 (8.8% vs. 7.9%).

Adolescents with a self reported risk of dying within one year of 1-10 percent, 11-20 percent, and 21-30 percent are significantly more likely to initiate marijuana use by Wave 4 than those who report a risk of 0, but there is no significant relationship between higher self-reported probabilities of dying and marijuana initiation. For regular marijuana use, only the teenagers who report a 1-year mortality risk of 1-10 percent have significantly higher rates of use than similar teens who report no risk of dying in the next year. Results are similar but less significant when the probability of dying by age 20 is used instead.

Conclusions: Adolescents’ perceptions of mortality risk are correlated with future use of illicit drugs, which has implications for targeting prevention efforts at teenagers most at risk for substance abuse. Further research is needed to explore whether the lack of correlation between very high reported probabilities of death and substance abuse is a result of the high responses being protest or careless responses rather than miscalculations of risk.

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Designing Effective Expansions of Insurance Coverage: Learning from New York's Health Reform Efforts

Presenter:

Sharon Long

Authors:

Sharon Long, John Graves, Stephen Zuckerman

Chair: Ted Frech; Discussant: Chris Garmon Mon June 5, 2006 15:30-17:00 Room 226

Lack of health insurance is a persistent problem in the U.S. health care system. Although there is increasing political consensus as to the need for new policies to increase insurance coverage, there is little consensus as to the form such actions should take: either further expansions of public programs or incentives to increase coverage in the private sector. Federal and State efforts to design effective strategies for expanding insurance coverage should build on the current efforts underway in several innovative states. One such state is New York: New York’s Health Care Reform Act of 2000 included a number of coverage expansions, including Family Health Plus for parents of Medicaid-eligible children and subsidies to make health insurance more affordable and available to small employers and their employees, sole proprietors, and working individuals whose employers do not provide health coverage. This paper assesses the effects of New York’s expansion on eligible parents with respect to public coverage, uninsurance, the displacement of private coverage, and health care access and use. A key challenge to evaluating state health reform initiatives is often a lack of state-specific data. As part of this study, we explore the feasibility of using the data from the National Health Interview Survey (NHIS) to evaluate New York’s expansion efforts. The NHIS samples from all states and the District of Columbia and, although not designed to provide state-level estimates for all states, provides state-level estimates for the largest states, including New York. For this study, we use data from the 1998-2004 rounds of the NHIS. As a check on our analysis, we compare the estimates of the effects of the New York’s expansion effort on insurance coverage from the NHIS to those obtained using comparable years of the Current Population Survey.

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How Much Choice? Nonlinear Relationships between the Number of Health Plan Options and the Choices of Medicare Beneficiaries

Presenter:

Brian Elbel

Authors:

Brian Elbel, Mark Schlesinger

Chair: Ted Frech; Discussant: Roger Feldman Mon June 5, 2006 15:30-17:00 Room 226

Background: Expanding the choices available to Medicare beneficiaries is a central aspect of recent Medicare reform. Economic theory predicts that as the number of health plan options available increases, beneficiaries will be more likely to find a plan that matches their preferences. Improved matching should lead to a) an increase in the take-up of Medicare Advantage (formerly, Medicare+Choice) plans as an alternative to fee-for-service Medicare, and b) an increase in the probability that individuals in poorly performing plans will exit when dissatisfied.
However, research on bounded rationality indicates that these assumptions might be wrong. This literature demonstrates that large numbers of options can be associated with choice deferral—foregoing options that would have been chosen if presented in a smaller choice set. However, most of this work (with one exception) has examined only low-cost, everyday goods. Whether the same is true for health plans is not clear. Objective: To determine how the health plan enrollment and disenrollment decisions of Medicare beneficiaries are influenced by the size of the beneficiary’s choice set. Data: We examine data from a separate survey of Medicare beneficiaries fielded in 2000.
Methods: We examine both the probability of enrollment into a Medicare health plan (when beneficiaries first become eligible for Medicare) and the probability of switching health plans. We also examine two additional outcomes to confirm our interpretation of the number of plans variable: Did those who did not enroll consider doing so, and How long did the beneficiary take considering their options. The key independent variable is the number of Medicare Advantage plans available in their county of residence. We control for other individual and market characteristics known to be related to enrollment and disenrollment and allow for a non-linear relationship between choice set size and our dependent variables. Results: We find that increasing the size of the choice set from 1-2 to 3-4 options does seem to both increase the probability of enrollment in a Medicare Health Plan, as well as switching plans. However, after 3-4 plan options, there is no subsequent increase in either enrollment or disenrollment, and some evidence of a decrease in both. These results seem robust across various model specifications and sub-samples. Conclusions: While some choice is beneficial in inducing health plan enrollment and switching, the relationship between number of options and enrollment and switching is non-linear. As health policy moves towards increasing the number of choices that consumes are asked to make, the behavioral economics and bounded rationality literature could have important contributions.

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Valuing Variety: How Much Do Workers Value Having Choices Among Health Insurance Plans?

Presenter:

Jean Abraham

Authors:

Jean Abraham

Chair: Ted Frech; Discussant: Ted Frech Mon June 5, 2006 15:30-17:00 Room 226

Authors: Jean Abraham, University of Minnesota (abrah042@umn.edu) and Anne Beeson Royalty, Indiana University Purdue University Indianapolis (royalty@iupui.edu)

Title: Valuing Variety: How Much Do Workers Value Having Choices Among Health Insurance Plans?

Rationale: In response to rising health care costs, insurers are introducing new products and employers are making changes to benefit designs, both in terms of the number and types of plans they offer to workers. Employers face tradeoffs when offering plan choice including fixed administrative costs per plan, higher premiums given lower per plan enrollment, adverse selection, and spiraling premiums. In contrast, there may be benefits associated with plan choice, particularly if the workforce exhibits heterogeneous preferences.

Objective: The primary objective of this study is to develop a model derived from the welfare economics literature to empirically estimate the monetary value that workers place on having variety with respect to the number and types of health plans offered to them through their place of employment.

Methodology: Obtaining estimates of the gains or losses associated with changes in the number or types of plans offered to workers is a two-step process. The first step is to empirically estimate multinomial logit and nested multinomial logit models of a worker’s choice of health plan, specifying the determinants of demand to include the employee’s premium contribution, the coinsurance rate, deductible, and covered benefits (e.g., prescription drug coverage). Second, we use integration methods to obtain the surplus function for our probabilistic health plan demand functions. Using the surplus function and specific values of the explanatory variables, we then estimate the gain or loss realized when the set of offered health plans changes. Calculations are performed for several simulated changes in plan offerings. We use data on 1,530 workers from the 1999 and 2001 linked Household Component-Insurance Component MEPS database. The Household Component (HC) is a random sample of the civilian, non-institutionalized U.S. population containing data on demographics, employment status, and health insurance. For individuals with an offer of employer coverage, surveyors asked for employer contact information and these employers were surveyed about their health plans offerings. The results comprise the MEPS Insurance Component (IC) database which contains information on premiums, employee contributions, plan type (e.g., HMOs, PPOs, and FFS plans), coinsurance, deductibles, and covered benefits for up to four comprehensive health plans offered to employees of private establishments and all plans offered by public employers.

Results: Preliminary estimates of the compensating variation for changes in the number and types of plans range from $165 to $1992.

Conclusions: As policymakers assess the effects of the managed care revolution and the consumer-driven health care movement, it would clearly be useful to know the value that workers put on having a variety of health plans from which to choose, as well as the extent of the losses incurred as they lose options. Employers would benefit from knowing how valuable a variety of health plan choices really is to workers, particularly since they face tradeoffs when designing their health insurance benefits.

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Modeling Efficiency at the Process Level

Presenter:

Robert Lee

Authors:

Robert Lee, Roma Taunton, Byron Gajewski, Marjorie Bott

Chair: Dave Vanness; Discussant: Brian Denton Mon June 5, 2006 15:30-17:00 Room 235

The health economics literature includes a significant number of efficiency studies, yet most have not fully engaged Newhouse’s (1994) concerns that standard data sources may omit important inputs and that output measures may ignore important sources of heterogeneity. A third concern is that Data Envelopment Analysis and Stochastic Frontier Analysis often disagree about efficiency rankings (Chirikos and Sear, 2000), suggesting that the results are sensitive to untested modeling assumptions. In looking at the performance of a sample of nursing homes, this study seeks to address all three issues.

This paper examines a single process: how nursing homes complete a standardized, mandatory assessment of residents. The paper is based on a study that also gathered detailed data about variations in the quality of these assessments and detailed data about differences in the characteristics of residents. The product should be homogeneous, and we have data to test this assumption. The paper analyzes primary data collected from a stratified random sample of 107 nursing homes during the last two years. The first step in collecting the underlying data was the construction and validation of a process map for each facility. As a result, the steps in the process for each nursing home and the resources used at each step were identified and verified. It is unlikely that data on any significant inputs into the production process are missing. Moreover, these data allow us to identify at which steps production is inefficient, not just which resources appear to be overused.

These data were augmented with data from Medicaid cost reports, the Minimum Data Set, and the Online Survey Certification and Reporting System. As a result, we have the data needed to conduct a variety of case mix-adjusted and quality-adjusted Data Envelopment and Stochastic Frontier Analyses.

At this point we have just finished data cleaning and have done initial DEA analyses. These first analyses find that some facilities are quite inefficient. Our analyses will proceed on three tracks. One will be to examine the correlations of efficiency scores as we change assumptions about input aggregation and returns to scale. Because we have data on input prices, the next track will repeat this process with DEA models that identify technical and allocative inefficiencies. We will again examine the impact of doing so on the correlations of efficiency scores. Finally, we will estimate alternative stochastic frontier cost functions that replicate the DEA assumptions about input aggregation and returns to scale. Again we will examine the correlations of the efficiency scores with the other models. For each of these three models we will estimate auxiliary regressions that examine whether ownership, chain membership, the structure of the care planning process, size, physical structure, market structure, or manager training affect efficiency scores.

Inefficient production is one of the hallmarks of the American health care system, yet economics has yet to offer profound insights into its sources. This unique data set should help us understand why alternative models paint different pictures of efficiency.

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Projecting the Health and Economic Impact of a Quadrivalent HPV Vaccine using a Multi-type Transmission Dynamic Model

Presenter:

Elamin Elbasha

Authors:

Elamin Elbasha, Erik Dasbach, Ralph Insinga

Chair: Dave Vanness; Discussant: David Vanness Mon June 5, 2006 15:30-17:00 Room 235

Background: The health and economic burden of HPV disease is significant. A safe, efficacious, prophylactic quadrivalent HPV (6/11/16/18) vaccine that reduces the overall incidence of cervical cancer, cervical intraepithelial neoplasias (CIN), genital warts, and HPV infection may soon be available. Objectives: To assess the cost-effectiveness of alternative HPV vaccination strategies (i.e., routine vaccination of 12-year old females versus 12-year old females and males) in settings with established cervical cancer screening programs in the U.S.

Methods: A non-linear, deterministic, age-structured, mathematical model of the transmission dynamics of HPV and cancer development in a U.S. population stratified by sex and sexual activity was developed and integrated with an economic model that accounts for the effectiveness and economic consequences of vaccination strategies. Inputs for the model were obtained from public data sources, published literature, and clinical trials. We assumed a vaccine uptake of 70%. We varied duration of protection from 10 years to lifetime and the cost of the vaccination series from $300-$500.

Results: Assuming lifetime duration of protection, vaccination combined with screening reduced the prevalence of high risk HPV by 60% and the incidence of genital warts, CIN, and cervical cancer by 76%, 43%, and 44% respectively after 100 years. The incremental cost-effectiveness ratios ranged from cost-saving to ~$124,000 per quality adjusted life year gained. The following parameters exerted the greatest influence on the results: vaccine characteristics of degree and duration of protection, preference weights, and cost of vaccination. Conclusion: Vaccination with a prophylactic quadrivalent HPV vaccine can reduce the incidence of cervical cancer, CIN, and genital warts and provide survival benefits and quality of life improvements at a cost within the range accepted as cost-effective for a reasonably wide range of model input values.

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Sicker and Poorer? The Role of Health Status for Welfare Leavers

Presenter:

Bianca Frogner

Authors:

Robert Moffitt, Bianca Frogner

Chair: Curtis Florence; Discussant: Curtis Florence Mon June 5, 2006 15:30-17:00 Room 309

Rationale: Temporary Assistance for Needy Families (TANF) emerged from major welfare reform at the federal and state level in the late 1990’s. Welfare reform imposed strict time limits, work requirements, and eligibility criteria, resulting in a large drop in the welfare rolls. Studies to date have shown that a majority of former welfare recipients, or welfare leavers, did relatively well in terms of employment and income, but a subpopulation of extremely poor welfare recipients were adversely affected. In addition, many welfare leavers were dropped from Medicaid even when still eligible for coverage. An issue that has not been well addressed is the distribution of health status of welfare leavers and whether it is bimodal. In other words, welfare recipients with relatively good health status are more likely to leave welfare, but there may be a subpopulation with very poor health that also left.

Objectives: To calculate the distribution of health status among welfare leavers and its change over time, with particular attention to possible bimodality; to calculate the likelihood that a person returns to welfare versus stays off welfare in the long run as related to where they are in the health status distribution; and to calculate health insurance coverage rates for welfare leavers of different health status levels.

Data: This study will use longitudinal household survey data from the Welfare, Children, and Families Study, commonly called the Three-City Study. The data collection process involved three rounds of in-person interviews ending in 1999, 2001 and 2005, allowing researchers to study the evolving effects of welfare reform. A random sample of approximately 2,400 households with children was drawn from racially and ethnically diverse low- and middle-income neighborhoods in three cities: Boston, Chicago, and San Antonio. The study interviewed both welfare and non-welfare recipients from the same neighborhood. Among all welfare reform data sets in the country, the study is unique in sample size and in length: the sample size is larger than the low income, welfare eligible portions of the Panel Study of Income Dynamics (PSID), and is longer than the largest national panel, the Survey of Income and Program Participation.

Methodology: We will analyze survey participants who have completed all three waves. We will use the many health measures in the data set to construct an index of health status with factor analysis. We will then see how an individual’s location in this distribution affects the likelihood of leaving welfare, returning to welfare, and staying off welfare. We will examine income, employment, and health insurance coverage conditional on each of these states. Hazard models with unobserved heterogeneity will be used to examine exit from and re-entry to welfare. Income, employment, and health insurance coverage will be estimated conditional on these transitions to allow for selection bias. One’s location in the health status distribution will enter all hazards and regression equations.

Results: We have not completed our analysis and do not have results at this time. We expect to have results by the time of the conference.

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Trends in the Health of the Poor and Near Poor: Have the Poor and Near Poor Been Catching Up to the Non Poor in the Last 25 Years?

Presenter:

Elise Gould

Authors:

Elise Gould, Timothy Smeeding, Barbara Wolfe

Chair: Curtis Florence; Discussant: David Becker Mon June 5, 2006 15:30-17:00 Room 309

Objective: We investigate how health status and the relationship between health status and income have changed over time.

Methodology: First, we document patterns of health status among children, prime-age adults, and adults over 65 using the National Health Interview Survey for selected years between 1978 and 2003. We measure income using three categories of poverty: poor for below 100% of poverty, near poor for between 100 and 200% of poverty, and non poor for above 200% of poverty. At the same time, we utilize three measures of health: self-reported fair or poor health, limitations in work, school, or home activities due to health problems, and a health-related quality of life index equal to one if individuals report both limitations and in fair or poor health. We track changes in health status by poverty status for all three age groups over the 25 year period. Next, we perform multivariate regression of the likelihood of having poor health for all three measures. Besides our investigation into the relationship between income and health, our probit model includes control variables for age, sex, race, ethnicity, education, and region.

Results: As expected, we find that poor health status and poverty are closely linked. For every age group and every heath indicator, the health of the poor is worse than that of the near poor or non poor. Adults show some slight improvement in health over time, using both measures. However, the gains appear greatest among the non poor, suggesting an increase in health disparities as income disparities increase. Health status as measured by health limitations has declined for all children from 1978 to 2003, though the greatest rate of increase was among the near poor children. In the probit estimates, we find poverty to have strong correlation with poorer health status and clear statistical evidence of the increasing association between income and health for nearly all age groups and all three measures of health.

Conclusions: The evidence suggests that poverty and near poverty play an increasingly important role in determining health status. The increase in income inequality when combined with the increase in reported disparities in limitations for children may have long run negative consequences for future earnings inequality and more fundamental measures of well-being. In conjunction with programs specifically directed to provide health insurance to the poor and near poor, public policies targeted at reducing poverty could have long term consequences on health.

Implications: We make a case that ill health is a separate and very important aspect of poverty that needs to be continuously monitored and reported in the same way that the number of uninsured are monitored and reported and the number of poor themselves are monitored and reported. Only when health status, SES, and access to care can be easily and systematically compared will we be in a position to say whether the poor and near poor are receiving adequate health care or are approaching the non poor in terms of access and health status.

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Choosing Health versus Wealth: A Laboratory Survey

Presenter:

Robert Graboyes

Authors:

Robert Graboyes

Chair: Curtis Florence; Discussant: Reed Johnson Mon June 5, 2006 15:30-17:00 Room 309

Rationale: We wish to develop a technique for revealing the monetary value that individuals place on stochastic health. Our methodology seeks a way to circumvent the tradeoff between moral hazard and risk-bearing in health care markets. Aside from this principal question, we wish to develop a prototype for a field experiment and suggest a possible structure for health insurance contracts.

Objectives: We wish to answer the following questions: How much are individuals willing to accept in lieu of medical treatments with a low probability of success? Is that willingness systematically related to the probability? Do they place higher value on loved ones than on themselves or on total strangers? Does fear of regret play a role in such choices?

Methodology: We use a contingent valuation method to estimate individuals’ willingness to accept cash in lieu of a treatment that has a low probability of success. We offer healthy individuals a choice of Policy T (full insurance coverage of an expensive treatment) or Policy C (a large, unfettered lump-sum cash indemnity upon diagnosis). For simplicity, we concern ourselves only with a single hypothetical medical contingency. With Policy C, consumers bear the marginal cost of a high-cost treatment without suffering the risk of catastrophic financial loss. In our survey, the disease and policies were abstract and hypothetical and the sample of subjects relatively small.

Results: Subjects choose the treatment policy more often when medicine is more efficacious. They choose the treatment policy most often for loved ones, less often for themselves, and least of all for anonymous strangers. Strikingly, subjects choose the treatment policy more often when ex post regret over the choice is likeliest, even when no differences exist in treatment efficacy. The responses were strongly consistent internally and comported well with economic logic. Despite the small sample, the results were highly significant. While healthy, the subjects were capable of signaling the marginal value they placed on a small probability of life. They were able to do so consistently over long lists of random scenarios.

Conclusions: The results suggest a low-cost methodology for estimating health-wealth tradeoffs and a potential means of inducing consumers to self-limit use of high-cost, low-benefit treatments. The results present several puzzles related to the valuation that individuals place on their own health versus the health of loved ones or strangers.

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Health Risky Behaviors and Social Capital: Four Approaches to the Issue of Causality

Presenter:

Sherman Folland

Authors:

Sherman Folland

Chair: Richard Scheffler; Discussant: Chris Seplaki Mon June 5, 2006 15:30-17:00 Room 313

Author: Sherman Folland (folland@oakland.edu), Department of Economics, Oakland University

Title: Health Risky Behaviors and Social Capital: Four Approaches to the Issue of Causality

Rationale: Social capital elements such as spouse, children or community are well known to be statistically associated with better health indicators. The thorny question, however, is whether these elements improve health or whether they are correlated with health for other, perhaps spurious, reasons. We need ideas and research to disentangle this issue.

Objectives: The objective of this paper is to describe and test four approaches to identifying whether the observed positive correlation of health with social capital indicators is causal.

Methodology: The four proposed tests are as follows: 1) instrument the community social capital indicator, following Putnam; 2) test the associations of community level social capital with individual smoking and excessive drinking behaviors; 3) apply the DeLeire/Levy data on risk valuing behaviors of married versus unmarried men and women with or without children to individual longitudinal data including the risky behaviors of smoking and excessive drinking; and 4) produce a natural experiment in which movers to other MSAs with different community social capital levels are compared to stayers regarding their smoking and drinking behavior. These tests are made possible through a unique database that combines the NLSY79 Geocode data with a large marketing database used by Putnam and combining these in turn with area health resource and MSA community characteristics data. The attempt is made throughout to spot potential endogeneities and address them as best possible, likewise to address and discuss the identification problems of social capital research described by Durlauf.

Results: Preliminary results show that the instrumental variables approach to the Putnam community social capital index produces similarly strong and positive associations with health behaviors as does the raw index. The Putnam community level social capital measures are associated with reduced smoking for older (30+ year olds) but not for younger ages. As of this writing, the DeLeire/Levy application and the natural experiment described above are still in process, the combined database for this, however, is completed.

Conclusions: In the spirit of Karl Popper, causality is never proved, we can only apply more and better challenges to the hypothesis. Of the tests I have completed both in this research and prior work, the hypothesis tends to survive reasonable tests. Given the importance that would probably be attached to the “discovery” that social capital is a substantial influence on one’s health, this research should probably conclude that the ‘social capital improves health’ hypothesis has earned the right to further study.

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Social Capital Externalities and Individual Mortality Risks in Swedish Municipalities

Presenter:

Kamrul Islam

Authors:

Kamrul Islam, Ulf-G. Gerdtham, Bo Gullberg, Martin Lindström, Juan Merlo

Chair: Richard Scheffler; Discussant: Chris Seplaki Mon June 5, 2006 15:30-17:00 Room 313

Rationale: Social interaction in various forms and degrees is common to all economic agents and externalities are a fundamental aspect of a modern interdependent society. As a societal characteristic the effects of social capital have been hypothesized to influence society in a multitude of ways, including health. Evidence has been found that the community social capital is important to individual health. If such a societal externality exists then this may have important implications for health policy.

Objectives: To analyze community social capital externalities on individual’s all-cause and cause-specific mortality risk in Swedish municipalities.

Methodology: Envisaged from conventional economic premises, this paper proposes a mechanism where social capital can be thought as aggregate factor of health production in a community which generates production externalities for the individuals live in the same community and explores the relationship within established paradigm of the Grossman model (Grossman, 1972). The study uses pooled data from Statistic Sweden’s Survey of Living Conditions (the ULF survey) from the annual interviews conducted in 1980-1997 for all the subjects aged 20-84 years who were followed up for 4-21 years. Two municipality social capital indicators- registered election-participation rates and registered crime rates are used to measure area level social capital. We estimate social capital impact of the mortality risk, controlling for the individual’s initial health status and a number of exogenous individual characteristics using extended Cox model (with time-varying covariates). A number of sensitivity analyses are performed with respect to different specifications. We also include additional macro variables such as municipality level income, urbanization, income inequality (estimated by the Gini coefficient) and aggregate level of education as potentially can confound the association between municipality social capital and mortality risk.

Results: Our results suggest that both municipality social capital indicators are significantly influence individual’s risk form all-cause mortality for males but not for females. In an analysis of cause-specific mortality, results indicate that higher rate of election-participation significantly decrease the risk of mortality from cancer and favorable effects are also noticed (but not significant at 5% level) on cardiovascular mortality or deaths due to ‘suicide’ or ‘other external causes’ (motor vehicle accidents, accidents and homicides). Analogous results are also observed for the crime rates indicator. The results are evident and robust to the alternative specifications tried in the sensitivity analysis for individual’s age 65 years or more.

Conclusions: We conclude that municipality social capital has spillover effects on mortality risk over and above individual personal characteristics for elderly population.

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The Role of Community Social Capital in Reducing the Prevalence of Serious Mental Illness

Presenter:

Richard Scheffler

Authors:

Richard Scheffler, Timothy Brown

Chair: Richard Scheffler; Discussant: Chris Seplaki Mon June 5, 2006 15:30-17:00 Room 313

Authors: Richard M. Scheffler (rscheff@berkeley.edu) and Timothy T. Brown (tbpetris@berkeley.edu, Nicholas C. Petris Center on Health Care Markets and Consumer Welfare, School of Public Health, University of California at Berkeley.

Title: The Role of Community Social Capital in Reducing the Prevalence of Serious Mental Illness.

Rationale. Community social capital has been theorized to positively affect individual mental health through its effects on information flows and social norms regarding social support. However, three recent reviews of this topic have found that the research literature to date suffers from methodological weaknesses.

Objectives: The objective of this paper is to estimate the association of community social capital on the likelihood of an individual suffering from serious mental illness.

Methodology: We estimate a mental health production function focusing on the association of community-level social capital (CSC) and serious mental illness. We use a new validated measure of community-level social capital, the Petris Social Capital Index, which is based on an actual ecological measure of CSC rather than on an aggregation of individual survey responses. We measure CSC at the level of the Metropolitan Statistical Area (MSA) in order to capture the effects of CSC in both the areas of an individual’s residence and employment. Our measure of serious mental illness is a reliable and valid indicator of serious mental illness: the Kessler K6. We link our measure of CSC to individual-level data on 48,222 adults in 48 MSAs for the years 1999-2001 and control for individual-level demographics, individual-level social capital, and MSA-level fixed effects. Lagged CSC is used rather than contemporaneous CSC in order to avoid endogeneity. We test contemporaneous individual-level social capital (ISC) for endogeneity, using instrumental variables and include tests that show the strength and exogeneity of our instruments. All estimates are conducted using linear probability models and sensitivity tests are conducted estimating the same specifications using probit models.

Results: We find that the level of CSC is inversely related to the probability of an individual having serious mental illness. However, CSC is subject to strong diminishing returns and only has an effect for the bottom quartile of individuals who live in those MSAs with the lowest levels of CSC. The effect was also only found when including MSA-level fixed effects, indicating the presence of strong omitted variable bias when MSA-level fixed effects are not included.

Conclusions: Community social capital is potentially an important environmental mediator of serious mental illness.

Disclosure information: This research was supported by the Center for Health Research at the University of California at Berkeley and the Centers for Disease Control and Prevention, Atlanta, GA through Cooperative Agreement Number U48/cCU 909706. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of the Centers for Disease Control and Prevention. The authors are employees of the University of California at Berkeley and have no conflict of interest with regard to this project.

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Cost-Effectiveness of Delivering Adult Influenza Vaccination in Non-Traditional Settings

Presenter:

Megan O'Brien

Authors:

Lisa Prosser, Megan O’Brien, Noelle-Angelique Molinari, Katherine Hohman, Kristin Nichol, Pascale Wortley, Mark Messonnier, Tracy Lieu

Chair: Noelle-Angelique M. Molinari; Discussant: Bo-Hyun Cho Mon June 5, 2006 15:30-17:00 Room 325

Despite the morbidity and mortality associated with influenza illness, vaccination coverage rates remain well below Healthy People 2010 goals for groups that are recommended to receive influenza vaccination. Non-traditional settings may represent an opportunity for boosting influenza immunization coverage rates for recommended adults. The objective of this project was to evaluate the cost-effectiveness of delivering inactivated influenza vaccinations to adults in non-traditional settings. A decision tree was developed to predict the costs and health effects of inactivated influenza vaccination in various settings compared with no vaccination. Non-traditional settings included in the analysis were (1) mass vaccination clinics that can be conducted at a variety of locations such as employer sites, retail stores, or pharmacies and (2) pharmacies that use pharmacists to deliver vaccinations. The traditional setting was defined as the physician office with a scheduled appointment for vaccination. Adults were stratified by age and risk status for influenza-related complications. Probabilities and costs (direct and opportunity) for uncomplicated influenza illness, outpatient visits, hospitalizations, deaths, vaccination and vaccine adverse events were based on primary and secondary data. Costs of vaccination in non-traditional settings were collected via telephone surveys with representatives of organizations that conduct mass vaccination clinics and pharmacies. Primary outcomes reported were $/influenza episode averted, $/hospitalization averted, and $/death averted. For healthy 18-49 year olds, cost per influenza episode averted for vaccination in the pharmacy setting was $140 (95% probability interval: cost saving - $1200), $260 (cost saving-$1800) in the mass vaccination setting, and $1150 ($390-$6200) in the traditional setting. Vaccination was more likely to be cost-saving as age increased. Cost-effectiveness ratios were more favorable for high-risk as compared with healthy adults in the same age group. Results were sensitive to assumptions regarding probability of influenza illness, costs of vaccination (including patient time costs), and vaccine effectiveness. Non-traditional settings may represent a more convenient setting for vaccination at comparable or better cost-effectiveness than the traditional physician office setting.

