Lecture 5- Estimating Price elasticities of Convalescent Care programmes Flashcards
What is the definition and formula for price elasticity?
The responsiveness of consumers demand to a change in price
Ep= Change in quantity demanded/ Quantity all divided by
Change in price/Price
Who wrote “Estimating Price elasticities of Convalescent Care programmes” and when
Ziebarth, 2010
What is convalescent care?
Mainly Preventative and medical rehab (medical care for recovery when severely sick)
What is a co-payment rate in health care terms?
Often insurance providers will charge a small portion of the treatment that the insured has to pay of the treatment.
What is SHI and are all Germans under it?
Statutory Health Insurance, it is mainly publicly funded health care, with a small co-payment rate.
It focuses on preventative care and medical rehabilitation.
90% of Germmans are on SHI, self-employed and high earners can go private but if you go private you can never come back to SHI
What did Ziebarth contribute with his research?
Before his paper there were mainly studies on price elasticities for health care in the US- not in Europe.
Also, this was the first to study price elasticities for preventative care and medical rehabilitation.
He measures how a doubling of the co-payment rate impacts demand for convalescent care programmes.
What data-set is used?
The German Socio-Economic Panel Study (SOEP)
THis is a representative annual household survey, surveying over 20,000 people
Ziebarth used data from 1995-1999
What was the main dependent variable ?
Convalescent care, it measures if the respondents had any preventative or medical rehabilitation treatment in the year before the interview
What were the two additional dependent variables?
Rehab to Prevent work disability
Rehab to recover from a work accident
What were some controls in the regression?
Personal characteristics (Age, Sex) , Income, Employment (full-time or part)
What empirical strategy was used?
Difference in difference
The co-payment rate doubled in 1997
What was the regression?
Looks at the effect of doubling co-payment rate on convalescent care demands
P= φ(a+ BPost 97+ γT+δ(Post 97 x T)+w’ζ)
P is the outcome variable either (demand for covalescent care, demand for care to prevent work disability or demand for care to recover from a work accident)
Post 97 is a dummy equally 1 if the year of the survey is 1997 or beyond
T shows the treatment dummy vartiable
The interaction of dummies Post97 x T gives the fif-in-dif estimate.
Why did Ziebarth compare the means of the personal characteristics (age ,sex) as well as income, education level, employment for the Treatment and Control Groups?
Since he applied controls in the regression so these factors wouldn’t impact the result, he wanted to measure the mean for each of these characteristics to see if it in fact was necessary to control for these characteristics.
Indeed he found that the mean for age and other areas between T and C were different so it was necessary to control for these areas otherwise OVB would be present.
Did the 1996 announcement of the doubling of co-payments coming in 1997 impact demand for convalescent care even before the change happened?
Yes, this was shown in column 5 of table 4, people began to adjust their behaviour and reduce demand even before the change in prices actually occured
Was there a large difference in the change in demand for those trying to avoid work disability compared to those who were engaging in medical rehabilitation programmes to recover from an illness?
The change in demand was much larger for those trying to avoid disability as this is a preventative measure.
He found that the price elasticity for programmes to prevent work disability is larger than medical rehabilitation programmes
