Governance and Corruption in Public Health Care Systems

Maureen Lewis
World Bank

January 2006

Center for Global Development Working Paper No. 78

Abstract:
What factors affect health care delivery in the developing world? Anecdotal evidence of lives cut
tragically short and the loss of productivity due to avoidable diseases is an area of salient concern in
global health and international development. This working paper looks at factual evidence to describe
the main challenges facing health care delivery in developing countries, including absenteeism,
corruption, informal payments, and mismanagement. The author concludes that good governance is
important in ensuring effective health care delivery, and that returns to investments in health are low
where governance issues are not addressed.

Cost of Illness: Evidence from a Study in Five Resource-

Poor Locations in India
David M. Dror
Erasmus University Rotterdam - Institute of Health Policy & Management; Micro Insurance Academy
(MIA)

Olga Van Putten-Rademaker

Delft University of Technology - Faculty of Technology, Policy and Management

Ruth Koren
Tel Aviv University - Professor Sackler Faculty of Medicine

Indian Journal for Medical Research (New Delhi), Vol. 127, pp. 343-357, April 2008

Abstract:
Background & Objectives: In India, health services are funded largely through out-of-pocket spending
(OOPS). The objective of this article is to provide data on the cost of an illness episode and
parameters affecting cost.

Methods: The data was obtained through a household survey carried out in 2005 in five locations
among resource-poor persons in rural or slum India. The analysis is based on self-reported illness
episodes and their costs. The study is based on 3,531 households (representing 17,323 persons) and
4,316 illness episodes.

Results: The median cost of one illness episode was INR 340. When costs were calculated as % of
monthly income per person, the median value was 73% of that monthly income, and could reach as
much as 780% among the 10% most exposed households. The estimated median per-capita cost of
illness was 6% of annual per-capita income. The ratio of direct costs to indirect costs was 67:30. The
cost of illness was lower among females in all age groups, due to lower indirect costs. 61% of total
illnesses, costing 37.4% of total OOPS, were due to acute illnesses; chronic diseases represented
17.7% of illnesses but 32% of costs. Our study shows that hospitalizations were the single most costly
component on average, yet they accounted for only 11% of total on an aggregated basis, compared to
drugs that accounted for 49% of total aggregated costs. Locations differ from each other in the
absolute cost of care, in distribution of items composing the total cost of care, and in supply.
Interpretation & Conclusion: Interventions to reduce the cost of illness should be context-specific, as
there is no one-size-fits-all model to establish the cost of healthcare for the entire sub-continent.
Aggregated expenses, rather than only hospitalizations, can cause catastrophic consequences of
illness.

Optimizing the Equity-Bond-Annuity Portfolio in

Retirement: The Impact of Uncertain Health Expenses
Gaobo Pang
Watson Wyatt Worldwide

Mark J. Warshawsky
Watson Wyatt Worldwide

December 2007

Pension Research Council Working Paper No. 2008-05

Watson Wyatt Technical Paper No. 07/14

Abstract:
This paper derives optimal equity-bond-annuity portfolios for households who face stochastic capital
market returns, differential exposures to mortality risk and uncertain uninsured health expenses, and
differential Social Security and defined benefit pension coverage. The results show that the health
spending risk drives household portfolios to shift from risky equities to safer assets and enhances the
demand for annuities due to their increasing-with-age superiority over bonds in hedging against life-
contingent health spending and longevity risks. Households with higher income have a greater
incremental demand for life annuities. The safe and higher-return annuities in turn provide a greater
leverage for equity investment in the remaining asset portfolios.

Do Subsidized Health Programs in Armenia Increase

Utilization Among the Poor?

Shweta Jain
General Electric Company

Diego F. Angel-Urdinola
World Bank

September 2006

World Bank Policy Research Working Paper No. 4017

Abstract:
This article analyzes the extent to which the Basic Benefit Package (BBP), a subsidized health
program in Armenia, increases utilization and affordability of outpatient health care among the poor.
The authors find that beneficiaries of the BBP pay approximately 45 percent less in fees for doctor
visits (and display 36 percent higher outpatient utilization rates) than eligible users not receiving the
BBP. However, even among BBP beneficiaries the level of outpatient health care utilization remains
low. This occurs because the program mainly provides discounted fees for doctor visits, but fees do
not constitute the main financial constraint for users. The authors estimate suggest that other non-fee
expenditures, such as prescription medicines, constitute a more significant financial constraint and are
not subsidized by the BBP. As a result, outpatient health care remains expensive even for BBP
beneficiaries.

Fiscal Health of Selected Indian Cities

Simanti Bandyopadhyay
National Institute of Public Finance and Policy, India

M. Govinda Rao
affiliation not provided to SSRN

World Bank Policy Research Working Paper No. 4863

Abstract:
This paper provides an overview of the fiscal problems faced by five urban agglomerations in India,
namely, Delhi, Hyderabad, Kolkata, Chennai, and Pune. It analyzes the fiscal health of the five urban
agglomerations, quantifies their revenue capacities and expenditure needs, and draws policy
recommendations on the means to reduce the gaps between revenue raising capacities and
expenditure needs. The main findings suggest that, except for five small urban local bodies in
Hyderabad, the others are not in a position to cover their expenditure needs by their present revenue
collections. All the urban agglomerations have unutilized potential for revenue generation; however,
with the exception of Hyderabad, they would fail to cover their expenditure needs even if they realized
their revenue potential. Except in Chennai, larger corporations are more constrained than smaller
urban local bodies. The paper recommends better utilization of own revenue through improved
administration of property taxes, implementation of other taxes, and collection of user charges. It
recommends that state governments should explore the option of allowing local bodies to piggyback a
small proportion on their value-added tax collections. Another way to reduce the fiscal gap would be to
earmark a portion of the sales proceeds from land and housing by state governments sold through
their development agencies for improvements in urban infrastructure. The paper also recommends
that the State Finance Commissions should develop appropriate norms for estimating expenditure
needs, based on which transfers from the state to local governments can be decided.

