Showing papers in "Health Economics in 2003"

Catastrophe and impoverishment in paying for health care: with applications to Vietnam 1993–1998

Abstract: This paper presents and compares two threshold approaches to measuring the fairness of health care payments, one requiring that payments do not exceed a pre-specified proportion of pre-payment income, the other that they do not drive households into poverty. We develop indices for 'catastrophe' that capture the intensity of catastrophe as well as its incidence and also allow the analyst to capture the degree to which catastrophic payments occur disproportionately among poor households. Measures of poverty impact capturing both intensity and incidence are also developed. The arguments and methods are empirically illustrated with data on out-of-pocket payments from Vietnam in 1993 and 1998. This is not an uninteresting application given that 80% of health spending in that country was paid out-of-pocket in 1998. We find that the incidence and intensity of 'catastrophic' payments - both in terms of pre-payment income as well as ability to pay - were reduced between 1993 and 1998, and that both incidence and intensity of 'catastrophe' became less concentrated among the poor. We also find that the incidence and intensity of the poverty impact of out-of-pocket payments diminished over the period in question. Finally, we find that the poverty impact of out-of-pocket payments is primarily due to poor people becoming even poorer rather than the non-poor being made poor, and that it was not expenses associated with inpatient care that increased poverty but rather non-hospital expenditures.

Cigarette demand: a meta-analysis of elasticities

Abstract: Estimating elasticities of cigarette demand has become commonplace amongst economists and policymakers. Synthesizing the various elasticities into a coherent message is quite challenging, however, as the point estimates are obtained using quite disparate modeling techniques and data. In this study, we perform a meta-analysis to explore factors that influence variations within and across studies. Empirical results suggest that demand specification, data issues, and estimation methodology have varying degrees of influence on reported estimates of price, income, and advertising elasticities.

Design techniques for stated preference methods in health economics.

Abstract: This paper discusses different design techniques for stated preference surveys in health economic applications. In particular, we focus on different design techniques, i.e. how to combine the attribute levels into alternatives and choice sets, for choice experiments. Design is a vital issue in choice experiments since the combination of alternatives in the choice sets will determine the degree of precision obtainable from the estimates and welfare measures. In this paper we compare orthogonal, cyclical and D-optimal designs, where the latter allows expectations about the true parameters to be included when creating the design. Moreover, we discuss how to obtain prior information on the parameters and how to conduct a sequential design procedure during the actual experiment in order to improve the precision in the estimates. The designs are evaluated according to their ability to predict the true marginal willingness to pay under different specifications of the utility function in Monte Carlo simulations. Our results suggest that the designs produce unbiased estimations, but orthogonal designs result in larger mean square error in comparison to D-optimal designs. This result is expected when using correct priors on the parameters in D-optimal designs. However, the simulations show that welfare measures are not very sensitive if the choice sets are generated from a D-optimal design with biased priors.

Missing... presumed at random: cost-analysis of incomplete data.

Abstract: When collecting patient-level resource use data for statistical analysis, for some patients and in some categories of resource use, the required count will not be observed. Although this problem must arise in most reported economic evaluations containing patient-level data, it is rare for authors to detail how the problem was overcome. Statistical packages may default to handling missing data through a so-called 'complete case analysis', while some recent cost-analyses have appeared to favour an 'available case' approach. Both of these methods are problematic: complete case analysis is inefficient and is likely to be biased; available case analysis, by employing different numbers of observations for each resource use item, generates severe problems for standard statistical inference. Instead we explore imputation methods for generating 'replacement' values for missing data that will permit complete case analysis using the whole data set and we illustrate these methods using two data sets that had incomplete resource use information.

