1. Health Production Functions

2. Outline Measures of Health Concepts:
Health Production Function
Marginal Product of Health
Historical Health Production Functions
Modern Health Production Functions
Contributions of health care
Lifestyle & Environment (Pollution)
Education

3. Measures of Health Status
What do we want:
A measure of the population’s health status, that captures those aspects of health that are meaningful, and can be measured with accuracy (i.e., quantifiable).
Two main types mortality and morbidity.

4. Measures of Health Status: Mortality Measures
Popular measures because is easy to quantify
know when someone dies and is regularly recorded information
Crude death rate
number of deaths per 100,000 population
for some time period—usually a year

5. Measures of Health Status: Mortality Measures
Infant mortality rate:
Number of death of children < age 1 per 1000 live births
Adjust for age, sex, and race to make more meaningful
Not necessary accurate in low-income and war-torn places
Under-five mortality rate
Mortality rate for elderly

6. Measures of Health Status: Mortality Measures
Life expectancy at birth (male and female)
Cause of death
In more developed countries, can use the cause of death to make analysis more meaningful
i.e., if studying pollution, may want to look at deaths due to asthma, or respiratory infections for infants (< age 1) or small children (< age 5)

8. Measures of Health Mortality Measures: Problems
Problems with mortality measures
Give information on acute problems that lead to death but don’t provide information on quality of life (do you live in pain and can you perform the tasks you want)
Tend to be used in aggregate data analysis not individual analysis

9. Measures of Health Morbidity
Morbidity: A statement about the extent of disability a person suffers as a consequence of a disease over time.
Difficult to quantify because no clear end point and need to asses: duration, severity, and consequences of a disease.

10. Measures of Health Morbidity
Need to measure the disability which could be physical, mental, functional, or social.
Some sources of these types of data are:
Hospital inpatient discharge records.
Hospital outpatient discharge records / outpatient records.
Survey data: self health assessments, days lost from work.

11. Measures of Health Morbidity
Typical morbidity measures includes:
Restricted-activity days due to illness
e.g. number of working days lost – Table 5.2.
Incidence rate of certain chronic conditions.
Self-assessment of health status.
Measures of mobility or activity (ADLs–activities of daily living).
Biomarkers: a characteristic that is objectively measured and evaluated as an indicator or normal biologic process. For example: blood pressure, cortisol (stress measure).

12. Measures of Health Morbidity
Chronic conditions with the highest overall prevalence in US are:
Chronic sinusitis
Arthritis
Asthma
Chronic bronchitis
Diabetes.

13. Health Production Functions (Determinants of Health: US Pop.)
Health Production Function: describes the relationship or flows of inputs and flows of outputs over a specified period.
Where output is usual some measure of health status (HS).
HS=F(inputs to health)
What could the inputs be?
HS=F(health care, environment, education, lifestyle, genetic factors, income)

14. Health Production Functions
Health Status (HS)
Does it make sense the curve flattens out, should it bend downwards again? B A
A>B : as you increase the number of health care inputs, the effects on total health status decrease. 1 2 3 4 5 6
Health Care Inputs (HI)

15. Marginal Product of Health Care
Marginal Product: Is the increment in health status caused by one extra unit of Health Care, holding all other inputs constant? A
MP is diminishing in size, demonstrating the law of diminishing marginal returns. B 1 2 3 4 5
Health Care Inputs

16. Marginal Product of Health Care
Marginal product that is relevant for policy makers:
They want to know if I add one billion dollars to health care, how much will the health status of the population improve.
The marginal product might be different for different types of groups, such as young, elderly, or poor.

17. Determinants of Health Historical View
To know what factors go into the health production function (inputs) need to understand the determinants of health.
Historical Question: what led to the population explosion and increase in life expectancy?