Econometric Models of Private and Public Health

Expenditure in OECD Countries, 1970-96

Maria-Carmen Guisan
Universidade de Santiago de Compostela

Matilde Arranz
affiliation not provided to SSRN

Applied Econometrics and International Development, Vol. 3, No. 3, 2003

Abstract:
We analyse the evolution of Private Consumption on Health, having into account that there are
substitution effects between public and private expenditure in OECD countries. From the analysis of
the evolution of these variables our main conclusion is that the increase of expenditure on Health, with
economic development, is generally positive for welfare and obeys to a rational behaviour of
consumers. So we do not agree with the propositions and attempts to cut public expenditure on this
important service which sometimes is made in the name of a kind economic efficiency that does not
have into account, in the desirable degree, the quality of services and social welfare. We estimate
some econometric models for private expenditure and the results confirm the existence of a high
degree of substitution, what means that diminutions in public expenditure do not imply diminution in
total expenditure on health but an increases in private one. The findings support a distribution
between private and public expenditure, in order to guarantee general assistance of population, to get
high standards of consumers welfare, accordingly with the stage of economic development, and to
avoid abuses in demand of free public health services.

Keywords: Health Economics, Consumption of Health Services, OECD countries, Econometric

Models, Private and Public Health Expenditure
Leakage of Public Resources in the Health Sector: An
Empirical Investigation of Chad

Waly Wane
World Bank

Bernard Gauthier
Ecole des Hautes Etudes Commerciales (HEC) Montreal

September 1, 2007

World Bank Policy Research Working Paper No. 4351

Abstract:
In the public sector in developing countries, leakage of public resources could prove detrimental to
users and affect the well-being of the population. This paper empirically examines the importance of
leakage of government resources in the health sector in Chad, and its effects on the prices of drugs.
The analysis uses data collected in Chad as part of a Health Facilities Survey organized by the World
Bank in 2004. The survey covered 281 primary health care centers and contained information on the
provision of medical material, financial resources, and medicines allocated by the Ministry of Health to
the regional administration and primary health centers. Although the regional administration is officially
allocated 60 percent of the ministry's non-wage recurrent expenditures, the share of the resources
that actually reach the regions is estimated to be only 18 percent. The health centers, which are the
frontline providers and the entry point for the population, receive less than 1 percent of the ministry's
non-wage recurrent expenditures. Accounting for the endogeneity of the level of competition among
health centers, the leakage of government resources has a significant and negative impact on the
price mark-up that health centers charge patients for drugs.

Sustainability of Healthcare Financing in the Western

Balkans: An Overview of Progress and Challenges

Caryn Bredenkamp
World Bank

Michele Gragnolati
World Bank - Latin America and Caribbean Region
 October 1, 2007

World Bank Policy Research Working Paper No. 4374

Abstract:
This paper explores the major challenges to the sustainability of health sector financing in the
countries of the Western Balkans - Albania, Bosnia and Herzegovina, the Former Yugoslav Republic
of Macedonia, Montenegro, Serbia and the province of Kosovo. It focuses on how the incentives
created by the different elements of the healthcare financing system affect the behavior of healthcare
providers and individuals, and the resulting inefficiencies in revenue collection and expenditure
containment. The paper analyzes patterns of healthcare expenditure, finding that there is some
evidence of cost containment, but that current expenditure levels - while similar to that in EU countries
as a share of GDP - are low in per capita terms and the fiscal space to increase expenditures is
extremely limited. It also examines the key drivers of current healthcare expenditure and the most
significant barriers to revenue generation, identifying some key health reforms that countries in the
sub-region could consider in order to enhance the efficiency and sustainability of their health systems.
Data are drawn from international databases, country institutions, and household surveys.

Linking Public Investment Programs and SPAHD Macro

Models: Methodology and Application to Aid Requirements

Pierre-Richard Agenor
University of Manchester - School of Social Sciences; International Monetary Fund (IMF) - Research
Department; National Bureau of Economic Research (NBER); World Bank

Nihal Bayraktar
Pennsylvania State University - School of Business Administration; World Bank

Emmanuel Pinto Moreira

World Bank

June 1, 2006

World Bank Policy Research Working Paper No. 3944

Abstract:
The authors propose a bottom up approach to link public investment programs with a class of macro
models recently developed to quantify Strategy Papers for Human Development (SPAHD) in low-
income countries. The methodology involves establishing constant-price projections of investment
outlays (disaggregated into infrastructure, education, and health), spending on maintenance and other
goods and services, salaries, and user charges. These estimates are incorporated in a SPAHD macro
framework to calculate, under alternative scenarios, domestic financing, foreign borrowing, and aid
requirements. The authors also evaluate the impact on growth and indicators associated with the
Millennium Development Goals. They use illustrative applications, based on a SPAHD model for
Niger, to highlight the link between tax reform and aid requirements.

Defining and Measuring Knowledge Capital in Healthcare

Sumathi Sundram
University of East Anglia
 Miranda Mugford
University of East Anglia

Richard Fordham
University of East Anglia

Charles Normand
Trinity College (Dublin)

2007

iHEA 2007 6th World Congress: Explorations in Health Economics Paper

Abstract:
This paper reviews the current literature on knowledge capital in health care and presents a model for
exploring the dimensions of knowledge capital in health care provision in an emerging technology.

Knowledge as a resource is difficult to control due to its non rival, non-excludable and cumulative
nature. Specialist knowledge is often organized into 'Knowledge commons' for greater concurrent
access, reproduction and expansion. Unlike other resources of production, increased usage does not
deplete it, but is invigorated and refined through increased usage by managers, producers,
researchers, and professionals. The externality of knowledge is made stronger in the case of
cumulative knowledge. The cumulative nature of knowledge makes it a resource for consumption.

Knowledge is a joint product and at the core of healthcare delivery as the sharing of experiences in
treating and supporting patients creates new knowledge on methods and practices of healthcare.
Healthcare delivery and knowledge generation happens in tandem hence knowledge management is
critical for the effectiveness and quality of healthcare delivery. This interdependency characterises the
intangible knowledge capital in the healthcare setting which in turn can become formalised into
research, clinical management policies and staff training programmes for reflection in institutional
accounts. What is not known is how far it is possible to identify the value of resources devoted to
'knowledge' in addition to these aspects, how far this is truly a joint cost, and what factors are
associated with the existence of knowledge capital.