What difference does the choice of SES make in health inequality measurement

Abstract: This note explores the implications for measuring socioeconomic inequality in health of choosing one measure of SES rather than another Three points emerge First, whilst similar rankings in the two the SES measures will result in similar inequalities, this is a sufficient condition not a necessary one What matters is whether rank differences are correlated with health - if they are not, the measured degree of inequality will be the same Second, the statistical importance of choosing one SES measure rather than another can be assessed simply by estimating an artificial regression Third, in the 19 countries examined here, it seems for the most part to make little difference to the measured degree of socioeconomic inequalities in malnutrition among under-five children whether one measures SES by consumption or by an asset-based wealth index

An empirical comparison of EQ-5D and SF-6D in liver transplant patients

Abstract: There remains disagreement about the preferred utility-based measure of health-related quality of life for use in constructing quality-adjusted life years (QALYs). The recent development of a new measure, the SF-6D, has highlighted this issue. The SF-6D and EuroQol EQ-5D measure health-related utilities on a scale where 0 represents death and 1 represents full health, and both have utility scores generated from random samples of the general UK population. This study explored whether, in a large sample of liver transplant patients, the two instruments provide similar results. The empirical data highlight important variation in the results generated from the use of the two instruments. The data are consistent with a view that the SF-6D does not describe health states at the lower end of the utility scale but is more sensitive than EQ-5D in detecting small changes towards the top of the scale.

Estimating the monetary value of health care: lessons from environmental economics.

Abstract: In the recent past, considerable effort in health economics has been made on applying stated preference methods such as contingent valuation and choice experiments. Despite this increased use, there is still considerable scepticism concerning the value of these approaches. The application of contingent valuation in environmental economics has a long history and has been widely accepted. Whilst choice experiments were introduced to the environmental and health economics literature at a similar time, the wider acceptance of monetary measures of benefit in environmental economics has meant that they have also been more widely applied. The purpose of this paper is to identify some of the key issues and debates that have taken place in the environmental economics literature, summarise the state of the art with respect to these issues, and consider how health economists have addressed these issues. Important areas for future research in health economics are identified.

Construction of the contingent valuation market in health care: a critical assessment.

Abstract: Contingent valuation (CV) has been criticised for being too hypothetical, with expressed values bearing little relation to actual values. The magnitude of this divergence, however, depends upon how realistic and believable the contingent market is. This paper presents an overview of five key aspects in the construction of the contingent market: (i) scenario development and presentation; (ii) payment vehicle; (iii) expression of risk; (iv) time period of valuation; and (v) survey administration. CV studies in health care since 1985, totalling 111, are critically reviewed with respect to these five aspects. It is concluded that CV studies in health care have performed poorly in the construction, specification and presentation of the contingent market, and that there has been little, if any, improvement in this respect over the last 15 years. Suggestions are made concerning why this may be the case, and how the construction of the contingent market may be improved in future.

The effect of cigarette prices on youth smoking.

Abstract: Prior economic research provides mixed evidence on the impact of cigarette prices on youth smoking. This paper empirically tests the effects of various price measures on youth demand for cigarettes using data collected in a recent nationally representative survey of 17 287 high school students. In addition to commonly used cigarette price measures, the study also examined the effect of price as perceived by the students. This unique information permits the study of the effect of teen-specific price on cigarette demand. The analysis employed a two-part model of cigarette demand based on a model developed by Cragg (1971) in which the propensity to smoke and the intensity of the smoking habit are modeled separately. The results confirm that higher cigarette prices, irrespective of the way they are measured, reduce probability of youth cigarette smoking. There is also some evidence of negative price effect on smoking intensity, but it is sensitive to the price measure used in the model. The largest impact on cigarette demand has the teen-specific, perceived price of cigarettes.

