Paolo Li Donni

Does hospital competition harm equity? Evidence from the English National Health Service

Increasing evidence shows that hospital competition under fixed prices can improve quality and reduce cost. Concerns remain, however, that competition may undermine socio-economic equity in the utilisation of care. We test this hypothesis in the context of the pro-competition reforms of the English National Health Service progressively introduced from 2004 to 2006. We use a panel of 32,482 English small areas followed from 2003 to 2008 and a difference in differences approach. The effect of competition on equity is identified by the interaction between market structure, small area income deprivation and year. We find a negative association between market competition and elective admissions in deprived areas. The effect of pro-competition reform was to reduce this negative association slightly, suggesting that competition did not undermine equity.

Measuring change in health care equity using small-area administrative data – Evidence from the English NHS 2001–2008

This study developed a method for measuring change in socio-economic equity in health care utilisation using small-area level administrative data. Our method provides more detailed information on utilisation than survey data but only examines socio-economic differences between neighbourhoods rather than individuals. The context was the English NHS from 2001 to 2008, a period of accelerated expenditure growth and pro-competition reform. Hospital records for all adults receiving non-emergency hospital care in the English NHS from 2001 to 2008 were aggregated to 32,482 English small areas with mean population about 1500 and combined with other small-area administrative data. Regression models of utilisation were used to examine year-on-year change in the small-area association between deprivation and utilisation, allowing for population size, age-sex composition and disease prevalence including (from 2003 to 2008) cancer, chronic kidney disease, coronary heart disease, diabetes, epilepsy, hypertension, hypothyroidism, stroke, transient ischaemic attack and (from 2006 to 2008) atrial fibrillation, chronic obstructive pulmonary disease, obesity and heart failure. There was no substantial change in small-area associations between deprivation and utilisation for outpatient visits, hip replacement, senile cataract, gastroscopy or coronary revascularisation, though overall non-emergency inpatient admissions rose slightly faster in more deprived areas than elsewhere. Associations between deprivation and disease prevalence changed little during the period, indicating that observed need did not grow faster in more deprived areas than elsewhere. We conclude that there was no substantial deterioration in socio-economic equity in health care utilisation in the English NHS from 2001 to 2008, and if anything, there may have been a slight improvement.

Incentive and selection effects of Medigap insurance on inpatient care.

The Medicare program, which provides insurance coverage to the elderly in the United States, does not protect them fully against high out-of-pocket costs. For this reason private supplementary insurance, named Medigap, has been available to cover Medicare gaps. This paper studies how Medigap affects the utilization of inpatient care, separating the incentive and selection effects of supplementary insurance. For this purpose, we use two alternative estimation methods: a standard recursive bivariate probit and a discrete multivariate finite mixture model. We find that estimated incentive effects are modest and quite similar across models. There seems to be very significant selection, with the presence of both adversely and advantageously selected individuals, stemming from the multidimensional nature of residual heterogeneity.

Effects of the Blair/Brown NHS Reforms on Socioeconomic Equity in Health Care

The central objectives of the ‘Blair/Brown’ reforms of the English NHS in the 2000s were to reduce hospital waiting times and improve the quality of care. However, critics raised concerns that the choice and competition elements of reform might undermine socioeconomic equity in health care. By contrast, the architects of reform predicted that accelerated growth in NHS spending combined with increased patient choice of hospital would enhance equity for poorer patients. This paper draws together and discusses the findings of three large-scale national studies designed to shed empirical light on this issue. Study one developed methods for monitoring change in neighbourhood level socioeconomic equity in the utilization of health care, and found no substantial change in equity between 2001-02 and 2008-09 for non-emergency hospital admissions, outpatient admissions (from 2004-05) and a basket of specific hospital procedures (hip replacement, senile cataract, gastroscopy and coronary revascularization). Study two found that increased competition between 2003-04 and 2008-09 had no substantial effect on socioeconomic equity in health care. Study three found that potential incentives for public hospitals to select against socioeconomically-disadvantaged hip replacement patients were small, compared with incentives to select against elderly and co-morbid patients. Taken together, these findings suggest that the Blair/Brown reforms had little effect on socioeconomic equity in health care. This may be because the ‘dose’ of competition was small and most hospital services continued to be provided by public hospitals which did not face strong incentives to select against socioeconomically-disadvantaged patients.