Nonaka & Takeuchi's theory of organisational knowledge creation lends itself to understanding the
context for knowledge creation and management of knowledge created in health research and
delivery of healthcare. The understanding of context is essential for the development of a definition for
knowledge capital in healthcare as it is the context that determines the value added

Guidelines provided by The International Federation of Accountants (IFAC) and Meritum Project for
reporting Intellectual capital could inform the process of developing measurements for knowledge
capital in healthcare. Current methods of accounting within health care institutions in the UK may not
adequately allow for management of 'knowledge capital' for optimum functioning of the services. The
concepts of knowledge and intellectual capital were born out of the need to protect the resources of
organisations that added value to business so that returns to investment could be maximised. In the
public funded arena, the business ethos in protection of these intangible assets may not be such a
strong force.

In economic terms Knowledge capital is different from other tangible capital such as land, labour, and
buildings and equipment in that when knowledge capital is subject to greater use and managed
appropriately the returns can accrue at an increasing rate. The social regulations required for its
usage is different to those used to regulate ecological systems of exhaustible resources.
Reference:
Baker. J, 'Creating knowledge creating wealth' realizing the economic potential of public sector
research establishments. A report to the minister for science and the financial secretary to the
treasury. August 1999
Danish Agency for Trade and Industry 'A guideline for intellectual capital statements- A key to
knowledge management'. Nov 2000
Department of health circular on criteria for defining Specialist services. HSC198, London 1998
Nonaka, I. And Takeuchi H. The Knowledge Creating Company,pp 58 New York: Oxford Uni23.
Foray.D, 'The economics of Knowledge' Revised and enlarged translation of: L'economie de la
connaissance. Massachusetts Institute of Technology Press. 2004University Press 1995

Pharmaceutical Innovation

Frederic M. Scherer
Harvard University - John F. Kennedy School of Government

July 2007

KSG Working Paper No. RWP07-004

AEI-Brookings Joint Center Working Paper No. 07-19

Abstract:
This article, written for the forthcoming Handbook of the Economics of Technical Change, surveys the
costs, risks, and challenges encountered in the discovery and development of superior new
pharmaceuticals. The changing methods by which drugs are discovered, the links between
companies and academic science, the changing character of public regulation, and the sharp rise in
the cost per new approved drug are analyzed. Determining which new drugs are both efficacious and
safe poses classic statistical decision theory problems. Why patents are so important to drug
developers is explored. A rent-seeking theory of new drug development is proposed to rationalize the
high gross margins but only slightly supra-normal returns on investment realized by pharmaceutical
companies, and the economic welfare implications are investigated.

Health Insurance Impacts on Health and Nonmedical

Consumption in a Developing Country

Adam Wagstaff
World Bank - Development Research Group

Menno Pradhan
World Bank Office Jakarta; VU University Amsterdam - Faculty of Economics and Business
Administration

April 2005

World Bank Policy Research Working Paper No. 3563

Abstract:
The authors examine the effects of the introduction of Vietnam`s health insurance (VHI) program on
health outcomes, health care utilization, and non-medical household consumption. The use of panel
data collected before and after the insurance program`s introduction allows them to eliminate any
confounding effects due to selection on time-invariant un-observables, and their coupling of
propensity score matching with a double-difference estimator allows them to reduce the risk of biases
due to inappropriate specification of the outcome regression model. The authors`results suggest that
Vietnam`s health insurance program impacted favorably on height-for-age and weight-for-age of
young school children, and on body mass index among adults. Their results suggest that among
young children, VHI increases use of primary care facilities and leads to a substitution away from the
use of pharmacists as a source of advice and non-prescribed medicines toward the use of them as a
supplier of medicines prescribed by a health professional. Among older children and adults, VHI
results in a marked increase in the use of hospital inpatient and outpatient departments. The results
also suggest that VHI causes a reduction in annual out-of-pocket expenditures on health and an
increase in non-medical household consumption, including food consumption, but mostly nonfood
consumption. The authors`estimate of the VHI-induced reduction in out-of-pocket health spending is
considerably smaller than their estimate of the VHI-induced increase in non-medical consumption,
which is consistent with the idea that households hold back their consumption considerably if, through
lack of health insurance, they are exposed to the risk of large out-of-pocket expenditures. This is
especially plausible in a country where at the time (1993), a single visit to a public hospital cost on
average the equivalent of 20 percent of a person`s annual nonfood consumption.

Extending Health Insurance to the Rural Population: An

Impact Evaluation of China's New Cooperative Medical
Scheme

Adam Wagstaff
World Bank - Development Research Group

Jun Gao
Ministry of Health, Beijing-Center for Health Statistics and Information

Ling Xu
Ministry of Health, Beijing-Center for Health Statistics and Information

Qian Juncheng
Ministry of Health, Beijing-Center for Health Statistics and Information

Magnus Lindelow
World Bank

March 1, 2007

World Bank Policy Research Working Paper No. 4150

Abstract:
In 2003, after over 20 years of minimal health insurance coverage in rural areas, China launched a
heavily subsidized voluntary health insurance program for rural residents. The authors use program
and household survey data, as well as health facility census data, to analyze factors affecting
enrollment into the program and to estimate its impact on households and health facilities. They
obtain estimates by combining differences-in-differences with matching methods. The authors find
some evidence of lower enrollment rates among poor households, holding other factors constant, and
higher enrollment rates among households with chronically sick members. The household and facility
data point to the scheme significantly increasing both outpatient and inpatient utilization (by 20-30
percent), but they find no impact on utilization in the poorest decile. For the sample as a whole, the
authors find no statistically significant effects on average out-of-pocket spending, but they do find
some-albeit weak-evidence of increased catastrophic health spending. For the poorest decile, by
contrast, they find that the scheme increased average out-of-pocket spending but reduced the
incidence of catastrophic health spending. They find evidence that the program has increased
ownership of expensive equipment among central township health centers but had no impact on cost
per case.

