Since 2001, implementation of a New Zealand’s Primary Health Care Strategy (the Strategy) has led to an increase in the proportion of primary health care services which are publicly funded, the development of 82 primary health organisations (PHOs) to oversee primary health care services and universal public capitation funding of PHOs. This approach has replaced the previous system of fee-for service targeted public subsidies paid to individual general practitioners (GPs). Patient copayments, although at a reduced level but still set by individual practitioners, have remained a core feature of the system.

This paper focuses on the implementation and impact of key policy changes over the first five years of the Strategy. Although patient copayments have fallen and consultation rates have increased, the new funding and payment system has raised a number of unresolved issues – whether to retain the new universal funding system or revert to the former targeted approach; how to achieve the potential gains from capitation when GPs continue to receive their income from a variety of sources and in a variety of different ways; and how to manage the potential for ‘cream skimming’.

Recent improvements in access may, in time, improve health status and reduce inequalities in health, but there is no guarantee that a universal system will necessarily improve average health or reduce inequalities. Much depends on the services being delivered and the populations that are benefiting most – something New Zealand needs better evidence on before determining future policy directions in primary health care.

Recently, for many health economics researchers, empirical estimation of the monetary valuation of a quality-adjusted life year (QALY) has become an important endeavour. Different philosophical and practical approaches to this have emerged. On the one hand, there is a view that, with health-care budgets set centrally, decision-making bodies within the system can iterate, from observation of a series of previous decisions, towards the value of a QALY, thus searching for such a value. Alternatively, and more consistent with the approach taken in other public sectors, individual members of the public are surveyed with the aim of directly eliciting a preference-based – also known as a willingness-to-pay-based (WTP-based) – value of a QALY. While the former is based on supply-side factors and the latter on demand, both in fact suffer from informational deficiencies. Sole reliance on either would necessitate an acceptance or accommodation of chronic inefficiencies in health-care resource allocation. On the basis of this observation, this paper makes the case that in order to approach optimal decision making in health-care provision, a framework incorporating and thus, to a degree, reconciling these two approaches is to be preferred.

Patient safety, and more broadly the quality of care, is typically discussed with reference to the reduction of preventable adverse events within hospitals and adherence to practice guidelines on care processes. We call it the ‘care-centered approach’ and recognize that the United States is a leader in the field. Another face of patient safety and care quality may be defined as the ‘system-centered approach’. It focuses on access to a timely and effective continuum of health-care services – clinical prevention, primary care and appropriate referral to and receipt of specialty care. Although France's efforts to pursue a care-centered approach to patient safety are limited, its system-centered approach yields some benefits. Based on the evidence we have reviewed for access to primary care (hospital discharges for avoidable hospital conditions), mortality amenable to medical intervention and consumer satisfaction, in the United States and France, there appear to be good grounds for bolstering the system-centered approach in the United States.

This paper studies the preferences among healthcare workers towards pay schemes involving different levels of risk. It identifies which pay scheme individuals would prefer for themselves, and which they think is best in furthering health policy objectives. The paper adds, methodologically, a way of defining pay schemes that include different levels of risk. A questionnaire was mailed to a random sample of 1111 dentists. Respondents provided information about their current and preferred pay schemes, and indicated which pay scheme, in their opinion, would best further overall health policy objectives. A total of 504 dentists (45%) returned the questionnaire, and there was no indication of systematic non-response bias. All public dentists had a current pay scheme based on a fixed salary and the majority of individuals preferred a pay scheme with more income risk. Their preferred pay schemes coincided with the ones believed to further stabilise healthcare personnel. The predominant current pay scheme among private dentists was based solely on individual output, and the majority of respondents preferred this pay scheme. In addition, their preferred pay schemes coincided with the ones believed to further efficiency objectives. Both public and private dentists believed that pay schemes, furthering efficiency objectives, had to include more performance-related pay than the ones believed to further stability and quality objectives.

Rising suicide rates have been identified as a social problem in several Western countries. The application of a Welfare Economics argument justifies a role for policy that reduces the welfare impact of suicide, whereas the measurement of that impact can inform policy making. Two dimensions of the concept can be measured: the social loss from suicide, and the inequality in the distribution of that loss. In this study, an alternative measure of suicide to the conventional suicide headcount, viz. the potential years of life lost (PYLL), is employed. The PYLL measure is a proxy measure of the social impact of suicide, and involves the concept of ‘premature’ loss of life. The PYLL also lends itself to inequality measurement. We apply the approach to inequality measurement of health phenomena that was pioneered in the 1980s by Jacques Silber and Julian Le Grand, in a literature now described as measuring health inequality per se. The empirical part of the paper statistically estimates equations on Australian suicide data for the period 1907–2003 and determines the trends in the social loss from suicide and the inequality of its age distribution. Some illustrative examples assist in interpreting the welfare impact of suicide measured both ways, by the headcount rate and the PYLL rate.