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The impact of universal influenza recommendation at the clinic level

Presenter:

Michael Washington

Authors:

Michael L. Washington, Bo-Hyun Cho, Maggie Coleman

Chair: Noelle-Angelique M. Molinari; Discussant: Ismael Ortega-Sanchez Mon June 5, 2006 15:30-17:00 Room 325

While the US Advisory Committee on Immunization Practices considers expanding influenza recommendations to children up to age 18, little discussion has occurred on the logistics and economic costs to physician’s offices if such a recommendation is made. Clinics would have to determine ways to accommodate the influx of clients seeking care during the influenza season while addressing the spike in demand for influenza vaccine. Will providers need additional rooms, resources, and time? How much while this extra effort cost? One way to answer such a question is with computer simulation. The author will present a clinic model that will describe the behavior of the clinic before and after the peak influenza season and measure the logistical and economic impact.

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Economics of Increasing Immunization against Influenza in the US: Assessing Strategies toward Universal Vaccination

Presenter:

Ismael Ortega-Sanchez

Authors:

Ismael R. Ortega-Sanchez, Noelle-Angelique Molinari

Chair: Noelle-Angelique M. Molinari; Discussant: Megan O'Brien Mon June 5, 2006 15:30-17:00 Room 325

Rates of influenza illness severity and mortality have remained significantly high despite vaccination efforts: about 36,000 deaths and 200,000 hospitalizations are annually attributable to influenza in the US. More effective and extensive vaccination strategies leading to a universal annual vaccination against influenza have been under consideration. Yet, no systematic and comprehensive analyses of their prospective cost and benefits are available. In this study a probabilistic model is built for a US age- and influenza-disease-risk representative population sample to analyze the health and economic impact of strategies increasing actual vaccination coverage rates and effectiveness. Data on disease burden and resource utilization attributable to outpatient care, hospitalizations and deaths in annual epidemics is used in the model, as are estimates of incidence of co morbid conditions and productivity impact of temporal disability or premature death. Scenarios with increasing vaccination are also built and simulated using Monte Carlo algorithms. Among them projected vaccine effectiveness and hypothetical herd immunity impacts in the unvaccinated across age and risk groups are considered. After including vaccination costs and performing simulation analyses this study provides estimated ranges for health outcomes and resource utilization, estimates the potential net health impact and cost value of possible vaccination strategies, assesses the dollar value of prospective vaccination strategies, and evaluates the effects of using different criteria to expand vaccination policies across age and risk groups (e.g., based on risk of death, indirect protection or net economic returns). Sensitivity analyses are also conducted and projections to the US population calculated.

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Cost function Estimation of Mass Influenza Vaccination Clinics - Theoretical Frameworks and Challenges

Presenter:

Bo-Hyun Cho

Authors:

Bo-Hyun Cho, Mark L. Messonnier, Michael L. Washington

Chair: Noelle-Angelique M. Molinari; Discussant: Michael Washington Mon June 5, 2006 15:30-17:00 Room 325

Abstract: From the perspective of vaccination providers, cost function estimation can provide useful information of the cost impact of output changes as well as input prices. Yet, a conventional cost function does not consider undesirable outputs such as long patient waiting times. In this study, the theoretical background and statistical properties of two empirical models using scaling and translating methods will be addressed and compared to those of the conventional cost function. The immediate advantage of such an approach is that both models preserve the conventional properties of the cost function such as homogeneity, convexity in output and input prices while including the impact of an undesirable output. Simulation results will illustrate the advantages and challenges of the proposed models.

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Adjusting the Value of a Statistical Life for Age and Cohort Effects

Presenter:

Joseph Aldy

Authors:

Joseph E. Aldy, W. Kip Viscusi

Chair: Glenn Blomquist; Discussant: Don Kenkel Mon June 5, 2006 15:30-17:00 Room 326

To resolve the theoretical ambiguity in the effect of age on the value of statistical life (VSL) this article uses a novel, age-dependent fatal risk measure to estimate age-specific hedonic wage regressions. VSL exhibits an inverted-U shaped relationship with age. In the year 2000 crosssection, workers’ VSL rises from $3.2 million (ages 18-24), to $9.9 million (35-44), and declines to $3.8 million (55-62). Controlling for birth-year cohort effects in a minimum distance estimator yields a peak VSL of $7.8 million at age 46, and flattens the VSL-age relationship. The value of statistical life-year also follows an inverted-U shape with age.

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Altruism and Environmental Risks to Health of Parents and their Children

Presenter:

Mark Dickie

Authors:

Mark Dickie, Shelby Gerking

Chair: TBA; Discussant: Allen Goodman Mon June 5, 2006 15:30-17:00 Room 326

Special protection of young children from environmental hazards has become a worldwide priority of government policies to improve human health. The fundamental tension between parental altruism and self-interest looms as the crucial behavioral factor determining the effectiveness of these policies. This paper tests altruism in a unique field experiment by estimating marginal rates of substitution between skin cancer risks faced by 488 parents and their children between the ages of 3 and 12 years. Tests are guided by a reformulation of a standard model of altruistic family behavior that incorporates household production of latent health risk. The model demonstrates that while the marginal rate of substitution between parent consumption and child consumption of market goods is equal to unity, the marginal rate of substitution between risks faced by the parent and child is equal to the ratio of marginal risk reduction costs. Econometric estimates presented support the altruism hypothesis.

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Willingness to Pay for Improved Health: A Comparison of Stated and Revealed Preferences Models

Presenter:

Sylvia Brandt

Authors:

Sylvia Brandt, Michael Hanemann

Chair: TBA; Discussant: Allen Goodman Mon June 5, 2006 15:30-17:00 Room 326

The valuation of asthma morbidity is significant for environmental and health policies. The total direct and indirect cost of asthma in the U.S. was estimated to be $6.2 billion in 1990 and $12.7 billion in 1998. Both the intangible psychosocial costs of asthma and disutility of risk avoiding/mitigating behavior are omitted from these estimates of the economic burden of asthma. Cost of illness studies therefore should be taken as a lower bound of the true cost of asthma. In this paper we discuss two approaches to estimating the willingness to pay (WTP) for reduced asthma morbidity, contingent valuation and health production function. The study population includes 250 children ages 5-11 with clinically diagnosed asthma, residing in a section of Fresno County, California. Asthma symptoms, including coughing, wheezing and/or shortness of breath, ranged from mild and intermittent to severe and persistent in this group. Detailed health measures (including atopy and pulmonary function), utilization of health services, levels of antigens in the households and exposures to criteria air pollutants were collected as part of a five-year epidemiological study. We administered two economic surveys to measure 1) households’ perceptions of risks to an asthmatic child, 2) averting and/or mitigating actions taken, and 3) households’ stated willingness-to-pay for a reduction in their children’s asthma morbidity. In the health production model the health outcome is a function of exposure to asthma triggers, mitigating and averting behavior and household’s perceived risks. We find that variation in WTP is explained by attitudes towards asthma specific health investments including concerns of associated risks and perceived effectiveness. Furthermore, the observed racial differences in willingness to pay are strongly correlated with the elements of the Health Beliefs Model and measures of self-efficacy. The survey data indicate that households select from a small number of large, discrete health investments and that most risk reducing behavior are daily behavioral modifications with no relevant market prices. We argue that the discrete nature of health investments and socio-cultural patterns of health care utilization make the revealed preference approach inadequate for the case of asthma. As an alternative we present a contingent valuation scenario that was specifically developed to minimize systematic variation in preferences for characteristics related to the scenario rather than the reduction in asthma morbidity. For this purpose, guided by extensive testing in focus groups, we selected a scenario based on a hypothetical asthma monitor that provides to the wearer an indicator of current asthma status. We will present the results of a dichotomous choice experiment using this hypothetical asthma monitor. We then summarize how the difference between households’ stated and revealed WTP vary by socio-demographic variables and asthma severity.

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Willingness to Pay for the Detection and Treatment of Vulnerable Plaque Related to Heart Attacks

Presenter:

Patricia Ryan

Authors:

Patricia L. Ryan, Glenn C. Blomquist

Chair: TBA; Discussant: Don Kenkel Mon June 5, 2006 15:30-17:00 Room 326

Recent medical studies have led cardiologists to revise theories regarding the cause of heart attacks. Rather than a gradual clogging of the arteries, eruption of a “vulnerable plaque” is thought to be the cause of approximately 75% of all heart attacks. As a result, traditional risk factors are no longer sufficient indicators of who is at risk for a heart attack. Our research investigates willingness to pay (WTP) for a new, hypothetical detection (screening) and treatment method for vulnerable plaque. We develop a survey instrument that exploits the visual and interactive aspects of the Internet. We provide information about screening and treatment and get individual’s perceptions of the effectiveness and risks associated with the screening and treatment. Using a web-based survey, which follows a contingent valuation format, we use an iterative bidding process to elicit the respondent’s WTP for either the screening or treatment of vulnerable plaque. The iterative bidding allows us to obtain a maximum willingness to pay value from each respondent. Internet, on-line surveys are often prone to coverage bias; however, Knowledge Networks has established a panel of randomly selected households, which allows researchers to achieve a nationally representative sample using online surveys. Our survey on screening (a simple blood test) resulted in a sample of 268 adults based on sampling representative of the general population. Our survey on treatment (a more invasive heart catheterization procedure) was administered only to those who had doctor-diagnosed heart problems and were therefore more familiar with these types of medical decisions and resulted in a sample of 295 adults. We find an average WTP for screening of approximately $90 and estimates for treatment that are approximately an order of magnitude greater. Our experience suggests that our approach can provide useful information for decision making dealing with screening and treatment related to heart attack.

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Go Out or Stay In? The Effects of Zero Tolerance Laws on Alcohol Use and Drinking and Driving Patterns among College Students

Presenter:

Lan Liang

Authors:

Lan Liang, Jidong Huang

Chair: Jody L. Sindelar; Discussant: Daniel Polsky Mon June 5, 2006 15:30-17:00 Room 332

Zero tolerance laws make it illegal per se for anyone under age 21 to drive with any measurable trace of blood alcohol. While a link has been established between zero tolerance laws and lower motor vehicle fatalities, research has not produced strong evidence on how zero tolerance laws influence individual alcohol use and drinking and driving behaviors. Using a unique data set and a difference-in-difference research design, we are able to analyze a number of pathways through which zero tolerance laws can work among an important underage population, college students. We find that zero tolerance laws change both drinking patterns and drinking and driving behaviors. In particular, we find that zero tolerance laws reduce drinking frequency and the probability of drinking and driving. More importantly, we are able to infer from the data whether drinking occurs at home or away from home. Our results indicate that zero tolerance laws reduce drinking intensity when drinking occurs away from home and reduce the probability of drinking and driving for those who report drinking away from home.

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The Impact of Marijuana Prices on Emergency Department Admissions

Presenter:

Rosalie Pacula

Authors:

Rosalie Pacula, Khoa Truong

Chair: Jody L. Sindelar; Discussant: Edward Norton Mon June 5, 2006 15:30-17:00 Room 332

There is a common belief among the general public that the health consequences of marijuana use are relatively minor even though the rates of dependence have grown significantly over the past decade. In this paper we examine the association between marijuana use and the utilization of emergency department (ED) services using quarterly data from the 1994-2002 Drug Abuse Warning Network (DAWN). Reduced form models evaluate the association between local marijuana prices and the number of marijuana-involved ED episodes. Additional controls are included to account for high rates of alcohol and cocaine use. We find that even when we control for alcohol and cocaine prices, counties with lower marijuana prices have statistically higher marijuana-involved ED mentions. This relationship holds for marijuana-only mentions as well as encounters involving marijuana and other drugs. The findings are even stronger when we restrict the sample to episodes involving individuals less than 25 years of age. These results provide convincing evidence that there are real acute health consequences associated with marijuana use.

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Fatal and Nonfatal Motorcycle Injuries: Can Alcohol Policies Influence Rider Safety and Reduce Accidents?

Presenter:

Michael French

Authors:

Michael T. French

Chair: Jody L. Sindelar; Discussant: Willard Manning Mon June 5, 2006 15:30-17:00 Room 332

Numerous studies have established the effectiveness of alcohol policies (e.g., blood alcohol content for driving under the influence convictions, minimum legal drinking age, beverage taxes) in reducing rates for automobile accidents, injuries, and fatalities. Only a few studies have analyzed the impact of alcohol policies on motorcycle accidents and none within the past 5 years. Given the growing popularity of motorcycle riding among all age groups and the inherent safety risks, a new and comprehensive investigation is warranted. The present study uses state-level longitudinal data from 1994 to 2003 to determine whether a variety of different alcohol and motorcycle safety policies have a significant impact on both fatal and nonfatal motorcycle injuries. Besides state-level policies, the analysis controls for numerous demographic and environmental factors in each state through the estimation of state fixed-effects models. The results lead to direct policy recommendations for how states can reduce motorcycle injuries and enhance overall motorcycle safety.

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The Economics of Racial Health Disparities

Presenter:

Amitabh Chandra

Authors:

Amitabh Chandra, Douglas Staiger

Chair: Jonathan Skinner; Discussant: Mon June 5, 2006 15:30-17:00 Room 335

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Identifying Inefficiency in the Diffusion of Medical Care Practices

Presenter:

Wesley Yin

Authors:

Wesley Yin

Chair: Jonathan Skinner; Discussant: Mon June 5, 2006 15:30-17:00 Room 335

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Diffusion and the Geography of Health Care Productivity

Presenter:

Jonathan Skinner

Authors:

Jonathan Skinner, Douglas Staiger

Chair: Jonathan Skinner; Discussant: Mon June 5, 2006 15:30-17:00 Room 335

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Cohort Turnover and Productivity: The July Phenomenon in Teaching Hospitals

Presenter:

Robert Huckman

Authors:

Robert Huckman, Jason Barro

Chair: Joel Hay; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 121

We consider the impact of cohort turnover-the simultaneous exit of a large number of experienced employees and a similarly sized entry of new workers-on productivity in the context of teaching hospitals. In particular, we examine the impact of the annual July turnover of house staff (i.e., residents and fellows) in American teaching hospitals on levels of resource utilization (measured by risk-adjusted length of hospital stay) and quality (measured by risk-adjusted mortality rates). Using patient-level data from roughly 700 hospitals per year over the period from 1993 to 2001, we compare monthly trends in length of stay and mortality for teaching hospitals to those for non-teaching hospitals, which, by definition, do not experience systematic turnover in July. We find that the annual house-staff turnover results in increased resource utilization (i.e., higher risk-adjusted length of hospital stay) for both minor and major teaching hospitals and decreased quality (i.e., higher risk-adjusted mortality rates) for major teaching hospitals. Further, these effects with respect to mortality are not monotonically increasing in a hospital’s reliance on residents for the provision of care. In fact, the most-intensive teaching hospitals manage to avoid significant effects on mortality following this turnover. We provide a preliminary examination of the roles of supervision and worker ability in explaining why the most-intensive teaching hospitals appear able to reduce turnover’s negative effect on performance.

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The Strange Case of the Negative Resident Wage

Presenter:

Jerry Cromwell

Authors:

Jerry Cromwell

Chair: Joel Hay; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 121

Authors: Jerry Cromwell (jcromwell@rti.org) and Ed Drozd (edrozd@rti.org), Research Triangle Institute (RTI)

Title: The Strange Case of the Negative Resident Wage

Rationale: Economic theory rarely encounters an input with a negative wage, or supply price. Theory also consistently rejects the notion of a “Giffin” input exhibiting an income effect wherein an employer seeks to buy more of the input when its price rises. Medical residents hired by non-profit teaching hospitals may exhibit both of these strange features.

Objectives: The paper derives estimates of the marginal subsidized wage, or shadow price, of residents in teaching hospitals at differing levels of Medicare financial dependence. The goals are (a) to quantify the degree to which residents are a “line-of-business” for hospitals, (b) to explore the role of Medicare payment factors in generating negative resident wage rates, and (c) to explain the continued growth in residents in the face of Congressional constraints on Medicare Direct and Indirect Medical Education (DME & IME = total GME) payments.

Methodology: Teaching hospital utility functions are maximized with respect to community services and size of teaching programs subject to revenue, cost, and patient care production functions. First-order conditions produce resident demand curves dependent on stipends that are offset by marginal Medicare DME and IME subsidies as well as preferences for higher patient volumes. Adjusted resident shadow prices are simulated by varying key Medicare payment and hospital demand parameters. Next, subsidies are calculated for roughly 1,000 teaching hospitals for 2001 and financial “bite” estimates quantified as a result of the 1997 Balanced Budget Act (BBA). Descriptive statistics and OLS regressions show trends in resident growth post-BBA, financial impacts of GME rollbacks, size distributions of subsidies, and the ultimate effective marginal resident wages by hospital characteristic.

Results: Post-BBA, 1996-2001, FTE resident counts in teaching hospitals increased roughly 7,000, or 9%, despite a 17-20% reduction in expected resident subsidies. Teaching hospitals easily absorbed such reductions that were only 0.5% of total revenues. Simulations indicated negative marginal effective wages for over 90% of teaching hospitals in 2001, encouraging further resident hires. With Medicare subsidies alone, resident shadow wages averaged -$57,000, implying that Medicare payments, at the margin, more than doubled the entire resident stipend (about $40,000). Econometric results showed a direct relationship between Medicare bite and resident growth, with hospitals facing negative marginal wage rates continuing to increase demand holding bite constant.

Conclusions: While the federal government has enacted wage subsidies for selected adults in the past, none compare with the enormous subsidies afforded residents in teaching hospitals. Congressional attempts to rein in resident growth through “soft” payment caps proved futile; persistent negative resident shadow prices remain for many hospitals. Extremely low relative wages, coupled with high resident patient care productivity, guarantees continued training slots for all U.S. medical graduates, large influxes of foreign graduates, and teaching hospital overpayments.

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Which is a Better Investment for Health Workforce Growth: Expanded Educational Space or Financial Support to Students?

Presenter:

Joanne Spetz

Authors:

Joanne Spetz, Susan Chapman, Jean Seago

Chair: Joel Hay; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 121

Rationale: The past eight years have been marked by a severe, acute shortage of registered nurses in the United States. In response to this shortage, federal and state governments have provided funding to nursing education programs to expand the supply of RNs. Most of these programs either provide financial support to currently-enrolled students, with the goal of improving the productivity of education programs, or expand the number of education slots available for students. There has been no research of the relative effectiveness of these strategies.

Objectives: This study compares the costs and results of programs to provide financial support to nursing students and expand nursing education slots, using new data from California.

Methodology: Twenty-two regional groups were awarded a total of $28 million to expand RN supply, with projects ending in 2005. Some of these groups used the funds to provide financial support to students, some expanded education slots, and some did both. In addition, some programs received private funds from hospitals and other local agencies to support their regional efforts. We are using data provided by the California Board of Registered Nursing, California Community Colleges Chancellors Office, the funded groups, and other state government agencies. To estimate the effectiveness of the financial support programs, we estimate a multivariate equation in which the graduation rate is the dependent variable, and the key explanatory variable is the percent of students receiving financial support. The coefficients from this equation are then used to estimate the net increase in graduating RNs resulting from the financial support programs. To estimate the effect of the slot-expansion programs, we multiply the number of new slots by the share of students expected to graduate. These two numbers of “net new nurses” are compared with the costs of each strategy.

Results: Over 1500 RN students received financial support to improve program productivity, and over 1800 new education spaces were created. Preliminary data suggest that the productivity-improvement programs had a substantial effect on student attrition. However, the programs that used funds to expand slots have allowed for the education of many additional nurses. It appears that the slot expansion programs provide more nurses per dollar. Final data are now being received by the research team and a final report will be written by March 31, 2006.

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Patients' Willingness to Accept Risk-Benefit Tradeoffs in Treating Multiple Sclerosis

Presenter:

George van Houtven

Authors:

George van Houtven

Chair: Peter Zweifel; Discussant: Frank Sloan Mon June 5, 2006 13:45-15:15 Room 213

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How Does Price Matter in Healthcare Stated-Choice Surveys?

Presenter:

F. Reed Johnson

Authors:

F. Reed Johnson

Chair: Peter Zweifel; Discussant: Mark Pauly Mon June 5, 2006 13:45-15:15 Room 213

A literature review of published stated choice (SC) studies related to health care indicates that all published studies estimate willingness to pay (WTP) by dividing the estimated utility difference between an intervention or outcome and a reference condition by the marginal utility of income (MUY). However, estimates of the marginal utility of income are only valid if subjects accept price levels as income-constrained, out- of-pocket expenses of obtaining the indicated outcome and if MUY is approximately constant over the relevant range of prices. There currently is little empirical evidence on how SC subjects evaluate price information when health care is partly or fully insured. SC subjects may ignore prices altogether in evaluating tradeoffs, discount prices because they are accustomed to paying only a fraction of actual prices, or recode price levels to categories such as low, medium, and high that ignore actual differences in price levels. Recoding may be a symptom of simplifying a less important attrib?????here patients currently pay for certain healthcare-related services out of their own pocket, and “cheap talk” strategies that alert subjects to common response errors in SC surveys.

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Age and Choice in Health Insurance: Evidence from Switzerland

Presenter:

Peter Zweifel

Authors:

Karolin Becker, Peter Zweifel

Chair: Peter Zweifel; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 213

TBA

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What matters: Reality or Perception? The impact of peer binging on college student drinking behaviors

Presenter:

Amy Wolaver

Authors:

Amy Wolaver, Lisa Powell, Frank Chaloupka, Christina Ciecierski, Henry Wechsler

Chair: Catherine McLaughlin; Discussant: Jeff DeSimone Mon June 5, 2006 13:45-15:15 Room 225

The objective of this paper is to determine the relative importance of actual and perceived rates of heavy drinking on individual behavior. We will also test whether the accuracy of students’ perceptions of heavy drinking matter by examining the difference in the student perceptions from the actual rates of heavy drinking on campus has an effect on the individual’s propensity to consume.

Methodology: Because peer effects potentially suffer from multiple sources of endogeneity problems, we use instrumental variable techniques and the 1997, 1999 and 2001 College Alcohol Studies to examine how the peer rate measures affect individual behavior. We assume that no contextual effects exist, which allows us to use average parental characteristics of peers to identify the effect of the level of heavy drinking on the probability that an individual engages in heavy episodic drinking. The CAS surveys ask students the question, “Based on what you have heard or experienced, approximately what proportion of [all students/ your friends] do you think are heavy or problem drinkers at this school?” We will examine whether there are differences in the peer effects based on the actual and perceived measures (based on the above self-reports) of peer problem drinking. These measures include: percent of all students estimated who are heavy or problem drinkers, percent of friends that are heavy or problem drinkers, the difference between their estimate of problem drinkers and the actual rate of binge drinking. We will also test for differences based on whether individual’s over- or under-estimate the peer rate of drinking.

Preliminary Results: Heavy episodic drinkers estimate slightly higher average rates of heavy/problem drinking at schools and much higher rates of heavy drinking among their friends than non-heavy episodic drinkers. Student perceived rates of heavy drinking are positively correlated with the actual rates of drinking at their schools. The perceived rate of heavy drinkers has a larger marginal effect on the probability of binge drinking by the individual than the actual rate at the school; but the difference between the actual and perceived rates of heavy drinking reduces the probability of binge drinking.

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Identifying Peer Effects in Substance Abuse Treatment

Presenter:

Tracy Falba

Authors:

Tracy Falba, Patrick Bayer, Jody Sindelar

Chair: Catherine McLaughlin; Discussant: Phil DeCicca Mon June 5, 2006 13:45-15:15 Room 225

Background: A wide variety of studies have examined the impact of peers on outcomes including education, crime, health, and labor market activity. Peer effects in drug and alcohol use (particularly among teens) have received considerable academic attention because peers are often thought to be important both for usage and abstinence. Research to date has not adequately isolated causal effects due to the fact that observed peers are typically not randomly assigned but chosen by the individuals studied.

Aims of Study: This study examines the impact of peers in drug and alcohol treatment programs in Connecticut on a variety of outcomes including successful completion of the program, drug usage during and after the program, relapse into drug or alcohol treatment (e.g., future admission for detoxification), crime, and labor market activity. We study the impact of a large set of peer characteristics related to demographic characteristics, past drug usage (by intensity and drug category), criminal activity, and labor market activity on these outcomes.

Methods: Using data from all drug treatment facilities in Connecticut, we use the methodology developed in Bayer et. al. (2004) to isolate causal effects of peers on outcomes. This methodology uses only the within-program variation in peer characteristics and therefore eliminates any variation associated with the selection or assignment into particular facilities. Because individuals spend reasonably short amounts of time in treatment and are admitted and released from programs on a regular basis, considerable variation exists in the characteristics of one’s peers in terms of past drug use, criminal activity, labor market activity, and age depending on the exact period of time that individuals receive treatment.

Results: To date, we have explored the features of the institutional setting in Connecticut. Our primary sample consists of all admissions for drug treatment (over 150,000) in Connecticut from 1995-2003. Of these about 60 percent are outpatient, 15 percent residential-short term, 15 percent residential long-term, and 10 percent methadone maintenance. Individuals were treated in a total of approximately 200 programs over this period. The data reveals a great deal of variation both across and within facilities for the wide set of peer characteristics and outcomes mentioned above, making the institutional setting appropriate for our methodology.

Discussion: This analysis provides a wide set of results that characterize a number of causal channels through which peers affect outcomes. Consequently this study has a number of important implications for how individuals should best be assigned to programs and groups within programs while receiving drug treatment. Additionally, this study informs our understanding of the nature of peer effects in drug use and treatment. The size of these effects have far-reaching policy implications ranging from the optimal timing of drug interventions, to the optimal range of treatment options, to the identification of individuals particularly at risk of relapse.

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The Determinants of Gambling Behavior

Presenter:

John Nyman

Authors:

John Nyman, John Welte, Bryan Dowd

Chair: Catherine McLaughlin; Discussant: Robert Kaestner Mon June 5, 2006 13:45-15:15 Room 225

Gambling has become an important public health issue. Gambling has been associated with suicides, marital violence, substance abuse, increased morbidity, and violent crime. Although gambling is primarily an economic activity, no single theory of the demand for gambles has gained wide-spread acceptance among economists. This paper presents a new model of the demand for gambling that is based on the standard economic assumptions that resources are scarce and consumer’s utility increases with income at a decreasing rate. It suggests that those who gamble have a labor market perspective, and as such, they regard the utility gain from gambling not only as related to the income gained but also to the work avoided.

This model is tested using the 2000 Survey of Gambling in the U.S., a nationally representative survey of 2,631 respondents. The existence of relationships that were suggested by the theory were tested for, using a system of 3 regression equations. It was found that whether a person gambled or not depended on whether they had a labor market orientation, as determined by their labor market experience. It was also found that the amount of gambling was determined by education and factors that were associated with labor market imperfections-such as, the respondent’s race, his health, whether he was obese, and the unemployment level in the respondent’s local market. Both sets of results are generally consistent with the theory.

This study has implications for public policy. It suggests that the findings from other studies that pathological gambling is more likely among certain racial groups may instead reflect the fact that certain races are more likely to engage in non-pathological gambling because of labor market imperfections, and among those who engage non-pathological gambling, these racial groups are no more likely than members of other races to become pathological gamblers. This has implications for programs that intervene to reduce pathological gambling.