The Impoverishing Effect of Adverse Health Events:

Evidence from the Western Balkans

Mariapia Mendola
University of Milan - Centro Studi Luca D'Agliano Milano

Caryn Bredenkamp
World Bank

Michele Gragnolati
World Bank - Latin America and Caribbean Region

December 1, 2007

World Bank Policy Research Working Paper No. 4444

Abstract:
This paper investigates the extent to which the health systems of the Western Balkans (Albania,
Bosnia and Herzegovina, Montenegro, Serbia, and Kosovo) have succeeded in providing financial
protection against adverse health events. The authors examine disparities in health status, healthcare
utilization, and out-of-pocket payments for healthcare (including informal payments), and explore the
impact of healthcare expenditures on household economic status and poverty. Methodologies include
(i) generating a descriptive assessment of health and healthcare disparities across socioeconomic
groups, (ii) measuring the incidence and intensity of catastrophic healthcare payments, (iii) examining
the effect of out-of-pocket payments on poverty headcount and poverty gap measures, and (iv)
running sets of country-specific probit regressions to model the relationship between health status,
healthcare utilization, and poverty. On balance, the findings show that the impact of health
expenditures on household economic wellbeing and poverty is most severe in Albania and Kosovo,
while Montenegro is striking for the financial protection that the health system seems to provide. Data
are drawn from Living Standards and Measurement Surveys.

The Impact of Price Subsidies on Child Health Care Use:

Evaluation of the Indonesian Healthcard

Aparnaa Somanathan
World Bank, South Asia - Human Development

May 1, 2008

World Bank Policy Research Working Paper No. 4622

Abstract:
Financial barriers to seeking care are frequently cited as one of the main causes of underutilization of
child health care services. This paper estimates the impact of Indonesia's healthcard on health care
use by children. Evaluation of the healthcard effect is complicated by the fact that card allocation was
non-random. The analysis uses propensity score matching to control for systematic differences
between treatment and control groups. A second potential source of bias is related to
contemporaneous, exogenous influences onhealth care use unrelated to the healthcard itself. Using
panel data collected prior to and after the introduction of the healthcard, a difference-in-differences
estimator is constructed to eliminate the effects of exogenous changes over time. The author finds
that although health care use declined for all children during the crisis years of 1997-2000, use of
public sector outpatient services declined much less for children with healthcards. The protective
effect of the healthcard on public sector use was concentrated among children aged 0-5 years. The
healthcard had no significant impact on use of private sector services. The results highlight the need
to provide adequate protection against the financial burden of health care costs, particularly during
economic crises.

Health Investments and Economic Growth :

Macroeconomic Evidence and Microeconomic Foundations

William Jack
World Bank

Maureen Lewis
World Bank

World Bank Policy Research Working Paper No. 4877

Abstract:
This paper reviews the correlations and potential links between health and economic growth and
summarizes the evidence on the role of government in improving health status. At the macroeconomic
level, the evidence of an impact of health on growth remains ambiguous due both to difficulties in
measuring health, and to the methodological challenges of identifying causal links. The evidence on
the micro linkages from health investments to productivity and income are robust. Progress in life
expectancy over the past two centuries has been spectacular, fueled by: improved agriculture that has
increased food quantity; knowledge of disease transmission, and effective public health interventions
that have controlled communicable diseases such as malaria, yellow fever, and hookworm; and, most
recently and importantly, investments in very young children that pay off in healthier and more
productive adults. Whether public investments in medical care affect health hinges on the quality of
health institutions. In much of the developing world, factors such as chronic absenteeism among
public providers, poor budget execution, ineffective management, and virtually no accountability
weaken public efforts. Institutional issues are central in efforts to enhance public health investments,
which in turn have a direct impact onthe population's welfare and, perhaps over the long term,
improvements in national income.

Environmental and Health-Related Standards Influencing

Agriculture in Australia

Randy Stringer
University of Adelaide - Centre for International Economic Studies (CIES)
 Kym Anderson
University of Adelaide - Centre for International Economic Studies (CIES); Centre for Economic Policy
Research (CEPR); World Bank Group - International Trade Unit

March 2000

CIES Working Paper No. 10

Abstract:
This report is part of a five-country study focusing on how environmental and human health related
standards apply to the agricultural sector. The overall study is coordinated by the Agricultural
Economics Research Institute (LEI) in the Netherlands. The five countries include Australia, Canada,
the European Union, New Zealand and the USA. Each country study provides an overview of its
agricultural sector; explains government policy objectives; outlines public sector approaches to the
various environmental and health-related issues confronting agriculture; details a comprehensive
inventory of environmental and health-related regulations; and draws out key economic implications of
complying with both current and prospective environmental and health-related policies, particularly as
they impact on the international competitiveness.

Until recently, Australia's farmers have been largely insulated from the demands of environmental
groups and from government restrictions on their activities. Now, however, various local, national and
international pressures are forcing policymakers to address agricultural environmental and health-
related issues and to examine ways to promote more sustainable farming practices. Australian policy
recognises that environmental and ecologically sustainable development issues must be dealt with at
all levels of government if the resource base is to be used optimally.

Australia has begun responding to this environmental challenge by committing to a process of

adapting sustainable development concepts, programs, and policies to suit domestic socioeconomic
conditions, including prevailing agricultural production, consumption and trade patterns. It also has
been a keen participant in international agencies such as Codex Alimentarius, WTO, IOE and IPPC,
whose foci are on global food safety and plant and animal health issues.

Environmental and food safety management involves a mix of government regulations and voluntary
approaches. Voluntary measures and agreements between governments, industry and community
groups play a key role, with an increasing emphasis on economic (ie. price-based) instruments. For
example, the current water reform agenda that is gradually being accepted across the country
includes moves towards full cost pricing of water delivery and tradeable water rights.

The Commonwealth Government is currently undertaking a comprehensive reform of the country's

environmental law regime. The objective of this process is to deliver better environmental outcomes in
a manner that promotes greater certainty for all stakeholders and minimises the potential for delay
and intergovernmental duplication (DE, 1998). Fundamental to the reform package is the integration
of environmental, economic and social considerations through the implementation of the principles of
ecologically sustainable development. The precautionary principle and the principle of
intergenerational equity are expressly recognised. Two other guiding principles of the reform process
are the need to maintain and enhance international competitiveness in an environmentally sound
manner and the adoption of cost-effective and flexible measures.