Azerbaijan is a country with one of the highest child mortality rates in the regions of Eastern Europe and the former Soviet Union. Drawing on the nationally representative Demographic and Health Survey, this study examines the utilization of antenatal care in Azerbaijan to identify the socio-economic determinants of the usage, and its frequency, timing and quality. Consequently, binomial logit, two ordered logit and negative binomial regression models are specified to estimate the effect of various socio-economic characteristics on the likelihood of utilization. Place of living is an important determinant of antenatal healthcare utilization in Azerbaijan. It is important in determining the likelihood of utilization, its timing and quality of care received, whereas it is not significant in the model predicting the frequency of antenatal utilization. Women’s education is also significant in three models out of four. Education is important in explaining the frequency and timing of utilization as well as the quality of services received, but it is not significant in predicting the likelihood of utilization. Wealth gradient is another important determinant of antenatal care utilization in Azerbaijan inasmuch as it is significant in explaining the likelihood of prenatal care utilization and its frequency. In addition, two variables, birth order and desirability of the last child or current pregnancy, are significant only in explaining the likelihood of utilization. Therefore, we confirm the findings of previous studies, which reported that the utilization of prenatal health care is a multistage process in which decisions are sequential. Although the same set of factors may affect decision-making at all stages, the effect of these factors is different at different stages. Implications for reforms in the healthcare sector to improve antenatal care utilization in Azerbaijan are provided and discussed.

Patients’ increasing use of alternative sources of information besides their physician and more active involvement in medical decision making may be changing relationships between physicians and their patients. We term patients who provide medical information to their physicians from sources other than their physician as information-oriented patients and investigate the relationship between having such patients and physician career satisfaction. We find that having more information-oriented patients is significantly associated with lower physician career satisfaction. Though healthcare information from alternative sources other than their physicians is thought to promote better-informed patient choices, the adverse relationship with physician career satisfaction found in this study may have important implications for patient access and quality of care.

The inclusion of both monetary and non-monetary indirect benefits in economic evaluations of public health programmes and services can have significant distributive effects between patient groups. As a result, some patients may be advantaged and others disadvantaged for reasons not directly related to health outcomes or (direct) treatment costs. In pluralistic democracies, there is a case for consulting the community on the fairness of policies that have such distributive implications. This paper reports the results of two pilot studies aimed at uncovering the preferences of the Australian public for the inclusion of indirect benefits in the evaluation of services for its national health scheme, Medicare. The initial survey found some support for taking account of non-monetary indirect benefits – for example, the social contribution made by parents of young children and carers of elderly relatives. By contrast, there was little support for giving high taxpayers priority access to general Medicare services, to life-saving organ transplants, or to very costly drugs, despite the indirect social benefits of doing so. However, such support increased significantly in the follow-up study when the outcomes were characterised as certain, identifiable and health related, and the opportunity costs of failing to take account of indirect benefits were made very clear. The follow-up survey provided evidence of public scepticism about the willingness or ability of government to use additional tax receipts for socially beneficial purposes, and/or a preference for programmes and services that focus on health rather than welfare more generally.

Recommendations issued by agencies undertaking appraisals of health technologies at the national level may impact upon the availability of certain treatments and services in some publicly funded health systems, and, as such, have regularly been subject to challenge, including by way of litigation. In addition to expertise in the evaluation of evidence, fairness of procedures has been identified as a necessary component of a claim to legitimacy in such circumstances. This article analyses the assessment of courts in three jurisdictions of the fairness of decision-making by such agencies and evaluates the judicial reading of procedural justice developed in this particular context against the conditions of ‘accountability for reasonableness’.

Many countries are incorporating direct measures of non-market outputs in the national accounts. For any particular output to be included there has to be data about it for two adjacent periods. This is problematic because the classification of non-market outputs is often subject to wholesale revision. We outline the challenges associated with classification changes and propose a solution. To illustrate we construct output and input indices and estimate productivity growth of the English National Health Service (NHS) for the period 2003–2004 to 2007–2008. Our index of output growth incorporates all care provided to NHS patients and captures improvements in survival rates, waiting times and disease management. We find that more patients are being treated and the quality of the care they receive has been improving. We implement our approach to dealing with changes as to how health services are defined and show what effect this has on estimates of output growth. Our index of input growth captures all labour, intermediate and capital inputs into health service production and we improve on how capital has been measured in the past. Inputs have increased over time but there has also been a slowdown since 2005–2006, primarily the result of a levelling off in staff recruitment and less reliance on the use of agency staff. Productivity is assessed by comparing output growth with growth in inputs, the net effect being constant productivity growth between 2003–2004 and 2007–2008.

