The Role of Policy and Institutions on Health Spending

This paper investigates the impact of policies and institutions on health expenditures for a large panel of Organisation for Economic Co‐operation and Development countries for the period of 2000–2010. A set of 20 policy and institutional indicators developed by the Organisation for Economic Co‐operation and Development are integrated into a theoretically motivated econometric framework, alongside control variables related to demographic (dependency ratio) and non‐demographic (income, prices and technology) drivers of health expenditures per capita. Although a large share of cross‐country differences in public health expenditures can be explained by demographic and economic factors (around 71%), cross‐country variations in policies and institutions also have a significant influence, explaining most of the remaining difference in public health spending (23%). Copyright © 2016 John Wiley & Sons, Ltd.     

Exploring shared options in funding long-term care for older people

Policy-makers throughout the world are faced with the question of how long-term care for dependent elderly people is to be funded. This paper discusses possible sources of funding and a variety of policy approaches which have been taken by members of the Organisation for Economic Cooperation and Development, with particular emphasis on Britain. It concentrates on options which share costs between the users (and their families) and the state. Details are provided of schemes involving private sector insurance and equity release products. A variety of issues arise from the proposed use of such 'partnership' schemes in Britain. Discussion of these issues draws in aspects of the wider social and policy contexts.     

Private finance and sustainable growth of national health expenditures

This analysis explores the role of the private sector relative to all health spending among Organization for Economic Cooperation and Development (OECD) countries. Bi-variate regression was employed for 31 countries using current data. It was found that the share of GDP allocated to health varies among countries, ranging from 5 percent in Turkey to 14 percent in the United States. Variation in per capita income explains much of this difference but other factors are important too. One appears to be the role of the private sector in financing health expenditures. Our analysis concludes that concern about rising health sector costs should be placed in a larger context: rising health care costs may be justified if benefits are large enough and cover the opportunity costs of alternative uses of resources.     

Public‐private partnerships in non‐profit hospitals: Case study of China

The gap between supply and demand for health care services is expanding rapidly in China. In order to resolve this problem, the government has implemented supply‐side reforms in the health care sector by inviting private capital to increase supply quantity and improve quality. However, health care institutions have high complexity and particular needs, while non‐profit hospitals have very strong public interests. This gives rise to complications in the implementation of public‐private partnerships (PPPs) for health care services. In this paper, the authors have selected one case each from three different models of non‐profit hospital PPP projects in the national PPP project database, operated by the Ministry of Finance, and compared how these projects were operated to identify the differences among them. A content analysis of the vital project documents is the primary analysis technique used for this comparison. Key issues investigated include reasons for model selection, requirements for private sectors and market competition level in different models, risk identification and sharing, design of payment mechanism, operation supervision, and performance appraisal of the project. Based on the comparison, some key lessons and recommendations are discussed to act as a useful reference for future non‐profit hospital PPP projects in China.     

Health insurance,endogenous medical progress,health expenditure growth,and welfare

We study the impact of health insurance expansion on medical spending, longevity and welfare in an OLG economy in which individuals purchase health care to lower mortality and medical progress is profit-driven. Three sectors are considered: final goods production; a health care sector, selling medical services to individuals; and an R&D sector, selling increasingly effective medical technology to the health care sector. We calibrate the model to the development of the US economy/health care system from 1965 to 2005 and study numerically the impact of the insurance expansion. We find that more extensive health insurance accounts for a large share of the rise in US health spending but also boosts the rate of medical progress. A welfare analysis shows that while the subsidization of health care through health insurance creates excessive health care spending, the gains in life expectancy brought about by induced medical progress more than compensate for this.     

Practice variation in long‐term care access and use: The role of the ability to pay

Practice variation in publicly financed long‐term care (LTC) may be inefficient and inequitable, similarly to practice variation in the health care sector. Although most OECD countries spend an increasing share of their gross domestic product on LTC, it has received comparatively little attention to date compared with the health care sector. This paper contributes to the literature by assessing and comparing regional practice variation in both access to and use of institutional LTC and investigating its relation with income and out‐of‐pocket payment. For this, we have access to unique individual‐level data covering the entire Dutch population. Even though we found practice variation in the use of LTC once access was granted, the variation between regions was still relatively small compared with international standards. In addition, we showed how a co‐payment measure could be used to reduce practice variation across care office regions and income classes making the LTC system not only more efficient but also more equitable.     