Women, Health and Productivity - Some Issues in India's

Development
 V. Basil Hans
St Aloysius Evening College, Mangalore (INDIA)

December 5, 2008

Abstract:
India is on the path of becoming an economic superpower but its performance index in health
component of human development, particularly that of women is not at all impressive. The typical
female advantage in life expectancy is not seen in India. In the context of the new economics of
liberalization and its challenges to work, human security and development it is necessary to
understand whether women are in a position to take advantage of the economic take-off. Therefore,
an attempt is made in this paper to analyses the health issues of women in India in relation to their
work environment, productivity and welfare. It focuses on two broad areas of gender-based
differences and inequalities, viz. the links between gender and economic productivity, and the
development of human capital.

Social Rights and Economics: Claims to Health Care and

Education in Developing Countries

Varun Gauri
World Bank

March 20, 2003

World Bank Policy Research Working Paper No. 3006

Abstract:
Gauri analyzes contemporary rights-based and economic approaches to health care and education in
developing countries. He assesses the foundations and uses of social rights in development, outlines
an economic approach to improving health and education services, and then highlights the
differences, similarities, and the hard questions that the economic critique poses for rights. The author
argues that the policy consequences of rights overlap considerably with a modern economic
approach. Both the rights-based and the economic approaches are skeptical that electoral politics and
de facto market rules provide sufficient accountability for the effective and equitable provision of
health and education services, and that further intrasectoral reforms in governance, particularly those
that strengthen the hand of service recipients, are needed. There remain differences between the two
approaches. Whether procedures for service delivery are ends in themselves, the degree of
disaggregation at which outcomes should be assessed, the consequences of long-term deprivation,
metrics used for making tradeoffs, and the behavioral distortions that result from subsidies are all
areas where the approaches diverge. Even here, however, the differences are not irreconcilable, and
advocates of the approaches need not regard each other as antagonists.

Trade in Health Services in the ASEAN Region

Jutamas Arunanondchai
Fiscal Policy Research Institute Foundation

Carsten Fink
 World Bank - Development Research Group (DECRG)

March 1, 2007

World Bank Policy Research Working Paper No. 4147

Abstract:
Promoting quality health services to large population segments is a key ingredient to human and
economic development. At its core, healthcare policymaking involves complex tradeoffs between
promoting equitable and affordable access to a basic set of health services, creating incentives for
efficiencies in the healthcare system, and managing constraints in government budgets. International
trade in health services influences these tradeoffs. It presents opportunities for cost savings and
access to better quality care, but it also raises challenges in promoting equitable and affordable
access. Drawing on a research project of the ASEAN Economic Forum, this paper offers a discussion
of trade policy in health services for the ASEAN region. It reviews the state of healthcare in the region,
existing patterns of trade, and remaining barriers to trade. The paper also identifies policy measures
that could further harness the benefits from trade in health services and address potential pitfalls that
deeper integration may bring about.

Comparative Human Development: Egypt, Middle East,

and the Developing World

Tarek H. Selim
The American University in Cairo

January 2008

Abstract:
The objective of this research is to derive a comparative human development index by which to study
the social welfare position of the Egyptian economy relative to the Middle East region and developing
countries. This includes a comprehensive set of economic development indicators: per-capita income,
poverty ratio, poverty gap, inequality of income, inequality of gender, and multiple dimensions of social
entitlements as inverse measure of social deprivation. Taking water access, health access, education
enrolment, and life expectancy as social entitlements, a new human development index is derived
based on different works in the literature, most notably the works of Bergson, Samuelson, Atkinson,
and Sen. This formulation is then applied to the Egyptian economy, the MENA region, and to a
regional set of 79 developing countries. This gives rise to achievements, constraints, and future
challenges on a comparative scale. Health Service Delivery in China: A
Literature Review

Karen Eggleston
University of California, Los Angeles - International Institute

Magnus Lindelow
World Bank

Li Ling
Beijing University
 Meng Qingyue
Shandong University

Adam Wagstaff
World Bank - Development Research Group

August 1, 2006

World Bank Policy Research Working Paper No. 3978

Abstract:
The authors report the results of a review of the Chinese-language and English-language literatures
on service delivery in China, asking how well China's health care providers perform, what determines
their performance, and how the government can improve it. They find current performance leaves
room for improvement in terms of quality, responsiveness to patients, efficiency, cost escalation, and
equity. The literature suggests that these problems will not be solved by simply shifting ownership to
the private sector, or by simply encouraging providers - public and private - to compete with one
another for individual patients. In contrast, substantial improvements could be (and in some places
have already been) made by changing the way providers are paid-shifting away from fee-for-service
and the distorted price schedule toward prospective payments. Active purchasing by insurers could
further improve outcomes.

Social Health Insurance Reexamined

Adam Wagstaff
World Bank - Development Research Group

01/01/2007

World Bank Policy Research Working Paper No. 4111

Abstract:
Social health insurance (SHI) is enjoying something of a revival in parts of the developing world. Many
countries that have in the past relied largely on tax finance (and out-of-pocket payments) have
introduced SHI, or are thinking about doing so. And countries with SHI already in place are making
vigorous efforts to extend coverage to the informal sector. Ironically, this revival is occurring at a time
when the traditional SHI countries in Europe have either already reduced payroll financing in favor of
general revenues, or are in the process of doing so. This paper examines how SHI fares in health
care delivery, revenue collection, covering the formal sector, and its impacts on the labor market. It
argues that SHI does not necessarily deliver good quality care at a low cost, partly because of poor
regulation of SHI purchasers. It suggests that the costs of collecting revenues can be substantial,
even in the formal sector where nonenrollment and evasion are commonplace, and that while SHI can
cover the formal sector and the poor relatively easily, it fares badly in terms of covering the nonpoor
informal sector workers until the economy has reached a high level of economic development. The
paper also argues that SHI can have negative labor market effects.

Government Health Expenditures and Health Outcomes

Farasat Bokhari
 Florida State University - Department of Economics

Yunwei Gai
Florida State University

Pablo Gottret
World Bank

May 4, 2006

Abstract:
This paper provides econometric evidence linking a country's per capita government health
expenditures and per capita income to two health outcomes: under-five mortality and maternal
mortality. Using instrumental variables techniques (GMM-H2SL), we estimate the elasticity of these
outcomes with respect to government health expenditures and income while treating both variables as
endogenous. Consequently, our elasticity estimates are larger in magnitude than those reported in
literature, which may be biased up. The elasticity of under-five mortality with respect to government
expenditures ranges from -.25 to -.42 with a mean value of -.33. For maternal mortality the elasticity
ranges from -.42 to -.52 with a mean value of -.50. For developing countries, our results imply that
while economic growth is certainly an important contributor to health outcomes, government spending
on health is just as important a factor.