Federal agencies in the USA pay significantly different prices for the same prescription drugs because each agency uses a different approach to derive the payment rate. Because we do not identify any economic rationale or socially accepted moral reasoning that would justify the current level of price variation, we suggest that the federal government should pay a uniform price for each drug. Laws and regulations that give certain federal agencies the ability to earn rebates, use formularies, or permit other special arrangements would need to be eliminated in order to have a single payment rate. This could make some government agencies worse off than others; however, a uniform payment rate would not need to affect beneficiaries’ current financial contributions, access to drugs, benefits or overall public expenditures. At the same time, having a single rate would permit the government to adopt a more effective approach to purchasing drugs and send a consistent message to pharmaceutical companies concerning which types of drugs the government wants them to develop for government beneficiaries. How this single price would be derived and how it would compare with the lowest or highest prices currently achieved by government agencies would depend on a variety of policy issues including the government’s desire to encourage pharmaceutical research and development and the need to control health care spending.

Equity is espoused in many national health policy statements but is a complex concept and is difficult to define. The way in which equity is defined in policy has implications for how the health-care system should be structured. Conflicts between different definitions of equity are identified in theory and policy. This paper discusses these issues, with specific focus on the equity principles underpinning the Irish health-care system. The complex mix of public and private funding in the Irish system brings the challenges in identifying (and achieving) equity objectives more sharply into view, and serves as a warning system for other countries.

This article analyses the European Union policymaking process regarding tobacco advertising. While others already highlighted the importance of intergovernmental bargaining between member states to explain the outcome of the tobacco advertising case, the main aim of this article is to identify the use of escape routes by the Commission, the European Parliament, the Council and interest groups that played an important role in overcoming the deadlock. When looking at the different institutions that structure policymaking, we argue that indeed focusing on escape routes provides a clear insight in the process and in what strategies were necessary to ‘make Europe work’. In the end, it appears to be a combination of escape routes that resulted in the final decision.

We investigate the impact of the transition towards managed competition in the Dutch health care system on health insurers’ contracting behaviour. Specifically, we examine whether insurers have been able to take up their role as prudent buyers of care and examine consumers’ attitudes towards insurers’ new role. Health insurers’ contracting behaviour is investigated by an extensive analysis of available information on purchasing practices by health insurers and by interviews with directors of health care purchasing of the four major health insurers, accounting for 90% of the market. Consumer attitudes towards insurers’ new role are investigated by surveys among a representative sample of enrollees over the period 2005–2009. During the first four years of the reform, health insurers were very reluctant to engage in selective contracting and preferred to use ‘soft’ positive incentives to encourage preferred provider choice rather than engaging in restrictive managed care activities. Consumer attitudes towards channelling vary considerably by type of provider but generally became more negative in the first two years after the reform. Insurers’ reluctance to use selective contracting can be at least partly explained by the presence of a credible-commitment problem. Consumers do not trust that insurers with restrictive networks are committed to provide good quality care. The credible-commitment problem seems to be particularly relevant to the Netherlands, since Dutch enrollees are not used to restrictions on provider choice. Since consumers are quite sensitive to differences in provider quality, more reliable information about provider quality is required to reduce the credible-commitment problem.

This paper investigates the determinants of the prices of branded prescription medicines across different regulatory settings and health care systems, taking into account their launch date, patent status, market dynamics and the regulatory context in which they diffuse. By using volume-weighted price indices, this paper analyzes price levels for a basket of prescription medicines and their differences in 15 OECD countries, including the United States and key European countries, the impact of distribution margins and generic entry on public prices and to what extent innovation, by means of introducing newer classes of medicines, contributes to price formation across countries. In doing so, the paper seeks to understand the factors that contribute to the existing differences in prices across countries, whether at an ex-factory or a retail level. The evidence shows that retail prices for branded prescription medicines in the United States are higher than those in key European and other OECD countries, but not as high as widely thought. Large differences in prices are mainly observed at an ex-factory level, but these are not the prices that consumers and payers pay. Cross-country differences in retail prices are actually not as high as expected and, when controlling for exchange rates, these differences can be even smaller. Product age has a significant effect on prices in all settings after having controlled for other factors. Price convergence is observed across countries for newer prescription medicines compared with older medicines. There is no evidence that originator brand prices fall after generic entry in the United States, a phenomenon known as the ‘generics paradox’. Finally, distribution and taxes are important determinants of retail prices in several of the study countries. To the extent that remuneration of the distribution chain and taxation are directly and proportionately linked to product prices this is likely to persist over time.