By showing the connection between the labor market and gambling, this study has also demonstrated that states that use lotteries to obtain revenues are methodically and disproportionately drawing on the resources of those who are least advantaged in society. This has implications for horizontal equity and tax justice.

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Alcohol Consumption and Unemployment

Presenter:

Gulcin Gumus

Authors:

Gulcin Gumus

Chair: Edward Norton; Discussant: Euna Han Mon June 5, 2006 13:45-15:15 Room 226

This paper analyzes how alcohol consumption affects the probability of being unemployed using data from the 2001-2002 National Epidemiologic Survey on Alcohol and Related Conditions (NESARC). In order to address the simultaneity between labor market performance and alcohol use, I estimate a maximum likelihood instrumental variables (IV) probit model. The age of drinking onset is used as an IV which proves to be a strong and valid identifying variable for alcohol use in the context of employment outcomes. Results indicate that there are substantial differences between standard probit estimates and the IV estimates. Controlling for all other factors, standard probit results suggest that men who drink more are more likely to be unemployed. However, this effect becomes statistically insignificant in the MLE results once I control for endogeneity. Finally, I also show that some IVs commonly used in the past studies fail to pass validity tests indicating that they might not be ideal candidates for an IV method.

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Employment and Income Effects Related to Drinking with Controls for Drug Abuse and Smoking: Analysis Using the NESARC Database

Presenter:

Allen Goodman

Authors:

Allen Goodman, Janet Hankin

Chair: Edward Norton; Discussant: Gary Zarkin Mon June 5, 2006 13:45-15:15 Room 226

Authors. Allen C. Goodman (allen.goodman@wayne.edu) and Janet R. Hankin (janet.hankin@wayne.edu), Wayne State University

Title: Employment and Income Effects Related to Drinking with Controls for Drug Abuse and Smoking: Analysis Using the NESARC Database

Rationale: A considerable literature has examined impacts of drinking on employment and income, but existing analyses have generally used databases that do not reflect the general population. In addition, existing analyses reflect data collected no later than the early to mid 1990s. This study seeks to update analyses with a new database that addresses both issues, with methods that reflect selection effects.

Objectives: The objective is to examine both direct and indirect impacts of alcohol consumption on labor force participation and income, with controls for drug abuse and smoking.

Methods: Multiple regression and maximum likelihood methods are used to estimate impacts of alcohol consumption on labor force participation and income, with controls for drug abuse and smoking. The study uses the recently collected National Epidemiologic Survey on Alcohol and Related Conditions (NESARC), designed to be the primary source for information and data on the U.S. population for alcohol and drug use. The NESARC provides multi-dimensional information on alcoholism, drug abuse, and cigarette smoking, as well as excellent individual and labor market information.

Results: Separate analyses by gender show that alcohol use significantly impacts the choice between part-time and full-time employment. Heavy drinkers are more likely to be unemployed or part-time workers compared to lighter drinkers or abstainers. In contrast, alcohol use has an insignificant impact on income conditional on employment. Because better health, education, and part-time v. full-time status are related to higher annual income, increased drinking indirectly lowers annual income by influencing these factors, but it has little direct impact on income outside of these indirect effects.

Conclusions: The labor force impacts of alcohol and substance abuse are complex. The alcohol impacts are most pronounced with respect to labor force participation, and full- v. part-time employment. Drug use has its major impact on men with respect to labor force participation (less likely to be full-time) and health (worse health). Women who use drugs are also less likely to work full-time and will have worse health. Current smoking has negligible effects on labor force status, but it is inversely related to health and to education, and thus impacts income indirectly in a negative manner. It has modest direct impacts on part-time worker incomes, but significantly negative direct impacts on income for both men and women.

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The Impact of Parental Drinking on Children's Utilization of Health Care Services

Presenter:

Ana Balsa

Authors:

Ana Balsa

Chair: Edward Norton; Discussant: Hua Wang Mon June 5, 2006 13:45-15:15 Room 226

Approximately one in four children in the United States are exposed to alcohol abuse or dependence in the family by the age of 18. While prior research has underscored the detrimental effects that parental drinking inflicts upon children, there are no large scale studies analyzing the magnitude of these effects relative to the costs directly incurred by those affected by problem drinking. Using the National Health Interview Survey, a nationally representative data set, this paper analyzes the economic consequences of parental risky drinking on children’s utilization of healthcare. We hypothesize that children with parents who misuse alcohol are more likely to suffer from certain health conditions (behavioral health problems, injuries, stress related conditions and physical abuse) that lead them to use more acute healthcare. On the other hand, negligence by a problem drinking parent can result in a lower demand for services that are not immediately needed by the child, such as dental or preventive care. The analysis is addressed in two ways. First, instrumental variables are used to analyze the impact of parental yearly consumption of alcohol on children’s use of healthcare services. Results indicate that higher amounts of parental drinking raise children’s utilization of mental healthcare, specialty care, and hospital services. Parental drinking also adds to the probability that a child goes without needed care and decreases the likelihood that a child has regular check-ups and dental visits. Children in non-intact or lower income families, girls and Hispanics are more likely to suffer the effects of parental risky drinking. A second analysis quantifies the effects of a change in a policy variable, beer tax, on children’s healthcare costs, controlling for various other state-related characteristics. Children’s use of acute healthcare services decrease substantially as the beer tax increases, and use of preventive services increase. Because female drinking is more elastic to beer tax than male drinking, it is possible that these differences are being led by variation in maternal alcohol consumption. Overall, the analysis suggests that the costs of parental alcoholism on children’s health and healthcare are not negligible and should be taken into consideration when designing policies and treatments, and when evaluating programs and outcomes.

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Do HMOs Provide Better Quality Primary Care to Medicare Beneficiaries?

Presenter:

Jayasree Basu

Authors:

Jayasree Basu, Lee Mobley

Chair: Albert Okunade; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 235

Managed care plans can directly reduce preventable hospitalizations by increasing primary and preventive services available to constituents. Accordingly, a higher rate of preventable hospitalization has been proposed as an indicator of poorer health plan performance. The literature suggests that there is greater use of preventive care in HMOs. To date, no study has evaluated whether Medicare HMO enrollees experience differential preventable hospitalization rates than those in traditional Medicare (FFS), or whether there would be beneficial spillovers from managed care penetration in the overall market that would reduce preventable hospitalizations for the Medicare population. The purpose of this study is to assess both direct and indirect effects of managed care on preventable hospitalizations among the elderly in four states.

This research uses the complete 2001 hospital discharge abstracts for elderly Medicare enrollees (age 65 and above) who reside in four states (NY, PA, FL, CA), from the Healthcare Cost and Utilization Project (HCUP-SID) database of the Agency for Healthcare Research and Quality. These states exhibit high but varying degrees of managed care experience and penetration. We use a multivariate cross sectional design with patient level data, modeling each state’s cohort separately due to heterogeneity across states. The logistic model controls for socioeconomic and demographic variables, patient severity of illness, and county resources. We use admissions for persons with “marker” conditions as a comparison group for the observed admissions for persons with preventable conditions, following methods used in the literature.

We find no evidence of beneficial spillovers from HMO penetration onto area Medicare populations. However, holding other factors such as demographics and illness severity constant, we find that in 3 out of 4 states, Medicare HMO patients had lower odds of a preventable admission versus marker admission than Medicare FFS patients. The odds in CA, NY, and FL were respectively 17%, 12%, and 9% lower for HMO as compared to FFS patients. There was no significant difference for HMO versus FFS patients in PA, the state with the tardiest managed care presence and lowest penetration by Medicare HMOs. Moreover, in the two states with longest tenure and greatest Medicare HMO penetration, CA and FL, the reduction in preventable admissions among Medicare HMO patients was mainly concentrated among more ill patients. That is, the predicted marginal probability of preventable vs marker admission was higher in FFS plans than Medicare HMO plans, and the gap widens across the patient severity index.

These findings suggest that Medicare HMO enrollees may have experienced better quality primary care than their FFS counterparts in these three states. The largest difference in quality between HMO and FFS patients was found in CA, the state with the earliest managed care penetration and largest Medicare HMO presence. Because we control well for patient illness severity, these findings add to the evidence that managed care outperforms traditional care among the elderly, rather than simply skimming off the healthiest populations. Although the study uses one outcome indicator for the quality of primary care, it is quite important for total social cost of care and a signal of effective management of chronic illness.

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HMO Selection Incentives and Underprovision of Mental Health Care

Presenter:

Zhun Cao

Authors:

Zhun Cao

Chair: Albert Okunade; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 235

Authors: Zhun Cao (zcao@charesearch.org), Thomas G. McGuire (mcguire@hcp.med.harvard.edu)

Title: HMO Selection Incentives and Underprovision of Mental Health Care

Rationale: Adverse selection, a well-known problem in insurance markets, interferes with the provision of fair and efficient coverage for mental health (MH) services. Managed care plans paid by capitation have an incentive to attract “good” risks (e.g. people more likely to use preventive care) and avoid “bad” risks (e.g. people with MH or other chronic conditions). The problem for MH care arises because people likely to use MH coverage are generally considered “bad risks” with higher overall health care costs than other potential enrollees. Competing managed care plans may therefore structure their product in a way to discourage enrollment by persons with mental illness. This type of selection could take the form of a limited MH provider network or especially strict requirements for referral to MH specialty care.

Objectives: The purpose of this paper is to test for the presence of service-level selection against MH care in the pattern of choice of Medicare managed care plans. We improve on existing tests of service-level selection in choice models by explicit control for health status variables, by use of HMO expenditures directly, and by following beneficiaries over time.

Methodology: Using an individual choice model, we assume that an individual’s utility is affected by the benefit expected from the plan once she/he is sick, personal preferences and needs, and cost of joining a plan. Empirically, we employ a random effect logit model, where the dependent variable is a dummy indicating if the individual is enrolled in a managed care plan, versus a traditional fee-for-service plan. The independent variables include service-level medical spending, demographic and socio-economic variables, mental and physical health status, county characteristics, etc. We also assume a random disturbance that is invariant for the individual across time. Negative signs of the coefficients for previous MH spending would imply MH services are possibly underprovided.

Data: Data from Medicare Current Beneficiary Survey (MCBS, 1996-2001) are used. The MCBS provides extensive information on Medicare HMO enrollment, personal characteristics, health status, etc. The longitudinal feature of the data allows us to follow an individual’s choice over years. We also merge MCBS with Area Resource File, Medicare Market Penetration File and Census Data to obtain information on market characteristics.

Results: We find that people with higher previous expenditure in MH services are less likely to enroll in a Medicare HMO plan, even after controlling for health status. The results imply that MH services may be underprovided by Medicare HMOs, compared to physical health care services.

Conclusions: The findings in this paper provide evidence that Medicare HMOs ration care at the service level, and that MH services are underprovided by HMO. In order to ensure sufficient MH care to the elderly people, service-level risk adjustment should be adopted in the Medicare payment policy to offset the HMOs’ incentive to select against people with higher MH risk.

Acknowledgement: Research support from NIMH grant R03 MH071602-01A1 is gratefully acknowledged.

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Propensity Score and Instrumental Analysis of Mortality Differences Between Medicare HMO Enrollees and FFS Beneficiaries

Presenter:

Matthew Maciejewski

Authors:

Matthew Maciejewski, Song Wang, Andrew Zhou

Chair: Albert Okunade; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 235

Rationale: Identification of the causal effect of an intervention is challenging in observational data. Propensity score and instrumental variable analysis has been used in health services applications to reduce confounding, but it is unknown whether these two methods are likely to generate similar results.

Objectives: To adjust for selection bias in estimating the effect of Medicare HMO enrollment on mortality for Medicare beneficiaries with diabetes comparing instrumental variables (IV) and propensity score matching (PS) approaches.

Methodology: Medicare claims data were obtained on a 2% sample (N=59,089) of Medicare beneficiaries with diagnosed diabetes in 1995. Managed care benefits and out-of-pocket premiums were also obtained from Medicare to generate county-level measures of plan generosity. We performed cross-sectional analysis of 59,089 patients. IV and PS using radius matching are used to generate the average effect of HMO enrollment on mortality across the entire sample and average treatment effects within quintiles. A non-parametric bootstrap is performed to calculate confidence intervals for the treatment effects by quintile.

Results: The average treatment effect from a PS matching model and a simple probit model suggested that HMO enrollment is associated with a 4% reduction in mortality for Medicare beneficiaries with diabetes in 1995. The mortality reduction from the IV model was much smaller (0.4%). The quintile-specific treatment effects were also very different been PS matching and IV, and also varied across quintiles. Improving balanced in observed covariates via PS were much less effective in reducing bias in the effect of HMO enrollment on mortality than was statistical correction for unobserved confounding via IV. When such a correction is applied, the mortality of HMO enrollees and FFS beneficiaries are almost equivalent.

Conclusions: Propensity score and instrumental variables analysis provided different treatment effect estimates in this study. Propensity score adjustment for imbalance in observed covariates was not able to address bias due to unobserved covariates in instrumental variables, which generated a null effect of HMO enrollment on mortality. Researchers interested in applying methods for identifying causal effects of treatment must clearly understand the nature of the bias that needs to be addressed.

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Determinants of catastrophic health expenditures in Brazil: the impact of the public system and private insurance

Presenter:

Antonio Bos

Authors:

Antonio Bos, Hugh Waters

Chair: Jon Christianson; Discussant: Jean Abraham Mon June 5, 2006 13:45-15:15 Room 309

Despite the fact that Brazil has a health system with universal access and care free of charge at point of delivery, several previous studies have shown that Brazil has a high number of households with large health expenditures. The primary objective of this research is to assess the effectiveness of the public health system and private health insurance in providing financial protection in health care to the Brazilian population.

This research utilizes data from a large national survey of households. The determinants of catastrophic health expenditures (CHE) were estimated by a probit regression with a Heckman selection adjustment, controlling for the need for health care.

According to our findings, the Brazilian health system provides a significant reduction (41%) in the probability that a household has CHE. On the other hand, private health insurance did not reduce out of pocket expenditures and, given that the premiums are quite expensive, made CHE more likely - by 37%.

Recommendations include further improvements in the quantity, accessibility, quality and reliability of public health providers and more extensive and appropriate provision of medicines by the public system. A tighter regulation of private health plans is also necessary, both on the high cost of the insurance premiums and on the restricted nature of the benefits.

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Ranking the health system efficiency among Canadian provinces and American states

Presenter:

Chunping Liu

Authors:

Chunping Liu, Brian Ferguson, Audrey Laporte

Chair: Jon Christianson; Discussant: Jennifer S. Schultz Mon June 5, 2006 13:45-15:15 Room 309

Rationale: The World Health Report 2000 ranks the performance of the health systems on 191 countries. In many countries such as Canada, health systems are actually managed at sub-national levels, provinces or states. In addition, most efficiency studies restrict themselves to a single output measure. We consider the multiple outputs case and apply the methodology, where data permits, at sub-national levels.

Objectives: The objective of this paper is to compare the efficiency of health systems amongst Canadian provinces and American states using non-parametric Data Envelopment Analysis (DEA) approach and a multiple inputs and outputs system.

Methodology: We employ DEA to analyze the technical efficiency of health systems, using both input-oriented and output-oriented approaches to fitting the efficient frontier and comparing the relative efficiency of units within frontier with their best practices peers on the frontier. As inputs we use information on physicians, nurses, hospitals and pharmaceuticals. We fit two models, one measuring inputs in quantity terms and the other measuring them in real expenditure terms, and investigate the implications of these two approaches for measures of relative efficiency. Of particular interest is what measures of expenditure efficiency relative to quantity efficiency can tell us about the degree to which different countries health expenditures go towards increasing factor income rather than increasing output. Another contribution of this paper is to include output variables other than the most commonly used Life Expectancy at Birth variable. Low birth weight infant mortality and life quality variables are very important output variables as the outcomes of the health system performance. We also consider measures of self-reported health status and Potential Year of Life Lost (PYLL) for stroke and cancer. Sensitivity analysis is performed using different sets of output variables.

Results: Half the Canadian provinces and eight American states are technically efficient in both the quantity and monetary models. The analysis suggests that Canadian provinces distributed resources relatively more efficiently overall in comparison with American states. It was determined that American states pay their inputs at levels above those in Canadian provinces’.

Conclusions: The analysis in this paper suggests that Canadian provinces distributed the resources relatively efficiently in comparison with American states. It is more reasonable to compare the health system efficiency at sub-national level. Since the efficiency scores for Canadian provinces are close to one, it is hard to squeeze more output for those inefficient Canadian provinces and we will have to invest more on resources in order to produce more outputs.

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Federal Health Care Funding in Canada: Is It Allocated According to Need?

Presenter:

Yukiko Asada

Authors:

Yukiko Asada, George Kephart

Chair: Jon Christianson; Discussant: Jon Christianson Mon June 5, 2006 13:45-15:15 Room 309

Background: Equity is one of the defining values of the Canadian health care system. While equity in the access to or utilization of health care has often been the focus of passionate public and policy debate, equity in federal health care funding has been largely neglected. The Canadian government currently distributes targeted health funding to provinces largely on an equal per capita basis. Thus, differences in average per capita need resulting from differences in health status or demographics are not taken into account. The objectives of this study were to assess potential magnitude of unequal need for health services between provinces and to compare different indicators and approaches to measuring need for health services.

Methods: We estimated relative per capita need for general practitioner, specialist, and hospital services by province using the following three approaches: (1) estimating relative per capita need for health services based on demographics (age and sex), (2) estimating relative per capita need for health services based on demographics, socioeconomic status, and health status, and (3) estimating relative per capita need for health services based on demographics and premature mortality. For all three approaches, we first fitted regression models to estimate standardized utilization of each of three types of health services by indicators of need. The standard was assumed to be average levels of utilization by needs indicators in the national sample. Two-part regression models were employed: logistic regression for use and nonuse, and negative binomial regression for frequency of use. Subsequently, the standard was used to estimate “expected” per capita utilization of each type of health services in each province. In addition, for (3) we combined expected per capita utilization of health services based on (1) and the standardized mortality ratio for people younger than 75 years of age. Data on health care utilization, demographics, socioeconomic status, and health status came from the 2000/2001 Canadian Community Health Survey. Data necessary to calculate the standardized premature mortality ratio for each province in 2001 came from E-STAT and CANSIM. The sample size for all analyses in this study was 111,249.

Results: All three approaches suggested that expected relative per capita utilization for general practitioner, specialist, and hospital services was not uniform across provinces, ranging from -1.07% to 24.31% of the Canadian average utilization. Higher need provinces indicated by all three approaches were Nova Scotia, New Brunswick, and Saskatchewan for general practitioner services, Nova Scotia and New Brunswick for specialist services, and Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, and Saskatchewan for hospital services. Different approaches, however, yielded inconsistent results for Newfoundland and Quebec. For all three types of services, these two provinces had higher than average need based on (3) and lower than average need based on (2).

Conclusions: This study suggests that there may be substantial differences in need for health services across provinces. Different approaches provided different results, and the assessment of needs for health services requires further methodological refinement.

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Affordability of health insurance: Do assets and net wealth explain the demand for health insurance better than income?

Presenter:

Didem Bernard

Authors:

Didem Bernard, Jessica Banthin, William Encinosa

Chair: TBA; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 313

Understanding the affordability of coverage is important for evaluating the role of policy in reducing the number of uninsured workers. We study worker health insurance take-up and coverage decisions using data from the Medical Expenditure Panel Survey (MEPS) from 1997 to 2003. Unlike previous studies which control only for current income, we include information on the presence and value of family-level assets such as home ownership, vehicles, savings accounts, stocks, bonds, retirement accounts, as well as liabilities, to estimate the effect of net wealth on insurance purchase decisions. Unlike most studies which focus on “worker” take-up, we also take into account the availability of insurance offers through the spouse’s employer in estimating enrollment decisions of workers and their families.

We estimate worker demand for employer sponsored health insurance as a function of the premium as well as worker, family, employer and plan characteristics. We use two approaches to deal with the lack of premium data for workers who decline coverage. The first approach uses a sub sample in MEPS from 1997-1999 with linked data from the Household Component (HC) and the Insurance Component (IC) which is a survey of employers. Although the HC-IC link sample is not nationally representative, it contains data on the premiums for takers and decliners as well as the availability of choice of health plans, and types of plans offered. The second approach uses simulated premiums from the Insurance Component List Sample. Using the nationally representative sample of employers in the MEPS-IC, we estimate average plan premiums as a function of predictor variables available on both the employer and household surveys, including location (state, MSA), firm size, industry, and plan types offered. We then use this model to predict premiums for workers in the household survey.

Among adults living in families with health insurance offers in 2001 and 2002, 7.6 percent did not take up private insurance. As expected, probability of take up declined with income: 8.6 percent of adults with middle income, 19.9 percent of adults with low income, and 32.4 percent of poor and near poor adults did not take up private insurance. (Bernard and Selden, 2005) Preliminary work based on this sample, suggests that assets and net wealth play a significant role in insurance coverage decisions. Controlling for income, adults who did not take up health insurance were significantly less likely to have assets. For example, among poor and low income adults, the decliners were less likely to own homes (46% vs. 54%), less likely to have cars (78% vs. 86%), less likely to have checking accounts (37% vs. 51%), less likely to have stocks (1% vs. 5%), and less likely to have individual retirement accounts (13% vs. 22%). Research using affordability thresholds based on income has shown that health insurance was affordable to between 25% to 75% of the uninsured in 2000. (Bundorf and Pauly, 2002) Our preliminary results suggest that in explaining health insurance purchase decisions, affordability thresholds based solely on income may be inadequate.

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Insurance Turnover as an Impediment to Improving Health Care Quality

Presenter:

Mark Votruba

Authors:

Mark Votruba, Randall Cebul, James Rebitzer, Raymond Herschman

Chair: TBA; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 313

Patients with chronic illnesses (e.g. diabetes, congestive heart failure, coronary heart disease) account for about 75% of medical care spending in the United States. A growing body of evidence suggests that these costs could be reduced significantly if chronic diseases were managed better. Insurers could therefore potentially profit by financing formal disease management programs for policyholders with chronic diseases. However, the financial incentive to do so is undermined by high insurance turnover rates when the returns from such investments accrue in the future or over many years. Based on membership records from a large regional insurer, we find that turnover rates are quite high. Almost 50% of members had discontinued coverage with our insurer after two years following their enrollment date, and fewer than 15% remained after eight years. The high rate of insurance turnover is primarily driven by turnover in employment. We show that turnover rates of this magnitude negate the financial incentive insurers have to finance disease management programs shown (in previous studies) to be effective at reducing costs. While the existence of longer-term insurance contracts could potentially mitigate this problem, a simple model of insurance competition in the employer group market suggests that adverse selection problems hinder the adoption of such contracts. Another interesting finding of this model is that increased insurance competition, while driving down employer group premiums, hinders adoption of cost-reducing disease management programs by increasing turnover. Finally, we show why state mandates for insurance coverage of disease management programs are likely to prove disappointing, as the underlying incentives of insurers are left unchanged.

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The Effects of Partial-Year Insurance Coverage on the Healthcare Utilization of Low-Income Children

Presenter:

Lindsey Leininger

Authors:

Lindsey Leininger, Willard Manning

Chair: TBA; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 313

Title: The Effects of Partial-Year Insurance Coverage on the Healthcare Utilization of Low-Income Children

Rationale: Studies on the dynamics of the insurance coverage of children demonstrate that treating insurance as a static measure provides an incomplete representation of the coverage of low-income children. Insurance coverage for this group is especially dynamic throughout the course of a year, with more children spending part of the year uninsured than spending the full year uninsured. The vast majority of research on the effects of insurance coverage on children’s access to care estimates the effects of point-in-time insurance coverage on access and utilization outcomes. With few exceptions, existing research does not examine the relationship between the amount of the year spent with insurance coverage and children’s healthcare utilization.

Objective: This work examines the effects of partial-year insurance coverage on the healthcare utilization of low-income children, accounting for the endogeneity of insurance status.

Data and Methods: The relationship seen in observational studies between health insurance and healthcare utilization is biased by unobservable characteristics that affect both insurance status and healthcare usage. Existing work on the effects of partial-year coverage on utilization measures is observational and does not account for unobserved heterogeneity among insured and uninsured children. This study uses instrumental variable techniques appropriate for limited dependent variables to provide evidence regarding the causal impacts of partial-year insurance coverage on the healthcare utilization of children.

We employ various instruments seen in the existing literature as well as additional instruments suggested by theory to estimate the insurance-utilization relationship for children. Several previous studies have utilized the variation in eligibility across states and years as an instrument with which to identify the relationship of interest. In addition to using this measure, we also use family-level and state-level instruments to estimate the effects of partial-year coverage on utilization measures.

The dependent variables of interest are the number of doctor visits received in the past year, whether a child has a usual source of care, whether a child was admitted into the hospital in the past year, and whether the child visited the emergency room in the past year. A sample of approximately 35,000 low-income children drawn from the 1997, 1999 and 2002 waves of the National Survey of America’s Families (NSAF) is used for the analysis.

Preliminary Results: Children with partial-year coverage have lower rates of healthcare utilization than those with full-year coverage but use more care than children who spend the entire year uninsured. The effect of the number of months of coverage on utilization exhibits a dose-response relationship, with each additional month of coverage lowering the probability of using care. Estimates from instrumental variables specifications are larger than those of ordinary least squares specifications.

Conclusions: This paper provides new evidence on the relationship between partial-year insurance status and the healthcare utilization of children. Its hope is to contribute to the currently small literature on this topic through employing a quasi-experimental design that accounts for non-random selection into insurance status.

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Generic Scrip Share and the Price of Brand-name Drugs: The Role of Consumer Choice

Presenter:

John Rizzo

Authors:

John A. Rizzo, Richard Zeckhauser

Chair: Avi Dor ; Discussant: Avi Dor Mon June 5, 2006 13:45-15:15 Room 325

Pharmaceutical expenditures have grown rapidly in recent decades, and now total nearly 10% of health care costs. Generic drug utilization has risen substantially alongside, from 19% of scrips in 1984 to 47% in 2001, thus tempering expenditure growth through significant direct dollar savings. However, generic drugs may lead to indirect savings as well if their use reduces the average price of those brand-name drugs that are still purchased. Prior work indicates that brand-name producers do not lower their prices in the face of generic competition, and our study confirms that finding. However, prior work is silent on how the mix of consumer choices between generic and brand-name drugs might affect the average price of those brand-name drugs that are purchased. We use a nationally representative panel of data on drug utilization and costs for the years 1996-2001 to examine how the share of an individual’s prescriptions filled by generics (generic scrip share) affects his average out-of-pocket cost for brand-name drugs, and the net cost paid by the insurer. Our principal finding is that a higher generic scrip share lowers average brand-name prices to consumers, presumably because consumers are more likely to substitute generics when brand-name drugs would cost them more. This effect is substantial: a 10% increase in the consumer’s generic scrip share is associated with a 15.6% decline in the average price paid for brand-name drugs by consumers. This implies that the potential cost savings to consumers from generic substitution are far greater than prior work suggests. In contrast, the percentage reduction in average brand costs to health plans is far smaller, and statistically insignificant.

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How Does Direct-To-Consumer Advertising Influence the Demand for Mental Health Treatment?

