Demand assessment and price-elasticity estimation of quality-improved primary health care in Palestine: a contribution from the contingent valuation method

This paper proposes a new methodology to assess demand and price-elasticity for health care, based on patients' stated willingness to pay (WTP) values for certain aspects of health care quality improvements. A conceptual analysis of how respondents consider contingent valuation (CV) questions allowed us to specify a probability density function of stated WTP values, and consequently, to model a demand function for quality-improved health care, using a parametric survival approach. The model was empirically estimated using a CV study intended to assess patients' values for improving the quality of primary health care (PHC) services in Palestine. A random sample of 499 individuals was interviewed following medical consultation in four PHC centers. Quality was assessed using a multi-attribute approach; and respondents valued seven specific quality improvements using a decomposed valuation scenario and a payment card elicitation technique. Our results suggest an inelastic demand at low user fees levels, and when the price-increase is accompanied with substantial quality-improvements. Nevertheless, demand becomes more and more elastic if user fees continue to rise. On the other hand, patients' reactions to price-increase turn out to depend on their level of income. Our results can be used to design successful health care financing strategies that include a consideration of patients' preferences and financial capacities.     

Use,option and externality values: are contingent valuation studies in health care mis‐specified?

A general population sample of Australian respondents completed a contingent valuation (CV) survey that asked them to value six scenarios. These varied according to whether the scenario was seeking to elicit: (i) use value; (ii) externality value; (iii) option value; or (iv) a combination. Results indicate that use plus externality and/or option value was significantly greater than use value alone. As CV studies in health (care) overwhelmingly focus on use value alone - often implicitly through study design rather than explicitly - this raises the possibility of mis-specification in CV research in health (care). The implications for CV in health (care) are considered.     

A stated preference approach to assessing health care-quality improvements in Palestine: from theoretical validity to policy implications

User fees have been promoted as a potential complementary funding mechanism for health care in developing countries. In this paper, we appraise the use of contingent valuation (CV) as a tool to help develop user fees schemes that could be used to assist in allocating, and partially fund, health care. A random sample of 499 patients seeking care in primary health care centers, in Palestine, were asked to reveal their willingness to pay values for specified improvements in the quality of delivered medical care. Empirical analysis suggests that, in this context, CV can lead to internally consistent results and useful policy implications.     

Sensitivity to scale in contingent valuation: the importance of the budget constraint

The possible insensitivity of willingness-to-pay (WTP) values to changes in scale continues to cause concern within the contingent valuation (CV) literature. Although several reasons for this phenomenon have been suggested, empirical evidence both supports and refutes insensitivity. This paper presents data that suggest that insensitivity may be significantly determined by the individual's budget constraint: the higher the proportion of income the expressed WTP represents, the greater the insensitivity of that WTP to changes in the scale of the good, irrespective of changes in underlying marginal utility. The methodological implication for CV studies in health care is outlined.     

The contingent valuation method—appraising the appraisers

Morrison & Gyldmark (MG)¹ in a recent issue of health economics reviewed the use of the contingent valuation (CV) method of measuring willingness to pay in the health area. Although it is useful to examine the appropriate role of the CV method in the health care field, the appraisal by MG has a number of limitations which are pointed out in this paper. These relate to some inaccuracies in the review of the literature, the limited nature of the criteria proposed by MG to evaluate CV studies, and finally I argue that the comparison between CV, QALYs, and HYEs is premature and confuses rather than clarifies the debate.     

The role of ‘reference goods’ in contingent valuation: should we help respondents to ‘construct’ their willingness to pay?

A general population sample of 135 Australian respondents completed one of four contingent valuation surveys that asked them to value health benefits either in the absence of an explicit reference good or in the presence of one of three different forms of reference good. Results suggest that respondents have a 'ball-park' figure that is then challenged by the reference good. For values that appear far lower than, or similar to, this 'ball-park' figure, the reference good has little quantitative effect, but qualitatively appears to help respondents in their confidence in this value being their actual WTP. The implications for CV research in health care are outlined in the discussion.     

