Disentangling incentives effects of insurance coverage from adverse selection in the case of drug expenditure: a finite mixture approach

Pricing above value: Selling to a market with selection problems

This paper shows that selection incentives in downstream markets distort upstream prices. It is possible for inputs to be priced above the value that the good has for final consumers. We apply this idea to pharmaceutical companies selling drugs to a health insurance market with selection problems. We specify the conditions under which drugs are sold at prices exceeding treatment value. Another feature of the model is an excessive private incentive to reduce market size, e.g. in the form of personalized medicine.

Basic versus supplementary health insurance: Access to care and the role of cost effectiveness

In a model where patients face budget constraints that make some treatments unaffordable without health insurance, we ask which treatments should be covered by universal basic insurance and which by private voluntary insurance. We argue that next to cost effectiveness, prevalence is important if the government wants to maximize the welfare gain that it gets from its health budget. Conditions are derived under which basic insurance should cover treatments that are mainly used by high risk agents with low income.

Analysis of Health Care Costs in Elderly Patients with Multiple Chronic Conditions Using a Finite Mixture of Generalized Linear Models

In this paper we analysed healthcare costs in a sample of elderly patients suffering from multimorbidity. On the one hand, multimorbid individuals consume a disproportionally large share of healthcare resources. On the other hand, the patient specific number and combination of co-occurring single diseases result in inhomogeneous data leading to biased estimates when using traditional regression techniques. Therefore, we applied a mixture of regressions in order to control for unobserved heterogeneity focussing on the identification of multimorbidity patterns. We used a subsample of N = 1050 patients from a multicentre prospective cohort study of randomly selected multimorbid primary care patients aged 65 to 85 years in Germany (ISRCTN 89818205) who completed a detailed questionnaire on healthcare utilization during the 6-month period preceding the interview. Disease combinations of 1047 were included. We detected four different groups of patients with regard to total costs. These groups corresponded largely to findings from the epidemiological literature. The effect of the presence of an additional disease on costs differed between groups. Moreover, two diametrically opposed cost trends were detected with respect to the number of co-occurring diseases. While in one group costs increased with the number of co-occurring diseases, in a second group cost tended to decrease. Copyright © 2016 John Wiley & Sons, Ltd.