Jongsay Yong

Population ageing and its implications on aggregate health care demand: empirical evidence from 22 OECD countries

Recent evidence indicates that the relationship between age and health care expenditure is not as straightforward as it appears. In fact, micro-level studies find that time to death, rather than ageing, is possibly the main driver of the escalating health care costs in developed countries. Unfortunately, the evidence at the macro level is less clear and often depends on the specification of the empirical model used. We use an aggregate demand framework to assess whether health expenditure is more likely to be driven by ageing per se or proximity to death. Using panel data from 22 OECD countries from the first half of the 1990s, we find population ageing to be negatively correlated with health expenditure once proximity to death is accounted for. This suggests that the effects of ageing on health expenditure growth might be overstated while the effects of the high costs of medical care at the end of life are potentially underestimated. With respect to the latter, our finding highlights the importance of long-term and hospice care management. An expanded long-term care program may not only improve patient welfare, but also reduce costs of care by reducing the duration of hospital care for terminally ill patients. If expensive medical treatment for patients near the end of life can be controlled for, health expenditure growth resulting from population ageing is unlikely to present a most serious problem.

Exclusionary Vertical Contracts and Product Market Competition

This article considers whether a monopolist is able to deter more efficient entrants through contracting with buyers. In the antitrust literature, the Chicago Schools stand is that such contracts cannot be anticompetitive; hence vertical contracts should be accorded per se legal status. In a four-stage game with the following features: (1) the incumbent enjoys a first-mover advantage, (2) the entrant must incur some sunk cost to enter the market, and (3) entry is uncertain, the author shows that vertical contracts can be anticompetitive if there exists product-market competition. Thus, the author advocates caution in treating all contracts as per se legal. A three-factor, repeated-measures experiment tested the effect of leadership style (charismatic, structuring, and considerate) on performance improvement on a manufacturing task over four trials. Findings from a repeated-measures multivariate analysis of variance indicated that individual exposed to considerate leadership had superior initial performance but that this difference faded over time. Further analysis indicated that self-efficacy fully mediated the relationship between leadership style and performance. Copyright 1999 by University of Chicago Press.

Competition, Prices and Quality in the Market for Physician Consultations

Prices for consultations with General Practitioners (GPs) in Australia are unregulated, and patients pay the difference between the price set by the GP and a fixed reimbursement from the national taxfunded Medicare insurance scheme. We construct a Vickrey-Salop model of GP price and quality competition and test its predictions using a dataset with individual GP-level data on prices, the proportion of patients who are charged no out-of-pocket fee, average consultation length, and characteristics of the GPs, their practices and their local areas. We measure the competition to which the GP is exposed by the distance to other GPs and allow for the endogeneity of GP location decisions with measures of area characteristics and area fixed-effects. Within areas, GPs with more distant competitors charge higher prices and a smaller proportion of their patients make no out-ofpocket payment. GPs with more distant competitors also have shorter consultations, though the effect is small and statistically insignificant.

The income distributive implications of recent private health insurance policy reforms in Australia

The Australian government implemented a series of private health insurance (PHI) policy reforms between 1997 and 2000. As a result, the proportion of the population with PHI coverage increased by more than 35%. However, this study found significant evidence that the policy reform disproportionately favours high-income earners. In particular, the 30% premium subsidy represents a windfall gain for households which would have purchased PHI even without the rebate. The amount of such gain is estimated to be around

Effects of competition on hospital quality: an examination using hospital administrative data

900 million per year, a large proportion of which went to higher income households.

How effective is “lifetime health cover” in raising private health insurance coverage in Australia? An assessment using regression discontinuity

This paper investigates the effects of competition on hospital quality using hospital administration data from the State of Victoria, Australia. Hospital quality is measured by 30-day mortality rates and 30-day unplanned readmission rates. Competition is measured by Herfindahl–Hirschman index and the numbers of competing public and private hospitals. The paper finds that hospitals facing higher competition have lower unplanned admission rates. However, competition is related negatively to hospital quality when measured by mortality, albeit the effects are weak and barely statistically significant. The paper also finds that the positive effect of competition on quality as measured by unplanned readmission differs greatly depending on whether the hospital is publicly or privately owned.