Willingness‐to‐pay for community‐based insurance in Burkina Faso

Abstract: PURPOSE: To study the willingness-to-pay (WTP) for a proposed community-based health insurance (CBI) scheme in order to provide information about the relationship between the premium that is required to cover the costs of the scheme and expected insurance enrollment levels. In addition, factors that influence WTP were to be identified. METHODS: Data were collected from a household survey using a two-stage cluster sampling approach, with each household having the same probability of being selected. Interviews were conducted with 2414 individuals and 705 household heads. The take-it-or-leave-it (TIOLI) and the bidding game were used to elicit WTP. RESULTS: The average individual was willing to pay 2384 (elicited by the TIOLI) or 3191 (elicited by the bidding game) CFA (3.17 US dollars or 4.25 US dollars) to join CBI for him/herself. The head of household agreed to pay from 6448 (elicited by the TIOLI) or 9769 (elicited by the bidding game) CFA (8.6 US dollars or 13.03 US dollars) to join the health insurance scheme for his/her household. These results were influenced by household and individual ability-to-pay, household and individual characteristics, such as age, sex and education. The two methods yielded similar patterns of estimated WTP, in that higher WTP was obtained for higher income level, higher previous medical expenditure, higher education, younger people and males. A starting point bias was found in the case of the bidding game. CONCLUSIONS: Both TIOLI and bidding game methods can elicit a value of WTP for CBI. The value elicited by the bidding game is higher than by the TIOLI, but the two approaches yielded similar patterns of estimated WTP. WTP information can be used for setting insurance premium. When setting the premiums, it is important to consider differences between the real market and the theoretical one, and between the WTP and the cost of benefits package. The beneficiaries of CBI should be enrolled at the level of households or villages in order to protect vulnerable groups such as women, elders and the poor.

The efficiency of health production: re‐estimating the WHO panel data using parametric and non‐parametric approaches to provide additional information

Abstract: The World Health Report 2000 focuses on the performance of health-care systems around the globe. The report uses efficiency measurement techniques to create a league table of health-care systems, highlighting good and bad performers. Efficiency is measured using panel data methods. This paper suggests that the WHO's estimation procedure is too narrow and that contextual information is hidden by the use of one method. This paper uses and validates a range of parametric and non-parametric empirical methods to measure efficiency using the WHO data. The rankings obtained are compared to the WHO league table and we demonstrate that there are trends and movements of interest within the league tables. We recommend that the WHO broaden its range of techniques in order to reveal this hidden information. Copyright © 2002 John Wiley & Sons, Ltd.

Willingness to pay for a QALY

Abstract: A willingness to pay (WTP) per quality-adjusted-life year (QALY) of DKK 88,000 was estimated on the basis of elicited preferences for health states. The WTP per QALY estimate presented here differs considerably from that implied in contingent valuation studies, suggesting that WTP for reducing risk of death is based on other preference structures than is ex post WTP for improvements in quality of life. Results further suggest that different preference structures may exist when respondents are faced with WTP questions in which case elimination of minor health problems are associated with negligible utility.

Alternative decision modelling techniques for the evaluation of health care technologies: Markov processes versus discrete event simulation.

Abstract: Markov models have traditionally been used to evaluate the cost-effectiveness of competing health care technologies that require the description of patient pathways over extended time horizons. Discrete event simulation (DES) is a more flexible, but more complicated decision modelling technique, that can also be used to model extended time horizons. Through the application of a Markov process and a DES model to an economic evaluation comparing alternative adjuvant therapies for early breast cancer, this paper compares the respective processes and outputs of these alternative modelling techniques. DES displays increased flexibility in two broad areas, though the outputs from the two modelling techniques were similar. These results indicate that the use of DES may be beneficial only when the available data demonstrates particular characteristics.

Economics of self-medication: theory and evidence.

Abstract: A pervasive phenomenon in developing countries is that self-prescribed medications are purchased from drug vendors without professional supervision. In this article we develop a model of self-medicating behavior of a utility-maximizing consumer who balances the benefits and risks of self-medication. The empirical investigation focuses on the role of income and health insurance on the use of self-medication. Our data are from the World Bank's Living Standards Measurement Survey of Vietnam, 1997-1998. The results show that self-medication is an inferior good at high income levels and a normal good at low income levels, and it shows a strong and robust negative insurance effect.

Threats to the estimation of benefit: are preference elicitation methods accurate?

