In health care systems today, including those of Switzerland and the United States, participants do not necessarily see the big picture of lifetime health costs and quality of life, and in many systems consumers and providers lack the incentives to manage preventative and chronic care to minimize lifetime private and social health costs. Resource allocation problems induced by asymmetric inform...

I show that US prescription drug prices can be better understood by accounting for history-dependent demand and industry pricing structure, which has important implications for potential government negotiation. First, I confirm the presence of inertia and history-dependent demand for generic drugs through a novel quasiexperiment. Next, I capture pricing structure in a dynamic pricing game invol...

The following is a model of psychological contracting with unmonitorable performance, implicit o¤ers, and screening for non-performance by the announcement of the expectation of performance. It is motivated by the $250 billion prescription drug industry, which spends $19 billion per year on marketing to US doctors, mostly on ‘gifts’, and often, as at Yale, with no monitoring for reciprocation. ...

In this paper we develop a general equilibrium overlapping generations (OLG) model with health shocks to study the life-cycle behaviors of health care spending and financing. We show that a calibrated version of our model is able to match the life-cycle trend of insurance take up ratios and average medical expenditure from the Medical Expenditure Panel Survey (MEPS) data in 2004/05. We then app...

This paper analyzes the impact of a negotiated scheme and a generic reference price system in comparison to a simple copayment system in a vertical di¤erentiation model with switching costs. The duopolistic market structure with an o¤-patent brand-name drug competing in a Stackelberg-mode with a generic version is adopted from Merino-Castéllo 2003. Brand-name drug and generic version di¤er in p...

HIV/AIDS is a disease for which we ourselves are the vector. Consequently, a high prevalence of the disease in the population is likely to generate a high incidence of new infections. This paper argues that in Sub-Saharan Africa, where the prevalence of other fatal diseases is high, there is a counter-intuitive effect of health care spending: such spending increases the life expectancy of the i...

Available online 19 September 2012 JEL classification: C72 D72 D74

This paper contributes to the existing literature by examining the determinants of health financing in 177 developed and developing countries. The study introduces the variables of government effectiveness and control of corruption to capture the impact of governance quality on different mechanisms of health financing. Utilizing panel data analysis, namely system-GMM estimators, to obtain unbia...