What Makes Cities Healthy?

Shahid Yusuf
World Bank

Wei Ha
Harvard University

Kaoru Nabeshima
World Bank

January 1, 2007

World Bank Policy Research Working Paper Series

Abstract:
The benefits of good health to individuals and to society are strongly positive and improving the health
of the poor is a key Millennium Development Goal. A typical health strategy advocated by some is
increased public spending on health targeted to favor the poor and backed by foreign assistance, as
well as by an international effort to perfect drugs and vaccines to ameliorate infectious diseases
bedeviling the developing nations. But if the objective is better health outcomes at the least cost and a
reduction in urban health inequity, the authors' research suggests that the four most potent policy
interventions are: water and sanitation systems; urban land use and transport planning; effective
primary care and health programs aimed at influencing diets and lifestyles; and education. The payoff
from these four in terms of health outcomes dwarf the returns from new drugs and curative hospital-
based medicine, although these certainly have their place in a modern urban health system. And the
authors find that the resource requirements for successful health care policies are likely to depend on
an acceleration of economic growth rates which increase household purchasing power and enlarge
the pool of resources available to national and subnational governments to invest in health-related
infrastructure and services. Thus, an acceleration of growth rates may be necessary to sustain a
viable urban health strategy which is equitable and to ensure steady gains in health outcomes.

Free Distribution or Cost-Sharing? Evidence from a

Randomized Malaria Prevention Experiment

Jessica Cohen
The Brookings Institution

Pascaline Dupas
Dartmouth College - Department of Economics

December 2007

Brookings Global Economy and Development Working Paper No. 11

Abstract:
It is widely believed that cost-sharing - charging a subsidized, positive price - for a health product is
necessary to avoid wasting resources on those who will not use or do not need the product. We
explore this argument in the context of a field experiment in Kenya, in which we randomized the price
at which pregnant women could buy long lasting anti-malarial insecticide-treated nets (ITNs) at
prenatal clinics. We find no evidence that cost-sharing reduces wastage on those that will not use the
product: women who received free ITNs are not less likely to use them than those who paid
subsidized positive prices. We also find no evidence that cost-sharing induces selection of women
who need the net more: those who pay higher prices appear no sicker than the prenatal clients in the
control group in terms of measured anemia (an important indicator of malaria). Cost-sharing does,
however, considerably dampen demand. We find that uptake drops by 75 percent when the price of
ITNs increases from 0 to $0.75, the price at which ITNs are currently sold to pregnant women in
Kenya. We combine our estimates in a cost-effectiveness analysis of ITN prices on infant mortality
that incorporates both private and social returns to ITN usage. Overall, given the large positive
externality associated with widespread usage of insecticide-treated nets, our results suggest that free
distribution to pregnant women is both more effective and more cost-effective than cost-sharing.

The Nature of Healthcare: A Cross-National Time Series

Perspective

Achintya Ray
Tennessee State University - College of Business
 July 22, 2008

Abstract:
Is healthcare a luxury? An answer to this question in the health economics literature mostly relied on
the use of the level of healthcare spending as the explained variable. But by using the level of
healthcare spending as the dependent variable, we may fail to identify pure income effects and
therefore, may not be able to estimate the income elasticity properly. Employing standard welfare
comparison methods widely used in the development economics literature, it is argued that budget-
share of healthcare in national income is a more convenient and better policy-relavant variable than
the level of spending on healthcare. Using panel data from 23 OECD countries for the years 1960-
1998, it is showed that aggregate healthcare is strictly a necessary and not a luxury service. Similarly,
publicly provided healthcare is a necessary service too. Results on the privately provided healthcare
are ambiguous and depends in part on the inclusion of the US in the sample of countries. The policy
Pro-Poor Interventions
implications of the results found are also discussed briefly.
for Infectious Diseases: When and How Do They Work?

Michael Thiede
University of Cape Town

Marianela Castillo-Riquelme
University of Cape Town

May 2007

iHEA 2007 6th World Congress: Explorations in Health Economics Paper

Abstract:
Infectious diseases constitute a major barrier to economic development in many low- and middle-
income countries. The spectrum of diseases ranges from those that attract major international
attention, such as HIV/AIDS, malaria and tuberculosis, to diseases that have been widely neglected
and that still have serious detrimental effects on livelihoods, mainly those of the poor and
disadvantaged socio-economic strata with serious implications for social and economic development.
There is a wide-ranging body of health economics research focussing on the cost-effectiveness of
interventions. Less has been published on the socio-economic dimension of interventions. Yet
interventions often do not address the health and socio-economic needs of the disadvantaged groups.
In addition, access to interventions is frequently jeopardised by lack of geographic availability, direct
non-medical costs associated with the utilisation of services as well as issues around (cultural)
acceptability.

This paper addresses the question of who benefits and who does not benefit from interventions aimed
at infectious diseases. Based on a systematic review of the literature (both peer-reviewed and 'grey'
literature), the study draws up a conceptual framework which highlights the benefit incidence of
interventions and applies an equity lense. Not only does this approach allow a classification of
interventions in terms of their socio-economic impact, it also provides an analytical structure to
investigate the influences of health system design in the respective settings as well as the role of
public-private mix and broader contextual issues. While focussing on common pitfalls and success
factors of programme implementation, the approach also seeks to highlight factors specific to the
study settings that may facilitate or impede equity in uptake and outcome of interventions aimed at
infectious diseases.
The study results are presented in a systematic format that categorises disease characteristics,
different levels of facilitating and impeding factors as well as socio-economic impact patterns. The
systematic approach constitutes an innovative tool to guide health policy makers at the local and
international level on the implementation of pro-poor interventions to tackle infectious diseases

Use of Modern Medical Care for Pregnancy and Childbirth

Care: Does Female Schooling Matter?