Abstract: Stated preference methods are used to estimate the value that people place on health care. The data that emerges from these studies is used to guide health policy. However, relatively little is known about how individuals make decisions in a preference elicitation task. Two methods (willingness to pay and conjoint analysis) are considered within the context of the literature from psychology (and also environmental economics) regarding how people construct preferences, process information, and make decisions. There is substantial evidence that individuals employ heuristics (cognitive shortcuts) in order to simplify tasks they are presented with. The use of heuristics implies that people ignore much of the information they are presented with and make decisions which would not be considered rational in the economic sense. These stated preference methods assume that individuals trade between the different attributes of a good or service when making decisions - an assumption that other theories predict is wrong. The implications of this are discussed.

Why do the sick not utilise health care? The case of Zambia

Abstract: When ill the individual faces the options of seeking health care, using self-medication or doing nothing. In an economic perspective, an individual's propensity to utilise health care is determined by the costs of utilisation and the perceived benefits of health care. The propensity to utilise health care may hence be expected to vary between individuals. In this paper we attempt on the one hand to determine what factors influence sick individuals' propensity to seek health care at a health facility or use self-medication (or do nothing), and on the other hand attempt to determine the factors that influence the magnitude of their expenditures for health care, in particular what other factors than just health status influence utilisation. For the empirical analysis, data, covering 9700 individuals, from the 1998 Living Conditions Monitoring Survey (LCMS) is used. We use a Multinomial Logit selection model to estimate the equation, which allows us to analyse health-care utilisation through two separate processes, the decision to seek care and the magnitude of expenditures incurred. In general, we find that the individuals are influenced by income, insurance, type of illness and access variables such as distance and owning a vehicle. Copyright (C) 2003 John Wiley Sons, Ltd.

Willingness to pay methods in health care: a sceptical view

Abstract: Recently, several experts in stated preference willingness to pay (WTP) methods have advocated greater use of these methods to facilitate cost–benefit analysis in health care [1–3]. The suggestion is that health economics lags behind other areas of economics that have embraced these methods, in particular environmental economics. A small but growing number of stated preference WTP studies have been conducted in the health field [4,5]. Two main methods have been employed: the ‘contingent valuation method’ (CVM) and ‘choice experiments’ (CE) – the method formerly known as conjoint analysis. These methods have generally been used to set a monetary value on a package of health and/or non-health benefits in the context of a specific intervention. Yet economic evaluation within the health care field remains dominated by cost-effectiveness and cost-per-QALY analysis. Health care payers have been reluctant to embrace cost–benefit analysis based on WTP methods [6,7]. And most health economists have preferred to refine the costeffectiveness approach rather than to develop new WTP methods [8,9]. Why is this? Advocates of WTP methods suggest it may be partly due to a common but erroneous perception that WTP studies are ‘somehow supportive of policies aimed at removing the provision of state-supplied health services’ [1]. It may also be due to the fact that stated preference WTP methods suffer from two serious (and possibly related) measurement biases that render them unattractive to health care decisionmakers. First, WTP responses tend to be undersensitive – although not necessarily totally insensitive – to the magnitude of benefit [10–12]. This includes both ‘scope effects’, involving different quantities of the same good, and ‘nesting effects’ (or ‘embedding effects’ or ‘part-whole bias’), involving one good incorporated within a larger bundle of goods. Scope effects are particularly strong in relation to health risks. Using high quality contingent valuation survey designs, and rigorous experimental methods, investigators have found that people tend to state a similar amount – roughly d50 – for any given magnitude of reduction in the risk of death or injury [13]. This has the effect of exaggerating implied monetary values for life and health for relatively small risk reductions. More generally, under-sensitivity to the magnitude of benefit tends to inflate valuations of interventions that yield relatively small benefits. Second, WTP methods tend to inflate valuations of the specific intervention that respondents are asked about, relative to interventions that respondents are not asked about [14]. Asking respondents to focus on one specific intervention in isolation acts as a kind of magnifying glass for stated WTP. When asked to consider an intervention in isolation, people are willing to pay sums of money far in excess of what they are willing to pay when asked to consider the same intervention in relation to a range of other interventions. This is sometimes known as ‘budget constraint bias’ [15]. Unlike the rational economic man of standard economic theory, survey respondents may be unable to budget simultaneously for the entire range of possible public and private goods and

Methodological issues raised by preference-based approaches to measuring the health status of children.

