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Constructing and Validating an Integrative Economic Model of Health Care Systems and Health Care Markets: a Comparative Analysis of OECD Countries University of Central Florida STARS Electronic Theses and Dissertations, 2004-2019 2018 Constructing and Validating an Integrative Economic Model of Health Care Systems and Health Care Markets: A Comparative Analysis of OECD Countries Jesse Helligso Part of the Health Policy Commons, and the Public Affairs Commons Find similar works at: https://stars.library.ucf.edu/etd University of Central Florida Libraries http://library.ucf.edu This Doctoral Dissertation (Open Access) is brought to you for free and open access by STARS. It has been accepted for inclusion in Electronic Theses and Dissertations, 2004-2019 by an authorized administrator of STARS. For more information, please contact [email protected]. STARS Citation Helligso, Jesse, "Constructing and Validating an Integrative Economic Model of Health Care Systems and Health Care Markets: A Comparative Analysis of OECD Countries" (2018). Electronic Theses and Dissertations, 2004-2019. 6177. https://stars.library.ucf.edu/etd/6177 CONSTRUCTING AND VALIDATING AN INTEGRATIVE ECONOMIC MODEL OF HEALTH CARE SYSTEMS AND HEALTH CARE MARKETS: A COMPARATIVE ANALYSIS OF OECD COUNTRIES by JESSE ANDREW ROBERT HELLIGSO B.A. Trinity University, 2004 M.A. University of Central Florida, 2007 A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Doctoral Program in Public Affairs in the College of Community Innovation and Education at the University of Central Florida Orlando, Florida Fall Term 2018 Major Professor: Thomas T.H. Wan © 2018 Jesse Helligso ii ABSTRACT This dissertation argues that there are three basic types of health care systems used in industrial nations: free market (private insurance and provision), universal (public insurance and private provision), and socialized (public insurance and provision). It examines the role of market forces (supply and demand) within the health care systems and their effects on health outcomes by constructing an integrative model of health care markets and policies that is lacking within the scientific and academic literature. The results show that, free market systems have decreased access to care, good quality of care, and are economically inefficient resulting in 2.7 years of life expectancy lost and wasted expenditures (expenditures that do not increase life expectancy) of $3474 per capita ($1.12 trillion per year in the U.S.). Socialized systems are the most economically efficient systems but have decreased access to care compared to universal systems, increased access to care compared to free market systems and have the lowest quality of care of all three systems resulting in 3 months of life expectancy lost per capita and a saving of $335 per capita. Universal systems perform better than either of the other 2 systems based on quality and access to care. The models show that health insurance is a Giffen Good; a good that defies the law of demand. This study is the first fully demonstrated case of a Giffen good. This investigation shows how the theoretically informed integrative model behaves as predicted and influences health outcomes contingent upon the system type. To test and substantiate this integrative model, regression analysis, Time-Series-Cross-Section analysis, and structural equation modeling were performed using longitudinal data provided and standardized by the Organization for Economic Cooperation and Development (OECD). The results demonstrate that universal health care systems are superior to the other two systems. iii For my son “J.J.”, Jesse James Madison Helligso, may you live in a world where no one must choose between their health care and feeding themselves, providing for their families or attaining an education. In memory of Alec Smith, who died June 2017, and the countless, nameless others that are no longer with us, because they could not afford their insulin (Mazziotta, 2018); “There but for the grace of God, go I”. iv ACKNOWLEDGMENTS First, I must thank Dr. Thomas T.H. Wan for his guidance and encouragement throughout this process. Without his knowledge and love of structural equation modelling this would not have been possible. Thank you to my committee, Dr. Kerstin Hamann, Dr. Christian King, and Dr. Xinliang Liu, for their invaluable feedback and sacrificing their time to allow me to complete this dissertation within limited time constraints. I would also like to thank the University of Central Florida for allowing me the opportunity to overcome my health issues and prove my academic abilities by accepting me into the Political Science M.A. program, and for the university’s financial support throughout this research within the Public Affairs Ph.D. program. Thank you to my mother, Jeri Johnson, for her encouragement to attain an education and all the sacrifices she has made on my behalf. Thank you to my grandfather, Gerald Petersen, without him stepping in to cover the costs of my health insurance I would not have been able to attain an education. Lastly, thank you to my wife, Kaitlyn, who has been my emotional support throughout this Ph.D. program, and for listening to me drone on and on endlessly for hours about health care economics and statistical modelling. v TABLE OF CONTENTS LIST OF FIGURES ..................................................................................................................... viii LIST OF TABLES ......................................................................................................................... ix CHAPTER 1: INTRODUCTION ................................................................................................... 1 1.1: Background .......................................................................................................................... 4 1.2: Research Questions .............................................................................................................. 7 1.3: Study Layout and Approach................................................................................................. 8 1.4: Terminology and Abbreviations .......................................................................................... 8 CHAPTER 2: LITERATURE REVIEW ...................................................................................... 10 2.1: Markets and the Supply of Medical Providers ................................................................... 11 2.2: Markets and the Demand for Health Care.......................................................................... 15 2.3: Markets and the Demand for Health Insurance.................................................................. 18 2.3.1: Market Concentration, Costs of Care and Insurance Premiums .................................. 19 2.3.2: Quality and Price of Insurance, Effects on Demand ................................................... 20 2.4: Comprehensive Market Analyses of Health Care .............................................................. 22 2.5: Analyses of Health Care Systems Based on Quality and Technical Efficiency ................ 25 2.6: Theoretical Framework for Analysis ................................................................................. 28 CHAPTER 3: BUILDING AN INTEGRATIVE MODEL OF HEALTH CARE MARKETS AND SYSTEMS ........................................................................................................................... 32 3.1: Economics: Visualizing Supply and Demand within an Abstract, General Health Care Market ....................................................................................................................................... 33 3.1.1: The Demand for Care .................................................................................................. 33 3.1.2: The Supply of Care ...................................................................................................... 35 3.1.3: The Demand for Insurance .......................................................................................... 36 3.2: Public Policy: Health Care Systems ................................................................................... 55 3.2.1: Free Market Health Care Systems ............................................................................... 57 3.2.2: Single Payer Health Care Systems .............................................................................. 67 3.3: Final Simplified Model of Health Care Systems and Market Forces ................................ 74 CHAPTER 4: RESEARCH DESIGN AND ANALYSIS ............................................................ 79 4.1: Data Sources....................................................................................................................... 80 4.2: Health Insurance as a Giffen Good .................................................................................... 81 4.2.1: Statistical Analysis of U.S. Health Insurance Exchanges ........................................... 83 vi 4.2.2: Giffen Good Conclusions ............................................................................................ 89 4.3: Comparative Analysis of Health Care Systems (Regression Analysis) ............................. 93 4.3.1: Health Systems Framework ......................................................................................... 96 4.3.2: Step 1: Determinants of Expenditures ......................................................................... 98 4.3.3: Step 2: Determinants of Health Care Resources ....................................................... 100 4.3.4:
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