20. Why has mortality declined?
Big medicine theory
Antibiotics for infectious diseases
High-tech treatments for cardiovascular disease
Economic growth theory
Nutrition allows one to withstand disease
Public health theory
Better sewers, cleaner water and air
The long reach of early life factors
Maternal nutrition in utero and fetal development
What looks like big medicine now could be long-term effects of better nutrition, public health in the past

21. Big Medicine Medicine is often a starting point
Seems logical?
Many studies show effects of medicine for specific conditions
Drug trials
Cardiovascular care
Small pox!
Some better than others
Difficult to assign an overall contribution
Readings question role of Big Medicine

22. Big Medicine

23. Big Medicine:Antiobiotics
The development of antibiotics helped, but it came very late in the process.

24. Big Medicine: Cardiovascular Disease
Medical advance appears more important for cardiovascular disease.

25. Economic growth & nutrition
Fogel: Find direct evidence for economic growth hypothesis
Measures of nutrition:
Height (nutrition as a child, esp. up to age 3)
Weight (nutrition as an adult)
Finds
Taller people live longer
People at the appropriate weight live longer
Collected lots of data on weights and heights over time

26. Economic Growth Explanation
In 1800, people were shorter and below optimal weight given height.
Both heights and weights have increased over time.
Fogel: This explains 50 to 80 percent of mortality decline.

27. Economic Growth Explanation
This was a time of exploration and many new foods were introduced into people diets.
Agriculture was advancing, new crops, crop rotation, seed production ….
Standards of living were increasing as a result of trade so people had the money to buy more food.
Better nutrition results in stronger immune system

28. Public Health Explanation
Preston and Deaton response to Fogel:
Fogel presents evidence on nutritional status not availability
Economic growth not only factor in nutrition
Interaction between disease and caloric intake
By 1900, U.S. well-fed  improvement since then?
Relationship between income and health changing
Example: China is about as rich as the US in 1900, but has life expectancy fairly close to US today and far above US in 1900
Quality of the food matters

29. The Public Health Revolution
Modern health practices date from the early 20th century (post germ theory)
Macro public health: sanitation; clean water; pasteurized milk
Micro public health: bathing and hand washing
Epidemiological studies: specific public health interventions improve health
Gap in child mortality by class emerges after public health information is available
Upper classes had more information?

30. The Public Health Revolution
First epidemiological study in public health
1854 and John Snow Cholera outbreak
Sept 1854, people living with a few blocks died of cholera. (thought a low lying cloud caused cholera)
Obtain water by signing up with a water supply company. (there were a couple of companies in area)
One company moved to a less polluted part of Thames–deaths much lower for HH receiving this water.
Matter of public health to make sure water coming from clean areas or to chlorinate the water.

31. The Long Reach of Early Life
Are recent mortality reductions due to public health or nutrition changes long ago?
Maybe there is much more to play out?
Almond and Mazumder: Effects of in utero exposure to flu
Substantial long-term effects of exposure to flu in utero during 1918 flu pandemic
Do other early life factors matter, but less dramatically?

32. Effects of in utero flu exposure
Peak of flu pandemic
4th quarter of 1918
Spike in poor health:
2nd quarter of 1919

33. Why has health improved?
Probably all three mattered
Contributions differ by time period
Economic development/nutrition
Most important before c. 1880
Public health/germ theory
Most important c
Improved medical care (Big Medicine)
Most important since 1960

34. Determinants of Health Modern Day
Contribution of Health Care to Population Health—which part of the health production curve are we on.
Look at elasticity of health status (HS) with respect to health care expenditure (HE).

35. Determinants of Health Health Care – Elasticities in the US
Evidence
First three use mortality as HS, last measures activity and morbidity.

36. Determinants of Health Health Care
1969 and 82 studies how health exp. has little impact. A 10% increase in health care expenditure reduces mortality by at most 1.7%.
Marginal effect of health care on health status is small in US – might be on flat part of health production function.
Need to think about population effects: may be small improvement in health status for one person but summed over the population is a much bigger effect.

37. Determinants of Health Health Care
Do you think the elasticities will be the same in other countries developed or developing?

38. Determinants of Health Health Care
Heterogeneity: Medicare lead to greater improvements in the health of black females than white males.

39. Determinants of Health Health Care
Young blacks benefit more than whites

40. Determinants of Health Health Care
WIC: government program designed to improve nutrition of women and infant and provide prenatal care.
BCHS: Bureau of Community Health Services Projects: i.e., maternal and infant care and community heath centers
Able to explain 56.5% of black neonate mortality with these health interventions.
But program such as WIC or prenatal care, do more to reduce mortality than expensive neonatal intensive care units (but hospitals make a lot of money from intensive care units).

