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    Does insurance for treatment crowd out prevention? Evidence from Diabetics’ Insulin usage

    Kaliski, Daniel (2019) Does insurance for treatment crowd out prevention? Evidence from Diabetics’ Insulin usage. Working Paper. TBC.

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    Abstract

    I provide new evidence that health insurance can discourage investment in health. I find that, in the United States before 2006, 13-30% of female diabetics who used insulin to manage their condition stopped using insulin once they turned 65 and became eligible for health insurance via Medicare. I reconcile these results with those from other studies by developing a model of the trade-off between prevention and treatment. The model explains the large effect sizes in this paper via two mechanisms. First, individuals substitute prevention efforts away from periods when the price of treatment is low and toward periods when the price of treatment is high. Second, this effect is stronger for preventive measures that have larger effects on health. The model also shows that the long-term crowding out of prevention is at least as large as the shift in the timing of prevention estimated in this paper. The introduction of more generous subsidies for insulin under Medicare Part D in 2006 eliminated this effect, saving up to $487 million per annum in forgone health care costs.

    Metadata

    Item Type: Monograph (Working Paper)
    School: School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Administrator
    Date Deposited: 04 May 2020 08:55
    Last Modified: 04 May 2020 08:55
    URI: https://eprints.bbk.ac.uk/id/eprint/31836

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