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Diabetes Treatments and Moral Hazard

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  • Jonathan Klick
  • Thomas Stratmann

Abstract

In the face of rising rates of diabetes, many states have passed laws requiring health insurance plans to cover medical treatments for the disease. Although supporters of the mandates expect them to improve the health of diabetics, the mandates have the potential to generate a moral hazard to the extent that medical treatments might displace individual behavioral improvements. Another possibility is that the mandates do little to improve insurance coverage for most individuals, as previous research on benefit mandates has suggested that mandates often duplicate what plans already cover. To examine the effects of these mandates, we employ a triple-differences methodology comparing the change in the gap in body mass index (BMI) between diabetics and nondiabetics in mandate and nonmandate states. We find that mandates do generate a moral hazard problem, with diabetics exhibiting higher BMIs after the adoption of these mandates.

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Bibliographic Info

Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

Volume (Year): 50 (2007)
Issue (Month): ()
Pages: 519-538

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Handle: RePEc:ucp:jlawec:v:50:y:2007:p:519-538

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Web page: http://www.journals.uchicago.edu/JLE/

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Cited by:
  1. Dhaval Dave & Robert Kaestner, 2006. "Health Insurance and Ex Ante Moral Hazard: Evidence from Medicare," NBER Working Papers 12764, National Bureau of Economic Research, Inc.
  2. Bailey, James, 2013. "Who pays for obesity? Evidence from health insurance benefit mandates," Economics Letters, Elsevier, vol. 121(2), pages 287-289.
  3. Yingying Dong, 2013. "How Health Insurance Affects Health Care Demand—A Structural Analysis Of Behavioral Moral Hazard And Adverse Selection," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1324-1344, 04.
  4. Thomas Stratmann, 2007. "Mandatory and affordable health insurance: commentary," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Oct, pages 29-31.
  5. Slade, Alexander N., 2012. "Health investment decisions in response to diabetes information in older Americans," Journal of Health Economics, Elsevier, vol. 31(3), pages 502-520.
  6. Alma Cohen & Peter Siegelman, 2009. "Testing for Adverse Selection in Insurance Markets," NBER Working Papers 15586, National Bureau of Economic Research, Inc.
  7. Spenkuch, Jörg L., 2012. "Moral hazard and selection among the poor: Evidence from a randomized experiment," Journal of Health Economics, Elsevier, vol. 31(1), pages 72-85.
  8. Christoph Engel, 2013. "Behavioral Law and Economics: Empirical Methods," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2013_01, Max Planck Institute for Research on Collective Goods.
  9. Yilma, Zelalem & van Kempen, Luuk & de Hoop, Thomas, 2012. "A perverse ‘net’ effect? Health insurance and ex-ante moral hazard in Ghana," Social Science & Medicine, Elsevier, vol. 75(1), pages 138-147.

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