Policy Workshop
Health
Universitas Indonesia
June, 2013
Michael Kremer
Harvard University
1
Income per Capita
(2005 dollars)
Life Expectancy
80
6000
70
5000
60
50
4000
40
3000
30
2000
20
1000
10
0
0
United
Vietnam
States 1900 2009
SSA 2009
United
States 1900
Vietnam
2009
SSA 2009
2
Two Themes
• Preventative and non-acute care vs. acute care
o Cost differences: provide to everyone vs. personalized specialized
care
o Behavioral differences?
o Epidemiological transition
• Consumer vs. supplier behavior
Debate Over Cost Recovery
Advocates:
• The poor can pay at least some fees
• Charging may increase valuation, screen out low
valuation consumers
• Fees vital to sustainability, motivating providers
Critics: impact on access
Compromise: small fees, variation by sector
Decision framework?
Since 1995, a wave of randomized evaluations:
Any generalizable lessons?
Grossman Model
Health as Human Capital
• Consumers invest if expected private
benefit exceeds costs
5
Policy Implications
• Potential government role when private and
social benefits of health investment differ
– Epidemiological externalities
– Natural monopoly/public good
– DWL of taxation: fiscal externality
– Response of take-up to price affects optimal subsidy
6
Externalities: School-Based Deworming in Kenya
• Disease externalities on neighboring schools,
untreated in school
– Disease prevalence
– School attendance
• Fiscal externality
o Increased labor supply ten years later
• Price response
o 75% take-up when free, 18% with small user fee
o No difference in take-up with family size despite per family fee structure
o Sicker students not more likely to pay for drugs
7
Public Goods:
Spring Protection
• $1K capital cost, negligible
marginal cost
• Randomized trial suggests 25%
reduction in diarrhea, switching
to protected springs
• Estimate that full private
property would create large static
losses, little dynamic benefit
• This might be different at higher
income levels
8
Health Human Capital Model
• Testable implications?
– Very flexible model? Tautological?
– Investment responds to perceived benefits
– Price response
– Treatment/prevention equivalence
– Information response
– Alternative models? Policy implications?
Impact of Price on
Preventative Health Take-Up
10
Does Paying Makes People
More Likely to Use Health Goods?
• Widely believed by practitioners
• Could arise due to sunk cost
fallacy
• No evidence
– Bednets in Kenya & Uganda (Cohen &
Dupas 2010; Hoffman et al 2009)
– Water purification in Zambia (Ashraf
et al 2010)
• Importance of zero price
point
11
Financial Incentives (Negative Prices)
• Large negative prices in conditional cash transfer
programs increase uptake of health and education
– Health & education: Mexico (Gertler 2004; Schultz 2004)
– Health: Tanzania (Evans et al. 2012)
• Small incentives also have remarkable impact
– HIV test results in Malawi (Thornton 2008)
– Cash transfer in Malawi: Transfer amount does not affect
outcomes (Baird et al 2011)
– Implications for human capital model?
12
Information
• Often, little impact of health education
– Intensive school health education intervention had no impact on
worm prevention behaviors in Kenya (Kremer & Miguel 2007)
• But in some cases, dramatic impacts
– Information on HIV prevalence by age in Kenya (Dupas 2011)
• Some puzzles for learning model
– Fade out of education campaign effect
– Greater responsiveness to coarse information in Bangladesh (Bennear
et al 2011)
– People tested negative for malaria still buy malaria meds in Kenya
(Dupas et al 2012)
13
Acute Treatment and Insurance
• Substantial expenditure on health treatment of
doubtful utility (Das and Hammer, 2005; Banerjee et al., 2004)
• Consumers bear substantial health risk (Gertler & Gruber
2002)
• Low take-up of voluntary health insurance in
Nicaragua (Thornton et al 2010)
• Limited and mixed evidence on effect of price of clinic
visits on take-up, health
– Exogenous increase in fees at clinics in Indonesia (Dow et al 2003)
– Subsidized anti-malaria in Kenya (Cohen and Dupas 2011)
– Mexican Seguro Popular health insurance program had no effect on
healthcare utilization in short term (King et al 2009)
14
Behavioral Model:
• Present bias
– Small up-front costs can deter investments with
immense long-run payoff
• Limited attention, salience, habit and norm
formation
• Welfare economics?
• Health planning approach?
15
Applying Insights from Behavioral Economics:
Program Design and Testing
• Water infrastructure often expensive,
recontamination frequent
• Chlorination safe, effective, low-cost, but
single-digit take-up under social marketing
• Design for free distribution, convenience, habit
formation, norm formation
16
Chlorine Dispenser System
• Majority of households
test positive for chlorine,
use sustained over time
(Kremer et al 2011)
• Very low cost
17
Health Care Provision: Background
Chaudhury et al. (2006)
18
Poor Quality
Physicians in Tanzanian hospitals…
Physical exams per patient
1.5
Questions asked per patient
4
Minutes spent per patient
6.3
0
1
2
3
4
5
6
7
Das et al 2008
• Frequent use of unqualified providers in
Tanzania and other countries (Leonard & Masatu 2007; Das &
Hammer 2005)
19
Approaches to Addressing Government Failure in
Service Delivery
• Community mobilization for accountability
• Provider Incentives
• Paying for results
• Contracting for health
20
Community Mobilization and
Accountability
• Community monitoring of health
services in Uganda (Björkman & Svensson
2009)
– Provider absence 14% lower in
treatment facilities
– Vaccination rates increased 46%
– 46% more children received vitamin
A supplements
• Contrasting results in India
education
21
Provider Incentives
• Pay for performance program in
Rwanda: Significant increase in quality
prenatal care but no impact on
number of visits (Basinga et al 2010)
• Non-financial rewards motivate public
health workers in Zambia (Ashraf et al 2012)
• Monitoring program linked pay to
nurse attendance in India (Banerjee et al
2008)
– Initial attendance boost; disappears after
6 months (program undermined)
22
Paying Communities for Results?
• Block grants to
communities tied to results
(Olken et al 2011)
– Regular weight checks for
children and iron tablets for
pregnant women increased
– Malnutrition fell by 2.2
percentage points
23
Contracting for Health in Cambodia
• Management of healthcare contracted out
to NGOs in some districts (Bhushan et al 2006)
• Targeted health outcomes increased one
standard deviation
– 42% increase in vitamin A and 36% increase in
prenatal care coverage
– Decreased absence rates among providers
• No change in non-targeted health outcomes
• Increased government spending in contract districts
offset by decrease in private health spending
24
Areas for Future Research
• Optimization failure and normative analysis
• Social norms in health, role of media (La Ferrara et
al., 2008; Jensen and Oster, 2009)
• Health care issues once low-hanging fruit is picked:
aging, curative care, social insurance
• Intersection of IO and health
o Pharmaceutical markets (Goldberg, 2006; Yanagizawa-Drott,
2012; AMCs)
o Private and public providers (Das et al. 2007)
• Political economy of health (Miller, 2008; Fujiwara,
2010; Duflo and Chattopadhyay, 2004)
25
Policy Conclusions
• RCTs and policy
o CCTs
o Deworming
o Needs tremendous amount of additional work
• Strong case for free, convenient provision of cost
effective technologies for prevention of
communicable disease
• Improved provision of curative care is challenge for
future
o Promising approaches, but need more evidence
26
END
27
Child Mortality and Income
28