Abstract: This paper identifies and discusses a number of methodological issues that require consideration when applying preference-based approaches to the measurement of the health status of children. It is argued that the decision about which dimensions of health status to incorporate into health state descriptions or classifications should depend, in part, upon whether the measure will be used to inform resource allocation within or across age groups. In addition, the paper identifies and discusses a number of methodological issues surrounding the appropriate respondents for descriptions and valuations of health status in different contexts; potential sources of bias in the description and valuation processes; and the psychometric integrity of alternative measurement approaches. Copyright © 2003 John Wiley & Sons, Ltd.

Public spending on health care and the poor.

Abstract: This paper uses new cross-country data to assess the relationship between public spending on health care and the health status of the poor. Data are drawn from two sources: (i) existing data on health status by income quintile tabulated from demographic health surveys in 44 countries; and (ii) our estimates of the health status of the poor in over 70 countries drawn from a new technique in decomposing social indicators. Our estimates confirm that the poor have significantly worse health status than the nonpoor and the regression results provide new evidence that public spending on health care matters more to them. However, the results suggest that increased public spending alone will not be sufficient to significantly improve health status.

An inquiry into the different perspectives that can be used when eliciting preferences in health.

Abstract: There are a number of perspectives that an individual could be asked to adopt in studies designed to elicit preferences for use in informing resource allocation decisions in health care. This paper develops a conceptual framework that clearly distinguishes between six different perspectives. It is argued that the appropriate perspective to use depends on normative considerations and the particular policy context to which it will be applied. We suggest a future research agenda that explicitly addresses these considerations and which involves direct empirical investigation into the effect of perspective on preferences.

Measuring income related inequality in health: standardisation and the partial concentration index.

Abstract: The partial concentration index (PCI) is commonly used as a measure of income related inequality in health after removing the effects of standardising variables such as age and gender which affect health, are correlated with income, but not amenable to policy. Both direct and indirect standardisation have been used to remove the effects of standardising variables. The paper shows that with individual level data direct standardisation is possible using the coefficients from a linear regression of health on income and the standardising variables and yields a consistent estimate of the PCI. Indirect standardisation estimates the effects of the standardising variables on health from a health regression which excludes income. The coefficients on the standardising variables include some of the effects of income on health if income is correlated with the standardising variables. Using these coefficients to remove the effects of the standardising variables also removes some of the effect of income on health and leads to an inconsistent estimate of the PCI. Indirect standardisation underestimates the PCI irrespective of the signs of the correlations of standardising variables and income with each other and with health. An adaptation of the PCI when the marginal effect of income on health depends on the standardising variables is also proposed.

Fixed fees and physician-induced demand: a panel data study on French physicians.

Abstract: This paper investigates on the existence of physician-induced demand (PID) for French physicians. The test is carried out for GPs and specialists, using a representative sample of 4500 French self-employed physicians over the 1979-1993 period. These physicians receive a fee-for-services (FFS) payment and fees are controlled. The panel structure of our data allows us to take into account unobserved heterogeneity related to the characteristics of physicians and their patients. We use generalized method of moments (GMM) estimators in order to obtain consistent and efficient estimates. We show that physicians experience a decline of the number of consultations when they face an increase in the physician:population ratio. However this decrease is very slight. In addition, physicians counterbalance the fall in the number of consultations by an increase in the volume of care delivered in each encounter. Econometric results give a strong support for the existence of PID in the French system for ambulatory care.