The willingness to pay for in vitro fertilization-related information and its attributes: a cross-sectional study in Israel

Market failure is defined by the departure from a Pareto-optimal equilibrium, in which no individuals could be made better off without making some other individual or individuals’ worse off. In health care there are many causes of market failure which weaken the efficiency of the health management system. Among these are incomplete information and information asymmetry between information providers and consumers. There is scant extant literature on the empirical valuation of health related information. The objective of this study is to measure the willingness-to-pay (WTP) for in vitro fertilization (IVF) treatment-related information and its attributes, and to analyse the factors affecting WTP, because of the apparent problems in providing information and the absence of specific guidelines for Israeli health care providers regarding IVF-related information, caused by limited time and resources, making it difficult for medical providers to interact adequately with IVF patients. There is a need for changes in government and health care policy in order to deal with these market failures. The study employed contingent valuation (CV) using the WTP technique as the method of economic evaluation. This method shows stated individual preferences as derived from direct responses to hypothetical questions. The empirical results are based on surveys of two Israeli population groups: patients undergoing IVF treatments in public health units and the general public. IVF patients and the general public value IVF-related information and reveal a positive WTP for it. The average WTP for IVF-related information amongst IVF patients is US$437.02, whereas for the general public it is US$546.56. In the Israeli health market, IVF-related information is not fully circulated by providers to their patients, although this information is valued by IVF patients and the general public. The market and policy failures present in the health care market in Israel should be addressed. The failure of the Israeli health care market to supply adequate IVF-related information constitutes the basis for rationalizing government intervention in market allocations of health goods and services. Administrators must recognize the necessity of providing information with respect to treatment options, treatment cycle success rates, possible side effects, clinical processes treatment costs, etc., since it is an important factor in the individual’s utility function. Government intervention should include direct and indirect regulations. The study addresses some of the biases commonly associated with CV methodology—the existence of embedding effects.     

The impact of information on non-health attributes on willingness to pay for multiple health care programmes

Despite the acceptance that health gain is the most important attribute of health care, other aspects of health care may affect utility. The aim of this paper is to report an experiment to test the impact of providing different levels of information in the context of the EuroWill study, a joint contingent valuation (CV) of multiple health programmes. Three hundred and three respondents were simultaneously asked for their willingness-to-pay (WTP) for three health care programmes: more heart operations, a new breast cancer treatment and a helicopter ambulance service. To test for the impact of variation in information, three versions of one of the programmes (heart) were provided. Results show that WTP for all three programmes tended to be significantly higher for respondents who were provided additional positive information about the heart programme. Our results show that CV of health care programmes, which only take into account medical outcomes, may lead to the value of such programmes not being adequately estimated, and that the impact of information may even be more decisive in the context of joint evaluation of multiple, rather than single, programmes.     

Economic evaluation in health care: is there a role for cost-benefit analysis?

This paper is devoted to the contingent valuation (CV) method and its possible area of application in health economics. With the CV method willingness to pay or willingness to accept is measured with survey methods. The CV method has been developed in environmental economics and is now the most commonly used method of measuring environmental benefits. The method has, however, seldom been used in economic evaluations of health care. The development of economic evaluation in the health care area is reviewed, and the existing methods (the human capital approach, cost-effectiveness analysis and cost-utility analysis) are compared with cost-benefit analysis using the CV method. It is shown that existing methods have several weak points, this makes the CV method an appealing alternative and/or complement to existing methods. From the empirical applications of the CV method in economic evaluations of health care it is evident that it is possible to achieve acceptable response rates. The methodological problems encountered when measuring willingness to pay with survey methods are shown to be similar to the problems encountered when measuring utility and quality of life in cost-utility analysis. Further studies with the CV method are necessary to further explore questions concerning the reliability and validity of the method.     

The value of informal care–a further investigation of the feasibility of contingent valuation in informal caregivers

Including informal care in economic evaluations is increasingly advocated but problematic. We investigated three well‐known concerns regarding contingent valuation (CV): (1) the item non‐response of CV values, (2) the sensitivity of CV values to the individual circumstances of caring, and (3) the choice of valuation method by comparing willingness‐to‐pay (WTP) and willingness‐to‐accept (WTA) values for a hypothetical marginal change in hours of informal care currently provided. The study sample consisted of 1453 caregivers and 787 care recipients. Of the caregivers, 603 caregivers (41.5%) provided both WTP and WTA values, 983 (67.7%) provided at least one. Determinants of non‐response were dependent on the valuation method; primary determinants were education and satisfaction with amount of informal care provided. Caregivers' mean WTP (WTA) for reducing (increasing) informal care by 1 h was €9.13 (10.52). Care recipients' mean WTA (WTP) for reducing (increasing) informal care by 1 h was €8.88 (€6.85). Values were associated with a variety of characteristics of the caregiving situation; explanatory variables differed between WTP and WTA valuations. The differences between WTP and WTA valuations were small. Based on sensitivity CV appears to be a useful method to value informal care for use in economic evalations, non‐response, however, remains a matter of concern. Copyright © 2009 John Wiley & Sons, Ltd.