Paying on the margin for medical care: Evidence from breast cancer treatments
Published Date:Feb 2016
Source:Am Econ J Econ Policy. 8(1):52-79.
Pubmed Central ID:PMC4758371
Funding:HHSN261201000140C/CA/NCI NIH HHS/United States
HHSN261201000035C/CA/NCI NIH HHS/United States
R01 AG032449/AG/NIA NIH HHS/United States
HHSN261201000035I/CA/NCI NIH HHS/United States
HHSN261201000034C/CA/NCI NIH HHS/United States
U58 DP003862/DP/NCCDPHP CDC HHS/United States
Description: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.
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