Presenter:

Samuel Zuvekas

Authors:

Chad D. Meyerhoefer, Samuel H. Zuvekas

Chair: Avi Dor ; Discussant: David Bradford Mon June 5, 2006 13:45-15:15 Room 325

Pharmaceutical manufacturers continue to increase their spending on direct-to-consumer (DTC) advertising, with DTC expenditures jumping from $0.6 billion in 1996 to almost $4 billion in 2004 (TNS Media Intelligence). Rosenthal et al (2003) suggest that such advertising is an important driver of rising prescription drug expenditures. These expenditure increases have been especially rapid among several classes of drugs used to treat mental health problems. For example, Zuvekas (2005) found that spending on mental health related prescription drugs increased 20 percent a year in real terms between 1996 and 2001, more than doubling from $6 billion to almost $15 billion. In addition, one-third of the Top 25 drugs ranked by sales are either antidepressants or antipsychotics (NIHCM, 2002). It is unclear how much of the increase in the demand for mental health treatment is due to increased advertising by the pharmaceutical industry. DTC advertising may cause both a shift from traditional forms of treatment to pharmacotherapy, as well as an increase in the aggregate demand for mental health drugs. Indeed, research by Iizuka and Jin (2003) and Iizuka (2004) suggests that increased DTC expenditures have a market-expanding effect. We seek to better understand and quantify the extent to which DTC advertising explains increased demand for mental health treatment and changes in how it is delivered. We derive a model of the joint demand for mental health pharmacotherapy and behavioral therapy, which incorporates the relevant costs influencing consumption decisions, including outof-pocket payments (cost-sharing) for ambulatory services, out-of-pocket prescription drug costs, insurance premiums, and the out-of-pocket costs for non-mental health ambulatory treatment and drugs. We then merge quarterly data on direct-to-consumer advertising for the 100 largest markets obtained from TNS Media Intelligence to data from the 1996-2003 Medical Expenditure Panel Survey (MEPS), a nationally representative survey of the U.S. civilian, noninstitutionalized population. These 100 largest markets account for approximately 86 percent of the television-owning population (80-82 percent of the total population). By exploiting regional market-level variation in DTC advertising for local (spot) television, local (spot) radio, and newspaper media, as well as variation over time in national and local media spending, we are able to identify the effect of advertising levels on the demand for mental health treatment. This is done using two different measures of consumer demand: 1) The number of ambulatory mental health visits and prescription fills; and 2) The level of consumer expenditures on ambulatory treatment and prescription pharmaceuticals. The former is estimated via a Zero-Inflated Ordered Probit specification, and the latter using a two-part model of medical expenditures. Both models deviate from the conventional demand literature by making use of a correlated random effects specification (Chamberlain, 1982) to control for individual-level heterogeneity in preferences and the endogeneity of model regressors. Estimates from these empirical models are used to forecast future advertising-attributable demand in light of advertising trends in the pharmaceutical industry for both public and private payers.

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Do Prescription Drugs Reduce Hospitalizations and Costs?

Presenter:

Bill Encinosa

Authors:

Bill Encinosa, Didem Bernard, Avi Dor

Chair: Avi Dor ; Discussant: Jian Li Mon June 5, 2006 13:45-15:15 Room 325

As health care costs continue to soar, Medicare, employers, and insurers are now designing pharmaceutical benefit plans to require greater consumer cost sharing. In fact, between 2000 and 2004, copayments for preferred drugs increased 62%, and copayments for non-preferred drugs increased 94%. In most circumstances, economists would conclude that increased patient cost sharing reduces moral hazard and excessive medical consumption, thereby improving social welfare. However, the case of prescription drugs is more complex. Often drugs are associated with preventive efforts to reduce further illness and complications, but the patient might not internalize these long run benefits of drugs. As a result, increased cost-sharing may lead to underuse of drugs. In fact, Dor and Encinosa (NBER, 2004) recently showed that copayment increases reduced patient compliance with anti-diabetic medications. In this paper, we examine the effect of drug noncompliance on patient outcomes and costs. We focus on diabetes since it is one of the most common chronic conditions, with 18.2 million affected in 2004 (6.3% of US population). It is also the leading cause of adult blindness, kidney failure, lower extremity amputations, and a leading cause of heart disease. It is the 6th leading cause of death. The prevalence of diabetes increased by more than 30% over the past 10 years. We examine the impact of anti-diabetic drug purchase compliance on hospitalizations and costs among persons with type 2 diabetes. We use Medstat’s Marketscan claims database for 45 large employers for 2001 and 2002. Since unobservable patient severity may determine both hospitalization and drug compliance, we control for unobservable severity by using GMM and AGLS Probit instrumental variable techniques. Our results show that compliance with drug treatment regimes lead to a lower probability of hospitalizations and to lower health care expenditures. Using the AHRQ HCUP Prevention Quality Indicators, we find that the probability of preventable diabetic hospitalizations under perfect drug compliance is 0.5%, compared to 8.8% under 50% compliance. More generally, under perfect compliance the probability of any hospitalization is 2.8% with an average length of stay of 3.6 days, compared to 38.6% under 50% compliance, with an average length of stay of 6.2 days. Under perfect compliance the probability of having any ER visits is 6.4%, compared to 24.5% under 50% compliance. In all IV models, patients with more severe unobservable severity were more apt to comply with their medications. As expected, the annual prescription drug costs are higher for patients who perfectly comply with drug treatment. The annual drug costs under perfect compliance are $3,683, and $1,727 under 50% compliance. It is not clear a priori whether there would be outpatient cost offsets associated with drug compliance, since getting prescriptions requires physician visits. We find that compliance is associated with more office visits, but fewer ER visits. The expected outpatient expenditures under perfect compliance are $3,116, compared to $592 for 50% compliance. However, the reduction in hospitalizations associated with drug compliance lead to large cost offsets…

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Cost-effective treatment for adolescents with opioid dependence

Presenter:

Daniel Polsky

Authors:

Daniel Polsky

Chair: William S. Cartwright; Discussant: Kathryn McCollister Mon June 5, 2006 13:45-15:15 Room 326

Optimal treatment strategies for drug dependence is rarely based on analysis of economic outcomes, yet limited financial resources for treatment frequently inhibit greater access to treatment services. A clinical trial in the National Drug Abuse Treatment Clinical Trials Network (CTN) is testing the effectiveness of Buprenorphine/Naloxone-facilitated rehabilitation (Bup/Nal) in opioid dependent adolescents/young adults. Bup/Nal in combination with psychosocial treatment has already been shown to improve treatment outcomes in adults. This new combined therapy offers hope for opiate dependent young people who have been growing in number and have very few prospects for treatment or recovery. Yet the tradeoff between short-term treatment and maintenance is acutely felt by young adults who may obtain better outcomes from maintenance therapy, but face the high costs of a lifetime of maintenance. If economic analyses with relevant and useful outcome measures could be performed on these treatment alternatives, a preferred treatment strategy for these patients could be ascertained. We are conducting a cost-effectiveness analysis to compare the incremental economic outcomes between short term Buprenorphine/Naloxone treatment and maintenance for treating opioid dependence in adolescents and young adults. The EuroQol EQ5D will be used to assess the patient’s preference for their health state. Urine analysis will determine whether subject is drug free at 3, 6, 9, and 12 months. The incremental medical costs (including both substance abuse treatment costs, the costs of other medical therapies, and costs of medical care born by patients) associated with the BUP/NAL intervention will be estimated. The analysis will estimate cost-effectiveness ratios (CER) which will represent the incremental medical costs of BUP/NAL per drugfree addict and per QALY; and estimate net social benefits of BUP/NAL by estimating the value to society of a drug-free addict in terms of reduced morbidity, crime, and improved productivity net of medical costs. Data collection within the clinical trial will involve the integration of instruments to collect counts of medical service use both within and outside the study protocol. A modified client-DATCAP will be used to determine price weights as proxies for social costs to value these medical services. The clinical trial is ongoing but a preliminary cost effectiveness analysis at three months postrandomization will be completed on the first 140 subjects by June 2006.

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Patient and Societal Utilities For A Spectrum Of Opiate, Cocaine, And Marijuana Problems

Presenter:

Kevin Kraemer

Authors:

Kevin L. Kraemer, Mark S. Roberts, Ihsan Salloum

Chair: William S. Cartwright; Discussant: Kathryn McCollister Mon June 5, 2006 13:45-15:15 Room 326

The lack of empirical data on societal and patient preference-based utility weights for drug-related health states and consequences limits the application of costutility analysis (CUA) to these common problems. To address this issue, we developed and pilot-tested a spectrum of opiate, cocaine, and marijuana related health state descriptions. Using a fractional factorial design, we then presented the health state descriptions to study participants recruited from the general population and from the drug treatment population for completion of Visual Analogue Scale, Time Trade-Off, and Standard Gamble exercises. We will present the results of these assessments and compare the advantages and disadvantages of these direct methods to indirect methods (e.g. EQ-5D, SF-6D) that rely on multi-attribute utility theory. In addition, we will present data on the test-retest reliability, consistency, and discrimination of the direct utility measurements. The results of this project will be useful for quality-adjusted life-years calculation in future CUA of drug abuse treatment programs and for burden of disease estimates in populations.

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Sensitivity of Preference-Weighted Health-Related Quality of Life Measures and Substance Use Severity

Presenter:

Jeffrey Pyne

Authors:

Jeffrey M. Pyne, Brenda Booth, Shanti Tripathi, Richard Rapp, Michael French, Kathryn McCollister

Chair: William S. Cartwright; Discussant: Kathryn McCollister Mon June 5, 2006 13:45-15:15 Room 326

Cost-effectiveness analyses using generic preference-weighted health-related quality of life (PWHRQL) measures to calculate cost per quality-adjusted life year (QALY) ratios are useful for making decisions about how to most efficiently allocate limited healthcare resources. To date, cost per QALY analyses have not been widely reported for substance abuse interventions, however. One of the first steps towards supporting the validity of cost per QALY analyses for substance use disorder interventions is examining the relationship between substance use severity and PWHRQL. We will present data on this relationship for subjects referred to substance abuse treatment programs in Ohio. The generic PWHRQL measures used in this study include the self-administered Quality of Well-Being (QWB-SA) scale (originally designed for use in cost per QALY analyses) and the standard gamble-weighted Medical Outcomes Study SF-12 (SF-12 SG). The substance use severity measure was the Addictions Severity Index (ASI). Three groups of patients were identified: substance abuse, drug dependence only, and alcohol and drug dependence. Our current sample includes 238 subjects and we expect to add approximately one hundred additional subjects by the time of presentation. Using the N=238 sample, we found significant QWB-SA, SF-12 SG, and ASI subscale differences between the substance dependent and substance abuse groups (p<0.01). The QWB-SA and SF-12 SG scores for the substance dependent groups were similar to those found among chronic physical health disorders. In multivariate analyses predicting the PWHRQL measures and controlling for sociodemographic variables; the ASI medical, psychiatric, and drug use subscales were significant predictors of the QWB-SA (R2=32%) and these predictors plus the ASI family/social subscale were significant predictors of the SF-12 SG (R2=48%). We will also present results of the effect of substance dependence related to specific substances in the presentation. Based on our current findings, it appears that both the QWB-SA and SF-12 SG are sensitive to cross-sectional substance use severity in a treatment-referred sample. Ultimately, cost per QALY analyses can provide an additional metric for communicating the value of substance abuse interventions and will allow for the direct comparison with existing cost per QALY ratios for other physical and mental health interventions.

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Is the Impact of Managed Care on Hospital Prices Decreasing?

Presenter:

William White

Authors:

William D. White, David Dranove, Richard Lindrooth, Jack Zwanziger

Chair: Frank Sloan; Discussant: Kathleen Carey Mon June 5, 2006 13:45-15:15 Room 332

Rationale: The introduction of managed care was followed by a sharp slow down in the growth of healthcare spending. However, recently expenditures have surged, raising the question of whether the impact of managed care has weakened. Previous research finds a strong inverse relationship between the level of concentration and prices in hospital markets under managed care. Two widely discussed hypotheses about why the effects of managed care may be decreasing are: 1) On the demand side of the market, relaxation of constraints on provider choice by Managed Care Organizations (MCOs) is reducing ability to steer patients and engage in price sensitive shopping to win discounts, weakening the relationship between concentration and price; and 2) on the supply side, downsizing and provider consolidation have led to increased market concentration, enabling providers to exercise growing countervailing market power. Objective: To examine how interactions between demand and supply factors have affected prices for hospital inpatient care for privately insured patients. Methods and Data: This research uses multiple regression analysis and pooled cross section time series data for Florida and California to test hypotheses regarding the effects of changes in concentration and the price sensitivity of shopping on hospital prices. Florida and California are selected for study because of long histories with managed care and data availability. Data are drawn from state and AHA hospital data files, the ARF, and unique data collected by Co-PI Jack Zwanziger on MCO network size. Pricing patterns are compared in five time periods: i) 1983 before the growth of managed care; ii) 1990, after the initial growth of managed care, but early in the process of hospital consolidation; iii) 1995 as MCO began to reduce restrictions on consumer choice of providers; iv) at the end of the 1990s (1999); and v) using the most recent data available (2001). To disentangle the effects of supply and demand side changes, two questions are considered. First, what would have happened to prices in more recent periods if measures of hospital market concentration and/or factors associated with the price sensitivity of shopping had remained fixed at previous levels? Second, have the magnitudes of coefficients associated with measures of concentration and/or the price sensitivity changed? Results: Our initial results indicate that that there was a growing inverse relationship between concentration and price in hospital markets until 1999, but between 1999 and 2001 this relationship plateaued. At the same time, concentration is increasing in many markets, consistent with a reduced ability to win price concessions. We are continuing to explore the possible effects of changes in constraints on consumer choice and the price sensitivity of shopping. Disclosure Information: This research is supported by a grant from the Robert Wood Johnson Foundation.

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Do the Financial Incentives Linked to Ownership of "Limited-Service" Hospitals Affect Physicians Practice Patterns?

Presenter:

Jean Mitchell

Authors:

Jean M. Mitchell

Chair: Frank Sloan; Discussant: Kevin Volpp Mon June 5, 2006 13:45-15:15 Room 332

Under existing federal law it is illegal for physicians to refer Medicare and Medicaid patients to a health care facility in which the physician has an ownership interest. Some states have enacted similar physician self-referral prohibitions that apply to privately insured patients. The federal law and most state self-referral prohibitions do not apply to “whole” hospitals and ambulatory surgical centers (GAO, 2003). Because hospitals are typically multi-product firms that offer a wide array of services, it was rationalized that any referral made by an individual physician investor of a “whole” hospital would in theory result in only small financial gains for the individual physician owner. Yet, under existing federal law it is illegal for a physician to refer patients to a hospital department in which he/she has an ownership interest (GAO, 2003). The “whole” hospital exception is one of the major factors that spurred the recent emergence and growth of physician-owned “limited-service” or “specialty” hospitals. Since the late 1990s, these facilities have become commonplace in states where certificate-of-need laws do not exist. Such facilities typically specialize in the provision of profitable services, most notably orthopedic, spine, cardiac or surgical procedures (GAO, 2003; Iglehart, 2005). Proponents contend that physician-owned limited-service hospitals are “focused factories”, that is, specialization results in economies of scale and lower production costs. In other words, high volume specialization enhances productivity. Advocates also maintain that because physician owners have direct control over management decisions, quality of care is better and patient satisfaction is higher (MedPAC, 2005). Opponents argue that physician ownership creates an inherent conflict of interest for referring physicians. Physicians receive a professional fee for performing surgery. However, physician owners also have a share of any profits generated from facility fees paid to the hospital. Thus, physician ownership has the potential to influence physicians’ referral behavior and practice patterns. Specifically, critics argue that the financial incentives linked to ownership result in the steering of patients to the physician-owned facility, increased utilization of more profitable services and selection of low-acuity and well-insured patients ( Iglehart, 2005; MedPAC, 2005). They contend that such practices by referring physician investors will undermine the ability of competing community hospitals to provide money-losing services such as emergency medical care. Despite concerns regarding the increasing number of physician-owned limited-service hospitals, nearly all empirical evidence to date employs a case study approach that focuses on the effects of limited-service hospitals on competing community hospitals…

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Safety Net Activities and Hospital Profitability During the 1990s

Presenter:

Jack Zwanziger

Authors:

Jack Zwanziger, Anil Bamezai

Chair: Frank Sloan; Discussant: Richard C. Lindrooth Mon June 5, 2006 13:45-15:15 Room 332

Background: Safety net (SN) hospitals in the US, also known as “hospitals of the last resort” provide health care services to the uninsured, low income, underinsured, to Medicaid beneficiaries, to patients who are “undesirable”. They have survived through a variety of direct subsidies from public funds and cross-subsidies from private payers. Both were imperiled in the 1990s with budget cuts and price competition. This study examined the financial performance of these hospitals over the 1990-2000 period. Data and Methods: We combined data (revenue, expenses, uncompensated beds size and teaching) from the Medicare Cost Report data sets with a range of hospital characteristics from the American Hospital Association Annual Survey of Hospitals for all urban general acute care hospitals in the US. We created a set of safety net measures including a factor characterizing the socio-economic status of the population living in the hospital’s service area (using Medicare patient origin data and the 1990 and 2000 census), the proportion of Medicaid patients and the uncompensated care burden (the proportion of a hospital’s expenses accounted for by uncompensated care). We then modeled revenue, expenses and profit margin as a function of time varying hospital and market characteristics (outputs, the competitiveness of the hospital market, HMO penetration) year dummies and interactions (with the year dummies) using hospital fixed effects specifications. We also tested for the potential endogeneity of the percent Medicaid and the uncompensated care burden using a 2SLS specification Finally, we estimated a logistic regression for the probability a hospital had a negative profit margin in a given year, as a marker of financial distress. Results: Profit margins were consistently lower at safety net hospitals but the gap between these profit margins and those of non-safety net hospitals did not increase during the 1990s. These differences are primarily due to lower revenue although expenses are somewhat higher as well. The models show essentially the same pattern. Hospitals with higher levels of safety net measures tend to have somewhat lower profits but the gap did not change significantly over the decade. Implications: Hospitals with higher safety net measures have consistently tended to have lower profit margins and as profit margins have slid may be the ones in the greatest distress. There is a need to focus subsidies properly to ensure the survival of the safety net in an environment where budget constraints and price competition are likely to persist and even to increase.

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Cigarette Advertisements and Smoking Cessation

Presenter:

Don Kenkel

Authors:

Donald Kenkel, Rosemary Avery, Dean Lillard, Adan Mathios

Chair: Sara Markowitz; Discussant: Hope Corman Mon June 5, 2006 13:45-15:15 Room 335

The academic and policy debate on cigarette advertising has mainly focused on whether cigarette advertising encourages children and adolescents to start smoking. Our econometric approach uses microdata to examine a related but neglected question: Does cigarette advertising maintain the size of the cigarette market by discouraging current smokers from quitting? We use variation in exposure to magazine advertisements as a natural or quasi-experiment to identify the influence of cigarette advertising on smokers’ attempts to quit smoking. Our preliminary results indicate that smokers whose reading habits expose them to more cigarette advertisements are less likely to attempt to quit and to successfully quit. The profits from discouraging cessation appear large enough to explain some, but not all, of the industry’s expenditures on advertising.

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Smoke and/or Drink? The Effect of Alcohol Control on Smoking by Teenagers

Presenter:

Philip Cook

Authors:

Philip Cook, Christopher Carpenter

Chair: Sara Markowitz; Discussant: John Tauras Mon June 5, 2006 13:45-15:15 Room 335

This is an analysis of whether different types of addictive goods are substitutes or complements in consumption. The behaviors considered are cigarette smoking and alcohol consumption by teenagers. Previous research has shown that zero tolerance laws, which set very low legal blood alcohol limits for individuals under the age of twenty-one, have reduced underage drinking. The current paper focuses on the effects of these laws on cigarette smoking by the affected group.

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An Exploration of the Relationship Between Risky Sexual Behavior and Substance Use by Teenagers and Young Adults

Presenter:

Michael Grossman

Authors:

Michael Grossman, Freddy Siahaan

Chair: Sara Markowitz; Discussant: Sara Markowitz Mon June 5, 2006 13:45-15:15 Room 335

We evaluate the extent to which the relationship between the use of such substances as marijuana and alcohol and various aspects of sexual behavior is causal. That is, does the use of marijuana and alcohol cause young people to initiate sexual intercourse at an earlier age, to be more likely to engage in sexual intercourse in the past month or past year, to be less likely to use condoms or other methods of birth control, and to have had more sexual partners? Establishing a causal effect of substance use on sexual behavior is essential to the design of effective public policies targeted at improving public health by affecting sexual behavior. A simple statistical association between substance use and sexual behavior is not sufficient evidence to determine causality because the observed relationship between substance use and sexual behavior may reflect causality in both directions (i.e., structural endogeneity) and may also reflect the influence of an omitted “third variable” (i.e., statistical endogeneity)—for example, “a thrill-seeking personality.” Thus, to obtain policy relevant causal estimates of the effect of substance use on sexual behavior, it is necessary to use statistical procedures that address these two sources of endogeneity. In previous research economists have used substance use control policies as instruments for use, but these attempts suffer from biases due to weak instruments, especially since the control policies do not vary much within areas over time.
Using panel data from National Longitudinal Survey of Youth 1997 with four observations on each person in the period from 1997 through 2000, we take two new approaches to establish causality. The first is a Granger causality model. The idea here is to see whether past substance use influences current sexual behavior, with past sexual behavior held constant. Conversely, we also regresses current substance use on lagged substance use and lagged sexual behavior. We take first differences to eliminate unobserved individual-specific and time-invariant fixed effects. Since first differences of lagged substance use and lagged risky sex are correlated with the disturbance term, consistent estimates of the first-differenced equation cannot be obtained by ordinary least squares. Therefore, we employ an instrumental variables estimation methodology that has been developed for panel data. In this methodology, second lags and longer lags of levels of substance use and sexual behavior serve as instruments for the lagged first differences. Unlike substance use control policies, these lags have significant explanatory power. Our second approach allows current substance use to have an impact on current sexual behavior. The equations specified in this model omit the lagged dependent variable as a regressor. Once again, first differences are obtained to eliminate fixed effects, and second and longer lags of levels of substance use serve as instruments for the lagged first difference.

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Effect of Drug Manufacturers' Rebates on Ohio Health Plans Pharmaceutical Expenditures

Presenter:

Enrique Seoane Vazquez

Authors:

Enrique Seoane Vazquez, Rosa Rodriguez-Monguio, Jay Visaria

Chair: Marisa Domino; Discussant: TBA Mon June 5, 2006 10:45-12:15 Room 121

Background: Medicaid federal drug rebates (i.e. retroactive discounts) were implemented in 1991, and Ohio Health Plans (OHP) -the program that manages Ohio Medicaid- supplemental rebates were implemented in April 2003. Manufacturers that sign a federal rebate agreement are eligible for federal Medicaid reimbursement for their products. Manufacturers of originator drugs that negotiate supplemental rebates with OHP are included in Ohio’s Medicaid prefer drug list (i.e. these drugs are covered without prior authorization). Objectives: The objective of the study is to evaluate the effect of manufacturers’ drug rebates on OHP drug expenditures. Material and Methods: The sources of data used in the study included OHP drug claim database, CMS, and other public sources. Drug expenditures trends for 1982-2003 were calculated and projected for 2004-2005. Drug expenditures for 2003 were calculated from the OHP claim database, and estimated rebates were subtracted from the fee for service (FFS) drug reimbursement in order to estimate the net cost of the pharmacy program.

Results: OHP’s FFS drug expenditures reached $1.7 billion in 2003. Originator drugs represented 85.7% and generic drugs 14.3% of the drug expenditures. The average expenditure per claim was $96.74 for originator drugs and $16.13 for generic drugs.

Manufacturers’ rebates provided an estimated reduction in drug expenditures of $407 million, representing 23.9% of FFS drug expenditures. OHP’s rebates included federal rebates (providing a reduction of 20.6% in drug expenditures) and state supplemental rebates (providing a reduction of 3.3%). Medicaid rebates favorable compare with rebates for the largest PBM in the U.S. that represented 8.4% of drug expenditures in 2003.

The average rebate for originator drugs was estimated at 27.33% of expenditures in those drugs, in contrast with the 5.5% estimated rebate for generic drugs. The implementation of the federal rebate generated an 8.8% reduction in the cost per Rx in 1991. Nevertheless, the cost per Rx had increased 41.2% during the three-year period (1988-1990) prior to the rebate, especially in the 1989, when prices went up by 44.6%. The implementation of the state rebate generated an increase of 0.1% in the cost per Rx in 2003. The cost per Rx had increased 34.1% during the three-year period (2000-2003) prior to this rebate, with an increase of 13.4% in 2002.

Conclusions: Ohio Medicaid pharmaceutical expenditures have doubled every five years during the period 1990-2003. Manufacturers’ rebates have not curved the upward trend in OHP drug expenditures. Medicaid federal and state rebates reduce the prices paid by the Medicaid program in relation to the prices listed by pharmaceutical companies. Nevertheless, the rebate, which is based on the AMP, creates an incentive for manufacturers to raise their prices before the rebate implementation.

In spite of the large rebates from utilization of originator drugs, substantial savings would derive from increasing the market share of generic drugs.

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Is drug coverage a free lunch? Cross-price elasticities and the design of prescription drug benefits

Presenter:

Jian Li

Authors:

Martin Gaynor, Jian Li, William Vogt

Chair: Marisa Domino Mon June 5, 2006 10:45-12:15 Room 121

Recently, many US employers have adopted more stringent prescription drug benefits. In addition, the U.S. will offer prescription drug insurance to approximately 42 million Medicare beneficiaries in 2006. These changes in drug prices can be expected to change not only the consumption of drugs but also the consumption of other medical goods, if those goods are complements or substitutes for drugs.

We use data from Medstat on individual claims and benefit design from 1997-2003 to examine the dynamic structure of demand for health care, focusing specifically on whether prescription drugs are (dynamic) complements or substitutes for inpatient and outpatient care. The Medstat data contain inpatient, outpatient, and pharmaceutical claims for a population of employees of a number of large, US employers. Our analytic sample contains more than 520,000 individuals each followed for at least three years and at most seven.

We study the effect of changing consumers’ copayments for prescription drugs on the quantity demanded of and expenditure on prescription drugs, inpatient care and outpatient care, allowing for effects both in the year of the copayment change and in the year following the change and controlling for changes in inpatient and outpatient deductibles, copayments, etc. Since many of our dependent variables have nonstandard distributions in our main analyses we employ fixed-effect count data models for our quantity measures: outpatient visits, inpatient stays, number of days supply of prescription drugs. We employ fixed-effect Tobit models for our various spending measures. In addition to fixed effects, we use block-bootstrap techniques to correct our standard errors for any serially correlated individual random effects.

Our results show that a one dollar increase in the consumer copayment for drugs has the following effects. In the first year after the change, drug spending falls by $20.6, but the outpatient spending increases by $10.9. In the second year after the change, drug spending continues to fall by $12.8, while outpatient spending rises by $15.3. There are no significance changes in inpatient spending in both years. In sum the total spending decreases by $9.5 in the first year after the price changes and increase by $1.5 in the second.

As is evident, there are both dynamic and instantaneous effects of changes in consumer drug copayments. Moreover, there is clear substitution effect between the consumption of prescription drugs and other medical services. The cost-savings on prescription drugs are largely offset by the increases in outpatient spending. These dynamic and substitution effects should be taken into account when estimating the expected cost of programs like the Medicare prescription drug benefit. The findings from this study also provide useful insights into the optimal design of insurance benefits.

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The Effect of Insurance on the Demand for Prescription Drugs by the Elderly and Near-Elderly

Presenter:

Merrile Sing

Authors:

Merrile Sing, Edward Miller, Jessica Banthin

Chair: Marisa Domino Mon June 5, 2006 10:45-12:15 Room 121

Rationale: Many people under age 65 have drug coverage through private group health insurance plans or Medicaid. Medicare beneficiaries are less likely to have drug coverage, and some obtain coverage through less generous, individually-purchased private plans. Medicare begins covering outpatient prescription drugs in 2006, when Medicare Part D becomes effective. The institution of Part D will increase access to drugs for some beneficiaries, but some beneficiaries may lose more generous drug coverage as some employer-sponsored retiree health plans discontinue coverage.

