A Guided Tour on research in Health Economics and its relevance for the Health Policy Agenda

1. A Guided Tour on research in Health Economics and its relevance for the Health Policy Agenda Prof. Guillem López-Casasnovas Depart. of Economics Univ. Pompeu Fabra.

2. intro • HEALTH ECONOMICS AS A A DISCIPLINE: ECONOMICS!!!! • HEALTH ECONOMICS AS A RESEARCH AREA: WIDE SCOPE WITH THE ADDED VALUE OF INTERDISCIPLINARITY…

3. A B WHAT INFLUENCES HEALTH? (OTHER THAN HEALTH CARE) Occupational hazards; consumption patterns; Education; Income etc WHAT IS HEALTH? WHAT IS ITS VALUE? Perceived attributes of health; health status indexes; value of life; utility scaling of health F E C MICRO-ECONOMIC EVALUATION AT TREATMENT LEVEL Cost effectiveness & cost benefit analysis of alternative ways of delivering care (e.g. choice of mode, place, timing or amount) at all phases (detection, diagnosis,treatment, after care etc.) DEMAND FOR HEALTH CARE Influences of A + B on health care seeking behaviour; barriers to access (price, time, psychological, formal); agency relationship; need MARKET EQUILIBRIUM Money prices, time prices, waiting lists & non-price rationing systems as equilibrating mechanisms and their differential effects D SUPPLY OF HEALTH CARE Costs of production; alternative production techniques; input substitution; markets for inputs (workforce, equipment, drugs etc.); remuneration methods and incentives G H PLANNING, BUDGETING & MONITORING MECHANISMS Evaluation of effectiveness of instruments available for optimising the system; including the interplay of budgeting, workforce allocations; norms; regulation etc. and the incentive structures they generate. EVALUATION AT WHOLE SYSTEM LEVEL Equity & allocative efficiency criteria brought to bear on E + F; inter-regional & international comparisons of performance

4. in the research-frontier agenda under the Williams’ frame of the discipline areas… • ‘A’ area: Grossman’s demand for health in the HK tradition, expanded at the macro level by reframing the neoclassical production function • ‘B’ area: QALY common ground analysis • Psychometrics at the micro • Time series analysis for the value of health at the macro level (controlling for exogenous factors other than health care!!)

5. ... in the research-frontier agenda • ‘C’ area: demand for health care, under uncertainty (ie. Insurance). Premia (actuarilly fair), prices, copayments, deductibles. The Rand experiment (70s!). Models of principal-agent relationship, moral hazard (HSAs in the policy arena), explaining waiting lists... • ‘D’ area: supply -induces demand: how many doctors, professional incentives, team production (and free riding), productivity, pay per performance, variation in clinical practice, ‘moonlighting’...

6. ... in the research-frontier agenda • ‘E’ area: public intervention in health care: ‘welfarists’ against ‘non-welfarists’. Eliciting preferences (eg. Conjoint analysis) vs. willingness to pay models. Plus cost analysis, bayesian approach to economic evaluation, prioritisation... • ‘F’ area: markets in health care (information theory, uncertainty), third party payment systems, optimal rate setting (semi-parametric cost frontier analysis) and optimal risk pooling, efficient prices (‘blending’ prospective and retrospective), risk adjustment techniques for risk selection avoidance....

7. ... in the research-frontier agenda • ‘G’ area: Global system evaluation in the public health tradition + WB + WHO + EQUTY project + global burden of disease impacts + analysis on how to combine public and private (insurance) systems... Under policy evaluation techniques ‘matching samples’, double and triple difference in difference models... • ‘H’ area: in the NHS tradition, Markov’s models, simulation techniques for changed scenarios, needs estimation, normative standarisation of utilisation, political devolution, the provision-production split, the Health System Integration Study, coordination in health care delivery, the optimal decentralisation and risk transfer to providers, rol for private care in public health systems...

8. I.- Health Economics is ‘what health economists do’ • Some selected 2007 & 2008 papers for the Arrow’s Award

10. Bleakley, QJE • Paradigmatical evaluation of a public policy (before/after type) under rich longitudinal pannel data regression analysis, under Indirect Least Sqares plus subsampling and comparison of methods. Assessing the social externalities derived from the hookworm eradication programme

12. Chandra & Staiger, JPE • Mostly theory oriented contribution. In the empirical part the paper argues against the flat of the curve hypothesis in myordial surgery. It accounts for the potential biased selection effect (surgery for those with a higher likelihood of recovery) that biases OLS. It uses instrumental variable methods after some initial logits on the cardio illness probability

14. Das & Hammer, J Devel Econom • Geographical dual practice possibilities and/or biased selection public/private physicians’ employment choice may be a problem. The paper follows a matching propensity score approach, sorting by income, patient characteristics, location, etc. It compares non lineal probit results with OLS.

