My readings on the Taiwan Health System

Three studies I just read on Taiwan health economics:

1. The Impact of National Health Insurance on Treatment for High Blood Pressure among Older Taiwanese.  
Usually when insurance intake increases medical consultations also increase. That is what this study finds for high-blood-pressure patients in Taiwan. Taiwan reformed its health system in 1995, when the country set up a universal health care insurance. The percentage of ensured people went from around 57% to 98% after the reform. The reform reduced the gap of consultations between the ensured and previously uninsured patients. 

2. Multivariate Analyses to Assess the Effects of Surgeon and Hospital Volume on Cancer Survival Rates: A Nationwide Population-Based Study in Taiwan.
Within the universal health care system in Taiwan there is a large database where every payment at a medical center gets registered, as well as related information regarding the consultation or treatment. The database is called National Health Insurance (NHI) Research Database. Unfortunately for me, only Taiwan citizens can have access to it. This study (Multivariate Analyses . . .) uses that data base, and finds: 

After adjusting for differences in the case mix, cancer patients treated by low-volume surgeons in low-volume hospitals had poorer 5-year survival rates [compared with high-volume surgeons and hospitals]. 

That database is a gold-mine for health economists to study very specific populations, diseases, and treatments.  

3. Learning from Taiwan: Experience with Universal Health Insurance. 
This article describes some positive effects of the Taiwan health insurance, specifically their improvement of access and better health of people at the bottom of the income distribution. But it also explains some negative effects:

On average, patients have 14 physician visits per person per year (far more than in most industrialized countries); however, a standard visit is less than 5 minutes in length. In these brief visits, the physician’s focus is on treating symptoms and prescribing medications, not listening to patients. Patients do not have time to address their comorbid conditions and rarely undergo a careful physical examination or history.  

Inappropriate physician payment incentives by national health insurance can adversely affect the specialty choices of medical trainees, and therefore the direction of postgraduate medical education in Taiwan. Trainees tend to choose specialties that allow a simpler payment process through national health insurance (such as dermatology), or specialties not covered by national health insurance (such as cosmetic surgery) that bring in much higher, out-of-pocket payments from patients. They tend to ignore poorly paid specialties covered by national health insurance (for example, obstetrics and gynecology). These distorted payment incentives may seriously affect the match between Taiwan’s physician workforce and its health care needs. 

There are many studies on the effects of the universal health system in Taiwan. What I have seen so far, however, are studies on its effect on patients' behaviour and health. One aspect I have not seen much is how the reform affected the supply (the medical centres - note that article 3 in the list above describes a response of clinicians). 

How the system works is that the government pays the hospitals base on the services provided, and that also means that there is some degree of competition among hospitals. Patients are free to choose where to go for consultation and clinics, including private or public providers. 

Since there is no market, another area worth exploring is how government compensate hospitals, and how effective that system is.  

Collective Action Problems

If the international community fails to cooperate, “the world is headed for a post-antibiotic era, in which common infections and minor injuries which have been treatable for decades can once again kill,” Dr. Keiji Fukuda, the WHO’s assistant director-general for health security, said in a statement.

Keep reading.  

Ontario needs better value for money in health care

Evidence is emerging that the effects of population aging on health-care spending are potentally overestimated, while the effects of care provided at the end of life are potentially underestimated. . .  

For starters, Ontario needs to develop a more effective and comprehensive system of paying for health care. The current pay-as-you-go structure imposes most of the fiscal burden on those currently working and fails to send any price signals to users. Diversification of the revenue base is needed to finance our system. Setting aside funds today to cover health-care costs in our senior years, just like we do for retirement, could ensure a more stable financing model and improve intergenerational fairness. Introducing income-tested co-payments for certain services may also mitigate cost issues.

There is more here.  

Diabetes and Labor Income

From a new paper by Xiaoou Liu & Chen Zhu: 

This paper analyzes the impact of diabetes awareness on labor income using data from a natural experiment in China. We find that diabetes in general leads to a 17.8% decrease in annual income after respondents being diagnosed, and the adverse impact is heterogeneous across different populations. Males and individuals with lower income are affected more, suggesting that social support may be necessary. The estimated income losses are primarily due to psychosocial consequences of diabetes, such as reduced productivity, diabetes-related distress, or discrimination in the workplace.