Objectives: To provide insight into the possible effects of Medicare Part D, this paper examines how prescription drug expenditures for the elderly and near elderly (those aged 55 to 64) are affected by different types of prescription drug coverage. We include the near-elderly because they will soon become Medicare beneficiaries, and policymakers are also interested in their demand for drugs.

Methods: We examine the effects of drug coverage on drug expenditures for elderly and near-elderly with econometric models estimated with data from the Medical Expenditure Panel Survey (MEPS), a nationally-representative database of the civilian non-institutionalized population in the U.S. Our models control for a wide variety of observed characteristics that differ across insurance groups, such as income, age, gender, race/ethnicity, education and health status. We distinguish between those with relatively generous drug coverage from Medicaid, employer-sponsored plans and Medicare HMOs, those with less generous coverage from individually-purchased plans, and those who have no coverage because they are uninsured or are covered only by Medicare (before 2006). We use two approaches to correct for the endogeneity of insurance status. First, we control for an important source of omitted variables bias by including variables that measure individuals’ attitudes toward risk and health care. Second, we develop several instruments for insurance coverage, such as Medicare HMO penetration rates, various measures of assets, and Food Stamp eligibility. We also use a therapeutic classification scheme to examine the demand for a few large classes of drugs of policy interest, such as statins. Although other studies have examined these issues, none have included the near-elderly in their analysis, used MEPS data, or included variables that measure individuals’ attitudes toward risk.

Preliminary Findings: At a point in time, approximately 70 percent of the near-elderly have prescription drug coverage through a private group health insurance plan or Medicaid. In contrast, approximately one-third of Medicare enrollees have prescription drug coverage through these relatively generous sources. From 1996 to 2002, the average prescription drug expenditure for the near-elderly increased from approximately $590 to $1,215 in constant 2002 dollars. During this same period, prescription drug expenditures increased from approximately $795 to $1,507 for Medicare enrollees.

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Clinical Trial Participation and Prescription Drug Use

Presenter:

Meredith Kilgore

Authors:

Meredith Kilgore, Dana Goldman

Chair: John Rizzo; Discussant: David Bradford Mon June 5, 2006 10:45-12:15 Room 213

Title: Clinical Trial Participation and Prescription Drug Use

Objective: To estimate the effect of cancer clinical trial participation on prescription drug utilization, drug costs, and out-of-pocket expenditures.

Methods: As part of the Cost of Cancer Treatment Study (CCTS), a national probability sample was drawn of patients participating in cancer clinical trials (n = 781) and a matched cohort of patients not enrolled in trials (n = 595) receiving treatment for the same cancers from the same providers as the trial participants. All CCTS subjects were interviewed about their prescription drug utilization and out-of-pocket drug expenditures. Treatment costs were estimated based on a large pharmacy transactions database. Multivariate regression was used to estimate the effects of trial participation on drug costs and out-of-pocket expenditures. Standard errors were corrected to account for the clustering of observations within trials and institutions. Weights were constructed using both propensity scores and sampling probabilities to correct for selection bias and to reflect the sampling design.

Results: Trial participation was associated with a $131 increase in prescription drug costs over a six-month period prior to the time of the interviews (p < 0.05), but no significant difference was found in out-of-pocket expenditures. These results were robust to a variety of model specifications.

Conclusions: Trial participation is associated with an increase in prescription drug utilization and costs, but these costs do not necessarily impose an economic burden on cancer trial participants.

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Cost-Effectiveness of Early-Stage Lung Cancer Adjuvant Treatments in Practice Using Instrumental Variable Estimates

Presenter:

John Brooks

Authors:

John Brooks, Elizabeth Chrischilles, Eun Cho, Shari Chen-Hardee, Shane Scott

Chair: John Rizzo; Discussant: James Henderson Mon June 5, 2006 10:45-12:15 Room 213

Rationale: Treatment “effectiveness” is generally defined as the effect of a treatment used in practice. Yet the usual approach in cost-effectiveness analysis is to use treatment efficacy and cost estimates from controlled trials to estimate what should be called “cost-efficacy” ratios. In an earlier paper (Journal of Econometrics,vol (77), 1997, pp 39-64) McClellan and Newhouse proposed using instrumental variable (IV) methods to estimate treatment effectiveness and treatment cost in practice to estimate true cost-effectiveness ratios. We apply their approach here. Our cost-effectiveness ratio estimates are from Medicare’s perspective and can help policy-makers judge whether treatments are over or underused in practice.

Objectives: To estimate cost-effectiveness ratios for adjuvant treatments (first course chemotherapy and radiation therapy after surgery) in practice for patients with non-small cell early-stage lung cancer (ESLC).

Methodology: We used patients with ESLC that had surgery for tumor removal in the SEER-Medicare linked database, 1992-1999 and assessed whether patients had adjuvant chemotherapy and radiation after surgery. Outcomes measured for each patient were three-year survival and total three-year Medicare reimbursements post surgery. Separate but identically specified instrumental variable models were estimated for each outcome variable. Both treatment variables (chemotherapy and radiation) were specified separately in each model. Instruments included local area (50-mile radius around patient residence) treatment rates over the period 1992-1999 and local patient concentration indices among essential providers (medical oncologists, radiation treatment centers). All models controlled for tumor stage, grade and site, patient age, gender, and race, and the socioeconomic characteristics of the patient’s zipcode. Models were re-estimated with different instrument specifications to assess the robustness of the estimates. Cost-effectiveness ratios were estimated as the ratio of the treatment-specific IV three-year cost estimate to the treatment-specific IV three-year survival estimate.

Results: Instruments had statistically significant effects on the choice of each treatment. Using IV analysis, adjuvant chemotherapy had positive and statistically significant effects on three-year survival and Medicare reimbursements. The statistical significance of these estimates varied somewhat with the instrument specification but the effects remained positive. No statistically significant relationships were found between adjuvant radiation and three-year survival or three-year Medicare reimbursements. Using different instrument specifications we found three-year adjuvant chemotherapy cost-effectiveness ratios ranging from $37,854 to $113,829.

Conclusions: Using the rationale within McClellan and Newhouse, our estimates suggest that increasing the rate of adjuvant chemotherapy for ESLC patients would cost Medicare between $37,854 to $113,829 for each additional three years of life saved. If a year of human life is valued around $75,000, these results suggeste that adjuvant chemotherapy was underused for ESLC patients. As radiation therapy did not increase three year survival this suggests that radiation treatment was potentially overused.

Disclosure Information: This research was supported by a grant from the National Cancer Institute.

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The Decision to Conduct a Head-to-Head Comparative Trial: A Game-Theoretic Analysis

Presenter:

Edward Mansley

Authors:

Edward Mansley, Elamin Elbasha, Steven Teutsch, Marc Berger

Chair: John Rizzo; Discussant: John Rizzo Mon June 5, 2006 10:45-12:15 Room 213

Recent Medicare legislation calls on the Agency for Healthcare Research and Quality to conduct research related to the comparative effectiveness of health care items and services, including prescription drugs. This reinforces earlier calls by government officials for “practical clinical trials” involving clinically relevant treatment alternatives. Using a game theoretic model, we explore the decision of pharmaceutical companies to conduct such “head-to-head” comparative trials. The model suggests that an important factor affecting this decision is the potential loss in market share and profits following a result of inferiority or comparability. This “hidden cost” is higher for the Market Leader than the Market Follower, making it less likely that the Leader will choose to conduct a trial. The model also suggests that in a full-information environment it will never be the case that both firms choose to conduct such a trial. Furthermore, if market shares and the probability of proving superiority are similar for both firms, it is quite possible that neither firm will choose to conduct a trial. Finally, our results indicate that incentives that offset the direct cost of a trial can prevent a “no-trial equilibrium”, even when both firms face the possibility of an inferior outcome.

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Effect of antidepressants on employment of women with HIV in the HAART era: 1995-2004

Presenter:

Omar Galarraga

Authors:

Omar Galarraga

Chair: Randall Ellis; Discussant: Cynthia Perry Mon June 5, 2006 10:45-12:15 Room 225

Background: Since the mid-1990s highly active antiretroviral treatment (HAART) has extended the lives, and the ability to work for individuals living with HIV in the United States. During the same period, antidepressants have become some of the most widely prescribed drugs. Employment of persons living with HIV depends on several factors including physical and mental health status, as well as local area labor market characteristics.

Data: This paper investigates the effect of antidepressants on the chances of being employed, using data from the Women’s Interagency HIV Study (WIHS). Started in 1995, the WIHS is a prospective cohort of 3,768 participants to study comprehensively the effects of HIV on women. About 80 percent of the participants are from racial minority groups in Bronx and Brooklyn (New York), Chicago (Illinois), Los Angeles and San Francisco (California), and Washington, D.C. Participant follow-up visits are scheduled every six months.

Rationale: There may be two channels for depression treatment to affect the labor market outcomes of persons living with HIV. First, a direct channel by which antidepressants may reduce depression symptoms and thus may improve the likelihood of being employed. Second, an indirect channel by which antidepressants may improve adherence to HAART regime, improving physical health, and then lead to better employment outcomes.

Methods: The methodological challenge is that more depressed persons are more likely to receive treatment, but they are also more likely to be unemployed. This paper uses the econometric method of instrumental variables to identify the treatment effect of antidepressants on employment. The main instrument is a measure of the generosity of the Medicaid program at the State level in terms of coverage of a particular class of antidepressants: selective serotonin reuptake inhibitors (SSRIs). The instrument helps to predict treatment choice independently of individual confounders, and thus reduce the bias in estimation.

Results: The empirical results from linear, non-linear, and auto-regressive models (under fixed and random effects assumptions) for panel data suggest that antidepressants may have a positive effect on the employment probability for the women’s sample. Conditional on receiving HAART, and controlling for individual and local area labor market characteristics, women who use antidepressants may have at least a seven-percentage-point higher probability of being employed than women who do not use antidepressants.

Policy Implications: The findings suggest that increasing efforts to improve screening, diagnosis, and treatment of depression in specific high-risk groups may be warranted not only for the physical and mental health benefits, but also as an avenue to increase employment. Furthermore, since the majority of the HIV care is financed by public funds, expanded access to depression treatment through the Medicaid and Ryan White CARE Act formularies may potentially improve labor market outcomes of persons living with HIV.

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The Influence of Mental Health Status on Employment for HIV-Positive Individuals

Presenter:

Stephanie Bernell

Authors:

Stephanie Bernell

Chair: Randall Ellis; Discussant: Didem Bernard Mon June 5, 2006 10:45-12:15 Room 225

Objective: In this study, we evaluate whether persons dually diagnosed as HIV-positive and having mental health problems have differential labor market outcomes than those without mental health problems. The underlying assumption of this study is that mental health can influence employment directly or indirectly through a decreased likelihood of using recommended treatment regimens that could stave off the onset of AIDS.

Empirical Model: In this paper, we specify a bivariate probit model of (1) the decision to work, which we represent as y1, and (2) the decision to use HAART, which we represent as y2, allowing for correlation (ρ) between the two decisions. The underlying assumption of this model is that two related decisions are considered by the same individual. Normally, for a two equation probit model it is assumed that the errors in the two equations (ε1 and ε2) are distributed normally N(0,1) and that the two errors are independent of one another (Cov(ε1,ε2) = 0). When there is reason to believe that the error terms are possibly related, then the bivariate model is appropriate. For example, there may be an underlying factor such as risk preferences that may affect HAART use and employment.

The dependent variables in the model are the following: (1) y1, which equals 1 if employed and 0 otherwise, and (2) y2, which equals 1 if the individual uses HAART and 0 otherwise. The independent variables in the model include demographic measures, exposure route, health measures, mental health status, and usual source of care.

Data: Data from the HIV Cost and Services Utilization Study (HCSUS) were used in this study. HCSUS is a survey of adults with known HIV infection who made at least one visit to a non-military, non-prison medical provider other than an emergency department in the United States during first two months of 1996. HCSUS collected data on 2864 individuals in 180 clinics, hospitals and private practices in 28 urban areas and 24 clusters of rural counties. For this analysis, we used data from the first follow-up interview to categorize mental health and data from the second follow-up interview to obtain data on HAART use, employment status and other demographic information. The appropriate sampling weights were used in all study analyses.

Results: Preliminary evidence demonstrates an interrelationship between HAART use, employment and mental health. More than half (57.7%) of those unemployed at the time of the baseline survey and about one-third (33%) of those employed at the time of the baseline survey had mental health composite score less than the median. However, almost 50% of those using HAART at the time of the baseline survey and 50% of those not using HAART at the time of the baseline survey had a mental health score below the median. The bivariate probit model results indicate that HIV-positive individuals with poor mental health have a reduced probability of working, but do not have generally have a reduced probability of using HAART. Individual with general anxiety disorder do, however, have an increased probability of using HAART.

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Labor Market Outcomes of Persons with Mental Disorders

Presenter:

Marjorie Baldwin

Authors:

Marjorie Baldwin, Steven Marcus

Chair: Randall Ellis; Discussant: Richard Scheffler Mon June 5, 2006 10:45-12:15 Room 225

Background: Mental disorders are common and associated with high costs and substantial levels of work disability. The poor labor market outcomes of persons with mental disorders are surely attributed, in part, to the association between mental disorders and deficits in higher-order social and cognitive skills that are important determinants of workplace productivity, yet pervasive stigma against mental illness may also play a role. This is the first study to apply the analytical tools economists have used to study other disadvantaged groups in the labor market specifically to persons with mental disorders, a group subject to some of the most intense stigma and poorest outcomes. Objectives: We use data from the 1999 Medical Expenditure Panel Survey to analyze employment outcomes among persons with mental disorders. The objectives are to compare the mean wages and employment rates of persons with and without mental disorders; and estimate the extent to which the poor outcomes for persons with mental disorders may be attributed to stigma.

Methods: We decompose wage and employment differentials between workers with and without mental disorders into an explained component, attributed to differences in the average productivity of the two groups, and an unexplained component, some part of which may be attributed to the effects of stigma against mental illness. The decompositions are based on wage and employment functions estimated separately for persons with and without mental disorders. Key explanatory variables include workers’ demographic and human capital characteristics, non-wage incomes, job characteristics, and functional limitations (physical/cognitive/social). We provide estimates of productivity-adjusted employment and wage differentials for persons with mental disorders overall, and for subgroups of persons with mood, anxiety, adjustment, or psychotic disorders.

Results: Employment rates are 85% for persons with no disorder vs. 70% for persons with mental disorders. The differential is explained, in part, by differences in health status, non-wage incomes, and gender, but approximately 20% remains unexplained. Among the employed, mean hourly wages are $14.85 for persons with no disorder vs. $14.09 for persons with mental disorders. About 70% of the wage differential is explained by differences in functional limitations, gender, part-time employment, and health insurance coverage. The remaining 30% is unexplained. The results reveal distinctly different patterns of labor market outcomes across the subgroups, consistent with a severity gradient of mental disorders such that persons with adjustment disorders experience the most favorable outcomes, while persons with psychotic disorders experience the least favorable. Implications: The project is timely because of the employment mandates of the ADA, and because recent advances in medications for serious mental disorders enable many persons with these illnesses to function at a level where they are able to work. The results identify productivity-related characteristics that contribute to the low wages and employment rates of persons with mental disorders, but also suggest that stigma may play an important role. By helping to identify barriers that impede success in the labor market, the results have important implications for mental health services directed toward improving employment outcomes among persons with mental disorders.

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Time Series Issues in the Estimation of the Rational Addiction using Micro Data

Presenter:

Brian Ferguson

Authors:

Brian Ferguson, Audrey Laporte, Frank Windmeijer

Chair: Susan Ettner; Discussant: Bill Crown Mon June 5, 2006 10:45-12:15 Room 226

Increased availability of micro panel data sets make time series econometric issues relevant in the estimation of RA models. In particular, the theoretical RA model possesses a saddlepoint equilibrium, meaning that the time series properties of the data are represented by a second order difference equation with one stable and one unstable root. The unstable root is expected to introduce nonstationarity problems akin to those found in the unit root macroeconometrics literature, and is also expected to dominate, and bias, the estimation of the coefficients of the RA equation as the time dimension of the data grows. In this paper we use Monte Carlo simulation methodology to illustrate the effects of the presence of an unstable root on the estimation of the coefficients of an RA model, and in particular on the estimated coefficients on lead and lag consumption. We show that as the time dimension of the data increases, the unstable root comes to dominate the estimation of RA-type models, to the point where the RA form can be decisively rejected even when it is the true data generating process. We also show that the larger the unstable root, the smaller the length of the time series required for the unstable root to come to dominate the estimation. Conclusions: The earlier applied RA literature paid little attention to time series issues, probably because the lack of individual level panel data sets made those issues moot. As, increasingly, micro panel data becomes available, researchers will need to take account of the implications of the dynamic structure of the RA model for its estimation, and in particular for the likelihood of significant bias to the estimated coefficients.

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Health Expenditure Estimation and Functional Form: Applications of Generalized Gamma and Extended General Linear Models

Presenter:

Edward Miller

Authors:

Edward Miller, Steven Hill

Chair: Susan Ettner; Discussant: Joel Hay Mon June 5, 2006 10:45-12:15 Room 226

Rationale: Health care expenditure regressions are used in a wide variety of economic analyses including risk adjustment and program and treatment evaluations. Two recent articles have demonstrated that generalized gamma models with heteroskedasticity (GGM-het) and extended general linear models (EGLM) provide flexible approaches to deal with a variety of data problems commonly encountered in expenditure estimation. To date, however, there have been few empirical applications of these models to expenditures.

Objective: We use nationally representative data from the first six panels of the U.S. Medical Expenditure Panel Survey (MEPS) to compare the bias and predictive accuracy of GGM-het and EGLM models with other regression models in a cross-validation study design.

Methodology: We estimate models of prescription drug, ambulatory and total health care expenditures conditional on having any expenditure. Models are estimated separately for the elderly and other privately insured adults. Since expenditure distributions vary by type of service and population, the appropriate functional form is also likely to vary. In estimating expenditures, we focus on two recently developed modeling approaches that flexibly accommodate skewness, kurtosis, heteroskedasticity and other data problems. The GGM-het model, proposed by Manning, Basu, and Mullahy (2005), uses a log-link like many standard GLM models. However, the GGM-het model is more flexible than standard models because the generalized gamma distribution has a scale parameter and two shape parameters and variance is explicitly modeled as a function of explanatory variables. In the EGLM model, proposed by Basu and Rathouz (2005), the link function is not specified prior to estimation. Instead, both the link and variance functions are simultaneously estimated along with the coefficients.

Our models use socioeconomic characteristics and condition information from the first year of each MEPS panel to predict expenditures in the second year. We use a split-sample cross validation design to compare results from GGM-het, EGLM, log OLS with heteroskedasticity (log-het), linear OLS, Poisson and Gamma models. We use the validation sample to test for over-fitting and to examine predictive ratios and mean prediction errors in the entire sample, in the tails of the distribution and for persons with chronic conditions.

Results: In our preliminary analysis we focused on total expenditures and estimated all types of models except EGLM. We found that the expenditure distribution for the elderly was more kurtotic than the distribution for other adults and the distributions varied in the extent of heteroskedasticity beyond simple functions of the mean. Overall, the GGM-het and log-het models fit the data for privately insured adults very well. However, none of our models was clearly superior for the elderly.

Conclusions: Our preliminary analysis confirms that GGM-het models are robust to a wide variety of common data problems. For some distributions, however, an even more flexible estimator, such as the EGLM model, may be required.

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Properties of treatment effect estimates in switching regime models: impacts of sample size and strength and dirtiness of instruments.

Presenter:

Henry (Joe) Henk

Authors:

Henry (Joe) Henk, William Crown, David Vanness

Chair: Susan Ettner; Discussant: Michael French Mon June 5, 2006 10:45-12:15 Room 226

Instrumental variables methods are widely used to adjust for unobserved variables that are correlated with both treatment selection and patient outcomes. However, there is a growing literature showing that such models often perform more poorly than ordinary least squares regression. The bias and precision of instrumental variables estimators have been shown to be sensitive to comparatively weak correlations of the instrumental variable with the residuals of the outcome equation. The bias and precision of instrumental variables estimators have also been found to be sensitive to the strength of the instruments. Larger sample sizes cannot overcome problems of bias but are helpful in improving precision.

To date, the examination of the properties of IV estimates has been confined to the single equation case. Single equation estimates of treatment effects do not account for the interactions of treatment cohorts with observed covariates. Nor do they account for differences in the distributions of patient characteristics between treatment cohorts. Switching regime models offer the potential to control for both of these factors-potentially enabling a more precise estimate of treatment effects. However, we know little about the sensitivity of treatment effects estimates obtained from switching regime models to issues such as the “dirtiness” of the IV, strength of the IV, or sample size. In this paper, we conduct simulation analysis to examine these properties for IV estimation of switching regime models when these factors are varied.

We present the results of a simulation study to demonstrate estimation error caused from correlation between the residual and the instrumental variable when IV estimation of switching regime models are employed to estimate of regression parameters in presence of an endogenous regressor.

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Do Residential Segregation and Economic Inequality Explain Race Disparities in Health Services Use?

Presenter:

Darrell Gaskin

Authors:

Darrell Gaskin

Chair: James Marton; Discussant: Patricia Ryan Mon June 5, 2006 10:45-12:15 Room 235

Authors: Darrell J. Gaskin (dgaskin@jhsph.edu), Adrian Price (adrian.price@ccaix.jsums.edu), Dwayne T. Brandon (dbrandon@jhsph.edu) Thomas A. LaVeist (tlaveist@jshph.edu)

Title: Does Residential Segregation and Economic Inequality Explain Race Disparities in Health Services Use?

Rationale: Nationally, disparities in health care utilization between African Americans and whites are well documented. Even after controlling for health status and health insurance coverage, African Americans still have lower rates of use of medical services. However, national analyses are unable to adequately control for the impact of racial segregation on geographic access and often compare African American samples that are disproportionately low income to White samples that have higher percentages of moderate/middle and high income respondents.

Objective: To determine if racial disparities in health care use can be attributed to residential segregation and economic inequality, we compared disparities in health care use in a national sample of adults to a sample of adults from a low income racially integrated community.

Methods: We estimated models of health care use using data from Medical Expenditure Panel Survey (MEPS), a national sample of adults conducted by the Agency for Health Research and Quality, and data from the Exploring Health Disparities in Integrated Communities Project (EHDIC). The EHDIC data is a 2003 survey of residents from a low income urban community in a northeastern state. This community has equal numbers of white non-Hispanic and African American residents. Census data shows that racial groups have similar median income and educational attainment. We conducted analyses of the full MEPS sample and a matched subsample, created by matching MEPS respondents to EHDIC respondents by race, gender, income and educational attainment. The MEPS and the EHDIC databases contain information on health services utilization: number of health care visits, emergency room use, usual source of care and whether the respondent has a regular doctor. For each dataset, we estimated the effects of race on each utilization measure and controlling for general health status, presence of chronic conditions, age, gender, marital status, insurance status, employment status, income and education.

Finding: We found differences in the race disparities in health care use across the datasets but some similarities too. In the MEPS data, African Americans were 15% less likely to have a health care visit compared to whites. However, in the EHDIC data, African Americans were 40% more likely to have a health care visits than whites. However, in the MEPS and EHDIC, African Americans were about 10% less likely to have a regular doctor compared to whites. In MEPS data, African Americans were 25% less likely to multiple medical visits compared to whites. In the EHDIC data, African Americans were 20% less likely to have multiple medical visits.

Conclusion: Segregation and income inequality may explain substantial proportion of the observed race disparities in the initiation of health care use. However, differences in the amount of services use and whether individual have a regular doctor are probably due to factors related to the physician-patient interactions and individuals’ experiences in the health care system.

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Disparities in Late-Stage Cancer Diagnoses in 1990 and 2000: A Comparative Study of Three American Cities

Presenter:

Janis Barry

Authors:

Janis Barry, Nancy Breen

Chair: James Marton; Discussant: Sylvia Brand Mon June 5, 2006 10:45-12:15 Room 235

Rationale: Previously, we reported that women living in poor, medically underserved, inner-city areas were at significantly increased risk of late-stage cancer diagnosis in 1990. Breast and cervical screening are widely used in the US to detect early stage cancer. We found that in neighborhoods where the odds of late-stage diagnoses are high, women face access barriers to screening.

Objectives: We use data on inner-city markets and residents to model economic changes over a 10 year period. Other researchers found independent effects of neighborhood unemployment, racial composition, environmental threats, and low socioeconomic status on a range of health outcomes. Analysis of the supply of health services, including the location of hospitals, clinics and drugstores, has been largely absent from the neighborhoods and health literature. We will examine these variables in our follow-up analysis.

Methodology: For both the initial 1989-1990 study and the 1999-2000 follow-up, we used variables from Surveillance, Epidemiology, and End Results (SEER) cancer registry data (race, age, marital status and city of residence) and linked them with 1990 and 2000 Census data at the tract level. We linked a measure of medical underservice (MUA) developed by the Health Resources and Services Administration (HRSA), and a measure of extreme poverty, defined as a Census tract in which more than 40% of the population lives in poverty. We analyze Atlanta, Detroit, and San Francisco, three major metropolitan areas with both high and low-income tracts and racially and ethnically diverse populations.

Results: In 1989-1990 we found that residence in an extremely poor or medically underserved area increased the likelihood of a late-stage cancer diagnosis. City of residence, and race/ethnicity also were major determining factors. Detroit represented the clearest case of market failure in the delivery of cancer screening services. Our preliminary studies for the 1999-2000 period show the same set of factors is associated with late-stage diagnosis. Despite a significant decline in late-stage diagnoses between 1990 and 2000; and a dramatic (24%) decline in the nationwide number of residents in extremely poor neighborhoods, our findings confirm that health care markets are underserving economically disadvantaged locations. Further, many poor neighborhoods without the federal MUA designation in 1990 still had not received it in 2000.

Conclusion: Our results identify areas in which women are not receiving preventive cancer services. In these areas, the combination of low income and social disadvantage act to reduce the health care choices available to women. We evaluate whether the same neighborhoods we examined in 1990 have improved their ability to provide residents access to services in 2000. For 2000, we analyze the location of health care delivery factors in the three inner cities, especially how spatial and racial divides foster late-stage diagnoses in the clearest case of market failure, Detroit.

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Location decisions of mammography facilities: racial/ethnic disparities across zip-codes

Presenter:

Jonathan Sunshine

Authors:

Mythreyi Bhargavan, Jonathan Sunshine

Chair: James Marton; Discussant: TBA Mon June 5, 2006 10:45-12:15 Room 235

Rationale: Among women age 40 and older, minority women have been found to have mammograms at a lower rate than white women. One potential cause may be that minority women live in neighborhoods with no mammography facilities in proximity to them, or because facilities in their neighborhoods are inadequately committed to patient service.

Study Objectives: To measure the effect of characteristics of a zip-code (and the surrounding area) on two sets of outcomes: (a) whether mammography facilities locate in the zip-code, and (b) commitment to patient service of mammography facilities in it. In particular, to measure if high percentage of minority population influences facility location decisions, above and beyond socio-economic factors.

Data: Data on demographic and socio-economic characteristics of zip-codes are obtained from the US Census. The list of mammography facilities and their zip-codes is obtained from the American College of Radiology (ACR) and Food and Drug Administration (FDA) databases of accredited mammography facilities. Patient-service commitment was measured using a pilot phone survey of 105 mammography facilities.

Methods:
The unit of analysis is the zip-code, referred to here as the target zip-code. Target zip-codes are categorized as high-white, high-black, high-Hispanic, and high-Asian based on the race and ethnicity of the largest sub-population in the zip-code. Quantitative outcomes of interest for the target zip-code are (i) presence of a mammography facility, (ii) the number of facilities per 100,000 women age 40 and older, and (iii) distance to nearest facility if the target zip-code has none. The explanatory variables are socio-economic characteristics of the target and surrounding zip-codes. Outcome (i) will be estimated using simple logistic regression and (ii) and (iii) with linear and log-linear regression.