Smoking cost the National Health Service (NHS) in England in 1996 an estimated £1.4–£1.7 billion. In 1998, in Smoking Kills, the Government outlined an action plan for reducing smoking prevalence. This paper estimates 2006 costs and the impact of declining prevalence. Estimates are derived from costs, service use, and attributable proportions based on current and ex-smokers’ prevalence and relative risk compared with never-smokers. Comparable 1996 costs were estimated by substituting 1996 prevalence. Smoking-attributable hospital admissions cost the NHS an estimated £1 billion in 2006, outpatient attendances cost £190 million, general practitioner (GP) consultations £530 million, practice nurse consultations £50 million and GP prescriptions £900 million; £2.7 billion in total. This represents 5% of adult hospital admission costs, 4% outpatients, 11% GP and 8% practice nurse consultations and 12% of prescription costs. Smoking accounted for 24% of respiratory disease hospital admission costs and 16% of cancer and cardiovascular disease costs (people aged ⩾35 years). The 2006 cost is estimated to be 13% lower than if smoking had remained at 1996 levels. Smoking represents a substantial cost throughout the NHS. Significant savings are associated with a reduction in prevalence, but much of this stems from an earlier phase of the smoking epidemic. Securing future such savings requires further policies to reduce smoking prevalence.

Historically, brand-name pharmaceuticals have enjoyed long periods of market exclusivity in Japan, given the limited use of generics after patent expiration. To improve the efficiency of the health-care system, however, the government has recently implemented various policies aimed at increasing generic substitution. Although this has created expectations that the Japanese generic drug market may finally take off, to date, generic usage has increased only modestly. After reviewing the incentives of key market participants to choose generics, we argue that previous government policies did not provide proper incentives for pharmacies to boost generic substitution. We offer some recommendations that may help to increase generic usage.

Funding contingent upon evidence development (FED) has recently been the subject of some considerable debate in the literature but relatively little has been made of its economic impact. We argue that FED has the potential to shorten the lag between innovation and access but may also (i) crowd-out more valuable interventions in situations in which there is a fixed dedicated budget; or (ii) lead to a de facto increase in the funding threshold and increased expenditure growth in situations in which the programme budget is open-ended. Although FED would typically entail periodic review of provisional or interim listings, it may prove difficult to withdraw funding even at cost/QALY ratios well in excess of current listing thresholds. Further consideration of the design and implementation of FED processes is therefore required to ensure that its introduction yields net benefits over existing processes.

This study aims to present an overview of the evolutionary policy process in reforming the health care system in Taiwan, through dissecting the forces of knowledge, social-cultural context, economic resources and political system. We further identify factors, which had a significant impact on health care reform policies in Taiwan through illustrative policy examples. One of the most illuminating examples highlighted is the design and implementation of a single-payer National Health Insurance (NHI) program in 1995, after nearly five years of planning efforts (1988–1993) and a two-year legislative marathon. The NHI is one of the most popular social programs ever undertaken in the history of Taiwan, which greatly enhances financial protection against unexpected medical expenses and assures access to health services. Nonetheless, health care reform still has an unfinished agenda. Despite high satisfaction ratings, Taiwan’s health care system today is encountering mounting pressure for new reforms as a result of its rapidly aging population, economic stagnation, and imbalanced NHI checkbook. Although there may exist some heterogeneous system characteristics and challenges among different health care systems around the world, Taiwan’s experiences in reforming its health care system for the past few decades may provide valuable lessons for countries going through rapid economic and political transition.

This article examines the features of a labor market in which there are two professional groups that both cooperate and directly compete with each other: certified registered nurse anesthetists (CRNAs) and anesthesiologists (MDAs). We examine how the relative numbers of these two types of anesthesia providers, and differences in regulation, affect the earnings of CRNAs, and the extent of supervision of CRNAs by MDAs. We find that both the earnings, and the likelihood of medical supervision of CRNAs, are closely determined by their market share. As the market share of CRNAs increases from 0% to 50%, the gains to MDAs from restricting competition increase; over this range the likelihood that CRNAs are supervised increases and their expected earnings decline. However, as the CRNAs’ market share increases beyond 50%, the costs to MDAs of anticompetitive measures become too large, therefore, the probability of supervision declines, and the earnings of CRNAs increase.