Measuring income related inequality in health and health care: the partial concentration index with direct and indirect standardisation.

The partial concentration index measures income related inequality in health (or health care) after removing the effects of standardising variables which affect health (or health care), are correlated with income but not amenable to policy. When the marginal effects of income are independent of the standardising variables, direct standardisation yields consistent estimates of the partial concentration index. Indirect standardisation underestimates the partial concentration index whenever the standardising variables are correlated with income, irrespective of the signs of the correlation of standardising variables and income with each other and with health. A generalised version of the partial concentration index is proposed for cases where the marginal effect of income depends on the standardising variables. Direct standardisation again yields a consistent estimate but indirect standardisation does not. It is also shown that the direct standardisation procedure can be applied to individual or grouped data and that the conclusions about the merits of direct and indirect standardisation hold for grouped data.Concentration index, inequality, direct standardisation.

Imperfect quality information in a quality-competitive hospital market

We examine the implications of policies to improve information about the qualities of profit seeking duopoly hospitals which face the same regulated price and compete on quality. We show that if the hospital costs of quality are similar then better information increases the quality of both hospitals. However if the costs are sufficiently different improved information will reduce the quality of both hospitals.Uncertain quality. Information. Competition. Hospitals.

Optimal Deterrence with Legal Defence Expenditure

Legal defence expenditure by those accused of a crime reduces their probability of punishment (whether innocent and guilty). We show that there could be more or less crime in a system which permits such expenditure. Because accused may choose a level of defence expenditure which bankrupts them if found guilty, deterrence can decrease when the fine is increased. The unregulated expenditure of innocent and guilty defendants is inefficient. We show that the optimal fine will never bankrupt the dishonest accused but that the honest accused can be bankrupt or left with positive wealth if convicted. We examine policies to regulate defence expenditure including a tax financed public defender system, a tax on legal defence and compensation for acquitted accused.Legal defence; deterrence; legal aid

Optimal Waits and Charges in Health Insurance

Waiting times are commonly used in the health sector to ration demand. We show that when money charges (coinsurance rates) are optimally set and there are no redistributional considerations, it is never optimal to have a positive waiting time if the marginal cost of waiting is higher for patients with greater benefits from health care. Although waiting time provides an additional instrument to control demand it does not mitigate the conflict between efficient risk bearing and efficient consumption of health care.Waiting times, rationing, optimal pricing, insurance

Income, relative income, and self-reported health in Britain 1979-2000

According to the relative income hypothesis, an individual’s health depends on the distribution of income in a reference group, as well as on the income of the individual. We use data on 231,208 individuals in Great Britain from 19 rounds of the General Household Survey between 1979 and 2000 to test alternative specifications of the hypothesis with different measures of relative income, national and regional reference groups, and two measures of self assessed health. All models include individual education, social class, housing tenure, age, gender and income. The estimated effects of relative income measures are usually weaker with regional reference groups and in models with time trends. There is little evidence for an independent effect of the Gini coefficient once time trends are allowed for. Deprivation relative to mean income and the Hey-Lambert-Yitzhaki measures of relative deprivation are generally negatively associated with individual health, though most such models do not perform better on the Bayesian Information Criterion than models without relative income. The only model which performs better than the model without relative income and which has a positive estimated effect of absolute income on health has relative deprivation measured as income proportional to mean income. In this model the increase in the probability of good health from a ceteris paribus reduction in relative deprivation from the upper quartile to zero is 0.010, whereas as an increase in income from the lower to the upper quartile increases the probability by 0.056. Measures of relative deprivation constructed by comparing individual income with incomes within a regional or national reference group will always be highly correlated with individual income, making identification of the separate effects of income and relative deprivation problematic.relative income, relative deprivation, income inequality, health.

Is Waiting-time Prioritisation Welfare Improving?

Rationing by waiting time is commonly used in health care systems with zero or low money prices. Some systems prioritise particular types of patient and offer them lower waiting times. We investigate whether prioritisation is welfare improving when the benefit from treatment is the sum of two components, one of which is not observed by providers. We show that positive prioritisation (shorter waits for patients with higher observable benefit) is welfare improving if the mean observable benefit of the patients who are indifferent about receiving the treat- ment is larger than the mean observable benefit of the patients who receive the treatment. This is true (a) if the distribution of the un- observable benefit is uniform for any distribution of the observable benefit; or (b) if the distribution of the observable benefit is uniform and the distribution of the unobservable benefit is log-concave. We also show that prioritisation is never welfare increasing if and only if the distribution of unobservable benefit is negative exponential.Waiting times, prioritisation, rationing

GP supply and obesity

We investigate the relationship between GP supply and body mass index (BMI) in England. Individual level BMI is regressed against area whole time equivalent GPs per 1,000 population plus individual and area level covariates. Using IV models we find that a 10% increase in GP supply is associated with a mean reduction in BMI of around 1 kg/m2 (around 4% of mean BMI). Our study suggests that better primary care in the form of reduced list sizes per GP can improve the management of obesity.Obesity; GP supply; Primary care

Third degree waiting time discrimination: optimal allocation of a public sector health care treatment under rationing by waiting

In many public health care systems treatment is rationed by waiting time. We examine the optimal allocation of a .xed supply of a treatment between di¤erent groups of patients. Even in the absence of any distributional aims welfare is increased by third degree waiting time discrimination. Because waiting time imposes dead weight losses on patients, lower waiting times should be o¤ered to groups with higher marginal waiting time costs and with less elastic demand for the treatment.Waiting times, prioritisation, rationing

Income, Relative Income, and Self-Reported Health in Britain 1979-2000

According to the relative income hypothesis, an individual's health depends on the distribution of income in a reference group, as well as on the income of the individual. We use data on 231,208 individuals in Great Britain from 19 rounds of the General Household Survey between 1979 and 2000 to test alternative specifications of the hypothesis with different measures of relative income, national and regional reference groups, and two measures of self assessed health. All models include individual education, social class, housing tenure, age, gender and income. The estimated effects of relative income measures are usually weaker with regional reference groups and in models with time trends. There is little evidence for an independent effect of the Gini coefficient once time trends are allowed for. Deprivation relative to mean income and the Hey-Lambert-Yitzhaki measures of relative deprivation are generally negatively associated with individual health, though most such models do not perform better on the Bayesian Information Criterion than models without relative income. The only model which performs better than the model without relative income and which has a positive estimated effect of absolute income on health has relative deprivation measured as income proportional to mean income. In this model the increase in the probability of good health from a ceteris paribus reduction in relative deprivation from the upper quartile to zero is 0.010, whereas as an increase in income from the lower to the upper quartile increases the probability by 0.056. Measures of relative deprivation constructed by comparing individual income with incomes within a regional or national reference group will always be highly correlated with individual income, making identification of the separate effects of income and relative deprivation problematic.Relative income, relative deprivation, income inequality, health

Managing Demand in Primary Care: The Market for Night Visits

We analyse the demand for and the supply of night visits in primary care. A model of demand management by general practitioners and of their choice between meeting demand by making visits themselves or passing them to commercial deputising services is presented. Demand and supply equations are derived and estimated using panel data from English primary care health authorities over the 1984-1994 period. The introduction of differential fees for GP and deputy visits in April 1990 led GPs to increase their own visits and to reduce the number made by deputies. GPs also responded by either reducing efforts to manage demand downwards or increasing efforts to induce demand. GPs manage demand downwards in response to exogenous demand increases. We also find that demand is not affected by the likelihood that the visit is made by a GP or a deputy, suggesting that patients do not perceive these visits as being of differential quality.Primary care, night visits, demand management.