M8: Production of health and healthcare
19 important questions on M8: Production of health and healthcare
Draw an example of a health production function
- Why does the curve flattens out?
- Could it bend downwards after some point?
- Diminishing marginal returns: : the first input of health care contributes more than some points further on the graph (last pill gives less effect than the first one)
- Could it bend downwards after some point? Yes, if an extra input produces less health (makes it worse)
What are the two key questions to measure the marginal contribution of health care?
- How to measure the populations health?
- How to estimate the impact of health care on health?
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Why do we have to be cautious with interpreting the relation between health expenditure and life expectancy?
True or false?
- Until the mid-twentieth century, practitionerprovided medical interventions played only a small role in the historical decline in population mortality rates.
- A larger role might be attributed to public health measures and the spread of knowledge of the sources of disease.
- True
- True
Give three main causes why mortality has declined over time in OECD countries (Cutler 2006) and explain them
- Economic growth increased supply of food that became available due to the agricultural and industrial revolutions allows one to withstand disease mid 18th – mid 19th century.
- Improvement of public health facilities better hygiene: sewers, cleaner water and air mid 19th – mid 20th century.
- Improvements in medicine Antibiotics for infectious diseases High-tech treatments for cardiovascular disease mid 20th century – …
Give the outcomes of the following studies about the marginal effect of health care at the individual level:
- RAND experiment
- Oregon experiment
- Card et al. (2009)
- RAND Health Insurance Experiment found virtually no effect of higher healthcare utilization (due to lower coinsurance) on health (except for the poor in poor health)
- Oregon experiment found that higher healthcare utilization (due to a Medicaid voucher) resulted in better self-reported health but not in improved objective health measures (Finkelstein et al. 2012)
- Card et al. (2009) find that more treatments to 65-years old Americans needing emergency (due to becoming eligible for Medicare) resulted in significant reduction of mortality
Inputs can be combined as
- Complements
- Perfect substitutes
- Imperfect substitutes
Draw the graphs and give examples
IS: Doing a job with a certain number of nurses and specialists
Complements:
- What happens you raise the number of inputs?
- The most efficient combination of inputs is dependent/independent of the prices of inputs in case of complements.
Perfect substitutes:
- How is the price of inputs shown in the graph?
- What does a flat slope say?
- And a steep slope?
Raising the number of inputs gives a higher outcome. Positive relationship between input and number of patients (Q), only if you use both inputs. Most efficient is independent of prices, you need a certain combination of input, you need them both.
Perfect substitutes:
Price of inputs is shown by the budget line (not in graph). Flat slope: buy input Y because this is cheaper. Steep slope: buy input X, this one is cheaper.
When is a firm said to experience economies of scale?
Which difficulties do hospitals face when measuring efficiency?
- Enormous heterogeneity of products: the “case-mix problem”
- Treatment of quality
- Lack of reliable measures
- Most hospital cost-function studies omit physicians’ input prices entirely
When is a firm allocative efficient when looking at a graph?
Is DEA better suited to measure the relative efficiency of hospitals than of dental practices?
What is a major weakness of DEA and SFA studies? For which products do these frontier techniques work best? Give two characteristics.
Since 2000, the gap in DALE between low- and high-income countries increased/decreased
Give three methodological challenges of evidence of the marginal effect of health care at the country level
- Adjust for differences in need
- Ruling out all other relevant factors affecting population health
- Ruling out reverse causality: extra health care may increase health, but better health may also reduce health care use / spending
Give the three requirements for measuring output of healthcare providers
- Final output indicators: number of patients (successfully) treated?
- Intermediary output indicators: number of activities performed?
- Appropriate case-mix correction possible Adequate data available (patient registries)
Give the definitions of frontier and non-frontier studies
Frontier studies: actual outputs of firm costs are compared to the most efficient (best practice) firms that are situated on the frontier
There are empirical findings on hospital economies of scale. Why are these underestimated? Give two reasons
- Imperfect quality measures
- Unobserved output heterogeneity (imperfect case-mix adjustment)
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