Entry regulation and the effect of public reporting: Evidence from Home Health Compare

Economic theory suggests that competition and information are complementary tools for promoting health care quality. The existing empirical literature has documented this effect only in the context of competition among existing firms. Extending this literature, we examine competition driven by the entry of new firms into the home health care industry. In particular, we use the certificate of need (CON) law as a proxy for the entry of firms to avoid potential endogeneity of entry. We find that home health agencies in non‐CON states improved quality under public reporting significantly more than agencies in CON states. Because home health care is a labor‐intensive and capital‐light industry, the state CON law is a major barrier for new firms to enter. Our findings suggest that policymakers may jointly consider information disclosure and entry regulation to achieve better quality in home health care.     

Machines that Go ‘Ping’: Medical Technology and Health Expenditures in OECD Countries

Technology is believed to be a major determinant of increasing health spending. The main difficulty to quantify its effect is to find suitable proxies to measure medical technological innovation. This paper's main contribution is the use of data on approved medical devices and drugs to proxy for medical technology. The effects of these variables on total real per capita health spending are estimated using a panel model for 18 Organisation for Economic Co‐operation and Development (OECD) countries covering the period 1981–2012. The results confirm the substantial cost‐increasing effect of medical technology, which accounts for almost 50% of the explained historical growth of spending. Despite the overall net positive effect of technology, the effect of two subgroups of approvals on expenditure is significantly negative. These subgroups can be thought of as representing ‘incremental medical innovation’, whereas the positive effects are related to radically innovative pharmaceutical products and devices. A separate time series model was estimated for the USA because the FDA approval data in fact only apply to the USA, while they serve as proxies for the other OECD countries. Our empirical model includes an indicator of obesity, and estimations confirm the substantial contribution of this lifestyle variable to health spending growth in the countries studied. Copyright © 2014 John Wiley & Sons, Ltd.     

Assessing health facility performance in Indonesia using the Pabón‐Lasso model and unit cost analysis of health services

Total health care costs have dramatically increased in Indonesia, and health facilities consume the largest share of health resources. This study aims to provide a better understanding of the characteristics of the best‐performing health facilities. We use 4 national Indonesian datasets for 2011 and analysed 200 hospitals and 95 health centres. We first apply the Pabón‐Lasso model to assess the relative performance of health facilities in terms of bed occupancy rate and the number of admissions per bed; the model gathers together health facilities into 4 sectors representing different levels of productivity. We then use a step‐down costing method to estimate the cost per outpatient visit, inpatient, and bed days in hospitals and health centres. We combined both ratio analysis and applied bivariate and multivariate analyses to identify the predictors of the best‐performing health facility; 37% of hospitals and 33% of health centres were located in the high‐performing sector of the Pabón‐Lasso model. The wide variation in unit costs across health facilities presented a basis for benchmarking and identifying relatively efficient units. Combining the unit cost analysis and Pabón‐Lasso model, we find that health facility performance is affected by both internal (size and capacity, financing, type of patients, ownership, accreditation status, and staff availability) and external factors (economic status, population education level, location, and population density). Our study demonstrates that it is feasible to identify the best‐performing health facilities and provides information about how to improve efficiency using simplistic methods.     

Social capital,life expectancy and mortality: a cross-national examination

This paper analyses the relationship between social capital and population health. The analysis is carried out within an econometric model of population health in 19 countries in the Organisation for Economic Co-operation and Development countries using panel data covering three different time periods. Social capital is measured by the proportion of people who say that that they generally trust other people and by membership in voluntary associations. The model performs well in explaining health outcomes. We find very little statistically significant evidence that the standard indicators of social capital have a positive effect on population health. By contrast, per capita income and the proportion of health expenditure financed by the government are both significantly and positively associated with better health outcomes. The paper casts doubt upon the widely accepted hypothesis that social capital has a positive effect on health and illustrates the importance of testing this kind of hypothesis in an extended model.