In addition, we will use logistic regression to compare mammography facilities in high-minority and high-white zip-codes in terms qualitative factors, such as whether the facility accepts Medicaid and charity patients, language skills and minority composition of front office and technologist staff, types of outreach activities, etc.

Preliminary Results: We find no large differences in the minority composition of the population (31% vs. 30% minority respectively) between zip codes with and without mammography facilities. However, controlling for zip-code socio-economics and population density, high black and Hispanic zip-codes are much less likely to have a mammography facility in them than predominantly white zip-codes (for example, 10% increase in the black percentage of the population decreases the odds of a facility in the zip-code by 14%). There is no significant effect of percent of minority populations on the number of facilities per 100,000 women age 40 and older.

Facilities in high minority zip-codes seem to be more committed to patient service than those in high-white areas, for example, one-half of the facilities surveyed in high-Hispanic and three-fifths of those in high-black zip-codes use posters and flyers for outreach into the community to educate women about mammograms, whereas less than one-third of the facilities in the high-white zip-codes do.

Conclusion:
High-minority zip-codes are less likely to have mammography facilities, but facilities in high-minority zip-codes may be more committed to patient care than those in high-white zip-codes.

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The Effect of Health Insurance Characteristics on Outpatient Mental Health Care and Substance Abuse Treatment Utilization among Privately-Insured Employees and their Dependents

Presenter:

Laura Dunlap

Authors:

Laura Dunlap, Edward Norton, Gary Zarkin

Chair: Michael Grossman; Discussant: Adetokunbo Oluwole Mon June 5, 2006 10:45-12:15 Room 309

Rationale: Although many studies exist that have examined the effect of private health insurance on demand for medical care, few studies have examined this relationship for mental health care or substance abuse treatment demand. Those studies that have examined MH/SA treatment demand have often focused on health insurance per se rather than examining specific effects of MH/SA plan coverage. Furthermore, many of these studies use data limited to service-using individuals and are unable to examine the effect of health insurance on any use of MH/SA care as well as level of use among service users.

Objective: The objective of this study is to estimate the effect of specific MH/SA health insurance characteristics on outpatient utilization of mental health and substance use treatment services for privately-insured employees and their dependents.

Methodology: We use a two-part model to estimate the effect of MH/SA health insurance characteristics on the likelihood of any use of outpatient MH or SA services and, conditional on use, the number of outpatient days. Our models include 4 variables representing MH/SA health insurance coverage, including three different measures of coinsurance rates and whether the health plan required precertification by the company’s employee assistance program (EAP) prior to MH/SA service use. Any use is modeled using a random-effects logit model and days of use is modeled using a random-effects negative binomial model. Both models are estimated using an instrumental variable approach to deal with potential endogeneity of the health insurance characteristics. Data used are private insurance enrollment and claims data for 1997-1998 from MEDSTAT’s Marketscan® database.

Results: We find that the outpatient coinsurance rate for in-network MH/SA is positively and significantly associated with any outpatient MH use, although the estimated marginal effect is quite small. Contrary to our expectations, employees’ number of outpatient MH care days received decreases as the in-network coinsurance rate increases. But again, this effect is extremely small. Among health insurance characteristics, the strongest predictor of MH use is the EAP precertification requirement which is negatively associated with MH use. Our analysis of substance use treatment finds little significant association between MH/SA health insurance variables and outpatient SA treatment utilization.

Conclusions: Our findings suggest that employees and their dependents do respond to expected out-of-pocket expenses for outpatient MH care, but this response is very small. Furthermore, MH/SA health characteristics appear to have little or no effect on SA treatment utilization. Finally, our results indicate that the role of an EAP is not straightforward. Rather than facilitating treatment access, EAP precertification may create an obstacle to treatment and discourage utilization. However, it is also possible that EAP precertification may decrease utilization through the formal health care system by providing some MH/SA services. Individuals with milder conditions may receive an adequate dose of services through the EAP and, therefore, not need additional services.

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Health Care Costs Associated with Autism among Privately Insured Children

Presenter:

Douglas Leslie

Authors:

Douglas Leslie, Andres Martin

Chair: Michael Grossman; Discussant: Laura Dunlap Mon June 5, 2006 10:45-12:15 Room 309

Rationale: Costs associated with the treatment of autism and other autism-spectrum disorders (ASDs) are largely unknown, but are likely considerable. If public and private health insurance programs are not designed so that coverage for individuals with ASDs is appropriate, access to care for these patients may be compromised.

Objectives: The objective of this paper is to compute health care cost estimates for children with autism, and to compare the costs associated with autism to those of other mental health disorders among children.

Methodology: Data for the study come from the MarketScan database, which includes private health insurance claims data for over 2.5 million covered lives across the U.S. Data for calendar years 2000 through 2003 were included in the analyses. Individuals aged 17 and under with a diagnosis of autism (ICD-9 code 299.0x) or any ASD (ICD-9 codes 299.0x, 299.1x or 299.8x) were identified, and costs of all health care services were calculated. In addition to total health care costs, costs associated with inpatient, outpatient and prescription drug care were also computed. Costs were also computed for children with other mental health disorders and compared with those for autism. Costs were adjusted for inflation using the medical care component of the consumer price index.

Results: The average total annual cost per autism patient ranged from $2,468 in 2000 to $3,562 in 2002, and among patients with any ASD ranged from $2,211 in 2000 to $3,133 in 2003. On average, approximately 3.5% of patients with autism or any ASD had an inpatient stay during the year. Most patients received outpatient or pharmacy care (96% and 83% on average, respectively). Inpatient costs among hospitalized autism patients averaged $9,927 per treated patient, but varied considerably over the period. Average outpatient and pharmacy costs for autism patients were more stable over time, and averaged $1,533 and $1,414 per treated patient over the period, respectively. In general, costs associated with autism or ASDs increased over the period. Costs associated with autism or ASDs were generally higher than those for other mental health disorders, although outpatient costs per treated patient were generally lower. The lower outpatient costs may be due to the fact that many patients with ASDs receive services through the school system, whereas patients with other mental health disorders may not.

Conclusions: These data suggest that ASDs are among the more costly mental health disorders in privately insured children, and are increasing over time. Given that the prevalence of ASDs is also increasing over time, it is clear that autism is an expensive disorder. It is important to note that the data presented in this study reflect only paid health care claims. To the extent that health insurance benefits for patients with autism are more limited than they are for other mental health conditions, as some studies suggest, these results likely underestimate the costs associated with ASDs relative to other disorders.

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Did Medicaid/SCHIP Crowd-Out Private Insurance Coverage among U.S. Low-Income Children?: A Multilevel Approach

Presenter:

Adetokunbo Oluwole

Authors:

Adetokunbo Oluwole, Dennis Shea

Chair: Michael Grossman; Discussant: TBA Mon June 5, 2006 10:45-12:15 Room 309

Authors: Adetokunbo Oluwole (axo129@psu.edu) and Dennis Shea (dgs4@psu.edu)

Rationale: The implementation of the Medicaid/SCHIP, which began shortly after the major welfare reform of 1996, represented a more recent effort to expand health insurance among lower income populations in the U.S. Previous studies have shown that earlier Medicaid expansions significantly increased public program participation and have reduced the number of uninsured individuals. However, empirical evidence indicates that the reduction in the number of uninsured has been offset by declines in private insurance coverage. Because the Medicaid/SCHIP expansions targeted a different population than earlier expansions and took a different form, a detailed study of these more recent efforts is needed.

Objectives: The objective of this paper is to measure the extent of crowd-out of private insurance coverage, among American low-income children, that is attributable to Medicaid/SCHIP expansion.

Methodology: We combine event history analysis and multilevel modeling techniques to analyze data from the 1996 panel of the Survey of Income and Program Participation (SIPP), which covers the period 1996 to 2000. The combined approach will estimate discrete-time logistic regression models. Events to be modeled are the following transitions in insurance coverage: (1) private coverage to Medicaid; (2) private to uninsured; (3) uninsured to private coverage; (4) uninsured to Medicaid; (5) Medicaid to private; and (6) Medicaid to uninsured. In addition to addressing the question of whether or not children have particular types of health insurance coverage, event history analysis also incorporates the timing of such coverage and transitions. Multilevel modeling accounts for cross-state variations in coverage transition rates as well as corrects for within-group correlation and non-constant error terms. State-level data from other sources such as the Area Resource Files, Regional Economic Information Services, and the Centers for Medicare and Medicaid Services will be appended to the SIPP dataset. The sample for the study consists of unmarried children nineteen or younger, and living in families with incomes at or below 300 percent of the federal poverty level (FPL). The analytic sample is expected to comprise about 8,000 low-income children.

Expected Results and Relevance: This study will provide some insight into how health insurance coverage policies might be directed to have maximum positive effect on the targeted (uninsured) population. This is especially important if there is some evidence of crowd-out of private insurance. Preliminary analyses show that the conditional probability of transition from private insurance to Medicaid/SCHIP started to increase shortly after states began to implement their Medicaid/SCHIP expansion programs.

Conclusions: Given the controversial estimates of crowd-out in previous studies, this study’s use of combined techniques of event history and multilevel modeling will provide more accurate and updated estimates using the 1996 panel of the SIPP dataset, which no other study has analyzed. In addition to personal and family characteristics, the models estimated in this study also control for some state- and program-specific factors, which many previous studies failed to account for.

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Involuntary Psychiatric Commitment and the Incidence of Suicide: An Economic Analysis

Presenter:

Martin Zelder

Authors:

Martin Zelder

Chair: David Cutler; Discussant: Alison Cuellar Mon June 5, 2006 10:45-12:15 Room 313

State laws permitting involuntary psychiatric commitment of those who constitute a risk to themselves, such as suicide attempters, are presumably intended to decrease suicide rates. Whether such laws have this intended effect has, however, not been previously investigated. Hence, this paper examines the relationship of involuntary commitment laws to state-level suicide rates drawn from the CDC’s Injury Mortality Reports data for 1999-2002. The empirical analysis is grounded in a discrete-choice expected-utility-maximization model in which an individual chooses whether or not to attempt suicide, given that the ‘success’ of an attempt is uncertain and that unsuccessful attempts are associated with involuntary psychiatric commitment. Within this model, the comparative-static impact of an increase in the term of involuntary commitment comprises two opposing effects. One effect is a standard deterrent effect: a longer commitment term reduces utility for those who attempt and fail, thus discouraging attempts and reducing the probability of a ‘successful’ suicide. The other, opposing effect entails escalation in the intensity of attempt made: to reduce the chance of ‘failure’ (remaining alive), an individual faced with a longer commitment term will increase the lethality of his attempt, thereby increasing the probability of ‘success’. Consequently, the impact of an increase in the commitment term is ambiguous—the suicide rate will fall or rise, respectively, depending on whether the deterrent effect or the escalation effect dominates. To test whether longer commitment terms discourage or encourage suicides, I have compiled data on state commitment laws, focusing in particular on the statutory maximum commitment term allowed (for an initial term of commitment). This data is then merged with state-level gender- and age-specific suicide rates obtained from the CDC’s WISQARS database. Other covariates, in addition to the commitment term measure and standard demographics, include indices of binge drinking, mental distress, disability, religiosity, and gun control. Potential endogeneity of commitment term laws is partially addressed by including the state’s lagged suicide rate (for 1960) as a regressor. Preliminary analysis of the 2002 data for a variety of age-gender cells finds dominant deterrent effects for women aged 65-69 and men aged 55-64, but a dominant escalation effect for men aged 70-79. This sort of heterogeneity is predicted by the model, in that the deterrent effect is predicted to be relatively small for the oldest men (who have the highest reported probabilities of success). This analysis will be expanded for the entire period, 1999-2002, for which WISQARS permits age-adjusted suicide rates to be generated. Also, data on commitment rates will be collected in order to reflect the true expected penalty posed by commitment. Finally, the issue of legal endogeneity will be explored via instrumental variables and longitudinal analysis extending well beyond the period of the WISQARS data.

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Antidepressants and Youth: Healing or Harmful?

Presenter:

Sara Markowitz

Authors:

Sara Markowitz, Alison Evans Cuellar

Chair: David Cutler; Discussant: Judy Shinogle Mon June 5, 2006 10:45-12:15 Room 313

Since 1987 some important changes have taken place in the development of antidepressants, including the introduction of several selective serotonin reuptake inhibitors and other new medications that reduce the likelihood of overdose and offer fewer negative side effects. There has been a tremendous growth in the use of the new antidepressants, and while these new drugs are safe and effective for treating adults with depression, there is growing concern about the risks of prescribing antidepressants to children. Recent reports link the use of antidepressant drugs to an increased risk of suicidal behaviors in teenagers. In the fall of 2004, the U.S. Food and Drug Administration made a controversial decision directing manufacturers of antidepressant drugs to include warning labels about the increased risk of suicidal thinking and behavior. This paper seeks to examine the relationship between antidepressants and suicide among youth. They main hypothesis to be tested is whether variations in the number of prescriptions written for antidepressants can explain differences in completed and attempted suicide rates at the Metropolitan Statistical Area (MSA) level. Information on prescriptions will be obtained from the National Ambulatory Medical Care Survey. This individual level data will be aggregated to the MSA level in order to make inferences about the trends in prescription practices. Linear regression techniques will be used to correlate the prescription data with attempted and completed suicide rates among youth under the age of 19. A host of state and area level factors will be included in order to account for potentially confounding effects of other variables. Results from this paper will contribute to the academic debate on the harmfulness of prescribing antidepressants to youth.

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Suicide and the Evolution of the Market for Anti-Depressants: A Test of Rational Choice Theory

Presenter:

Dean Lillard

Authors:

Dean R. Lillard

Chair: David Cutler; Discussant: Pinka Chatterji Mon June 5, 2006 10:45-12:15 Room 313

In early work, Hammermesh and Soss (1974) use the rational choice framework of economics to ask whether patterns in suicides can be explained by models of utility maximization. Despite interesting findings, the empirical literature on the economics of suicides has received little attention. Recently, however, Marcotte (2003) extended the role suicide plays by examining not successful suicides but both attempted and successful suicides. He first observes an empirical regularity that income of suicide attempters is higher than people who consider but do not actually attempt to commit suicide. He then incorporates this finding into a utility maximization model by positing state dependent utility functions. In this paper, I take a different approach to investigate whether suicide attempts and successes change in response to the cost of mental states of being. In particular, I take advantage of the fact that, since 1958, new pharmacological breakthroughs have led to the development of new drugs that treat depression. Three waves of drug development have occurred over this time period, each successive development yielding more effective treatments with fewer side effects. As shown by Berndt and coauthors (Berndt, Busch, and Frank 2001, Berndt, Frank, and McGuire 1997, Frank, Busch, and Berndt 1998) the market for these drugs grew phenomenally over the 1990s. In this empirical analysis I investigate how the probability of suicide attempts and completed suicides vary with the availability and cost of anti-depressant drugs. I use data from the National Comorbidity Survey (used also by Marcotte), the National Health Interview Surveys, and data on aggregate rates of suicides by state. To these individual and aggregate data I merge data on the number and type of anti-depressant drugs on the market in each year, the average list price of those drugs, and the flow of advertising for those drugs in 27 nationally distributed consumer magazines. Data on availability and list prices are taken from the Red Book from 1959-2004. Data on advertising of these products come from a print magazine advertisement archive collected and compiled at Cornell University. I then investigate whether the probability of attempted or successful suicide varies with these factors. I also investigate whether the same patterns are present in aggregate (state level) suicide rate data. The estimation strategy is to treat the arrival of the anti-depressant drugs as an event that treats individuals born in different years exogenously. I empirically compare decisions to attempt/complete suicide across age, race, income, and demographic characteristics.

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Use of instrument variables in the presence of heterogeneity and self-selection: An application in breast cancer patients

Presenter:

Anirban Basu

Authors:

Anirban Basu, James J. Heckman, Salvador Navarro-Lozano

Chair: Bruce Stuart; Discussant: Partha Deb Mon June 5, 2006 10:45-12:15 Room 325

Background: Instrumental variables (IV) are widely used in health economics literature to adjust for hidden selection biases in observational studies and estimate causal treatments effects. However, less attention is paid to the proper use of instrumental variables if treatment effects are heterogeneous across subjects and more importantly, if individuals select treatments based on expected idiosyncratic gains or losses from treatments. In the context of this interaction of heterogeneity and self-selection, we highlight the role conventional instrumental variable analysis and alternative approaches using instrumental variables in estimating causal treatment effects on 5-year costs in breast cancer patients. Given the similarities in 5-year mortality rates between breast conserving surgery with radiation therapy (BCSRT) and mastectomy (MST), estimation of treatment effects on costs is important in evaluating the cost-effectiveness of alternative treatments. Data: We use the Center for Medicare and Medicaid Services national claims database of a 5% random sample of all Medicare beneficiaries. The data were collected as part of the Outcomes and Preferences in Older Women Nationwide Survey (OPTIONS) project, and was used by other researchers to study costs of breast cancer patients under alternative treatments. Outcome: Average Treatment Effect (ATE) on 5-year direct costs. Treatments: BCSRT versus MST Alternative Methods: Traditional covariate adjustments, traditional IV analysis, control function approach using ordinary least-squares regressions. Results: We find that covariate adjustments estimates a treatment effect of $12,829 (se=1,639). Using two instruments, the treatment effect is estimated to be $32,136 ($15,005). Using one instrument at a time and also the propensity score as an instrument give estimates of treatment effects ranging from $8,421 ($8,828) to $44, 921 ($21,790), where some of these estimates are significantly different from each other. Employing a newly proposed test, we find evidence of self-selection based on idiosyncratic differences in outcomes between treatments. This implies the treatment effects estimated by traditional IV analysis may not be consistent estimates of ATE. We therefore estimate the marginal treatment effects (MTEs) using the control function approach with the polynomials of propensity scores. However, in this application, we find that it is not possible to estimate the MTE over its full support; hence ATE cannot be estimated with this data. Any attempt to estimate ATE with these data would require extrapolation of the control function beyond the range of observed support for the propensity scores. Consequently, depending on the function form of the control function we get estimates of ATE ranging from -$46,698 ($69,571) to $88,727 ($34,435). Conclusions: Estimation of causal ATE with instrumental variables faces several limitations. Traditional IV analysis do not provide consistent estimates of ATE if heterogeneity in treatment effects exist and patients self-select into treatment based on idiosyncratic effects. Marginal treatment effects can be estimated and used to overcome this limitation of traditional IV analysis. However, one may still fail to estimate an ATE, if the data do not provide full support for the propensity scores. Consequently, development and application of instrument-free semi-parametric methods to estimate causal treatment effects can be extremely valuable.

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More Ado About Two: Endogenous Switching, Sample Selection, Endogenous Treatment Effects and the Modified Two-Part Model

Presenter:

Joseph Terza

Authors:

Joseph V. Terza

Chair: Bruce Stuart; Discussant: Willard Manning Mon June 5, 2006 10:45-12:15 Room 325

Applications and theoretical assessments of the two-part model (2PM) of Duan et al. (1983) abound in the health economics, econometrics and biostatistics literatures. Mullahy (1998) shows that the conventional 2PM specification and estimator will likely be biased when used as a basis for policy analysis via estimated marginal effects or elasticities derived from the conditional mean function. At issue here is the fact that the conventional 2PM is estimated under log transformation of the outcome variable, and that so-called retransformation to express the model in untransformed conditional mean form, often requires that additional structure be imposed on the model. Mullahy (1998) shows that a modified 2PM (M2PM) which obviates retransformation is, therefore, more appropriate for policy analytic purposes. In the present paper, we derive a version of the M2PM that accommodates endogenous switching or one of its two more common incarnations – sample selection or endogenous treatment effects. There are numerous contexts in which such a model is applicable. For example, Welch et al. (1984) and Parente and Evans (1998) apply standard methods for dealing with endogenous switching to the conventional 2PM in the context of estimating the impact of health insurance on utilization and expenditure. As a by-product of the present research, we show that these rote applications of extant methods to the standard 2PM formulation will be biased. We review the 2PM and M2PM approaches and introduce the new estimator in the context of the estimation of average treatment effects. Details of the model and estimator pertaining the sample selection and full endogenous switching applications are also given. The performance of the estimator is then evaluated in the sample selection context using simulated data. We assess the accuracy and efficiency of the estimator for policy analysis relative to more conventional approaches (Heckman, 1976; Terza, 1998) which are biased in the M2PM context. The method is applied to data from the 2002 National Survey on Drug Use and Health in an analysis of the effect of drug abuse on earnings.

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Health Care Use and Endogenous Insurance Decisions of the Elderly: An Econometric Analysis of HRS Panel Data Using Latent Factor Models

Presenter:

Pravin Trivedi

Authors:

Fei Liu, Pravin K. Trivedi

Chair: Bruce Stuart; Discussant: William Greene Mon June 5, 2006 10:45-12:15 Room 325

With the growth of the elderly population in the United States, a major concern is the coverage of their health insurance plans. The elderly may acquire private insurance to supplement their Medicare benefits because the program does not cover commonly used services such as outpatient prescription drugs and nursing home service. These observations motivate this paper,which fills the gaps in research on the private insurance selection of elderly and the associated impacts on health care utilizations. A series of questions arise when we research this area: What are the causes and consequences of enrolling in supplementary insurance plans? Does unobserved heterogeneity, such as personal risk attitudes and life style, play a role in insurance decision and associated health use? Supplementary plans include Medigap plans and other supplemental policies, which can cover specific benefits such as long-term care. It is not hard to find that insurance enrollment decision is dependent with health care use. On one hand, these two variables are influenced by observable information, such as health status, income etc. On the other hand, latent factors, or unobservable heterogeneity, such as attitudes toward risks and life style, may also have a substantial impact on both enrollment decision and utilization. Thus the econometric modeling of the effect of insurance on health care utilization faces three challenges. First, to control for the endogeneity, we use maximum simulated likelihood estimation with latent factors. Second, the dependence between two decisions causes a simultaneity problem. The simultaneity is corrected by jointly modeling insurance enrollment decision and health care utilization. Third, this paper analyzes a five-wave panel data from Health and Retirement Study (HRS). The analysis of longitudinal data presents a challenge both to methodology and empirical application. This paper applies the joint maximum simulated likelihood estimation approach within a panel framework. We use the original HRS, which started in 1992 and surveyed subsequently every two years. However, Wave 1 (1992) questions ask about health care utilizations in the last 12 months, while questions in subsequent waves ask about the period since the previous interview or the last 2 years. In order to obtain consistent measurement of medical care utilization, we use data from wave 2 to 6 and restrict the attention to individuals who have Medicare. The final data consists of 4,541 individuals with 11,775 observations. This is an unbalanced panel because some individuals, who appear in the initial waves but not in all subsequent waves, do so due to death. Although follow-up response rates in HRS are high, attrition due to death for the elderly sample is unavoidable. And new people join HRS survey later mainly because of family reconstruction.

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Panel

Presenter:

Carol Medlin

Authors:

Chair: TBA Mon June 5, 2006 10:45-12:15 Room 326

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Panel

Presenter:

Ethan Yeh

Authors:

Chair: TBA Mon June 5, 2006 10:45-12:15 Room 326

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Panel

Presenter:

Julian Jamison

Authors:

Chair: TBA Mon June 5, 2006 10:45-12:15 Room 326

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Economic projections of heath care spending and the demand for physicians

Presenter:

Mark Henk

Authors:

Mark Henk

Chair: Richard Cooper Mon June 5, 2006 10:45-12:15 Room 332

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Expenditures necessary to increase the production of physicians within the US

Presenter:

Gail Wilensky

Authors:

Gail Wilensky

Chair: Richard Cooper Mon June 5, 2006 10:45-12:15 Room 332

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Impact of physician shortages on the delivery of services

Presenter:

Richard Cooper

Authors:

Richard Cooper

Chair: Richard Cooper Mon June 5, 2006 10:45-12:15 Room 332

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Economic impact of medical migration from developing to developed countries

Presenter:

Marko Vujicic

Authors:

Marko Vujicic

Chair: Richard Cooper Mon June 5, 2006 10:45-12:15 Room 332

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The Fragile Foundations of Regional Scientific Advantage: The Impact of US Stem Cell Policy on the Geography of Scientific Discovery

Presenter:

Scott Stern

Authors:

Jeffrey L. Furman, Fiona Murray, Scott Stern

Chair: Ernst R. Berndt Mon June 5, 2006 10:45-12:15 Room 335

This paper evaluates the impact of restrictions on embryonic stem cell use in US Federally funded scientific research on the geography of scientific discovery. In order for localized knowledge spillovers to be translated into sustained scientific leadership, researchers in close proximity to an original discovery must be able to exploit that discovery more rapidly and more intensively than distant researchers. Local researchers must be able to take scientific advantage of a discovery more quickly than their more distant competitors are able to catch up. This paper exploits an exogenous shock to the process of step-by-step scientific discovery to assess the sensitivity of regional scientific agglomeration to a temporary shift in the knowledge production process. Specifically, this paper examines the impact of the Bush Administration’s policy of limiting the scope of Federally funded human embryonic stem cell research to experiments using a already existing stem cell lines. Over the past several years, research into the biological foundations of stem cells has been described by biologists as one of the most promising areas of scientific progress, with rapid advances using both embryonic and non-embryonic stem cells, human as well as non-human sources. Moreover, at least in the initial period after the key discoveries of the 1990s, stem cell research has tended to be geographically localized, with a small number of locations and institutions accounting for a very large fraction of the overall discoveries. In August, 2001, the Bush Administration enacted a policy that placed a subtle but substantive restriction on the freedom of Federally funded researchers; it limited experiments using human embryonic stem cells and conducted with Federal funds to only a small number of possible stem cell lines that had been developed prior to the date of the policy change. While researchers were free to use these specific stem cell lines or to seek alternative funding sources, the policy seems to have placed significant restrictions on academic researchers dependent on Federal funding, and that adapting to the policy required a period of adjustment and exploration. Observers have suggested that this unexpected delay in the activity of those at the scientific frontier provided an opportunity for less well-positioned researchers to catch up and for equally well-positioned researchers to forge ahead…

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Does Financing Have a Real Effect on Biotech Drug Development?

Presenter:

Sean Nicholson

Authors:

Patricia Danzon, Andrew Metrick, Sean Nicholson

Chair: Ernst R. Berndt Mon June 5, 2006 10:45-12:15 Room 335

In the 1990s the U.S. government instituted three policies that simplified the approval process and/or shortened the review time for drugs targeting life-threatening illnesses and have unmet medical needs, thereby increasing the expected profit of developing specific types of drugs. This paper examines whether the accelerated review (1991), fast track (1997), and priority review policies (1997) increased innovation by biotech and pharmaceutical firms in the targeted disease areas, as measured by pre-clinical research activity, human/clinical trials, and approved compounds. We also examine whether companies responded to the policies differently based on the availability of financing and their prior therapeutic focus. We use the PharmaProjects data base of drugs in development between 1989 and 2004, and apply a propensity score method to predict the types of compounds that would have received accelerated review, fast track, or priority review status prior to the implementation of the three policies. We predict the propensity to receive a special status based on attributes of the compound and the number of therapies on the market that are approved to treat a particular condition.

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Biotechnology Drugs, Traditional Pharmaceuticals and International Price Controls

Presenter:

John Calfee

Authors:

John E. Calfee, Elizabeth DuPre, Mario Villarreal

Chair: Ernst R. Berndt Mon June 5, 2006 10:45-12:15 Room 335

In recent years the U.S. share of worldwide pharmaceutical expenditures has increased from about one-third to one-half, partly because of the imposition of price controls in all advanced economies other than the U.S. This has raised questions about the rewards to new drug development, the bulk of which is performed by profit-seeking private firms. At the same time, the advent of biotechnology has generated new drugs that in comparison to traditional pharmaceuticals are more tightly targeted at biological mechanisms, less susceptible to competition, and possibly less susceptible to price controls. Using a data based that includes prices and volumes of individual drugs (both biotech and traditional) across six industrialized nations, this paper explores the impact of biologically targeted drugs on foreign price controls and foreign adoption of new drugs. We also suggest implications for pharmaceutical reimbursement and costs in the U.S.

