When health trumps money: Economic incentives and health equity in the public provision of nursing homes in Norway.

The allocation of public care services should be determined by individual needs, but can be influenced by economic factors. This paper examines the impact of economic incentives on the allocation of public nursing home care in the Norwegian long-term care system. In Norway, municipalities and city districts have economic incentives for choosing nursing home care for high-income individuals in need of care and home-based care in sheltered housing for low-income individuals. The study uses a theoretical model and empirical data from the municipality of Oslo to determine if nursing home spots are allocated based on income, which would be financially advantageous for the city districts. We do not find evidence that the economic incentives of the care provider play a role in the allocation of nursing homes. Thus, in this setting, needs seem to be the dominant factor for allocation of nursing home care, while economic incentives seem to play no significant role. The clear legal mandate to provide services based on needs only is likely an important factor in this.

Using fees to reduce bed-blocking: a game between hospitals and long-term care providers.

In several countries, a fee has been introduced to reduce bed-blocking in hospitals. This paper studies the implications of this fee for the strategic decisions of the hospitals and the long-term care providers. We introduce a Stackelberg game where the hospital is the leader and the care provider the follower. The policy reduces the treatment time at the hospital but does not necessarily lead to less bed-blocking, as this depends on the treatment time and bed-blocking before the reform. We test the results with data from the Norwegian Coordination Reform introduced in 2012 and find that this reform led to a large reduction in bed-blocking. The direct effect was even larger than a naïve comparison would suggest because hospitals began to report patients as ready to be discharged earlier than before the reform. Confronted with the theoretical predictions, this would mean that hospital services in average were set relatively close to the minimum levels before the reform.

Smoking, health, risk, and perception.

We provide a description of health-related incentives faced by a rational smoker by considering the role of perception in both immediate quality-of-life effects of smoking and future risk of mortality. A person who adapts psychologically to a lowered health state, smokes more early in life and shifts demands for health investments and health-complementary activities later in life. He also smokes more in total. Someone aware of the full mortality consequences of smoking, smokes less and demands less medical care than someone who believes that these effects are highly reversible. The impacts of new information on mortality risk are most valuable early in life. Lastly, someone endowed with a longer life expectancy smokes more in the first part of life but conditional on access to medical care.