Empirical definition of social types in the analysis of inequality of opportunity: a latent classes approach

The empirical analysis of inequality of opportunity centres on disparities between social types, defined by the exposure to circumstances beyond individual control. Despite this, its main theoretical foundation—the Roemer model—does not indicate how to carry out, in practice, the required partition of the population into such types. This paper operationalises this definition of social types using a latent classes approach. Our specification is embedded in a probabilistic extension of the canonical Roemer model, which assumes that the relevant population consists of a finite number of latent types, from which each individual can be treated as a random draw. This makes possible the use of the full set of circumstances in the data, allows for unobserved individual heterogeneity and does not require an ex-ante specification of the number of types by the researcher. Our approach is illustrated by an empirical application featuring a large UK cohort study that was used in earlier literature to examine inequalities of opportunity in a wide array of social outcomes.

EX‐ANTE AND EX‐POST MEASUREMENT OF EQUALITY OF OPPORTUNITY IN HEALTH: A NORMATIVE DECOMPOSITION

This paper proposes and discusses two different approaches to the definition of inequality in health: the ex-ante and the ex-post approach. It proposes strategies for measuring inequality of opportunity in health based on the path-independent Atkinson equality index. The proposed methodology is illustrated using data from the British Household Panel Survey; the results suggest that in the period 2000-2005, at least one-third of the observed health equalities in the UK were equalities of opportunity.

Reporting heterogeneity in health: an extended latent class approach

This article explores how individual socio-economic characteristics affect unobserved heterogeneity in self-reporting behaviour and health production using a multivariate finite mixture model. Results show a positive relationship between objective and subjective observable health indicators and true health and support the existence of self-reporting bias related to socio-economic characteristics and individual life styles.

Testing for Asymmetric Information in Insurance Markets: A Multivariate Ordered Regression Approach

The positive correlation (PC) test is the standard procedure used in the empirical literature to detect the existence of asymmetric information in insurance markets. This article describes a new tool to implement an extension of the PC test based on a new family of regression models, the multivariate ordered logit, designed to study how the joint distribution of two or more ordered response variables depends on exogenous covariates. We present an application of our proposed extension of the PC test to the Medigap health insurance market in the United States. Results reveal that the risk–coverage association is not homogeneous across coverage and risk categories, and depends on individual socioeconomic and risk preference characteristics.

The welfare cost of unpriced heterogeneity in insurance markets

We consider the welfare loss of unpriced heterogeneity in insurance markets, which results when private information or regulatory constraints prevent insurance companies to set premiums reflecting expected costs. We propose a methodology which uses survey data to measure this welfare loss. After identifying some “types” which determine expected risk and insurance demand, we derive the key factors defining the demand and cost functions in each market induced by these unobservable types. These are used to quantify the efficiency costs of unpriced heterogeneity. We apply our methods to the US Long-Term Care and Medigap insurance markets, where we find that unpriced heterogeneity causes substantial inefficiency.

Do Reduced Hospital Mortality Rates Lead to Increased Utilization of Inpatient Emergency Care? A Population-Based Cohort Study

Objectives To measure the impact of the improvement in hospital survival rates on patients’ subsequent utilization of unplanned (emergency) admissions. Data Sources/Study Setting Unplanned admissions occurring in all acute hospitals of the National Health Service in England between 2000 and 2009, including 286,027 hip fractures, 375,880 AMI, 387,761 strokes, and 9,966,246 any cause admissions. Study Design Population‐based retrospective cohort study. Unplanned admissions experienced by patients within 28 days, 1 year, and 2 years of discharge from the index admission are modeled as a function of hospital risk‐adjusted survival rates using patient‐level probit and negative binomial models. Identification is also supported by an instrumental variable approach and placebo test. Principal Findings The improvement in hospital survival rates that occurred between 2000 and 2009 explains 37.3 percent of the total increment in unplanned admissions observed over the same period. One extra patient surviving increases the expected number of subsequent admissions occurring within 1 year from discharge by 1.9 admissions for every 100 index admissions (0.019 per admission, 95% CI, 0.016–0.022). Similar results in hip fracture (0.006[0.004–0.007]), AMI (0.006[0.04–0.007]), and stroke (0.004(0.003–0.005)). Conclusions The success of hospitals in improving survival from unplanned admissions can be an important contributory factor to the increase in subsequent admissions.