Aparnaa Somanathan
World Bank, South Asia - Human Development

May 1, 2008

World Bank Policy Research Working Paper No. 4625

Abstract:
Controversy exists over whether the estimated effects of schooling on health care use reflect the
influence of unobserved factors. Existing estimates may overstate the schooling effect because of the
failure to control for unobserved variables or may be downwardly biased due to measurement error.
This paper contributes to the resolution of this debate by adopting an instrumental variable approach
to estimate the impact of female schooling on maternal health care use. A school construction
program in Indonesia in the 1970s is used to construct an instrumental variable for education. The
choice between use and non-use of maternal health services is estimated as a function of schooling
and other variables. Data from the Indonesia Family Life Survey are used for this paper. Standard
regression models estimated in the paper indicate that each additional year of schooling does indeed
have a significant, positive effect on maternal health care use. Instrumental variable estimates of the
schooling effect are larger. The results suggest that schooling has a positive impact on maternal
health care use even after eliminating the effect of unobserved variables and measurement error. This
paper moves beyond previous work on the impact of education on health care use by adopting an IV
approach to address the problem of endogeneity and measurement error. IV methods have been
used widely in the labour economics literature to examine the impact of schooling on wages and other
labour market outcomes but rarely to estimate the effect of schooling on health outcomes.

Income Growth, Health Expenditure, Education

Investment: The Effects on Population Growth

Yuhua Shi
Australian National University

July 21, 2006

iHEA 2007 6th World Congress: Explorations in Health Economics Paper

Abstract:
Two of the most salient aspects of the process of economic growth are the decline in both fertility and
mortality, and the growth of investment in human capital. These phenomena are observed in both
long-term historical data for countries that developed early, and in more accelerated form, in the post-
World War II period. For example, over the 19th century, life expectancy at birth in England rose from
37.3 to 48.2 years, and by 1930, it had reached 60.8. The average number of years of schooling rose
from 2.3 for the cohort born in 1801-1805 to 9.1 for the cohort born 1897-1906. Statistics from the
World Bank show that averaging across lower income countries, life expectancy at birth rose from
42.2 in 1950 to 63.3 in 1990; gross secondary school enrollment increased from 17.1 percent in 1960
to 46.9 percent in 1990.

The link between demographic transition and economic growth has been explored in a number of
studies. Mortality fell directly because of higher incomes (which led to better nutrition) and because of
advances in health technology. Mortality decline in turn, triggered the process of demographic
transition, in which, with a varying lag, fertility fell. And increased survival chances promote income
growth by raising the human capital investment. However, in these studies, mortality rate is treated
exogenously in discussing its effects on fertility, human capital investment and growth.

In this paper we incorporate mortality variable into the endogenous growth model, where agents
choose between consumption, fertility choice, human capital investment and health investment to
prolong life span within a dynamic family model. Income growth leads to higher health investment,
which in turn increases the survival rate; a higher probability of survival increases the return on human
capital, which will lead to induce a quality-quantity trade-off for the number of children chosen. The
result suggests that health investment increases along with income growth; fertility rate increases first
and declines toward the steady state level as the survival rate of agents rises with increasing health
investment. The return on human capital is higher with high level of survival rates and lower fertility
level, which is consistent with the literature.

We also present that with government subsidies on health expenditure, the process of fertility
transition is triggered, which tends to increase in children's education and hence income growth. This
result is quite interesting and is in line with the stylized fact: in developing countries, such as Sri Lanka
and China, mass investment in public health improves the health status of popEarnings
Effects of Household Investment in Health in Colombia

Rocio Ribero
University of the Andes (Colombia)

March 6, 2000

Abstract:
This study considers the links between primary indicators of health and individual labor productivity in
Colombia and explores how additional public expenditures on health may improve individuals' health.
Sample statistics how that illness occurs more frequently for women than for men, for less educated
than for more educated, for rural than urban residents, and for older individuals. The well educated
are considerably taller than those without schooling (6 cm. for males and 4 cm. for females). The
empirical evidence confirms that health indicators are related to individual earnings in Colombia. A
Mincerain log-earnings equation that includes health indicators as a form of human capital in addition
to schooling is specified. When the morbidity variable is treated as endogenous and measured with
error and the model is estimated by instrumental variables [IV], it becomes significant and has the
expected negative sign. Controlling for age, education, sector of employment, gender and geographic
location, an increase by 50% on the average number of days an individual was ill and unable to do his
ordinary activities in the last month would imply reductions in labor earnings of 11% for urban males,
8% for urban females, 13% for rural males and 7% for rural females. The estimations with height
show a positive sign and high significance even without the IV correction, but the coefficients
increased with IV methods by an order of magnitude. Having one more centimeter of stature would
increase urban female earns by 4.7% and urban male earnings by 12%. Individual's wealth and living
 in a community with better health provision indicators are linked with better health outcomes. An
analysis of the returns to schooling shows that schooling captures part of the effect of health on
productivity when the health indicator is not included in the Mincer equationulation. And we have
observed in these countries, a quicker demographic transition that has been completed within a few
decades. The Moral Economy of Investing in Child Health:
Considerations in Resource Poor Settings

Daniel Reidpath
Brunel University -- Centre for Public Health Research

Pascale Allotey
affiliation not provided to SSRN

Subhash Pokhrel
Brunel University - School of Health Sciences and Social Care

iHEA 2007 6th World Congress: Explorations in Health Economics Paper

Abstract:
Health is widely regarded as a strategic national investment and one that is particularly pertinent to
the Millennium Development Goals (MDGs). A tension exists, however, between national strategies to
achieve the MDGs through macroeconomic investment in health ad education, and the
microeconomic realities that suffuse poor households. National policies may favor investment, but the
choices and activities of households are constrained by a "moral economy" of cultural and and
economic necessity which mitigates the exigency of investment; an economy within which social and
cultural pressures prescribe conformity to established norms, even at the expense of greater long
term advantage. For the macroeconomic strategy to succeed, households must "co-invest",
notwithstanding the constraints imposed by their moral economy. At the very least households need to
utilise the available health services and pay the opportunity costs associated with that use. This,
however, is not what happens. In broad terms, health services are chronically under-utilised by poor
households even when their use carries no direct cost. Indeed, amongst the poorest countries,
particularly in sub-Saharan Africa, it is the middle class that captures most of the gain from state
policies to invest in health, with the poor, especially the rural poor benefiting least. This paper explores
the nature of the moral economy within poor households with a particular focus on implications for
investment in child health.The Health and Cost Benefits of Work Site
Health-Promotion Programs

