Rising inequality and the implications for the future of private insurance in Canada (Joint with Mark Stabile, Health Economics, Policy and Law)
Abstract: Income and wealth inequality have risen in Canada since its low point in the 1980s. Over that same period we have also seen an increase in the amount that Canadians spend on privately financed health care, both directly and through private health insurance. This paper explores the relationship between these two trends using both comparative data across jurisdictions and household level data within Canada. It will then outline the implications for the future of private insurance in Canada. The starting hypothesis is that the greater the level of inequality the more difficult it becomes for publicly provided insurance to satisfy the median voter. Thus, we should expect increased pressure to access privately financed alternatives as inequality increases. In the light of our findings, the paper considers the implications of growing inequality on the future of private health insurance in Canada.
Physician Incentives and the rise in C-sections: Evidence from Canada ( NBER working paper , joint with Sara Allin, Michael Baker and Mark Stabile)
Abstract: More than one in four births are delivered by Cesarean section across the OECD where fee-for-service remuneration schemes generally compensate C-sections more generously than vaginal deliveries. This paper exploits unique features of the Canadian health care system to investigate if physicians respond to financial incentives in obstetric care. Previous studies have investigated physicians' response to incentives using data from institutional contexts in which they can sort across remuneration schemes and patient types. The single payer and universal coverage nature of Medicare in Canada mitigates the threat that our estimates are contaminated by such a selection bias. Using administrative data from nearly five million hospital records, we find that financial incentives can explain close to 15% of the excess C-section rate observed in Canada between 1994 and 2010. This result is mostly driven by obstetricians, rather than by general practitioners.
Work in Progress
Meeting the target? The impact of targeted financial incentives on primary care physicians' labour supply Abstract: This paper investigates primary care physicians' responses to targeted incentives. While these incentives are a common tool employed by governments to try to influence the delivery of health care, especially primary care, the nature and range of their effects are complex. Both theory and existing empirical evidence suggest that increasing the payment for a medical act does not necessarily lead physicians to increase their provision of the targeted procedure. Moreover, given the relatively broad scope of primary care physicians' practice, their responses to specific bonuses or premiums may also include changes to their activities in areas of care that are not directly targeted by the incentives. Exploiting the introduction of a premium that increased the remuneration for obstetric care in Ontario, I find that primary care physicians did not increase their provision of the services targeted by the premium following its introduction. On the contrary, doctors who were initially providing higher volumes of those services adjusted their provision downwards in response to the incentive. The results also suggest that the incentive might have negatively affected the provision of services in other areas of care by primary care physicians receiving the premium. These changes in practice style are in line with the predictions of a labour supply model in which income effects are relatively strong. At a time when health care budgets are growing at a pace that is often qualified as unsustainable, this paper contributes to understanding the potential broader impacts of targeted financial incentives on the delivery of care, and their alignment with governments' objectives.
The health impacts of income shocks and local inequality: Evidence from linked administrative Canadian data (joint with Boriana Miloucheva)
Abstract: Despite policies designed to foster redistribution, the concentration of income among top earners has increased in most developed economies, as has inequality within and across communities. Aside from the well-documented repercussions of these trends on social cohesion and productivity, recent evidence suggests that changes in the income distribution might affect individuals’ physical and mental well-being. It remains unclear, however, whether rising inequality affects health primarily through its impacts on people’s relative economic situation or through their absolute level of income. In this paper, we use four years of Canadian hospital records linked with individual-level census data to investigate how changes in local income distributions, in addition to changes in own income, might affect people’s health. To generate exogenous variations in income, we exploit changes in the price of oil, which affect individuals’ income differentially based on their industry of work. Oil price shocks also simultaneously induce shifts in the income distribution within communities, the nature of which depends on the industrial composition of the local labour market. The resulting alterations in neighbourhood income distributions allow us to separately identify the effect of changes in individuals’ relative income from that of changes in their absolute income on their health. As such, we can examine how changes in the income distribution might impose externalities on one’s physical and mental health outcomes, even as his own-income remains constant. Finally, we investigate how the individual-level health income gradient can be amplified or muted by local inequality. Our results shed new light on mechanisms through which the surge in income inequality observed in most OECD countries might affects people’s well-being.
From C-section to Health Conditions: Are Children's Health Outcomes Influenced by Birth Delivery Methods? Abstract: Caesarean section rates have risen steadily across the OECD in the past two decades. In the United states and in Canada, they have reached levels nearly twice as high as the benchmark suggested by the World Health Organization. Among the potential consequences of this trend, the impact of C-section birth on health outcomes in childhood has attracted the attention of both the media and the scientific community. Research conducted in clinical settings suggests that a caesarean birth would affect the composition of an infant's intestinal microbiota in his first days of life, with the potential impact of impeding the development of his immune system. However, studies using observational data to investigate the relationship between C-section birth and health outcomes later in childhood offer mixed findings, some confirming and others casting doubts on the association between both phenomena. In this paper, I use individual-level data on Canadian infants born between 1994 and 2006, and follow them from pregnancy through childhood to investigate the causal impact of C-section deliveries on health outcomes in childhood, and to assess its importance at a population level. To account for the endogeneity between health and birth delivery method, I employ an instrumental variables approach exploiting physicians' response to financial incentives. I use the relative payment received by physicians for a C-section, which varies exogenously across Canadian provinces and through time, to instrument for the probability that a newborn is delivered by C-section. This identification strategy yields a local average treatment effect corresponding to the impact unnecessary C-sections on children's outcomes (chronic conditions, hospitalizations, minor ailments and overall health status). From a public policy perspective, this estimate is particularly interesting: the long term harmful consequences of unnecessary C-sections being weighted against weaker short-term benefits.
Local inequality and departures from publicly provided healthcare in Canada (joint with Mark Stabile)
Wage gap between Francophones and Anglophones in Quebec, 1970 to 1990: A cohort approach (joint with Julien Gagnon and Vincent Geloso)