Provider and Worker Responses to Supply-Side Audits in Social Insurance

Social insurance often relies on third-party gatekeepers to certify eligibility, but planners cannot easily verify whether those certifications are accurate. We study this problem in the market for medical sick leave using the universe of sick leave certificates in Chile from 2018–2022 (about 22 million records). We estimate how a sharp increase in enforcement changes behavior on both the supply side (physicians) and the demand side (workers). We combine matched difference-in-differences and regression discontinuity in time on physicians, and a design that addresses non-random patient exposure. Enforcement produces a large and persistent drop in issuance among the highest-issuing physicians, with smaller spillovers to similar non-sanctioned physicians. Workers who were more exposed to these physicians reduce sick-leave use, but the final effects are smaller than the supply contraction, consistent with imperfect substitution on the worker side across providers. Workplace networks strengthen these effects, suggesting that information and access to substitute certifiers are channeled through coworkers. The findings show how substitution and spillovers shape the ultimate impact of monitoring policies.