Can We Trust Online Physician Ratings?

About RateMDs.com: 

RateMDs.com, launched in 2004, is one of the earliest physician review websites in the United States, and records the largest number of user-submitted reviews with narratives (Lagu et al., 2010). According to Gao et al. (2012), as of January 31, 2010, there were a total of 368,559 physician ratings, covering about 16% of all practicing US physicians. The likelihood of being rated varies widely across specialties and is consistent across the regions: 32.43% of obstetrician/gynecologists, approximately 24.63% of medical specialists, 20% of surgeons, and 16.25% of primary care physicians had received a rating. (p. 8).

That is from the paper titled "Can We Trust Online Physician Ratings? Evidence from Cardiac Surgeons in Florida" by Susan F. Lu & Huaxia Rui. The abstract: 

Despite heated debate about the pros and cons of online physician ratings, very little systematic work examines the correlation between physicians’ online ratings and their actual medical performance. Using patients’ ratings of physicians at RateMDs website and the Florida Hospital Discharge data, we investigate whether online ratings reflect physicians’ medical skill by means of a two-stage model that takes into account patients’ ratings-based selection of cardiac surgeons. Estimation results suggest that five-star surgeons perform significantly better and are more likely to be selected by sicker patients than lower-rated surgeons. Our findings suggest that we can trust online physician reviews, at least of cardiac surgeons.

From the conclusions:

To our surprise, patients are smarter than many critics imagine. (p. 22). 

3 Research Links on Health Economics

1. The child health implications of privatizing Africa's urban water supply (Journal of Health Economics, January 2014). A draft is here (May 3013). 
2. The effects of health information technology on the costs and quality of medical care (Journal of Health Economics, March 2014). A draft is here (November 2010). That is puzzling and not surprising. Some of the reason for that are here. 
3. . . . persons who frequently drink and drive do not typically engage in this behavior because of cognitive limitations. They know what they are doing and understand the legal consequences of their behaviour. (Journal of Health Economics, February 2014). A draft is here. 

A Kidney Coop

The source is the National Kidney Foundation (2014), and I took the paragraph from this paper where the authors, Eames & Zambrano, propose a Kidney Cooperative, an ingenious idea relative to the status-quo. See page two. 

Medicaid and Emergency Visits

From an article in HSPH

Adults who are covered by Medicaid use emergency rooms 40 percent more than those in similar circumstances who do not have health insurance, according to a unique new study that sheds empirical light on the inner workings of health care in the U.S.

 And

. . . prior work by Finkelstein, Baicker, and others on Oregon’s lottery applicants showed that people who obtain Medicaid increase their use of primary and preventive care. But as Finkelstein points out, the net effect of Medicaid in the study was to also increase use of emergency services.

The study evaluates a lottery program in Oregon. 

In Oregon, uninsured adults are eligible for the lottery-based Medicaid program when their annual income falls below the federal poverty level established by the U.S. Department of Health and Human Services, which in 2013 is roughly $11,490 for a single person or $23,550 for a family of four.

Which makes me think in something like "Lottery cash-transfers."

Dealing with prostitution across Europe

The Guardian posted an interesting article regarding how politicians are dealing with ever-lasting prostitution and the externalities of this social phenomenon. The answer to why prostitution has been around since forever is fairly logic and easy: there´s  an actual market for it; buyers and sellers, services and products...and prices. But the 21st century calls for a new approach to get a hold on social behaviors the likes of prostitution, and it seems that the efforts made by politicians to "solve" them need help from an economic way of thinking.

The Guardian article reads: 

Politicians across Europe are considering reforming prostitution laws as part of the fight against human trafficking and sexual exploitation. France has criminalised the purchase of sex, a model they have taken from Sweden, which has pioneered a hard-line approach to prostitution since 1999. But where do European countries stand now? -The Guardian. 

The interactive map shows how politicians attempt to regulate prostitution in European countries. However, what can we say from an economic point of view? How can economics shed a light on the regulations concerned with prostitution and its externalities? 

