Summary literature BMO-32806
LECTURE 2
(OECD, 2020) Health at a Glance: Europe 2020 - STATE OF HEALTH IN
THE EU CYCLE
The resilience of health systems to COVID-19
The staggering impact of COVID-19 on our society and economy has abruptly brought public health
back to the top of the policy agenda. COVID-19 mortality has a clear social gradient, which is a bleak
reminder of the importance of the social determinants of health. The virus has disproportionately hit
older people and those with underlying health conditions. Poor people, people living in deprived
areas and ethnic minorities have also been disproportionately affected. This highlights the need for a
strong focus on policies to tackle the social determinants of health, including inclusive social and
economic policies and interventions beyond the health system that address the root causes of
inequalities. Moreover, the COVID-19 pandemic has highlighted the need to consider the resilience
of health systems as an equally important dimension of health system performance alongside
accessibility, quality of care and efficiency.
Addressing the health and welfare impact of air pollution
Between 168.000 and 346.000 premature deaths across EU countries can be attributed to air
pollution from fine particles alone. The economic and welfare losses from air pollution are
substantial.
Reducing other important risk factors to health
Beyond environmental issues, a number of modifiable risk factors also have important impacts on
people’s health and mortality, notably smoking, alcohol consumption, unhealthy nutrition, lack of
physical activity and obesity. Despite progress in reducing smoking rates over the last decades,
smoking remains the most important cause of premature mortality across the EU. In addition, more
than one in six adults are obese across EU countries, and there are wide socio-economic disparities in
overweight and obesity rates. Adult obesity rates continue to increase in most EU countries. Obesity
is also a recognised risk factor for complications from COVID-19. There are large socio-economic
inequalities in overweight and obesity rates, often starting at a young age.
Ensuring universal and effective access to care for all the population
Most EU countries have achieved universal coverage for a core set of health services, which is crucial
to deal effectively with the COVID-19 pandemic. However, the range of services covered and the
degree of cost-sharing vary substantially. Effective access to different types of care can also be
restricted because of shortages of health workers, long waiting times or long travel distances to the
closest health care facility. The COVID-19 pandemic highlighted the shortages of health workers in
many countries, and the need for mechanisms to mobilise human resources quickly in times of crisis.
Waiting times for elective surgery are likely to increase further following the COVID-19 pandemic.
,(OECD, 2019) Health at a Glance 2019: OECD Indicators.
India might be the last place on earth where you’d expect to find health care innovation (see
examples in the introduction). However, despite the pressing demand and constrained supply, a few
relatively new Indian hospitals have devised ways of providing good health care affordably. These
hospitals should serve as an inspiration to others. Therefore, it has been investigated how some
Indian hospitals are able to provide world-class health care at ultralow cost. How are some Indian
hospitals able to provide such high-quality health care at ultralow prices? This is in small part due to
the differential in the cost of labor; Indian employees have lower salaries. However, this cost-
advantages is often nullified (tenietgedaan) by other costs, e.g. for equipment, in India being much
higher than in for example the US. To deliver on their dual commitments to high quality and ultralow
cost, the Indian hospitals we looked at developed three powerful organizational advantages:
a hub-and-spoke configuration of assets: they concentrate high-quality talent and
sophisticated equipment. The hub-and-spoke approach is facilitated by the use of technology
— such as telemedicine — allowing doctors in the hubs to effectively and efficiently serve
patients seeking care at the spokes. Unless expensive equipment, complex tests, or
consultations with super-specialists are required, patients receive care closer to their homes.
That lowers the costs — such as lost wages during time away from work, transportation
expenses, and room and board — that often deter poor people from seeking health care
even when it is free. A hub-and-spoke architecture also helps create large volumes. By
reducing the barriers to treatment, they increased physician productivity. Their aim is to gain
market power rather than to lower costs. The hub-and-spoke configuration allows hospitals
not only to lower costs but also to improve quality.
an innovative way of determining who should do what: by shifting tasks, the best Indian
hospitals match the skill levels of their people with the basic requirements of tasks. They
support specialization, reduced time to move patients from one to another, and self-service,
(where patients and family members take over tasks performed by hospital staff).
a focus on cost-effectiveness rather than just cost cutting: efforts to prolong the life of
technology, reduce waste and matching the sophistication of equipment to the task.
Those process innovations allow the hospitals to lower their costs without compromising quality;
in fact, the first two even improve quality. The innovations result not from a grand design but from
constant experimentation, learning, adaptation — and necessity.
Lessons for U.S. Hospitals
Just how transferable is the Indian model to the developed world? Barriers certainly exist, among
them regulations, fee-for-service incentives, pharmaceutical lobbies, trade unions, medical
malpractice lawsuits, and investments in extensive hospital infrastructure. However, these barriers
may be lower than many suppose. In the coming decade, U.S. hospitals will be under even more
pressure to lower costs, improve quality, and expand access—the very things the Indian hospitals we
studied have been tackling. U.S. hospitals should reconfigure assets, shift tasks, promote
innovation, and cultivate frugality. Such moves don’t require changes in legislation; only a
commitment to reverse the inexorable rise in costs.
