James W. Henderson

Rural isolation and the availability of hospital services

Abstract This study empirically examines some important factors affecting the geographic distribution of hospitals. Using 1996 cross-sectional data on hospital locations in Texas, we employ a count-data methodology to estimate the impact of demand and rural isolation on the frequency of hospital service in a given geographical area. Using the models estimates, we calculate the population thresholds needed to support a given frequency. Results suggest that population, population density, per capita income, and rural isolation are important factors in determining the number of hospitals in an area. Our methodology and results provide a means to inform and evaluate policy decisions regarding the designation of medically underserved areas.

Earnings, rates of return to education and the earnings distribution in Pakistan

Abstract Utilizing data from a survey of 1000 households in Rawalpindi, this study presents estimates of the rate of return to schooling and differences in these rates of return by schooling level and sector of employment. The major finding reported is that the rate of return to schooling in one of Pakistans major urban areas is low, both in relation to the rate of return on physical capital and in relation to the rates of return to schooling in other developing countries. These low rates of return appear to be a result of a conscious government policy which drastically compressed the skill-wage structure.

Earnings functions for the self-employed: Comment

Abstract The standard human capital earnings model is applied to data from a 1975 socioeconomic survey conducted in Tehran, Iran. Results show that the returns to schooling for the self-employed (not including street vendors, canvassers, and newsvendors) are statistically equivalent to those of wage and salary workers. Thus, in contradiction to conclusions drawn from a study by Chiswick (1976), the high rates of return to schooling found in many studies of less-developed countries do not appear to be the result of the systematic exclusion of the self-employed from the estimating samples. In other words, when wage and salary workers are compared with the self-employed in similar occupations, their earnings profiles are similar.

The Impact of Agglomeration Economies on Estimated Demand Thresholds: An Extension of Wensley and Stabler

Central place theory predicts that geographic markets located in rural areas have lower demand thresholds, and, therefore, a higher frequency of business establishments relative to areas that are more proximate to urban centers, other things equal. Wensley and Stabler (1998) confirm this prediction using data on the location and frequency of business activities in rural Saskatchewan. We demonstrate that this relationship may not always hold true depending on the existence and magnitude of agglomeration economies. If average cost differences associated with being located in an urbanized area are sufficiently large, then the relationship between urban proximity and number of establishments may be reversed. We provide evidence of this reversal using 1996 cross‐sectional data on hospital services in Texas.

Replace Pharmaceutical Patents Now

Pharmaceutical patents are anachronistic holdovers from an era in which modern economic understanding and tax tools were unavailable. Superior mechanisms lie somewhere between a first best pricing solution for the entire economy at one extreme and the current arrangements at the other. We discuss the economics of suggested alternatives and suggest that the intertemporal bounty is the best way to meet the multiple objectives of immediate distribution at marginal cost pricing of newly innovated patented drugs and easily administered, efficient inducement to continued innovation. The intertemporal bounty prevents the expansion of monopoly power resulting from co-pay or -insurance provisions common to modern prescription drug plans.

Cost-effectiveness of cervical cancer screening strategies

Despite its low incidence in the developed world, cervical cancer is the second most common cancer among women worldwide and the third most common cause of cancer-related deaths. Screening saves lives. When diagnosed and treated in the preinvasive stage, 5-year survival probabilities approach 100%. This review addresses the cost-effectiveness of the various screening strategies commonly used worldwide. The starting age of screening, interval between screens and age of women at cessation of screening are the most important variables determining cost-effectiveness. While the traditional Pap test is still the most cost-effective screening method in most settings, human papillomavirus testing can improve outcomes at reasonable costs in certain high-risk populations.

Employer-Sponsored Health Insurance: Past, Present and Future

The most important feature of the health insurance market in the United States today is the predominance of employer-sponsored insurance (ESI). More than 65% of the non-elderly population and over 90% of the privately insured non-elderly population receives health insurance at the workplace (EBRI, 2000). The absence of government-sponsored insurance in the U.S. prompted ESI as the most likely alternative for several reasons. First, private insurance companies discovered economies of scale in administering group plans, especially in large-group settings. Second, the workplace is an ideal setting for pooling risk–workers are, on average, healthier than non-workers and they form groups to work, not to purchase health insurance. Finally, the tax code in the U.S. exempts health insurance benefits from taxable income, a subsidy worth more than

Health Economics and Policy

100 billion to the working population with ESI (Gruber, 2001). By the 1980s, persistently high spending and a growing number of uninsured served as catalysts for a series of health care reforms aimed at slowing the growth in spending and improving access to care. Government efforts to control spending targeted Medicare and Medicaid. But the private sector seemed unable to reign in spending, and premiums continued to increase at double-digit rates throughout the decade. With the public and politicians looking for ways to hold down spending, health care reform became a political issue in the 1992 presidential election. Preying on the concerns of the middle class, who feared losing health coverage in the event of a layoff, the political strategy was to sell the American public on a system that provided everyone with universal access to health coverage. While the Clinton health care reform plan was seriously flawed in its implementation, many aspects of the plan survived. In fact, the plan’s reliance on managed care to control spending became the cornerstone of a market-based reform movement embraced by both insurance companies and employers. In the short run, the natural evolution of market forces and the widespread acceptance of managed care seemed to work as evidenced by data presented in Table 1. Annual spending growth fell from double-digit rates in the 1980s and early 1990s to around 5% per year throughout much of the latter half of the decade. Health care spending leveled off at just over 13% of gross domestic