Demand, Competition and Redistribution in Swedish Dental Care

Abstract: Essay 1: Individuals with higher socioeconomic status (SES) also tend to enjoy better health. Evidence from the economics literature suggests that a potential mechanism behind this “social health gradient” is that human capabilities, that form SES, also facilitate health-promoting behaviors. This essay empirically investigates the significance of socioeconomic differences in health behaviors, using dental care consumption as an operationalization of health investments. I focus on adults at an age where lifetime trajectories for SES can be taken as given and use lifetime income to capture SES. I estimate the impact of lifetime income on dental care consumption and find robust evidence that the social gradient in dental care consumption steepens dramatically over the life-cycle. Considering that dental care consumption only reflects a small part of individuals' health investments the results suggest that lifetime effects of SES on health behaviors could be substantial in other dimensions.Essay 2: This essay studies the effect of competition on prices on a health care market where prices are market determined, namely the Swedish market for dental care. The empirical strategy exploits that the effect of competition differs across services, depending on the characteristics of the service. Price competition is theoretically more intense for services such as examinations and diagnostics (first-stage services), compared to more complicated and unusual treatments (follow-on services). By exploiting this difference, I identify a relative effect of competition on prices. The results suggest small but statistically significant negative short-term effects on prices for first-stage services relative to follow-on services. The results provide evidence that price-setting among dental care clinics responds to changes in the market environment and substantial effects of competition on prices over time cannot be ruled out.Essay 3: The Swedish dental care insurance subsidizes dental care costs above a threshold and becomes more generous as dental care consumption increases. On average, higher-income individuals consume more dental care and have better oral health than low-income individuals. Therefore, the redistributional effects of the Swedish dental care insurance are ambiguous a priori. I find that the dental care insurance adds to the progressive redistribution taking place through other parts of the Swedish social insurance (SI) for individuals aged 35-59 years whereas it reduces the progressivity in the SI for those aged 60-89 years. While the result for the oldest individuals is problematic from an equity point of view, the insurance seems to strengthen the progressitivy of the Swedish social insurance for the vast majority of patients.