A Two-Stage Estimation of Hospital Quality Using Mortality Outcome Measures: An Application Using Hospital Administrative Data

The Australian government introduced three major private health insurance policy initiatives in recent years. These are, in chronological order, (i) the Private Health Insurance Incentives Scheme (PHIIS), which imposes a tax levy on high-income earners who do not have private health insurance and provides a means-tested subsidy schedule for low-income earners who purchase PHI; (ii) a 30% premium rebate for all private health insurance policies to replace the means-tested component under PHIIS; and (iii) lifetime health cover, which permits a limited form of age-related risk rating by insurance funds. Together, these policy changes have been effective in encouraging the uptake of PHI; the percentage of the population covered by PHI rose from 31% in 1999 to 45% at the end of 2001. The difficult issue, however, is in disentangling the effects of the three policy changes, given that they were introduced in quick succession. This article attempts to evaluate the effect of lifetime health cover using a regression discontinuity design, an approach that makes use of cross-section data that allows the effect of lifetime health cover to be isolated via local regression. The results suggest that the importance of lifetime health cover appears to be grossly over-rated in previous studies. Our estimates indicate that it accounts for roughly 22–32% of the combined effects of all the policy initiatives introduced in the late 1990s. While these figures suggest that its effect is clearly significant, it is nonetheless nowhere near the effect often associated with lifetime health cover.

Hospital Competition, Technical Efficiency and Quality

This paper proposes a method of deriving a quality indicator for hospitals using mortality outcome measures. The method aggregates any number of mortality outcomes into a single indicator via a two-stage procedure. In the first stage, mortality outcomes are risk-adjusted using a system of seemingly unrelated regression equations. These risk-adjusted mortality rates are then aggregated into a single quality indicator in the second stage via weighted least squares. This method addresses the dimensionality problem in measuring hospital quality, which is multifaceted in nature. In addition, our method also facilitates further analyses of determinants of hospital quality by allowing the resulting quality estimates be associated with hospital characteristics. The method is applied to a sample of heart-disease episodes extracted from hospital administrative data from the state of Victoria, Australia. Using the quality estimates, we show that teaching hospitals and large regional hospitals provide higher quality of care than other hospitals and this superior performance is related to hospital case-load volume.

On the Hospital Volume and Outcome Relationship: Does Specialization Matter More Than Volume?

This paper studies the link between competition and technical efficiency of public hospitals in the state of Victoria, Australia. It finds a positive relationship between efficiency and competition as measured by the Hirschman–Herfindahl Index (HHI) and a negative relationship when the number of competing private hospitals is used instead of HHI. It also finds that whether or not quality is treated as an endogenous output variable influences the statistical estimates of the link between efficiency and competition. The findings point to possibly undesirable resource allocation effects when public hospitals are made to compete with a large number of private hospitals.

An assessment of four popular auction mechanisms in the siting of NIMBY facilities: some experimental evidence

OBJECTIVE To evaluate the relationship between hospital volume and outcome by focusing on alternative measures of volume that capture specialization and overall throughput of hospitals. DATA SOURCES/STUDY SETTING Hospital administrative data from the state of Victoria, Australia; data contain 1,798,474 admitted episodes reported by 135 public and private acute-care hospitals. STUDY DESIGN This study contrasts the volume-outcome relationship using regression models with different measures of volume; two-step and single-step risk-adjustment methods are used. DATA COLLECTION/EXTRACTION METHODS The sample is restricted to ischemic heart disease (IHD) patients (ICD-10 codes: I20-I25) admitted during 2001/02 to 2004/05. PRINCIPAL FINDINGS Overall hospital throughput and degree of specialization display more substantive implications for the volume-outcome relationship than conventional caseload volume measure. Two-step estimation when corrected for heteroscedasticity produces comparable results to single-step methods. CONCLUSIONS Different measures of volume could lead to vastly different conclusions about the volume-outcome relationship. Hospital specialization and throughput should both be included as measures of volume to capture the notion of size, focus, and possible congestion effects.