The labour market for nursing: a review of the labour supply literature

Abstract: The need to ensure adequate numbers of motivated health professionals is at the forefront of the modernisation of the UK NHS. The aim of this paper is to assess current understanding of the labour supply behaviour of nurses, and to propose an agenda for further research. In particular, the paper reviews American and British economics literature that focuses on empirical econometric studies based on the classical static labour supply model. American research could be classified into first generation, second generation and recent empirical evidence. Advances in methods mirror those in the general labour economics literature, and include the use of limited dependent variable models and the treatment of sample selection issues. However, there is considerable variation in results, which depends on the methods used, particularly on the effect of wages. Only one study was found that used UK data, although other studies examined the determinants of turnover, quit rates and job satisfaction. The agenda for further empirical research includes the analysis of discontinuities in the labour supply function, the relative importance of pecuniary and non-pecuniary job characteristics, and the application of dynamic and family labour supply models to nursing research. Such research is crucial to the development of evidence-based policies.

Logical inconsistencies in survey respondents' health state valuations -- a methodological challenge for estimating social tariffs.

Abstract: Logical inconsistencies in survey respondents' valuations of hypothetical health states - represented by the EQ-5D, for example - present a conundrum as to whether or not their responses ought to be included for estimating social 'tariffs'. A 'logical inconsistency' occurs when a state that 'in logical terms' is unambiguously less severe than another is assigned a lower value. Excluding such responses is defensible on data quality grounds but puts at risk the representativeness of the estimated tariff, given it is meant to represent the preferences of 'society'. This paper explores the rationale for and effect of excluding, to varying degrees, responses distinguished by the number of pairwise inconsistencies they contain, and reports equations for two tariffs that arise from contrasting approaches. The data are from a random sample of adult New Zealanders whose visual analogue scale valuations for a selection of EQ-5D states were collected in 1999 via a postal survey to which 1360 people responded (a 50% response rate). We conclude that there is no simple, generalisable 'rule' to guide exclusions and therefore researchers ought to explore the sensitivity of their estimated tariffs (and ultimately QALY estimates) to alternative treatments of logically inconsistent responses.

Demand for private health insurance: how important is the quality gap?

Abstract: Perceived quality of private and public health care, income and insurance premium are among the determinants of demand for private health insurance (PHI). In the context of a model in which individuals are expected utility maximizers, the non purchasing choice can result in consuming either public health care or private health care with full cost paid out-of-pocket. This paper empirically analyses the effect of the determinants of the demand for PHI on the probability of purchasing PHI by estimating a pseudo-structural model to deal with missing data and endogeneity issues. Our findings support the hypothesis that the demand for PHI is indeed driven by the quality gap between private and public health care. As expected, PHI is a normal good and a rise in the insurance premium reduces the probability of purchasing PHI albeit displaying price elasticities smaller than one in absolute value for different groups of individuals.

Assessing and comparing costs: how robust are the bootstrap and methods based on asymptotic normality?

Abstract: This article addresses and challenges some common perceptions in the statistical assessment of costs and cost-effectiveness in health economics. Cost data typically exhibit highly skew distributions. Two techniques whose validity does not depend on any specific form of underlying distribution are the bootstrap and methods based on asymptotic normality of sample means. These methods are generally thought to be appropriate for the analysis of cost data. We argue that, even when these methods are technically valid, they may often lead to inefficient and even misleading inferences. It is important to apply methods that recognise the skewness in cost data. We further demonstrate that it may also be important to incorporate relevant prior information in a Bayesian analysis.

A view from the bridge: agreement between the SF-6D utility algorithm and the Health Utilities Index.

