Journal of health economics
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The hypothesis that dentists do not induce demand for their services is tested using reduced form estimates of the price elasticity of demand. If demand is autonomous, shifts in supply for whatever reason should generate equivalent estimates provided access costs change proportionately with shifts in supply. If demand inducement is present demand can appear to be very elastic, or very inelastic, depending on what is causing the shift in supply. Each of three applications of this test, conducted in the context of jointly estimated fee and quantity equations using annual Canadian data for 1956-1989, rejects the no inducement hypothesis.
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A social experiment was conducted in San Diego to test the effectiveness of monetary incentives in improving the health of nursing home residents and lowering Medicaid expenditures. Use of a Markov model to represent the resulting health changes of nursing home residents shows that the monetary incentives had beneficial effects on both the quality and the cost of nursing home care. ⋯ If implemented, this kind of incentive program would save Medicaid substantial amounts of money, but not through lowering nursing home payments. Instead, the more efficient use of nursing homes would transfer more people out of hospitals and thereby save unnecessary hospital reimbursement.
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In this paper we consider whether methods currently used to measure utility of health outcomes are consistent with the equity criteria adopted by researchers. We show that unless the chosen equity criterion is incorporated in the design of the measurement instrument, the derived health state utilities are inconsistent with the equity criterion (except under special circumstances). Adjustment algorithms are derived, based on the axioms of von Neumann-Morgenstern utility theory, which take account of difference equity criteria currently adopted in the literature. The proposed approach is based on simple lottery questions of the type already used widely in empirical studies.