New drug for old insomnia

The FDA has been quite a controversial government agency, particulary regarding the process for new-drugs approval. Once again, a new drug has been developed; this time, Merck is trying to fight insomnia with an effective slepping pill without the common side effects of the existing sleep disorder medication. Ian Parker wrote an article regarding this matter in The New Yorker called "Big Sleep". In this article, Parker reviews the "sleeping pill" industry and provides an insight of the troubled, bureaucratic F.D.A drug approval process. What are the economic consequences of such approval processes? What should really be the role of the F.D.A, specially concerning the approval of medications that could benefit millions of people?

A few weeks later, the F.D.A. wrote to Merck. The letter encouraged the company to revise its application, making ten milligrams the drug’s starting dose. Merck could also include doses of fifteen and twenty milligrams, for people who tried the starting dose and found it unhelpful. This summer, Rick Derrickson designed a ten-milligram tablet: small, round, and green. Several hundred of these tablets now sit on shelves, in rooms set at various temperatures and humidity levels; the tablets are regularly inspected for signs of disintegration.

The F.D.A.’s decision left Merck facing an unusual challenge. In the Phase II trial, this dose of suvorexant had helped to turn off the orexin system in the brains of insomniacs, and it had extended sleep, but its impact didn’t register with users. It worked, but who would notice? Still, suvorexant had a good story—the brain was being targeted in a genuinely innovative way—and pharmaceutical companies are very skilled at selling stories.

Merck has told investors that it intends to seek approval for the new doses next year. I recently asked John Renger how everyday insomniacs would respond to ten milligrams of suvorexant. He responded, “This is a great question.” After the approval process is finished, the marketing division of Merck—a company whose worldwide sales last year totalled forty-seven billion dollars—will conduct a different kind of public trial. The study will address this question: How successfully can a pharmaceutical giant—through advertising and sales visits to doctors’ offices—sell a drug at a dose that has been repeatedly described as ineffective by the scientists who developed it? (Ian Parker, "Big Sleep"). 

Insomnia, far from being just a sleep disorder, has negative biological and cognitive consequences and, unfortunately, is terribly common. 

• About 30 percent of adults have symptoms of insomnia 

• About 10 percent of adults have insomnia that is severe enough to cause daytime 

consequences 

• Less than 10 percent of adults are likely to have chronic insomnia (according to the American Academy of Sleep Medicine.)

Domestic insurers should be able to cover visits to overseas facilities.

In this post on how to improve the US Health Care System Robert Graboyes says

Domestic insurers should be able to cover visits to overseas facilities.

Health care can be good and cheaper in other developed countries. And health care in private clinics and hospitals can be OK and much cheaper in middle-income and even in low-income countries. For some US residents and citizens it might be a good deal to get an OK health care in a developing country than NO care at all at home, especially if local insurance covers treatment overseas. We could actually see a sort of specialization in international health care markets. For example, certain countries (even developing countries) can become specialize in some types of dental care procedures, etc.  

That has many possible implications, such as:

1) Possible price equalization in international health care markets at certain margins.

2) More incentives for the development of health clusters in developing countries.

3) A reassignment of resources in the health sector in the US.

What improves health care systems

In a very interesting post on Singapore's hospital industry, Tyler Cowen offers some key lessons:

. . . urbanization is good for your health care system. That is another reason to deregulate urban density. 

. . . congestion prices for your roads make it easier for hospitals to compete. Driving north on the Beltway to a Maryland hospital, from Fairfax, isn’t so great, especially if you are really sick. 

Health Economics: Guatemala Paper of the Day

Isabella Gaitan and I wrote the paper. The title is "Availability of Consumer Prices from Hospitals for a Common Cesarean Procedure in Guatemala."

We investigate the availability of price information for a common surgical procedure, a C-section, in the context of Guatemala. We phoned 98 hospitals and found that, for the most part, hospitals are willing to give an approximate price. The range of prices is Q. 3,000 - Q. 13,000 in Guatemala City, and Q. 2,300 - Q. 9,000 in the departments of the country. It is more difficult however to get more detailed information of prices, such as the price of different components of the procedure. There is room for a consumer to increase her welfare by “shopping around.” The industry is an example of “monopolistic competition.”