Abstract: BACKGROUND: The SF-6D is a new health state classification and utility scoring system based on 6 dimensions (‘6D’) of the Short Form 36, and permits a ‘‘bridging’’ transformation between SF-36 responses and utilities. The Health Utilities Index, mark 3 (HUI3) is a valid and reliable multi-attribute health utility scale that is widely used. We assessed within-subject agreement between SF-6D utilities and those from HUI3. METHODS: Patients at increased risk of sudden cardiac death and participating in a randomized trial of implantable defibrillator therapy completed both instruments at baseline. Score distributions were inspected by scatterplot and histogram and mean score differences compared by paired t-test. Pearson correlation was computed between instrument scores and also between dimension scores within instruments. Between-instrument agreement was by intra-class correlation coefficient (ICC). RESULTS: SF-6D and HUI3 forms were available from 246 patients. Mean scores for HUI3 and SF-6D were 0.61 (95% CI 0.60–0.63) and 0.58 (95% CI 0.54–0.62) respectively; a difference of 0.03 (p50.03). Score intervals for HUI3 and SF-6D were (-0.21 to 1.0) and (0.30–0.95). Correlation between the instrument scores was 0.58 (95% CI 0.48–0.68) and agreement by ICC was 0.42 (95% CI 0.31–0.52). Correlations between dimensions of SF-6D were higher than for HUI3. CONCLUSIONS: Our study casts doubt on the whether utilities and QALYs estimated via SF-6D are comparable with those from HUI3. Utility differences may be due to differences in underlying concepts of health being measured, or different measurement approaches, or both. No gold standard exists for utility measurement and the SF-6D is a valuable addition that permits SF-36 data to be transformed into utilities to estimate QALYs. The challenge is developing a better understanding as to why these classification-based utility instruments differ so markedly in their distributions and point estimates of derived utilities.

An experiment on simplifying conjoint analysis designs for measuring preferences.

Abstract: In conjoint analysis (CA) studies, choosing between scenarios with multiple health attributes may be demanding for respondents. This study examined whether simplifying the choice task in CA designs, by using a design with more overlap of attribute levels, provides advantages over standard minimal-overlap methods. Two experimental conditions, minimal and increased-overlap discrete choice CA designs, were administered to 353 respondents as part of a larger HIV testing preference survey. In the minimal-overlap survey, all six attribute levels were allowed to vary. In the increased-overlap survey, an average of two attribute levels were the same between each set of scenarios. We hypothesized that the increased-overlap design would reduce cognitive burden, while minimally impacting statistical efficiency. We did not find any significant improvement in consistency, willingness to trade, perceived difficulty, fatigue, or efficiency, although several results were in the expected direction. However, evidence suggested that there were differences in stated preferences. The results increase our understanding of how respondents answer CA questions and how to improve future surveys.

Stratified cost-effectiveness analysis: a framework for establishing efficient limited use criteria.

Abstract: The cost-effectiveness of new health care technologies is conditional upon who receives what therapy and under what circumstances. Understanding this heterogeneity in cost-effectiveness, health care payers often limit reimbursement of therapies to a more restrictive sub-group of patients than that indicated in a product's licensing. Such limits may be based upon clinical or demographic criteria that are prognostic of costs, outcomes or both. However, there is little guidance on how to estimate and interpret stratified cost-effectiveness analysis. In this paper we present a framework for estimating the benefits from stratification that permits consideration of both the opportunity cost resulting from a lack of adherence with criteria and the efficiency loss associated with incorporating equity concerns.

Estimation of the determinants of household health care expenditures in Nepal with controls for endogenous illness and provider choice.

Abstract: This paper uses the Nepal Living Standards Survey, a nationally representative sample of households from 1996, to investigate the determinants of household out-of-pocket health expenditures. The analysis uses a multi-equation joint estimation to control for endogeneity of sickness and provider choice. The results of this analysis indicate several interesting findings. First, common unobserved factors were found to be statistically significant determinants of illness, choice of provider, and health expenditures, and may cause bias to parameter estimates if not controlled. Second, the income elasticity is estimated to be 1.10, with income having both a direct effect on health expenditure, and an indirect effect through likelihood of illness and the type of provider that is chosen. Third, housing and sanitary conditions were found to have a substantial effect on illness, and as a result, out-of-pocket health care expenditures. Fourth, despite the fact that urban, ill individuals who seek care are more likely to utilize care in more expensive settings, average health care expenditure among the urban sample was found to be substantially lower than among the rural sample, partly due to a lower likelihood of reporting illnesses and injuries and of using any type of health care provider.