Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments
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Finkelstein_Paying on the margin.pdf
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924.93 KB
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Author(s)
Einav, Liran
Finkelstein, Amy
Williams, Heidi L
Date Issued
February 2016
Journal
American Economic Journal: Economic Policy
Publisher
American Economic Association
Citation
Einav, Liran, Amy Finkelstein, and Heidi Williams. “Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments.” American Economic Journal: Economic Policy 8.1 (2016): 52–79. © 2016 American Economic Association
Version
Final published version
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)
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/pol.20140293