You can see the paper here. It also reflects my adventures with LaTex, which is awesome! One of the great things I started to learn in Senegal. 

Health Economics: Australia Abstract of the Day

A basic prediction of theoretical models of insurance is that if consumers have private information about their risk of suffering a loss there will be a positive correlation between risk and the level of insurance coverage. We test this prediction in the context of the market for private health insurance in Australia. Despite a universal public system that provides comprehensive coverage for inpatient and outpatient care, roughly half of the adult population also carries private health insurance, the main benefit of which is more timely access to elective hospital treatment. Like several studies on different types of insurance in other countries, we find no support for the positive correlation hypothesis. Because strict underwriting regulations create strong information asymmetries, this result suggests the importance of multi-dimensional private information. Additional analyses suggest that the advantageous selection observed in this market is driven by the effect of risk aversion, the ability to make complex financial decisions and income.

Source: Buchmueller et al. (Journal of Health Economics, September 2013).  

From the conclusions:

We find that adults covered by private hospital insurance spend fewer nights in hospital over the course of a year than individuals without private coverage. Privately insured individuals are in better self-reported health and are less likely to report a recent physician’s visit. Since private insurance in Australia provides no reimbursement for outpatient care, this latter result can be interpreted as evidence that the privately insured group is healthier than the group without private coverage. Thus, our results are consistent with advantageous, rather than adverse selection . . . 

Our analysis of household expenditure data indicates that consumers who purchase private health insurance are also significantly more likely to purchase other types of insurance.

Drafts of the paper and a slide presentation are here.  

Health and Retirement

Source. 

Transplante de órganos (Spanish)

Muy buena explicación por mi colega Fredy Abed. 

Classic article of the day (Health Care)

This article (1991) is wonderful to understand the historical relationship between technological change, insurance, and medical costs in the US. The title is "The Health Care Quadrilemma: An Essay on Technological Change, Insurance, Quality of Care, and Cost Containment" (Burton Weisbrond, Journal of Economic Literature). 

Notice that the historical trade off has been between more innovation and higher prices and less innovation and lower prices. The author presents a pretty interesting theoretical framework to understand the pricing mechanism in the health industry. 

The author's argument has important implication for other industries as well, such as education. In fact, you will see the high contrast in the way prices are determined in the health care industry vs. in education. 

The article stands out in the health economics literature I have read so far.  

Payments in the Medical Industry (The US)

This is a very interesting (and often shocking) article of how payments are determined in the medical industry in the US. It is very long, and it is gated. 

More questions than answers (health insurance)

This paper summarizes the literature on the impact of state subsidized or social health insurance schemes that have been offered, mostly on a voluntary basis, to the informal sector in low- and middle-income countries. A substantial number of papers provide estimations of average treatment on the treated effect for insured persons. The authors summarize papers that correct for the problem of self-selection into insurance and papers that estimate the average intention to treat effect. Summarizing the literature was difficult because of the lack of (1) uniformity in the use of meaningful definitions of outcomes that indicate welfare improvements and (2) clarity in the consideration of selection issues. They find the uptake of insurance schemes, in many cases, to be less than expected. In general, we find no strong evidence of an impact on utilization, protection from financial risk, and health status. However, a few insurance schemes afford significant protection from high levels of out-of-pocket expenditures. In these cases, however, the impact on the poor is weaker. More information is needed to understand the reasons for low enrollment and to explain the limited impact of health insurance among the insured.

The paper (by Acharya et al) is here.  
HT: Catalina Granda Carvajal. 

Height and cognition

Previous research using US data suggests that height, as a marker for early investments in health, is associated with better cognitive functioning in later life, but this association disappears once education is controlled for. Using an English cohort of men and women older than 50 years, we find that the association between height and cognitive outcomes remains significant after controlling for education suggesting that height affects cognitive functioning not simply via higher educational attainment. Furthermore, the significant association between height and cognitive function remains even after controls for early life indicators have been included.

Source: Guven & Sheng Lee (Health Economics, February 2013). I did not find an ungated version of the paper.