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

Liran Einav, Amy Finkelstein and Heidi Williams ()

No 20226, NBER Working Papers from National Bureau of Economic Research, Inc

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-codes: H44 I13 I18 (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-com, nep-hea and nep-ias
Note: AG EH IO LE PE PR
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Published as Liran Einav & Amy Finkelstein & Heidi Williams, 2016. "Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 52-79, February.

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Related works:
Journal Article: Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments (2016)
Working Paper: Paying on the margin for medical care: Evidence from breast cancer treatments (2014)
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