American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments
American Economic Journal: Economic Policy
vol. 8,
no. 1, February 2016
(pp. 52–79)
Abstract
We present a simple graphical framework to illustrate the potential welfare gains from a "top-up" health insurance policy requiring patients to pay the incremental price for more expensive treatment options. We apply this framework to breast cancer treatments, where lumpectomy with radiation therapy is more expensive than mastectomy but generates similar average health benefits. We estimate the relative demand for lumpectomy using variation in distance to the nearest radiation facility, and estimate that the "top-up" policy increases social welfare by $700-2,500 per patient relative to two common alternatives. We briefly discuss additional tradeoffs that arise from an ex ante perspective. (JEL G22, I11, I13, I18)Citation
Einav, Liran, Amy Finkelstein, and Heidi Williams. 2016. "Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments." American Economic Journal: Economic Policy, 8 (1): 52–79. DOI: 10.1257/pol.20140293Additional Materials
JEL Classification
- G22 Insurance; Insurance Companies; Actuarial Studies
- I11 Analysis of Health Care Markets
- I13 Health Insurance, Public and Private
- I18 Health: Government Policy; Regulation; Public Health
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