IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/11303.html
   My bibliography  Save this paper

The Incidence of the Healthcare Costs of Obesity

Author

Listed:
  • 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
    Note: HC LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w11303.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Woodbury, Stephen A, 1983. "Substitution between Wage and Nonwage Benefits," American Economic Review, American Economic Association, vol. 73(1), pages 166-182, March.
    2. Arleen Leibowitz, 1983. "Fringe Benefits in Employee Compensation," NBER Chapters, in: The Measurement of Labor Cost, pages 371-394, National Bureau of Economic Research, Inc.
    3. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-648, July-Aug..
    4. Patricia M. Anderson & Kristin F. Butcher & Phillip B. Levine, 2003. "Economic perspectives on childhood obesity," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 27(Q III), pages 30-48.
    5. Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-183, May.
    6. Gruber, Jonathan, 2000. "Health insurance and the labor market," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 12, pages 645-706, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. 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.
    3. David Lempert, 2007. "Women's Increasing Wage Penalties from Being Overweight and Obese," Working Papers 414, U.S. Bureau of Labor Statistics.
    4. 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.
    5. 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.
    6. Fabrice Etilé, 2007. "Social norms, ideal body weight and food attitudes," Health Economics, John Wiley & Sons, Ltd., vol. 16(9), pages 945-966, September.
    7. Bhattacharya, Jay & Packalen, Mikko, 2012. "The other ex ante moral hazard in health," Journal of Health Economics, Elsevier, vol. 31(1), pages 135-146.
    8. 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.
    9. Lakdawalla, Darius & Sood, Neeraj, 2013. "Health insurance as a two-part pricing contract," Journal of Public Economics, Elsevier, vol. 102(C), pages 1-12.
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. 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, May.
    15. 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.
    16. 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 of Labor Economics (IZA).
    17. 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.
    18. 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.
    19. 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.
    20. 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.
    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Goldman, Dana P. & Sood, Neeraj & Leibowitz, Arleen, 2005. "The reallocation of compensation in response to health insurance premium increases," Economics Letters, Elsevier, vol. 88(2), pages 147-151, August.
    2. Jay Bhattacharya & Neeraj Sood, 2005. "Health Insurance and the Obesity Externality," NBER Working Papers 11529, National Bureau of Economic Research, Inc.
    3. Ying Wu, 2003. "Substitution between wages and on-the-job training in an optimal labor contract," International Review of Economics & Finance, Elsevier, vol. 12(3), pages 369-383.
    4. Bhattacharya, Jay & Bundorf, M. Kate, 2009. "The incidence of the healthcare costs of obesity," Journal of Health Economics, Elsevier, vol. 28(3), pages 649-658, May.
    5. Kolstad, Jonathan T. & Kowalski, Amanda E., 2016. "Mandate-based health reform and the labor market: Evidence from the Massachusetts reform," Journal of Health Economics, Elsevier, vol. 47(C), pages 81-106.
    6. Patricia M. Anderson & Bruce D. Meyer, "undated". "The Incidence of a Firm-Varying Payroll Tax: The Case of Unemployment Insurance," IPR working papers 95-23, Institute for Policy Resarch at Northwestern University.
    7. Gruber, J., 1992. "The Efficiency of a Group-Specific Mandated Benefit: Evidence from Health Insurance Benefits for Maternity," Working papers 92-19, Massachusetts Institute of Technology (MIT), Department of Economics.
    8. Maria Anauati & Sebastian Galiani & Federico Weinschelbaum, 2015. "The rise of noncommunicable diseases in Latin America and the Caribbean: challenges for public health policies," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 24(1), pages 1-56, December.
    9. Oyer, Paul, 2004. "Salary or Benefits?," Santa Cruz Department of Economics, Working Paper Series qt8xs3k3j8, Department of Economics, UC Santa Cruz.
    10. Priyanka Anand, 2017. "Health Insurance Costs and Employee Compensation: Evidence from the National Compensation Survey," Health Economics, John Wiley & Sons, Ltd., vol. 26(12), pages 1601-1616, December.
    11. Perronnin, Marc, 2013. "Effet de l'assurance complémentaire santé sur les consommations médicales, entre risque moral et amélioration de l'accès aux soins," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/13659 edited by Wittwer, Jérôme, October.
    12. Katerina Sherstyuk & Yoav Wachsman & Gerard Russo, 2007. "Labor Market Effects Of Employer‐Provided Health Insurance," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 538-556, July.
    13. Gilad Sorek & David Benjamin, 2016. "Health insurance mandates in a model with consumer bankruptcy," Journal of Regulatory Economics, Springer, vol. 50(2), pages 233-250, October.
    14. Dwight Lee & Ronald Warren, 1999. "Mandated health insurance and the low-wage labor market," Journal of Labor Research, Springer, vol. 20(4), pages 505-515, December.
    15. Aurélie Pierre & Florence Jusot & Denis Raynaud & Carine Franc, 2018. "Généralisation de la complémentaire santé d’entreprise. Une évaluation ex ante des gains et des pertes de bien-être," Revue économique, Presses de Sciences-Po, vol. 69(3), pages 407-441.
    16. DeVaro, Jed & Maxwell, Nan L., 2014. "The elusive wage-benefit trade-off: The case of employer-provided health insurance," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 23-37.
    17. Gruber, Jonathan & Lettau, Michael, 2004. "How elastic is the firm's demand for health insurance?," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1273-1293, July.
    18. Anderson, Patricia M. & Meyer, Bruce D., 1997. "The effects of firm specific taxes and government mandates with an application to the U.S. unemployment insurance program," Journal of Public Economics, Elsevier, vol. 65(2), pages 119-145, August.
    19. Goldzahl, Léontine, 2017. "Contributions of risk preference, time orientation and perceptions to breast cancer screening regularity," Social Science & Medicine, Elsevier, vol. 185(C), pages 147-157.
    20. Jonathan Gruber & James M. Poterba, 1996. "Tax Subsidies to Employer-Provided Health Insurance," NBER Chapters, in: Empirical Foundations of Household Taxation, pages 135-168, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:11303. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.