41. Determinants of Health Health Care
Morbidity
Maybe health care is better at reducing morbidity (reduction of pain, mobility, etc.).
Evidence:
Newhouse and Friedlander (1980) looked at biomarkers such as blood pressure, cholesterol, abnormal chest Xrays …
Found availability of health care was rarely significantly related to these measures. But better educated individuals had better health.
They did not control for the quality of health care, did these organizations do an adequate job.

42. Determinants of Health Health Care
Rand Health Experiment
Controlled experiment in health insurance
, 7,000 individuals
Randomized into 14 different insurance plans but one health maintenance organization. (different price, same quality)
Co-payments ranged from 0-95% with a maximum outlay of $1000 dollars per participant.
Wanted to test the effects of alternative health insurance policies on the demand for health care and on the health status.
Fully insured purchased roughly 40% more health care.

43. Rand Health Experiment
Little difference in health status

44. Determinants of Health Health Care
Rand Health Experiment (continued)
Folland, et al. use this as evidence that health care has little effect on health status.
How would you criticize the study.
Is 40% meaningful (reduce from 2 visits to the doctor to 1 visit?) might not have been going enough to the doctor in the first place.

45. Determinants of Health Health Care
We showed earlier that subgroups mattered. So what is the effect of greater costs on the poor, on newborns, infants or on blacks—other studies show that the poor’s health declined as the amount of insurance they had to pay increased.
Time period of the study, duration of experiment and length of time till poor health are also important factors.

46. Determinants of Health Health Care
Folland summarizes that health care is not a major determinant of health status.
So what else might be?

47. Determinants of Health Environment and Life Style Factors
Evidence shows that countries whose citizens have better life-styles (lower smoking, more exercise, not excessive drinking…) have better health status. (difference between US and Europe?)

48. Determinants of Health Environment and Life Style Factors
Fuchs compares average death rates in Nevada and Utah for and
Compares these two states because feels they are similar, same level of income and medical care, but Utah has Mormons so smoke and drink less.
To do this better need to control for as many observables as you can (income, pollution levels, % urban population ….)

49. Determinants of Health Environment and Life Style Factors
Concludes the lifestyle is an important part of health.

50. Determinants of Health Environment and Life Style Factors
What is a major health problem today and what type of life-style factors lead to this? What is being done about it?
There is a lot of work going on studying the effects of air pollution (especially particulate matter) on asthma and other respiratory disease.
If you want to look at recent economic studies look at Chay and Greenstone.
Drug use/smoking/excessive drinking: especially crucial for newborn health.

51. Determinants of Health Income
Talked about this for developing countries.
But just looking in the developed (already rich world) there is less of a correlation between health and income. This is partly because there is just not enough variation in income.
Pritchett and Summers (1996) do show that people with very low incomes in developed countries have worse health.

52. Determinants of Health Education
Two Theories:
1. Education central to health
Education not important

53. Determinants of Health Education
1. Health important
Better educated people know how to use medical and other market inputs and their own time to produce health care.
More efficient producer of health status.
Medicaid, all the confusing paper work, when are you eligible and when not. Hard for an uneducated person to figure this out.
Better educated probably demand more answers.
Able to read and understand how to take care of themselves better.

54. Determinants of Health Education
Education not important
Omitted Variable Bias
Some third factor that is missing that effects both education and health status (e.g. mother’s education).

55. Determinants of Health Education
Evidence:
Tends to show that theory 1 is correct. Education does lead to better health outcomes.
Miguel article-Health and Development Section
Lleras-Muney (2002): used timing of compulsory education laws.
Birth cohorts from before and after compulsory education would have had similar experiences but differed in education.
Compulsory education led to 1.7 more years of life per person.

56. Health Production Functions Developing Countries
Van der Gaag and Gertler (1990)
Interpret as elasticities (log-log relationship).

57. Van der Gaag and Gertler
Literacy is a very important factor. (not showing causation like Miguel is trying to show).

58. Health Production Functions Developing Countries
Link between education and health weakens when family background variables are controlled for.
Correlation between health care expenditures and health.
A 10% increase in health exp. is associated with an increase of 0.6 years of life expectancy, 4.1% reduction in IMR, 8.7% reduction in child mortality rate.

59. Discussion Questions
Do you think how health care is practiced might affect the impact of health care on health status? What might you change in the US system?
Do you think public and private dollars at substitutable, i.e., will you buy the same kind of health care and will it have the same effect on your health status?