16. Finkelstein, QJE • Generalized linear model, weighted and unweighted OLS. Estimation, trend and actual residual (before and after type) since the introduction of Medicare on health care insurance and on a full range of affected variables...

18. Fishback et al. Rev of Econom & Statistics • Searching for the relief costs of the lifes saved by the program. Micro panel data for understanding the effects of the great depression: OLS, OLS with fixed effects ands 2SLS with fixed effects

20. Glazer et al. JHE • Pure theoretical contribution (Game Theory)

22. Hall & Jones QJE • Theory Model calibration Numerical results in valuing how marginal utility of extending life increases, and not decline, with rising incomes

24. Iizuka, Rand Journal • Mc Fadden standard nested logit- share equation, on how physicians mark up the prescribed drugs. Nested logit models with/without instrumental variables plus random coefficients with instrumental variables.

26. Avery et al. JPE • Dealing with the reverse causality problem between advertising and consumption Instrumental variables approach, OLS and linear probability models.

28. Biglaiser & Ma Rand Journal • Pure theoretical contribution

30. Acemolglu & Finkelstein, JPE • Mostly theoretical plus time series analysis on how hospitals react to changes. Censored data estimation between those who adopt and who does not technological changes

32. Aldi & Viscusi, Rev of Econom & Statistics • Adjusting the value of the statistical life for age and cohort effects. Observing the wage/ risk trade-offs. Age specific regression analysis of hedonic wages, extended to a two stage minimum distance estimator. Data pooling in order to control for the birth-cohort effect.

34. Brown & Finkelstein, AER • Estimation of the crowding-out effect between public and private programs for health insurance Medicaid and Long Term Care. Model calibration and numerical simulation of the before and after type

36. Card et al., AER • Time series analysis from rich micro data on the impact of the Medicare implementation on the utilization of health care services. Before and after comparison once having adjusted for hospital diversity and several other interactions.

38. Fang et al., JPE • Testing advantageous selection: whether risk averters are ‘cookies’: they insure more and utilize less. Why and how. Rich data set very much worked with, two micro panel and OLS estimation.

40. Leonard, JHE • Random effects logit regression, since among the observations some physicians without changes in the patients’ satisfaction. Comparing this with fixed effects estimation for those with variation of patients’ satifation versus utilizing random effects for all the sample. Haussman test for the difference.

42. Martin et al., JHE • On the potential endogeneity of health care spending on health programs (money flows where health problems exist, and resources tend to correct them). Tackling the problem by Instrumental variables and two stage least squares. Testing the validity of several instruments.

44. Van Houtven & Norton, JHE • Testing the effects of heterogeneous informal care treatments on Medicare expenses. Two part expenditure model according to the type of informal home care, once controlling for endogeneity through instrumental variables (since formal and informal care are mostly interdependent but only formal care impacts on spending). Since 2SLS standard structure is inconsistent in controlling for endogeneity, they adopt two stage residual inclusion and for the discrete outcomes, a probit for instrumental variables.

46. Yin, JHE Panel data and a difference-in-difference approach for orphan drugs and others, since orphans are subject to a different set of incentives. Testing the effectiveness of these incentives in terms of actual pharmaceutical innovation

47. GENERAL THEORETICAL TREND • GROWING ANALYTICAL SOPHISTICATION • USA DOMINATES • PUBLIC HEALTH EXTERNALITIES WITH RENEWED INTEREST • MACRO: HEALTH VALUE GAINS • MICRO: CLINICAL PRACTICE AND INCENTIVES

48. GENERAL THEORETICAL TREND • INSURANCE, MORAL HAZARD & COSTS • LESS ON CBA OR CEA • PROVIDERS SUPPLY/ DEMAND OF HEALTH CARE VERY MUCH SENSITIVE TO THE ESPECIFICITY OF THE HEALTH SYSTEMS FOR EXTRAPOLATING RESULTS

49. GENERAL EMPIRICAL TREND • REGRESSION ANALYSIS BEFORE AND AFTER TYPE • INSTRUMENTAL VARIABLES FOR ENDOGENEITY • DIFFICULTY IN TESTING THE DIRECTION OF THE REVERSE CAUSALITY HYPOTHESIS • RICH LONGITUDINA, MICRO, PANEL DATA.

50. GENERAL POLICY CONCERNS: IN • INTERACTIONS PUBLIC/ PRIVATE INSURANCE • EXTERNALITIES AND ECONOMIC DEVELOPMENT EFFECTS FROM PUBLIC HEALTH INTERVENTIONS • STRATEGIC ORGANISATIONAL DESIGN FOR HEALTH: THE INCENTIVE COMPATIBILITY FRAME • RISK SELECTION AND ADVERSE SELECTION IN INSURANCE