This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Journal: Economic Policy
  4. February 2016
  5. Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments

Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments

  • Liran Einav
  • Amy Finkelstein
  • Heidi Williams
American Economic Journal: Economic Policy
vol. 8, no. 1, February 2016
(pp. 52-79)
Download Full Text PDF

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.20140293

Additional 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
There are no comments for this article.
Login to Comment