Recent authors have proposed that waiting times for elective treatment should be reduced to the point where the costs of doing so exceed the benefits. This paper considers how this criterion could be put into effect. Taking benefits first it argues that these could be estimated in three different ways – social cost benefit, clinical and user valuation – that would not necessarily produce consistent results and hence a choice has to be made between them. It then considers the costs of reducing waits and argues, citing relevant evidence, that these may range widely according to whether or not reductions can be achieved through simple management measures or whether more long-term capacity is required. It concludes therefore that the apparently simple criterion proposed for defining the point where waiting times are optimal is hard to establish. Choice of criterion must be made in the light of the overall values that a given health care system is intended to promote.

The proportion of the population treated for major medical conditions, including diabetes, cancer and mental illness, increased rapidly during the 1990s. We document the magnitude of these increases and use a model of prevalence to identify three potential causes: increased clinical incidence of disease, longer survival times among persons with chronic illnesses and increased detection. We present a series of analyses to evaluate the contribution of each factor. We find that increases in obesity explain a large proportion of the increase in treatment rates for conditions closely linked to obesity (e.g. diabetes). We provide some evidence that increases in treated prevalence unexplained by changes in the underlying clinical incidence of disease are driven by increased detection and treatment of patients with ‘subclinical’ illness.

Questions about the design of the new US Medicare prescription drug benefit were raised even before its passage, where one of the most heated issues has been the number of plans offered to beneficiaries. Whether beneficiaries believe that there should be extensive or limited choice is still an open question. To study this issue, we analyzed data from the Kaiser Family Foundation/Harvard School of Public Health Survey, which included 718 individuals aged 65 years and above. The survey asked these older adults (i) whether they prefer having dozens of plans or for Medicare to offer a restricted number of plans and (ii) whether they think there are too many, too few or the right amount of plans. Our findings show that the majority of beneficiaries (69%) preferred that Medicare offer a limited number of options while only 29% wanted to see dozens of plans on the market. We also examine the effect of education level, income, political affiliation, race and health status on the desire for more or fewer plans. One surprising finding is that seniors with higher education appear to prefer fewer, not more, plan choices. Overall, our results question the merit of offering so many prescription drugs plan choices to Medicare beneficiaries.

There has been substantial consolidation among health insurers and hospitals, recently, raising questions about the effects of this consolidation on the exercise of market power. We analyze the relationship between insurer and hospital market concentration and the prices of hospital services. We use a national US dataset containing transaction prices for health care services for over 11 million privately insured Americans. Using three years of panel data, we estimate how insurer and hospital market concentration are related to hospital prices, while controlling for unobserved market effects. We find that increases in insurance market concentration are significantly associated with decreases in hospital prices, whereas increases in hospital concentration are non-significantly associated with increases in prices. A hypothetical merger between two of five equally sized insurers is estimated to decrease hospital prices by 6.7%.

In response to predictions that population ageing will increase government spending over the coming decades, in 1997–98, the Australian Government introduced means-tested income fees and accommodation charges for those admitted to nursing homes with income and assets above set threshold levels. Immediately prior, all residents paid the same price for their care and were not required to contribute towards the cost of their accommodation. In addition, in relation to those eligible to pay a higher price, the Government reduced its subsidisation of the cost of their care. The Government anticipated that the initiative would more equitably share the cost of age-related services across the public and private sectors, and result in some cost savings for itself. The purpose of this study is to assess the impact of the policy on the average price paid by residents. The findings suggest that the policy may have contributed to an increase in the average price paid, but statistical evidence is limited due to a number of data issues. Results also indicate that the rate of increase in the price was greater after the Residential Aged Care Structural Reform package was introduced. The study contributes to the economic analysis of the sector by evaluating time series estimates of prices paid by residents since the early 1970s.

Money is the default way in which intangible losses, such as pain and suffering, are currently valued and compensated in law courts. Economists have suggested that subjective well-being regressions can be used to guide compensation payouts for psychological distress following traumatic life events. We bring together studies from law, economic, psychology and medical journals to show that alleviating psychological distress through psychological therapy could be at least 32 times more cost effective than financial compensation. This result is not only important for law courts but has important implications for public health. Mental health is deteriorating across the world – improvements to mental health care might be a more efficient way to increase the health and happiness of our nations than pure income growth.