,(Innocenti et al., 2019) The effect of past health events on intentions
to purchase insurance, Journal of Economic Psychology
Abstract
We investigate whether past negative health experiences are positively associated with intentions to
purchase insurance to mitigate the risks of income losses due to illnesses and disabilities. Using an
original survey based upon representative samples of working individuals in 11 countries, we show
that both personal and vicarious experience substantially increase intentions to purchase income
protection insurance policies. More specifically, agents who have personally experienced a
negative health event in the past are 25% more likely to state the intention to purchase income
protection insurance than those who have not had such an experience. Moreover, personally
knowing someone who suffered from ill health increases intentions by 40%. We show that severe
or more recent health events do not strengthen the effect of experience on intentions to purchase
insurance. Insurance ownership increases by 23% due to personal experience and by 31% because of
vicarious experience.
Introduction
Self-protective measures to mitigate the risks of future negative events, specifically income losses
due to prolonged illness or disability, do exist. Income protection insurance is designed to do just
that: it pays out a benefit equivalent to a substantial proportion of the policyholder’s earned income
(typically up to 70%) in the event of a serious illness or disability that prevents them from working for
a significant period of time. Nonetheless, income protection insurance uptake is still low. This paper
contributes to the literature aimed at understanding how individuals form their intentions to
purchase insurance. Previous research in economics and psychology has found an association
between prior experience and the intention to purchase various types of insurance.
We also investigate the existence of possible discrepancy between intentions and actual behaviour
and provide evidence of a positive correlation linking past experience, be it first- or second-hand, and
income protection insurance ownership. This suggests that experience affects intentions but also
behaviour, although to a lesser extent.
Related literature
The fragmentation of the labour market has increased substantially over the last few decades. The
prevalence of different types of ‘non-traditional’ employment, the rise and fall of entire industries,
and the growth in the sharing economy have all brought greater uncertainty to the global labour
market. This uncertainty, together with the risk of contracting a serious disease and being unable to
work, puts individuals at risk of losing income for significant or even prolonged periods of time. These
risks are likely to increase the vulnerability of certain segments of society to immediate shortfalls in
earned income. Self-protective measures such as income protection insurance policies could help
vulnerable consumers to cope with these negative instances. However, contrary to what these
findings might suggest, income protection insurance uptake is still low. Low purchasing rates have
been explained by non-rationality and more specifically by misperceptions of probabilities and
inabilities to process information. Previous studies claim that past negative experiences could
potentially overcome these hindrances. Experience carries an informational value and thus can be
considered “a great teacher”. Severe personal experience provides information about the
consequences of the lack of preventive measures as well as about one’s own personal vulnerability,
, raising awareness of the need for planning for the future. These studies suggest that experience can
teach individuals how to plan and thus revise their intentions.
To summarise, the literature above has generally identified a positive relationship between personal
and vicarious experience and the intention to adopt precautionary measures such as insurance in
multiple domains. However, to the best of our knowledge, no study has assessed whether a positive
relationship between experience and intentions holds in the domain of income protection insurance.
This represents the main objective and core contribution of this paper.
However, this study takes a further step and tries to cast some light also on the relationship between
past experience and actual ownership. In a nutshell, the effect and magnitude of experience might
differ depending on whether we evaluate intentions or actual behaviour, suggesting a possible lack of
correspondence between attitudes and actions. We will also account for this explanation and use our
original dataset to investigate the possible existence of a ‘planning-behaviour gap’ in the context of
income protection insurance.
Results
In order to test our main conjecture, we start by analysing the impact of experience on the intention
to purchase an income protection policy. Having had a negative health experience in the past
increases the probability of stating the intention to purchase an insurance policy by 0.11.
In summary, Table 2 suggests that past health experience, be it personal or vicarious, is a strong
driver behind individuals’ intention to purchase income protection insurance, providing strong
support for our hypothesis. Remarkably, it is also shown that knowing someone who has in the past
suffered from ill health exerts a stronger effect on intentions to purchase than personal experience
does. This strong relationship suggests that, on the one hand, intentions to purchase might be rooted
into the salience and vividness of the experience potentially of others and not only on its
informativeness concerning one’s vulnerability. On the other hand, this relationship could be
explained by the fact that, when intending to buy income protection insurance, individuals do not
have to provide details of the health history of their peers, whereas they are obliged to disclose their
own. The latter can result into denial of coverage or an increase in the premium. As a consequence,
vicarious experience does not act as an obstacle to seeking coverage in the way that personal
experience does.
Interestingly, our results are stable also for those individuals whose income exceeds their country
median. Wealthier individuals are in principle less vulnerable to income interruptions and potentially
less inclined to adopt self-protective measures. We do not find any evidence for a gender effect on
intentions to purchase insurance. Being an employee also does not affect intentions to purchase
insurance in a significant manner. Generally, those who see themselves as being at risk of losing
income for unexpected health reasons are significantly more inclined toward the rational decision to
buy income protection insurance.
Robustness checks
We conducted multiple of robustness checks to determine the solidity of our results. Our results
remain robust even when controlling for risk aversion, insurance knowledge, and financial literacy.
