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The Incidence of the Healthcare Costs of Obesity

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  • Jay Bhattacharya
  • M. Kate Bundorf

Abstract

The incidence of obesity has increased dramatically in the U.S. Obese individuals tend to be sicker and spend more on health care, raising the question of who bears the incidence of obesity-related health care costs. This question is particularly interesting among those with group coverage through an employer given the lack of explicit risk adjustment of individual health insurance premiums in the group market. In this paper, we examine the incidence of the healthcare costs of obesity among full time workers. We find that the incremental healthcare costs associated with obesity are passed on to obese workers with employer-sponsored health insurance in the form of lower cash wages. Obese workers in firms without employer-sponsored insurance do not have a wage offset relative to their non-obese counterparts. Our estimate of the wage offset exceeds estimates of the expected incremental health care costs of these individuals for obese women, but not for men. We find that a substantial part of the lower wages among obese women attributed to labor market discrimination can be explained by the higher health insurance premiums required to cover them.

Suggested Citation

  • Jay Bhattacharya & M. Kate Bundorf, 2005. "The Incidence of the Healthcare Costs of Obesity," NBER Working Papers 11303, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11303
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    Cited by:

    1. Naci Mocan & Erdal Tekin, 2011. "Obesity, Self-Esteem and Wages," NBER Chapters,in: Economic Aspects of Obesity, pages 349-380 National Bureau of Economic Research, Inc.
    2. Donna Gilleskie & Euna Han & Edward Norton, 2017. "Disentangling the Contemporaneous and Dynamic Effects of Human and Health Capital on Wages over the Life Cycle"," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 25, pages 350-383, April.
    3. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    4. David G. Blanchflower & Andrew J. Oswald & Bert Van Landeghem, 2009. "Imitative Obesity and Relative Utility," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 528-538, 04-05.
    5. David Lempert, 2007. "Women's Increasing Wage Penalties from Being Overweight and Obese," Working Papers 414, U.S. Bureau of Labor Statistics.
    6. Bhattacharya, Jay & Packalen, Mikko, 2012. "The other ex ante moral hazard in health," Journal of Health Economics, Elsevier, vol. 31(1), pages 135-146.
    7. Zhen Miao & John C. Beghin & Helen H. Jensen, 2013. "Accounting For Product Substitution In The Analysis Of Food Taxes Targeting Obesity," Health Economics, John Wiley & Sons, Ltd., vol. 22(11), pages 1318-1343, November.
    8. Euna Han & Edward C. Norton & Lisa M. Powell, 2009. "Direct and Indirect Effects of Teenage Body Weight on Adult Wages," NBER Working Papers 15027, National Bureau of Economic Research, Inc.
    9. Christian A. Gregory & Christopher J. Ruhm, 2011. "Where Does the Wage Penalty Bite?," NBER Chapters,in: Economic Aspects of Obesity, pages 315-347 National Bureau of Economic Research, Inc.
    10. Fabrice Etilé, 2007. "Social norms, ideal body weight and food attitudes," Health Economics, John Wiley & Sons, Ltd., vol. 16(9), pages 945-966.
    11. Atella, Vincenzo & Pace, Noemi & Vuri, Daniela, 2008. "Are employers discriminating with respect to weight?: European Evidence using Quantile Regression," Economics & Human Biology, Elsevier, vol. 6(3), pages 305-329, December.
    12. Lakdawalla, Darius & Sood, Neeraj, 2013. "Health insurance as a two-part pricing contract," Journal of Public Economics, Elsevier, vol. 102(C), pages 1-12.
    13. Tomas Philipson & Richard Posner, 2008. "Is the Obesity Epidemic a Public Health Problem? A Decade of Research on the Economics of Obesity," NBER Working Papers 14010, National Bureau of Economic Research, Inc.
    14. Lopez-Pablos, Rodrigo A., 2007. "Health Econometric: Uncovering the Anthropometric Behavior on Women's Labor Market," MPRA Paper 5961, University Library of Munich, Germany, revised 26 Nov 2007.
    15. Dragone, Davide & Savorelli, Luca, 2012. "Thinness and obesity: A model of food consumption, health concerns, and social pressure," Journal of Health Economics, Elsevier, vol. 31(1), pages 243-256.
    16. Oswald, Andrew J & Powdthavee, Nattavudh, 2007. "Obesity, Unhappiness, and The Challenge of Affluence : Theory and Evidence," The Warwick Economics Research Paper Series (TWERPS) 793, University of Warwick, Department of Economics.
    17. Euna Han & Edward C. Norton & Sally C. Stearns, 2009. "Weight and wages: fat versus lean paychecks," Health Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 535-548.
    18. Lopez-Pablos, Rodrigo A., 2008. "Notas sobre Descomposiciones Microeconométricas: Un Análisis Antropométrico
      [Notes on Microeconometric Decompositions: An Anthropometric Analysis]
      ," MPRA Paper 8222, University Library of Munich, Germany.
    19. A. Spithoven, 2009. "Why U.S. health care expenditure and ranking on health care indicators are so different from Canada’s," International Journal of Health Economics and Management, Springer, vol. 9(1), pages 1-24, March.
    20. Fomba Kamga, Benjamin & Kengne Kamga, Arline & Audibert, Martine, 2013. "Health and Labour Income of Wage Earners and Self-Employed Workers in Cameroon," IZA Discussion Papers 7324, Institute for the Study of Labor (IZA).
    21. Yaniv, Gideon & Rosin, Odelia & Tobol, Yossef, 2009. "Junk-food, home cooking, physical activity and obesity: The effect of the fat tax and the thin subsidy," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 823-830, June.

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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