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Exploring Behavioral/Economic Interventions to Improve Health Outcomes among Adolescents in Poor Countries

Presenter:

Cynthia Perry

Authors:

Cynthia Perry

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: While the medical literature has previously shown an association between maternal depression and poor pediatric asthma outcomes in children, it has not yet addressed the causal question of whether treating maternal depression leads to an improvement in child health management in the case of a chronic disease such as asthma. There are in fact many reasons (e.g., poor social networks) why we might find maternal depression in the same households with poor child health management, and most of these would not be expected to change with the treatment of depression.

Objectives: The objective of this paper is to compare asthmatic children whose mothers are offered treatment for depression with asthmatic children whose mothers are not offered treatment for depression to determine whether there is evidence of improvements in child health management following the offer of treatment.

Methodology: This project uses Florida Medicaid Claims data. A concern with these data is that mothers are not randomized into a depression diagnosis. In particular, child health utilization can positively affect the probability that maternal depression is identified by a physician. Because this could bias the results of a direct pre-post analysis, I use an instrumental variables technique that uses differential propensities to diagnose depression among primary care physicians to predict whether a child’s mother is diagnosed.

Results: OLS results suggest no improvement in child health management with the offer of depression treatment. But these results likely confound women who are diagnosed for depression precisely because their children have high health care utilization with women who are diagnosed for reasons unrelated to their child’s health. The high health care utilization (that is unrelated to maternal depression) of the former group can swamp the possible improvements of the latter group. Using the instrumental variables strategy to predict which mothers are likely to be diagnosed with depression, I find a reduction in ER visits for asthma care in the post-diagnosis period. I also estimate an overall reduction in total asthma spending in the post-diagnosis period.

Conclusion: These results suggest that in the case of mothers of asthmatic children, improving the ability of primary care physicians to detect depression could yield a cost offsets from better asthma management. Further research is necessary to determine whether similar benefits are present in the case of other chronic childhood diseases.

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Diffusion of prescription drugs for Alzheimer's disease (AD) among older adults

Presenter:

Chandrakala Ganesh

Authors:

Chandrakala Ganesh, Dennis Shea

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: AD is projected to affect 14 million Americans by 2050. Technological advances have led to the approval of five drugs to treat AD. While the demand for these drugs has been rising rapidly since their introduction there is little nationally representative research available on individuals who use them. Findings from this study would help in integrating aspects of access, quality and costs of health care services such as prescription drugs for elderly with Alzheimer’s disease.

Objectives: This paper has three objectives: (1) to examine the trends in diffusion of AD drugs among community residing Medicare beneficiaries from 1993 to 2002, (2) to determine the racial, ethnic and socioeconomic disparities in diffusion of AD drugs, (3) to identify determinants of current and projected future costs of AD drugs.

Methodology: The paper uses data on community dwelling beneficiaries from the Medicare Current Beneficiary Survey, years 1993 to 2002, and data on health care systems from the 2003 Area Resource File. Analysis procedures would be conducted on three samples: beneficiaries with only a claims diagnosis of AD, beneficiaries with a claims diagnosis or a survey report of AD, and beneficiaries with a claims diagnosis of AD, survey report of AD, or other dementia diagnosis. This categorization would help in determining how the results would change based on varying sample definitions. Analyses procedures will include conducting basic descriptive analysis on the numbers and types of drugs that are used by elderly with AD. Hazard models will be used to estimate the trends and disparities in diffusion of AD drugs. Finally, costs would be estimated by a generalized linear model using gamma regression functions.

Results: Preliminary studies of the 2001 MCBS data show that 3.5 percent of the community-dwelling Medicare beneficiaries suffered from AD. In 2001, 31 percent of Medicare beneficiaries used AD drugs, compared to 1.4 percent in year 1999. In general, beneficiaries who were white, lived in urban areas, had higher education, with drug coverage had greater utilization rates of AD drugs than those who were black, in rural areas, with lower education, without drug coverage. In 2001, the mean annual total drug and out-of-pocket expenditures of beneficiaries using AD drugs were $2317 and $850 respectively, versus $1749 and $663 for beneficiaries not using AD drugs.

Conclusion: The introduction of several new drugs for the treatment of AD makes it an ideal candidate for the study of diffusion. Preliminary studies suggest that new drug technology for AD has a significant impact on health care utilization and health care costs

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Impact of supplemental insurance on access, expenditures and health: Evidence from Europe & the U.S.

Presenter:

Jennifer Schultz

Authors:

Jennifer Schultz, Bedassa Tadesse

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Context: Health insurance reform has been attempted many times in the U.S. and it will continue to be a heavily debated issue. Thus, it will be important to learn from the experiences of countries with social or tax-financed health insurance systems experimenting with different payment arrangements to help inform policy decisions in the U.S. on the appropriate mix of public and private health services and health insurance. To date, there have been a limited number of studies analyzing the impact of supplemental health insurance and out of pocket expenditures on health care utilization and health status in countries outside of the U.S.

Objectives: To study the purchase of supplementary insurance and evaluate health care expenditures, health care utilization, ex post static moral hazard and health status of older Europeans from 10 countries with social or tax-financed health insurance and varying private payment arrangements. To compare results to the experiences of Medicare beneficiaries in the U.S.

Methodology: We investigate our study objectives using data from the 2003 Survey of Health, Aging, and Retirement in Europe, which is a representative sample of the non-institutionalized population aged 50 and older in each country (Austria, Denmark, France, Germany, Greece, Netherlands, Italy, Spain, Sweden, & Switzerland). We model the probability of purchasing supplemental health insurance as a function of socioeconomic and health variables. We also model the number of outpatient visits (over one year) and total out-of-pocket health expenditures as a function of supplemental health insurance, characteristics of health care systems in each country, and individual characteristics. To address potential adverse selection (endogeneity of insurance) we rely on extensive health-related control variables (e.g. chronic conditions, diseases, smoking status, ADLs, mental health, parental health, self-reported health status) and multiple regression strategies (instrumental variables) to reduce the bias of unobserved heterogeneity. The existence of moral hazard is investigated by analyzing the relationship between the use of physician services and the price of care, conditional on health insurance characteristics, health status and other control variables.

Results: In all of these countries, individuals face some out of pocket payments, even though most are living in countries with public insurance. The two exceptions are Germany and the Netherlands, where most are privately insured (based on income thresholds). Only Switzerland has a private, mandatory insurance system financed through premiums. Out of pocket payments range from 11% (Germany) to 42% (Italy) of health expenditures, the majority going toward outpatient care and medications. The percent of survey respondents facing positive out of pocket expenditures ranges from 36.8% (France) to 88.7% (Sweden). 9.1% (Germany) to 86% (France) of the population purchases supplementary insurance. Deductibles, coinsurance, and copayments vary across countries. In most countries, the proportion of individuals with positive out of pocket expenditures is not significantly different between those who have supplementary insurance and those who do not. Early results from the multivariate models suggest that supplemental insurance has a significant effect on the utilization of physician services. Results from other models are pending.

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The effect of health care expenditures on sickness absence

Presenter:

David Granlund

Authors:

David Granlund

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: Previously, the effects of individuals’ health status on sickness absence have been estimated. From a public policy perspective it is also helpful to know how a policy variable like public expenditures on health care can influence the absence rate. The paper also relates to the still open question of whether increased expenditure on health care on an aggregated level actually does improve the health statues of the population.

Objective: The objective of this paper is to estimate the impact of public health care expenditures on absence from work due to sickness or disability.

Methodology: Using panel data on the Swedish municipalities during the period of 1993-2003, the effect of public health care expenditures on the sickness absence in the municipalities is estimated. Demographic characteristics and educational levels are included as proxies for health. The model also incorporates proxies for working conditions and economic incentives to remain at work. Finally, municipality and year specific fixed effects are included to take account of time-invariant heterogeneity between the municipalities and changes over time common to all municipalities in Sweden. An instrumental variable method is used to avoid the potential problem of endogeneity. The main sources of data are Statistics Sweden, The Swedish Social Insurance Agency and The Swedish Association of Local Authorities and Regions.

Results: Preliminary results indicate that the public expenditures on health care have a significant negative effect on the absence days. According to the estimate, an increase of the operating cost on health care with 1000 SEK (~$125 USD) per inhabitant reduces the absence with approximately 0.6 days per insured. Since there are roughly two inhabitants per insured, this indicates that the cost of avoiding one day of absence by increasing operating cost on health care accounts to approximately 3 300 SEK (~$413 USD). This can be compared with the GNP per working day in Sweden, which is roughly 3 000 SEK (~$375 USD).

Conclusions: The results from this paper indicate that public expenditures on health care have an effect on the number of absence days. These results give support for a positive causality between health care expenditures and the health of the population.

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The Effect of Managed Care on the Diffusion of Psychotropic Medications

Presenter:

Marisa Domino

Authors:

Marisa Domino

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Background: The last decade has witnessed unprecedented growth in new technologies in mental health treatment. The availability of new pharmacological agents has had an enormous impact on the treatment of mental health disorders, enabling recipients of these medications to experience relief of many symptoms and improve their levels of functioning and quality of life. The diffusion of these new behavioral health technologies, or rate at which these products have spread through the market, has been very uneven. Some psychotropic medications, such as Selective Serotonin Reuptake Inhibitors (SSRIs), now considered first line treatments for depression, have diffused very quickly, while others, such as venlafaxine, also a treatment for depression with equal efficacy have not had much success developing a substantial market share. In order to advance models of best practice, it is important to understand the factors that underlie these varying rates of diffusion. Differences in adoptions and diffusion rates of psychotropic medications across insurance settings, geographic regions, or subpopulations defined by age, gender, or racial or ethic groups has important implications for the quality of care received by persons with mental illnesses. As the tools of managed care increasingly penetrate behavioral health insurance, the diffusion of new psychotropic products into existing treatment options is likely to be strongly affected. The direction of this effect is ambiguous due to the complexity and differing incentives inherent in these tools.

Objectives: The purpose of this paper is to examine whether managed care penetration is associated with different rates of psychotropic drug diffusion in fee-for-service Medicaid programs.

Methodology: Data on all psychotropic medications reimbursed through fee-for-service Medicaid programs in almost all states (n=49) in the US were obtained from 1991-2003. Prescriptions were converted to daily dose units in order to pool information from medication classes. Two of the major classes of psychotropic medications, antidepressants and antipsychotics were examined separately. State-level fixed effect regressions were run on the dependent variable of daily dose units, with state-level Medicaid managed care penetration as the explanatory variable of interest. Diffusion curves were also modeled using a classic logit framework as well as with hyperbolic secant function.

Results: Results indicate a negative association between the managed care penetration level in a state and the number of daily dose units of psychotropic medication filled.

Conclusion: Although managed care emphasizes outpatient treatment over more costly inpatient care, the tools used by many managed care programs, including prior authorization and drug formularies may delay the receipt of treatments and these effects may be spilling over to non-managed settings. Further research to examine this effect is warranted.

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The Empirical Relationship between Community Social Capital and the Demand for Cigarettes

Presenter:

Timothy Brown

Authors:

Timothy Brown

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Authors: Timothy T. Brown (tbpetris@berkeley.edu), Richard M. Scheffler (rscheff@berkeley.edu), Sukyong Seo (sue_seo@berkeley.edu), and Mary Reed (maryreed@berkeley.edu). Nicholas C. Petris Center on Health Care Markets and Consumer Welfare, School of Public Health, University of California at Berkeley.

Title: The Empirical Relationship between Community Social Capital and the Demand for Cigarettes.

Rationale. Community social capital has been theorized to positively affect individual health behaviors through its positive effects on information flows and societal health norms. Smoking behavior is potentially one of these health behaviors.

Objectives: The objective of this paper is to estimate the association of community social capital with the demand for cigarettes. This association should be strongest in areas where there is a larger concentration of groups with strong non-smoking norms, such as religious groups.

Methodology: We estimate a two-part demand function focusing on the association of community-level social capital (CSC) and cigarette smoking. We use a new validated measure of community-level social capital, the Petris Social Capital Index, which is based on an actual ecological measure of CSC rather than on an aggregation of individual survey responses. We measure CSC at the level of the Metropolitan Statistical Area (MSA) in order to capture the effects of CSC in both the areas of an individual’s residence and employment. We link our measure of CSC to individual-level data on 38,807 adults in 48 MSAs with a population of 1 million or more for the years 1998-2000. We also split our measure of CSC into overall CSC and the percentage of CSC attributable to religious groups. We control for sex, age, race/ethnicity, marital status, education, cigarette prices, potential smuggling, income, nonsmoking regulations, and MSA-level fixed effects. Participation in smoking is estimated using a linear probability model and the number of cigarettes smoked is estimated using a negative binomial model.

Results: We find that the percentage of CSC attributable to religious groups is inversely related to the number of cigarettes demanded by smokers, but is not related to smoking participation.

Conclusions: Community social capital is a potentially powerful inhibiter of the smoking behavior of current smokers.

Disclosure information: This research was supported by the Centers for Disease Control and Prevention, Atlanta, GA through Cooperative Agreement Number U48/cCU 909706. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of the Centers for Disease Control and Prevention. The authors are employees or students of the University of California at Berkeley and have no conflict of interest with regard to this project.

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The Impact of Health on Academic Performance: New Evidence Using Genetic Markers

Presenter:

Steven Lehrer

Authors:

Steven Lehrer, Weili Ding, J. Niels Rosenquist

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

The causal effect of health on education outcomes remains an open question since numerous unobserved factors may explain the correlation between health and education. Using a very rich data set that tracks 900 students through high school and an instrumental variables strategy we estimate the causal impact of obesity, ADHD and depression on adolescent academic performance by exploiting variation in genetic markers. Our data contains direct measures of four genes, whose strong associations with the health outcomes considered in our study are well established in the scientific literature. We also account for endogenous health behaviors such as regular smoking that may influence the health outcomes observed. We present evidence that these genetic markers and their interactions are valid instruments with good statistical properties, revealing a new dynamism from health to education. We find substantial heterogeneity in the effects of health on academic performance. Poor physical and mental health status have a strongly perverse effect on the academic performance of female students which, while of great policy importance, requires additional investigations.

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(In)Consistency of Preference Ratings: Results Using Three Methods of Preference Elicitation

Presenter:

Kathleen Gillespie

Authors:

Kathleen Gillespie, Elena Andresen, Sarah Boslaugh, Angela Recktenwald

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Background. The direct elicitation of preferences for different health states is one method suggested for measuring quality of life. Direct elicitation methods include the standard gamble (SG), time trade-off (TTO), and visual analog scale (VAS). Though theoretically appealing, in practice these methods produce some troubling results. First, the distribution of elicited preferences can be both left and right censored, with many persons rating health scenarios with a zero or one value. Second, health states that should have a logical ordering may receive reverse rankings. Finally, little is known about how the direct elicitation methods correlate with quality of life ratings derived from scales such as the Quality of Well-Being (QWB) scale.

Setting. Eighty-eight persons rated health states using the SG, TTO, and VAS methods and completed the Quality of Well-Being (QWB) scale. Thirty-four of the persons were randomly recruited; the other 54 were persons with disabilities. All persons rated 9 health states (the subject’s own health, single-eye blindness, double-eye blindness, and 6 scenarios that included various disabilities) using the 3 methods. Each of the 6 disability scenarios had two variants that differed only in health status; respondents were randomly assigned one of the two versions. Preferences were elicited using computerized software.

Methods. The mean preferences from the SG, TTO, and VAS methods were compared and the distributions were graphed. Multinomial logistic regression to predict zero, intermediate, and one responses used patient demographics and preference elicitation method as explanatory variables. The number of preference reversals within and across methods was counted. Correlation with preference imputation was examined by comparing the SG, TTO, and VAS utility values for own health with the QWB score.

Results. The SG and TTO methods gave higher mean preferences than the VAS method. However, the higher means were due primarily to a large number of ones. There were also many zeros, so that the distributions were both left and right censored. The VAS method yielded smoother single-peaked distributions of preferences across all health states. Inconsistent preferences occurred relatively infrequently. Blindness health states were rated inconsistently by 9% of respondents using the SG, 3% using the TTO, and 11% using the VAS. Across disabilityscenarios, persons with disabilities gave preference ratings that were 0.02 (SG) to 0.09 (VAS) higher than randomly selected participants, although among 36 options of health status and rating technique, there were several comparisons that were reversed. Randomly selected subjects were more consistent in giving the higher health state scenario a higher rating. None of the three methods were significantly correlated with the QWB scores for own health, the VAS method had the highest correlation (r=.179; p=.108).
Discussion. The distributions of preferences suggest that use of the SG and TTO methods is problematic. The large numbers of zeros and ones could be valid responses, or could indicate difficulty understanding the methods or protest valuations. The number of preference reversals was a small minority of all possible comparisons, but is troubling nonetheless. None of the three methods was correlated with QWB scores when rating own health.

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Bayesian Analysis of Health Care Provider Choice in Rural India

Presenter:

Bijan Borah

Authors:

Bijan Borah

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

This paper uses a Bayesian mixed multinomial logit (MMNL) framework to analyze the determinants of health care provider choice in rural India. Classical framework often becomes infeasible when random coefficients in MMNL model are allowed to be correlated and/or when distributions other than normal are assigned to the random coefficients. Allowing correlation between the random coefficients increases the number of parameters to be estimated, which often becomes difficult using classical methods. Normal distribution for the random coefficients is appropriate when there is some theoretical basis for the coefficient to be any real number. However, on many occasions, a random coefficient is expected to be either positive or negative. For example, price coefficient in the utility specification is expected to be always negative as people dislike higher price. In such cases, distributions with positive support (e.g., log-normal distributions) are more appropriate. However, when the distributions are assumed to be non-normal, the resulting likelihood surface often becomes very irregular, leading to failure in finding the maximum. Bayesian framework provides a natural way to deal with these complexities. In this paper, we assume both normal and log-normal distributions for the price coefficients. We use a Gibbs sampler with a layer of Metropolis-Hastings algorithm embedded within it to make random draws from the resulting joint posterior distribution. Our findings show that models with normal coefficients fit the data better. Price and distance are found to be important determinants of health care provider choice in rural India. Moreover, when individual-specific characteristics are interacted with provider attributes, model fit improves, indicating that these characteristics also influence health care provider choice decisions.

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Controlling for Quality in Hospital Inefficiency Estimation

Presenter:

Ryan Mutter

Authors:

Ryan Mutter, Michael Rosko

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: Recent increases in the costs of healthcare in the U.S. apparently are not accompanied by commensurate increases in quality, leading many to speculate that inefficiencies exist. In addition, the growing recognition of the important role that resource allocation decisions play in quality improvement has augmented interest in healthcare inefficiency measurement. Conceptually, healthcare quality improvement can reduce resource use by eliminating medical errors and unnecessary procedures. Alternatively, quality improvement can result in greater resource use because it requires more or better services. While stochastic frontier analysis (SFA) has become a popular method to estimate the inefficiency of hospitals, and it may be a powerful analytic tool, existing applications of SFA may not adequately control for the quality in analyses of hospital inefficiency. Without proper control, inefficiencies may be over- or under-estimated. This study assesses the role of quality in hospital inefficiency estimation.

Methodology: We identify existing strategies to control for hospital quality that have been employed in SFA estimation of hospital inefficiency. Employing SFA methods, we compare hospital inefficiency estimates with no hospital quality controls to the estimates with the following controls for hospital quality: 1) structural measures only (e.g., hospital teaching status), 2) structural and aggregated outcome measures (e.g., risk-adjusted, all-causes mortality), and 3) structural measures and multiple outcome measures designed to capture the multi-dimensional nature of hospital quality (e.g., risk-adjusted mortality rates for a variety of conditions and procedures and patient safety event rates).

Our sample is comprised of over 1,200 U.S., urban, general hospitals for the period 1999-2002. The quality variables are obtained by applying the Inpatient Quality Indicator (IQI) and Patient Safety Indicator (PSI) modules of the Agency for Healthcare Research and Quality (AHRQ) Quality Indicator (QI) software to 20 Healthcare Cost and Utilization Project (HCUP) State Inpatient Databases (SID). Other control variables in our hospital cost function include the input, output, price, and product descriptor variables commonly used in hospital applications of SFA from data files compiled by the American Hospital Association (AHA), the Center for Medicare & Medicaid Services (CMS), and Solucient.

Results: Preliminary analysis with 2001 data suggests that it is important to employ controls for quality in hospital applications of SFA. Although the average estimated inefficiency measure across hospitals is unaffected by the inclusion of quality controls, a number of the hospital quality variables entered the model significantly, and the rankings of hospitals by inefficiency scores was impacted by the choice of quality control strategy. Moreover, an inaccurate assessment of the impact of quality on cost can result from the use of a single outcome measure only.

Conclusions: We provide a rationale and empirical support for the inclusion of controls for quality in hospital applications of SFA. Researchers able to include variables that control for the multi-dimensional nature of hospital quality should do so. Researchers faced with data constraints that limit the quality variables they can include should be aware of the limitations of their analysis when interpreting and applying their results.

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Effects of Population Movement on the Risk of Chagas Disease in the California Blood Supply: A Preliminary Model

Presenter:

Leslie Wilson

Authors:

Leslie Wilson, Janine Ramsey

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: Chagas disease is a parasitic disease found predominantly in Latin America, including Mexico. Mexico routinely screens for Chagas disease in their blood supply, however there is currently no screening of the United States blood supply for Chagas disease. Although there are only a few documented cases of chagas attributed to blood transfusions, symptoms of this disease often don’t manifest until 10-30 years after contracting the disease. In addition with the increase in migration from Mexico to parts of the United States, the risk may be increasing.

Objectives: The objectives of this paper is to present a preliminary model of chagas disease transmission risk in the California and Mexican blood supply based on both the migration within Mexico from endemic to non-endemic areas in the migration from Mexico to California.

Methodology: We developed a model of migration and transmission risk for Chagas disease in Mexico and California. We used existing prevalence of chagas in the migrating population and probability estimates of blood donation, likelihood of having Chagas disease, infectivity depending on blood fractionation type, and other factors, to estimate the rate of seropositivity and risk of contracting Chagas from donated blood. We conduct a sensitivity analysis for the uncertain parameters.

Results: The base case California analysis we demonstrated a seropositivity rate of 0.015, and an immigrant donation rate of 0.01232. We estimated that the current verbal screen would eliminate only 0.000542 donations and that each unit given would be fractionated to go to 2.5 recipients. Sensitivity analysis showed that if the immigrant population continues to increase and the current efforts continue to increase blood donation from 1 to 10% in Hispanic communities, then the risk of contracting Chagas disease from blood transfusion in California increases from about 112 to 913 individuals. If the seropositivity rate of Mexican Immigrants is varied from the low rate of 0.000222 to the highest rate of 0.023, then the number of Californians contracting Chagas goes from about 1 person to 172 persons. When the infectivity is varied from a low of 0.01 to a high of 0.34, then the annual number contracting Chagas disease in California goes from only 11 to 384.

Conclusion: We suggest that more data collection is needed so that a more refined model can be made to estimate risk of Chagas disease to Californians receiving blood. However, from the current estimates, we feel that the risk of contracting Chagas disease from the blood supply is high enough to warrant testing, at least in the high risk areas with high population movement from endemic areas.

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Food for Thought: Food Stamps, Food Insecurity and Disability

Presenter:

Brian Armour

Authors:

Brian Armour, M. Melinda Pitts

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Food insecurity, defined as having insufficient funds to enable families to purchase enough food to maintain an active and healthy lifestyle, is particularly problematic in impoverished households. Disabled impoverished persons, in particular those who live alone, may be more susceptible to food insecurity as functional limitations may impede their ability to purchase and prepare food. The association between food insecurity and disability among the impoverished was assessed using data from the Panel Study of Income Dynamics (PSID) for 2003. The PSID is a longitudinal study of a representative sample of U.S. individuals and the family units in which they reside. The study collected economic and health information on 7822 families in 2003. Household food insecurity was calculated from the USDA 18 core item food security module. The household head or spouse was defined as disabled if they reported having difficulty with one or more activities of daily living or instrumental activities of daily living. Food stamp participation information was used to identify 728 families receiving food stamps in 2003. Results from our analysis suggested that among households receiving food stamps in 2003, 41.3% of disabled households were food insecure relative to only 26.3% of non-disabled households. Results from our multivariate analysis revealed that households whose head and or spouse was disabled were at increased risk of being food secure in comparison to households whose head and/or spouse had no disability. Food insecurity may be reduced by the Food Stamp Program; however, the program is significantly less able to minimize the probability of food insecurity in disabled households. These results suggest that the food stamp program is in need of reform in order to be better able to address the needs of the disabled.

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Replace Pharmaceutical Patents Now!

Presenter:

James Henderson

Authors:

Earl Grinols, James Henderson

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Pharmaceutical patent protection places Americans on the horns of an untenable dilemma. On one hand, monopoly protection limits the treatment options for individuals without prescription drug coverage and causes American consumers - many of whom are sick and not working - to pay too much for their medications. On the other hand, providing insurance for prescription drugs brings into play the monopolist’s response which is to raise the drug’s price in proportion to the inverse of the plan co-pay. A 20% co-pay, for example, creates an overwhelming incentive that leads the supplier to raise price to 5 times the initial level and reap the profit windfall. The firm adjusts its price-output pair from the (5p 0, q0) point only if profits are thereby raised further.

In this paper we discuss a socially preferable alternative to the patent system as a mechanism protecting intellectual property rights. Three important issues must be addressed. 1) How can we deal effectively with the above-mentioned monopoly pricing response to a prescription drug co-pay? 2) What is the best way to reward innovators to insure that the benefits of innovation are spread quickly and widely (at marginal cost prices)? 3) How do we go about calculating the reward for innovation?

The only way out of the unacceptable quandary is to sever the link between monopoly power created by the patent system and drug distribution. In fact, patent protection for new inventions is an anachronistic holdover compromise solution from an earlier era. Modern theory and tools imply an entirely different approach. This paper reviews historical policies toward research and development in light of the intervention principles of public finance. It concludes that an intertemporal bounty satisfying certain conditions is more efficient than current law and also dominates other structures including patent buyouts, except for a full-economy Ramsey pricing solution. Since Ramsey pricing is unlikely ever to be seen in practice, the investigation of efficient replacements for pharmaceutical patenting is timely and significant. The investigation identifies a mechanism for marginal cost drug pricing consistent with inducement to innovation as strong as provided by patents, consistent with increased social efficiency and practical implementation. The latter is argued from positive consideration of the fact that a similar system is successfully in place and has been used for many years in another sector of high innovation, the music industry.

The present research raises the possibility of change in the pharmaceutical drug industry as part of the larger movement in the United States to find a more desirable social ethic that can drive and sustain our health care system.

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Smoking and Ratings of Perceived Health Status

Presenter:

Kirsten Yaffe

Authors:

Kirsten Yaffe

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Introduction: The perceived health status of smokers has been shown to be lower than that of nonsmokers; however, causality is not clear. Smoking could lower someone’s self-rated health status physically, due to the adverse effects of smoking; psychologically, due to feelings of guilt or of weaker self control; or due to other factors. An external factor that could increase the propensity to smoke may also cause other health-related issues, lowering perceived health status. The biochemical effect of nicotine on the nicotinic receptors in the brain suggests that smoking can also be a form of self-medication. The causative agent, which evokes the need to self-medicate, could also lead to a lower health status.

Purpose: The purpose of this study is to examine the extent to which reported quality of life differs between smokers and nonsmokers when other physical and mental health status factors are controlled for.