Ron Z. Goetzel
Thomson Healthcare

Ronald J. Ozminkowski
Author - Consultant

Annual Review of Public Health, Vol. 29, April 2008

Abstract:
We review the state of the art in work site health promotion (WHP), focusing on factors that influence
 the health and productivity of workers. We begin by defining WHP, then review the literature that
addresses the business rationale for it, as well as the objections and barriers that may prevent
sufficient investment in WHP. Despite methodological limitations in many available studies, the results
in the literature suggest that, when properly designed, WHP can increase employees' health and
productivity. We describe the characteristics of effective programs including their ability to assess the
need for services, attract participants, use behavioral theory as a foundation, incorporate multiple
ways to reach people, and make efforts to measure program impact. Promising practices are noted
including senior management support for and participation in these programs. A very important
challenge is widespread dissemination of information regarding success factors because only 7% of
employers use all the program components required for successful interventions. The need for more
and better science when evaluating program outcomes is highlighted. Federal initiatives that support
cost-benefit or cost-effectiveness analyses are stressed, as is the need to invest in healtHealth
Endowments and Parental Investments in Infancy:
Evidence from Rural India

Ashlesha Datar
RAND Corporation

Arkadipta Ghosh
Mathematica Policy Research, Inc.

Neeraj Sood
RAND Corporation; National Bureau of Economic Research (NBER)

June 14, 2007

iHEA 2007 6th World Congress: Explorations in Health Economics Paper

Abstract:
Background and Objectives: In several developing countries parents face significant uncertainties
about children's survival. These uncertainties are likely to affect intra-household investments in
children. Theories of intra-household resource allocation are inconclusive regarding parental behavior.
For example, parents might follow a reinforcing strategy and invest more in the healthy infant who
they believe is more likely to survive and enjoy the fruits of their investment. On the other hand,
parents might choose to compensate for low initial health endowments by investing more in their less
endowed infant. Whether parents reinforce or compensate for children's endowments has important
long term consequences for both intrafamily and population health disparities. In this paper, we
estimate the relationship between a child's initial health endowment and parental health investments.
We also evaluate how this relationship changes with changes in infant mortality risks.

Methods: We use data on rural households from wave I (1992-93) of the National Family Health
Survey conducted in India. We utilize variation in birth size across siblings to estimate mother fixed
effects models with additional controls for pre- and post-natal attributes that vary across siblings.
Further, we stratify villages by infant mortality rate to investigate how parental investment strategies
are affected by the background mortality risk. We also examine whether differences in parental
behavior between high- and low-infant mortality areas can be explained in terms of preferences for
discrimination or access to health infrastructure. Parental investments studied in the paper include
age appropriate immunizations against polio and non-polio diseases, and whether a child was
breastfed for six months.

Results: We find evidence of reinforcing investment in child health - children with relatively smaller
birth size are less likely to be immunized and breastfed compared to their larger birth size siblings. We
also find that high background mortality risks magnify this pattern of reinforcing investment. This
finding is robust and cannot be explained by either differences in preferences or access to health
infrastructure across high- and low-infant mortality areas.

Conclusion: These results show that children's endowment differences as well as background
mortality risk can have sizeable impacts on intrahousehold resource allocations in a developing
country. Also, these results have important implications for public policies seeking to improve birth
outcomes and immunization coverage in developing countries. In particular, our results suggest that
public policies that improve infant survival create unique incentives for parents to invest in their
children. Improving infant survival will also increase incentives for investing in less endowed children,
consequently reducing health disparities in the population. hy work environments, to complement
Mortality Risks, Health Endowments,
individual based interventions.
and Parental Investments in Infancy: Evidence from Rural
India

Ashlesha Datar
RAND Corporation

Arkadipta Ghosh
Mathematica Policy Research, Inc.

Neeraj Sood
RAND Corporation; National Bureau of Economic Research (NBER)

November 2007

NBER Working Paper No. W13649

Abstract:
This paper examines whether increased background mortality risks induce households to make
differential health investments in their high-versus low-endowment children. We argue that increases
in background mortality risks may disproportionately affect the survival of the low-endowment sibling,
consequently increasing the mortality gap between the high- and low-endowment siblings. This
increase in mortality gap may induce households to investment more in their high endowment
children. We test this hypothesis using nationally representative data from rural India. We use birth
size as a measure of initial health endowment, immunization & breastfeeding as measures of
childhood investments and infant mortality rate in the child's village as a measure of mortality risks.
We find that in villages with high mortality risks, small-at-birth children in a family are 6-17 percent
lessHIV Pandemic, Medical Brain Drain, and Economic
Development in Sub-Saharan Africa

Alok Bhargava
University of Houston - Department of Economics

Frédéric Docquier
Catholic University of Louvain; CREAM, Centre for Research on Environmental Appraisal &
Management, UK; Institute for the Study of Labor (IZA)
 The World Bank Economic Review, Vol. 22, No. 2, pp. 345-366, 2008

Abstract:
Country-level longitudinal data at three-year intervals over 1990-2004 are used to analyze the factors
affecting emigration of physicians from Sub-Saharan countries and the effects of this medical brain
drain on life expectancy and number of deaths due to AIDS. Data are compiled on emigrating African
physicians from 16 receiving Organisation for Economic Co-operation and Development (OECD)
countries. A comprehensive longitudinal database is developed by merging the medical brain drain
variables with recent data on HIV prevalence rates, public health expenditures, physicians' wages,
and economic and demographic variables. A triangular system of equations is estimated in a random
effects framework using five time observations for medical brain drain rates, life expectancy, and
number of deaths due to AIDS, taking into account the interdependence of these variables. Lower
wages and higher HIV prevalence rates are strongly associated with the brain drain of physicians from
Sub-Saharan African to OECD countries. In countries in which the HIV prevalence rate exceeds 3
percent, a doubling of the medical brain drain rate is associated with a 20 percent increase in adult
deaths from AIDS; medical brain drain does not appear to affect life expectancy. These findings
underscore the need to improve economicconditions for physicians in order to retain physicians in
Sub-Saharan Africa, especially as antiretroviral treatment becomes more widely available. likely to be
breastfed or immunized compared to their large-at-birth siblings. In contrast, we find no significant
within family differences in investments in villages with low mortality risks.