Methods: Data from the 2002 Medical Expenditure Panel Survey (MEPS) was used in this analysis. The dataset represented a population of 97,221,295 non-institutionalized adults in the US, 22% of which were current smokers.

To address confounding of explanatory variables by smoking, logistic regressions were run using smoking status as the dependent variable. Explanatory variables included demographics, smoking-unrelated diseases, smoking-related diagnoses, and mental/emotional characteristics. Variables that were significantly associated with smoking and smoking status were used as the explanatory variables in a linear regression with perceived health status as the dependent variable.

Results: Even after adjusting for the other significant measures of emotional and physical health, smoking remained a significant factor affecting perceived health status, although the influence of smoking on health status decreased by more than half. In the univariate model, the coefficient on smoking was 0.40. When other explanatory variables were included in the model, the coefficient on smoking status was 0.18.

The only smoking-related diagnosis significantly associated with smoking in the logistic regressions was emphysema. In the linear regression, the three factors with the largest effects on health status were perceived mental health status (0.50), diabetes (0.46), and emphysema (0.46). Mental health status also has a much larger t-value than any others do in the model; it is likely that the health and mental health status measures are correlated strongly enough that a multivariate model should be used instead with mental health status included as a dependent variable.

Discussion: A limitation of this model is the accuracy of the outcome variable, which is measured on a five-point scale, from 1 (“excellent”) to 5 (“poor”). Although this scale is treated as an interval scale, it is unlikely that ratios between adjacent values are the same throughout the scale. (The difference between “excellent” and “very good” is likely not as large as between “fair” and “poor.”) It is therefore harder to determine the exact effects on health status of a change in the explanatory variables (i.e., the coefficients are harder to interpret); however, inferences can be drawn about the relative effects of each factor in comparison with others.

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Smoking cessation and health

Presenter:

Yu-whuei Hu

Authors:

Yu-whuei Hu, Dong Hwa

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: Medical and public health studies have found that smoking may increase the likelihood of diseases occurring and causing premature death. Many developed countries, including Taiwan, have implemented a variety of policies designed to raise the costs of smoking in order to reduce cigarette consumption. Most studies have provided evidence that smoking may harm one’s health. However, not enough studies have shown the benefits to health from a cessation of smoking.

Objectives: In this paper, we empirically study the health effect of smoking cessation on the elderly male (aged sixty and over) in Taiwan.

Methodology: We derive data from the “Survey of Health and Living Status of the Middle Aged and Elderly in Taiwan: A Longitudinal Study Since 1989” which provides information regarding the subjects’ smoking history before 1989 and smoking behavior from 1989 to 1999. We define the health effect by the following two measures. One is survival years, given survived at age 60 and the other is self-assessed health status, which is categorized into five degrees: excellent, very good, good, fair and poor. We adopt Cox proportional hazard model to estimate the effect of early smoking cessation on the hazard rate of one’s life and ordered probit model to analyze the health effect of the length of sustaining smoking cessation.

Results: The empirical results show that those who quit smoking before the age of 54 had a lower hazard ratio and a higher survival probability. In addition, the results show that, among those who quit smoking before 1989, the self-assessed health status was better the longer the smoking had ceased. Besides, the results also show that the younger a person is when he becomes addicted, the more likely he is to die at each age.

Conclusions: Our empirical analysis implies that early smoking cessation is positively associated with longer life and better health status.

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Tiered Co-payments and Cost-Related Medication Underuse?

Presenter:

Todd Wagner

Authors:

Todd Wagner, Michele Heisler, John Piette

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Introduction Many insurance plans use tiered co-payments, in which patients pay less for generic medications than for branded prescriptions, to encourage the use of generic medications. However, co-payments may force some patients to forgo prescription drugs due to costs. Research indicates that approximately 20% of adults with a chronic illness will underuse prescription drugs due to cost pressures. With cost-sharing on the rise, many decision makers are concerned because underuse of medication has been linked to worse health outcomes and to greater rates of hospitalization. In this study, we analyze how tiered co-payments are associated with medication underuse.

Methods We fielded a national survey of chronically ill adults over age 50 (n=4085). Respondents reported whether they had been given a prescription for each of 16 chronic health problems. On a condition-by-condition basis, participants were asked: “In the past 12 months, have you ever taken less of this medication than prescribed by your doctor because of the cost?” If they said yes, they were asked whether they (1) did not fill a prescription at all, (2) took fewer pills or a smaller dose, (3) put off or postponed getting a prescription filled, (4) used herbal medicines or vitamins when they felt sick rather than take their prescription medication, and (5) took the medication less frequently than recommended to ‘stretch out’ the time before getting a refill. For each of these five questions, responses were collecting using a 5-point ordinal scale: never, less than every two or three months, about every two or three months, at least once a month, at least once a week. We used linear probability models to estimate the probability of underuse as a function of co-payments among those with tiered co-payments (n=2771). We created dummy variables for co-payments: <$5, >$5 and <=$15, >$15 and <=$50, or >$50, do not know, or are not sure. In the multivariate analyses, we controlled for age, gender, income, and chronic conditions, and we used sampling weights and corrected the standard errors for clustering.

Results Cost-related underuse was more consistently associated with higher co-payments for generic medications than for branded medications, suggesting that people were less-price sensitive to their branded medications. The association between co-payments and cost-related underuse was strongest for not filling a prescription and postponing the filling of a prescription; the association was considerably weaker for stretching out the dose, taking fewer doses or substituting herbal medications.

Conclusions A substantial minority responds to co-payments by underusing their medication, and the effect is greatest at the cash register where people either do not fill the prescription or postpone filling the prescription. Although underuse is associated with co-payments, the effects are not the same for generic and brand name medication. People were more likely to forego medication when prescribed a generic than a brand name medication. Given that most patients do not talk to their clinician about medication underuse, clinicians need to explain the use of generic medications to their patients so that patients do not always equate value with price.

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Demand for Private Health Insurance in Germany

Presenter:

Majed Elhewaihi

Authors:

Majed Elhewaihi

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Undoubtedly, demand for private health insurance in Germany is growing, alone in 2004 around 400.000 Germans have chosen one of the private coverage schemes. Between 2002 and 2003, about 300.000 of statutory insured persons have taken out outpatient supplementary private insurance, while in the same period, around 242.000 have taken out optional hospital benefits. We argue that perceived quality of private and public health care, insurance premiums and income are among the determinants of this growing demand. This study is the first in Germany that moves from theoretical to empirical framework. It uses economic modelling to analyze the effects of these determinants on the probability of purchasing private health insurance. Economic modelling states, demand for private health insurance is demand for high health care quality. The model was developed taking into consideration the unobserved endogeneity and heterogeneity. Results support the hypothesis that the demand for private health insurance is driven by the quality gap between both insurance sectors.

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Mixed Ownership Markets: Theory and Evidence from Hospitals in the US and China

Presenter:

Karen Eggleston

Authors:

Karen Eggleston

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

A mixture of government and private ownership, including both not-for-profit and for-profit firms, is an abiding feature of healthcare delivery in many established market economies and is emerging in many developing and transitional economies. Yet virtually no existing theories model endogenous co-existence of government, private nonprofit and for-profit ownership in a market, or focus on the normative question of whether the co-existence of all three forms is socially desirable. This paper aims to fill this gap through a parsimonious theoretical “merger” of the noncontractible quality theory of ownership (Hart, Shleifer and Vishny 1997; Glaeser and Shleifer 2001) and the theory of soft budget constraints as a dynamic commitment problem (Kornai, Maskin and Roland 2003). I argue that endogenous soft budget constraints are a more compelling explanation of the soft incentives of government managers than that presented by Hart, Shleifer and Vishny (1997), that government managers are more replaceable than private managers. In fact, it seems to be quite the opposite: government employment is often more stable than that in the private sector, frequently entailing a lower wage in exchange for more job security. Consistent with empirical evidence from US hospitals (e.g., Duggan 2000; Baicker and Staiger 2005), I allow for both a predatory principal (the ratchet effect) and soft principal (the soft budget constraint) in the same context, operating on different margins.

The model helps to explain why most industries are dominated by private for-profit firms; why some sectors such as healthcare tend to be dominated by private not-for-profit and government providers; and what factors drive the changing patterns of ownership mix across industries over time. In the model, private entrepreneurs are most responsive to market conditions; government provision assures supply (access) but is differentially prone to soft budget constraints and slower innovation. Mixed ownership lessens the social cost of government provision because competitive discipline and private R&D leads to contractibility - with a lag - for many aspects of innovation. I present evidence consistent with the model from two contrasting contexts: a meta-analysis of hospital ownership and performance in the US; and recent data on government and private hospitals in China.

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Exploring Deductibles: Do they Matter in the Era of Managed Care?

Presenter:

Maia Platt

Authors:

Maia Platt

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: Copayments / coinsurance and medical costs have been researched extensively, but the similar effects of deductibles have not yet been comprehensively established.

Objectives: To establish and quantify the effect of deductibles on the health care costs and utilization of privately insured non-elderly population in the USA.

Methodology: Medical claims, enrollment records and health benefits design from 40 large health care plans in 1998, obtained through MEDSTAT Group Inc. provided financial and demographic information on more than one million enrollees. Translog model with interaction terms and polynomials was used to obtain derivatives at various values of deductibles. Marginal effects are modeled as projected changes in average enrollee’s annual costs or utilization, per $1 change in deductible, in 1998 dollars.

Results: Contrary to the initial expectations, the relationship between deductibles and medical costs was found to be predominantly positive. It is our hypothesis that a mix of plans with both positive and negative marginal effects is due to self selection: people with low medical costs tend to move away from plans with high deductibles, resulting in higher mean costs for the remaining enrollees. The range of derivatives variation is established as (-$5) to (+$13) for plans with existing deductibles, and is further expanded up to $30 for plans with no existing deductibles: “sticker shock” effect. Changes in total costs are primarily driven by the change in the outpatient utilization and costs: both sign and value. Inpatient care demand curve was found to be perfectly inelastic, indicating that deductibles affect discretionary care only. The effect of deductibles does not seem to be mitigated by isolated application of managed care tools (such as precertification requirements). However, a systematic concept of managed care applied by PPO plans seems to be capable of reducing their impact on medical costs under certain conditions.

Conclusions: Even in the presence of managed care, deductibles continue to be a barrier, restricting access to medical care. However, higher deductibles in most cases fail to restrict spending. The predominantly positive relationship between deductibles and medical costs indicates, that if the deductible is lowered, there is a higher probability that insurer’s average costs per enrollee will go down, due to the inflow of people with low expected costs (i.e. healthy population). However, this probability varies substantially across the geographic states, most likely due to the states’ different regulations of the health insurance and health care industries, as well as different wages and / or health care prices across the states. Thus, opportunities exist for improving access to health care by lowering deductibles without imposing heavy financial burdens. Government involvement is strongly encouraged.

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The Effects of Competition and Multi-Hospital Systems on Hospital Prices

Presenter:

Emmett Keeler

Authors:

Glenn Melnick, Emmett Keeler

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Hospital prices in the US are rising again following years of little growth in which managed care plans had been able to leverage competition among hospitals to negotiate lower prices. Two explanations for the apparent shift in bargaining power from managed care plans to providers are that managed care may be weakened from consumers demanding broader networks, or that providers may be strengthened by the formation of larger scale multi-hospital systems.

Our study investigates how competition and the formation of hospital systems has affected the balance of power in hospital-health plan bargaining as reflected by hospital pricing behavior over time. We analyze trends in adjusted per diem hospital prices in California during a period of significant price growth (1995 through 2003) to assess whether the price constraining effects of hospital competition have weakened or if the ability of hospitals that are part of systems to charge higher prices explains the increase in hospital prices in that period. We find that competition in local markets remains an important factor in controlling hospital prices. However, the formation of hospital systems, both nonprofit and for-profit, has allowed member hospitals to charge higher prices. System effects have gotten larger over time, and apply even in competitive markets. This shift could be a permanent source of hospital price inflation, both for hospitals that are part of systems as well as for non system hospitals that compete in the same local markets.

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Applying Lean Toyota Production System Methods to Improving Health Care Systems

Presenter:

Sheri Eisert

Authors:

Sheri Eisert

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: While health care has seen strides in technology and pharmaceutical development, there has been little change in the processes of health care provision in the last 30 years. There are significant redundancies in the processes of care, numerous patient hand-offs between health care providers and a “silo mentality’ in care provision. Although many health care processes resemble “assembly-line like processes” health care systems have not widely utilized the knowledge of other industries in improving efficiencies, quality, customer satisfaction and workforce development.

Objectives: To identify the usefulness in applying Lean Toyota Production System principles and techniques to improving efficiency, effectiveness and quality in health care systems.

Methodology: Through case study analysis, “real” health care system processes are mapped to identify current and operationally agreed upon future state process activities, distinguishing between value added and non-value added activities. The implemented future state process and related improvements (efficiency, effectiveness and quality) are evaluated, including follow-up for improvement sustainability. The primary lean principles and tools that are used to create the current and future state include value stream mapping, standard work and elimination of the eight wastes (underutilized people, waiting, inventory, transport, defects, motion, overproduction, excess processing). The approach to improvement implementation will be the use of Kaizen (continuous improvement) through Rapid Improvement Event weeks (five day work week cycles) and selected operational teams that are involved in the particular process (including upstream and downstream).

Results: The use of Lean Toyota Production System principles and techniques are readily adapted to health care systems. The degree to which health care systems, patients and providers could benefit through becoming “lean” are significant. Through the elimination of waste, improvements in quality of care, patient safety and satisfaction (both patient and workforce) will follow. The primary challenge in implementing Lean Toyota Production System principles in health care is convincing individual health care providers that their participation in eliminating waste and standardizing processes are of benefit to their individual work processes and outcomes.

Conclusion: With ever increasing health care costs and continued concerns for patient safety, quality of care, patient satisfaction and workforce shortages, health care systems are of need of major transformation. The application of Lean Toyota Production Systems is one approach to viewing health care systems through “new eyes”. Health care systems have much to learn from other industries surviving and thriving in competitive markets.

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New cost sensitivity index based on cognitive cost cues for an application of the Lens model on physicians' choices

Presenter:

Christine Huttin

Authors:

Christine Huttin

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rational: This paper presents a generalization of the construction of a cost sensitivity index that analyzes the influence of implicit financial and economic information on physicians. The use of an adaptation of the Lens model on physicians’ choices allows describing how such type of cost information could interact with clinical information. It may be controversial to integrate implicit financial or economic information and cognitive knowledge in current measurement of price and cost in health care. However, the application of the Lens model on physicians’ choices from a European pilot study presented at the Brunswik society tended to show that it may capture significant behavioral changes (for up to 1/3 of the sampled physicians in some of the surveyed countries). The use of such information can also increase the explanatory power of current demand models for health care services and current measured effects of out of pocket payment and prices.

Objective: This paper will present the construction of this new type of cost index, based on cost cognitive cues and will discuss how to combine this type of measure with current information on price and cost. Traditional measures used to assess responses of agents to monetary value of goods and services are prices and costs. These prices can be changed in order to take into account psychological effects of a measure on a consumer, but they will still be measured by traditional objective price and cost information collected through official agencies or company surveys. In health care, net price to consumer reflects very poorly the information used by either the patient or his physician.

Methodology: The type of information used in this index is described in verbal terms, can use monetary values, but not always. Measures are based on thresholds and intervals that represent decisions’ shifts, not represented by traditional distance measurement. New weighting systems within cost cues and between modules of cost cues are also used, based on market survey research techniques such as conjoint analysis (or other statistical procedures that are used to test judgment analysis designs)

Results: The current development of the index is based on results from the pilot study from the allergy study on a European health care system and a disease economic model tested on NAMCS US data. The methodology integrates stated and revealed physicians’ preference with the new type of cost information. Validation stages are currently in process in the US with new sets of data and some results on sources of biases will be presented (for instance, the existence of systematic bias between internet and mail surveys).

Conclusions: This paper aims to propose an integration of implicit cost information in current measurement systems of price and cost of health care, when current accounting systems are insufficient to forecast health care expenditures. Such conditions for instance refer to economic change or periods of transitions that totally modify the relative cost structure and economics of both providers and patients.

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The Flip-Side of Social Capital: The Distinctive Influences of Trust and Mistrust on Self-Reported Health in Rural China

Presenter:

Hongmei Wang

Authors:

Hongmei Wang, Mark Schlesinger, Hong Wang, William Hsiao

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: Health researchers have observed stagnant and sometimes declining health outcomes in rural China despite the fact that absolute income is increasing constantly. The elimination of inequality in health is seen as an urgent public health policy issue, but the determinants of these disparities are poorly understood once economic deprivation has been reduced. Few studies have focused on social capital and health in China. In the case of China, a relevant question to ask is whether social capital, measured as interpersonal trust, has changed due to economic reforms and whether the erosion of social capital is related to the worsening of the health status of rural residents.

Objectives: In the setting of rural China: (1) Is social capital measured as trust related to individual’s health? If yes, how does social capital impact on health? (2) How does social capital compare to other socio-economic factors, such as income and education, as predictors of physical and psychological well-being? (3) How does social capital differentially affect an individual’s health status in developing countries compared to advanced economies?

Data and Methods: This paper employed data from the household survey of the Rural Mutual Healthcare Project, jointly conducted by Harvard China Health Policy Center and China Health Economics Institute. The survey was conducted in two provinces in China in year 2002 using stratified clustered sample. The final sample for this paper consisted of 9608 participants. The outcome variables included a 5-point scale self-reported general health and a 3-point scale self-reported mental health measure. Social capital was measured by 10 questions measuring both trust and mistrust levels. A trust index and a mistrust index were constructed and both measures were also aggregated at village level for analysis. This paper adopted multivariate ordered logistic regression analyses, adjusting for survey design effects, for main analyses. A rich set of control variables including demographic, health risk measures, social economics status variables, and sanitary measures were controlled in the models.

Conclusions: (1) Social capital measured as interpersonal trust is significantly associated with an individual’s health in rural China. Social capital appears to impact on both mental health and physical health, but to different degrees. Both individual-level social capital and village-level social capital have a significant impact on health. Individual trust and mistrust have opposite impact on a person’s health as expected. However, results from stratified analyses suggest that mistrust operates on health separately from trust. (2) The overall magnitude of effects of social capital on health is substantial, comparable to social economic status factors such as education and health insurance. (3) Compared to that of advanced economies, the magnitude of influences of social capital on health appears to be bigger in rural China.

Disclosure information: The authors are either faculty members or student at Yale University or Harvard University and have no conflicted interest with regard to this project.

Part of the abstract has been presented in ASSA 2005 annual meeting.

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Institutional Aspects of Medical Technology Assessment

Presenter:

Robert Kemp

Authors:

Robert Kemp

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Economic evaluation is being prescribed for improving allocation of health care resources, for marketing technologies, and as an academic endeavor unto itself. The institutional arrangements for the delivery of health care technologies are often assumed to be exogenous to the technological assessment. However, for MTA to be a valuable tool, the institutional aspects of the assessment have to be made explicit. The first aspect to be considered is the nature of the patient-practitioner transaction. The decision on the use of a technology may be bound by institutional rules, a specific practice environment, or be relatively open to clinical imperative. The decision may have a directly measurable pecuniary impact, generate a charge, or may be made in a framework of a priori allocation of health care resources. Agency issues need to be addressed. Secondly, the decision framework may be “ex-post” or “ex-ante”; ‘ex-ante’-undertaken prior to the implementation to estimate net outcome in relation to costs or “ex-post’ subsequent to knowing a program’s net outcome effects. The ex-ante analysis may be based principally on an experimental design where as the ‘ex-post’ may be based principally on retrospective data. Ex-post data may be based on multiple experiments introducing the ambiguity of common comparator trials. Ex-ante evaluations are required for technologies that will be difficult or impossible to control after they are diffused. Third, the values used in economic evaluation may be determined by the institutional rules used to allocate resources in an area, and may be determined by a precedent of using cost-effectiveness in such allocations, leading to the impossibility of finding a set of preferred programs. Non-transparency or ambiguity about these institutional aspects will limit the usefulness of the subsequent evaluation. Non-transparency or institutional ambiguity allows for the publication of essentially useless studies and to the ability of vested interests to use economic evaluation for non-substantive purposes, such the marketing of a technology. Critical appraisals from treatments for dementia, chemotherapy, and diabetes are used to illustrate the importance of the specification of these institutional aspects.

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Obesity and Nutritional Knowledge

Presenter:

Irina Grafova

Authors:

Irina Grafova

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: Currently, obesity presents one of the biggest public health problems. From a public policy perceptive, it is important to know whether propagation of nutritional knowledge could be used as an effective public policy tool in reducing the prevalence of obesity.

Objective: The objective of this paper is to examine the relationship between nutritional knowledge and obesity.

Methodology: This study uses the 1999 wave of the Panel Study of Income Dynamics (PSID). PSID is a longitudinal study of a representative sample of U.S. individuals and the family units in which they reside. The 1999 wave of PSID used in this study contains questions on height, weight, nutritional knowledge and attitude toward importance of balanced diet of the respondents. The econometric technique used is ordered probit with known cut points, i.e. interval regression model.

Results: The main result is that there are two distinct patterns in the relationship between nutritional knowledge obesity. First, for individuals attaching greater importance to a balanced diet, greater nutritional knowledge corresponds to a lower probability of being obese. This pattern is consistent with the notion of preventive nutritional knowledge: persons who are aware of the connection between poor nutrition and certain health conditions have higher expected costs associated with obesity and are more likely to follow a balanced diet and avoid obesity. Second, for individuals who attach low importance to balanced diet, greater nutritional knowledge corresponds to greater probability of being obese. This pattern is consistent with the notion of reactive nutritional knowledge: obese persons, especially those with obesity-associated health conditions are more likely to be aware of health problems caused by dietary imbalances and obesity and would be more likely to possess greater nutritional knowledge due to his/her condition. Empirical analysis reveals that consistent with the pattern of preventive nutritional knowledge the negative effect of nutritional knowledge on the probability of being obese or overweight for women without obesity-related conditions is double that for women with such conditions. Likewise, consistent with the pattern of reactive nutritional knowledge the positive relationship between nutritional knowledge and the probability of being obese without obesity-related conditions is half that for men with such conditions.

Conclusion: The analysis shows that there are two distinctive patterns in the relationship between nutritional knowledge obesity. Nutritional knowledge could be preventive to obesity, in which case greater nutritional knowledge leads to lower probability of being obese. Nutritional knowledge could also be reactive to obesity, in which case obesity leads greater nutritional knowledge. Ignoring the reactive effect of nutritional knowledge, while estimating the size of its preventive effect on obesity, may lead to biased and insignificant estimates.

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Impact of public health program and maternal education on immunisation behaviour of children in rural Bangladesh

Presenter:

M. Zia Sadique

Authors:

M. Zia Sadique, Mohammad Asadullah

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: Vaccine preventable diseases account for considerable proportion of child deaths and morbidity in many developing countries. Understandably so, the expanded program of immunization (EPI), features one of the corner stones of public health program of most developing courtiers. These programs have brought considerable direct and indirect benefits to health and nutritional status of children. Despite these programmatic interventions, many developing countries have yet to achieve the target of Universal Childhood Immunisation of 80 percent, and in many situation immunisation uptake remains low posing the threat of disease outbreak very likely. It is extremely important for policy makers in developing countries to evaluate the contribution of public health programs which will help developing programs that are more effective in achieving their targets.

Objective:

The objective of the paper is to evaluate the contribution of a public health program on the demand for childhood vaccination by decomposing the direct and indirect channels through which public health program influences household demand for preventive health care.

Methodology: The paper aims to estimate household demand for child immunization in a rural area of Bangladesh where a maternal health care program known as Maternal and Child Health (MCH) Program is in operation. We exploit the existence of an exogenously assigned maternal health care program in the study area where households in the treatment area received important health facilities. Households in the control area were exposed to pubic health facilities only.

We focus on three immunisation/vaccination outcomes for the most recently born child for a sample of 1033 children: (i) no immunisation, (ii) partial immunisation and (iii) full immunisation. The empirical analysis employs Ordered Probit regressions where the dependent variable is defined jointly for all possible outcomes mentioned above.

While the multivariate analysis accounts for a host of demand side determinants of immunisation outcomes in the treatment and control areas, special attention is given to mother’s education and risk attitude, and their interaction with the program effect on immunisation behaviour.

Results:

The MCH program has significantly enhanced immunisation status of children - both directly and indirectly. Mother’s education has shown important influence over child health care choices related to immunisation. This positive effect is purely driven by the knowledge and awareness associated with maternal education. The results lead to confer that the MCH program acts as a substitute for maternal education as it has found to compensate low endowment of mothers education. Prenatal care visit has also significantly enhanced household’s demand for childhood immunization, where prenatal care proxies for both risk awareness of pregnant mothers and knowledge about health care choices. Public health program has reinforced the household’s risk awareness towards child health choices. These findings remain robust to control for household income leading to the conclusion that influence of maternal education and pre-natal health care choice are not proxying for an income effect.

Conclusion: Public health program has important spillover effects on child health and welfare which should be included in their evaluation.

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Continuous Enrolment Requirement: Do we really need it?

Presenter:

Onur Baser

Authors:

Onur Baser

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: Continuous Enrolment is a “must requirement” for the analyses based on claims data since failure to control for different variable length creates a bias in our estimators. This requirement, however, may decrease the sample sizes substantially. Relaxing of continous enrolment requirement and the appropriate adjustment to the models are necessary.

Objective: We proposed a two stage estimation method which can be used to estimate our outcomes consistently without imposing continous enrolment requirement.

Method: We provide systematic treatment of the correction for possible selection bias of any claims data where the selection rule is described by a censored regression model. We first use the duration of time a patient is tracked for selection. Second using Tobit residuals in the structural equation, we showed that we removed possible selection bias due to continuos enrolment requirement. We used every patient in our first stage estimation, continously enrolled and not continously enrolled and used this infromation to estimate our second stage model over continously enrolled patients. We also derive a simple test to determine possible selection bias due to continous enrolment requierment.

Results: We proved that the resulting estimators are consistent and asymptotically normal. Simulation studies are comfirmed our results.

Conclusion: Continous enrolment requirement can be very restrictive in certian cases, and failure to adjust for information from droped out patients may lead to bias. Adjustment is required to control for possible selection bias.

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One way to improve two part modeling of longitudinal cost data - using latent class clustering of cost casemix groups

Presenter:

Jeonghoon Ahn

Authors:

Jeonghoon Ahn

Mon June 5, 2006 9:30-10:45 Room Alumni Lounge

Rationale: Though two part model has prevailed for the last two decades as the methodology to analyzing cost data in health economics, the advantages of using longitudinal (panel) data received little attention.

Objectives: The objective of this paper is to highlight the advantage of using a clustering technique in longitudinal two part model.

Methods: A longitudinal medical cost data of 3,260 patients for two years was first clustered by latent class cluster analysis by cost characteristics - categorical indicator variables with 5 categories of the each year’s cost, dichotomous indicator variables with 0 for zero cost and one for positive cost for each year. Latent class cluster analysis identifies cost casemix groups using the correlation structure of these cost indicator variables and these indicator variables are mutually independent in each identified casemix group. To determine the optimal number of casemix groups, Sample Size Adjusted Bayesian Information Criteria and Consistent Akaike Information Criteria was compared. For each group of identified cost casemix group, panel data two part model (random effect and fixed effect) for cost estimation was applied and then compared with the pooled data result, which only models heterogeneity in the intercept.

Results: The two results with casemix control and without casemix control were significantly different. This difference is mainly resulted from the significant differences in characteristics among the casemix groups. The higher level of heterogeneity control in latent class clustering can significantly improve two part model in longitudinal analysis.

Conclusions: When two part model is applied in longitudinal data, there is an advantage of heterogeneity control whether assuming individual heterogeneity intercept as random effect or fixed effect. This advantage can be further extended by using a clustering technique such as latent class clustering specifically on longitudinal cost variable.

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