The Impact of Insurance Prices on Decision-Making Biases: An Experimental Analysis

This paper tests whether the use of endogenous risk categorization by insurers enables consumers to make better-informed decisions even if they do not choose to purchase insurance. We do so by adding a simple insurance market to an experimental test of optimal (Bayesian) updating. In some sessions, no insurance is offered. In others, actuarially fair insurance prices are posted, and a subset of subjects is allowed to purchase this insurance. We find significant differences in the decision rules used depending on whether or not one observes insurance prices. Although the majority of choices correspond to Bayesian updating, the incidence of optimal decisions is higher in sessions with an insurance option. Most subjects given the option to purchase actuarially fair insurance choose to do so, however fewer subjects purchase insurance when the probability of a loss is higher. Working Paper 06-1

What is the Economic Cost of Overweight Children?

Childhood overweight is now considered the most common health problem for children in the U.S. An important question is whether parents and policymakers will see rising medical expenditures for these children while they are still young. We estimate the overweight attributable fraction (OAF) of children’s medical expenditures, controlling for other factors that may cause expenditures to differ. We find that medical expenditures for overweight children are on average $12.09 higher per year (OAF = 0.5 percent), but confidence intervals are large and include zero. We also find little difference in the types of principal diagnoses per visit reported by weight status.

Economic impact of the South Carolina Medicaid for the working disabled program

The Medicaid for the Working Disabled program in South Carolina is designed to allow disabled individuals to return to work without losing health care coverage. This report analyzes the economic impact of the program in South Carolina

Malpractice Experience and the Incidence of Cesarean Delivery: A Physician-Level Longitudinal Analysis

This study examines the influence of malpractice claims on the practice behavior of a panel of obstetricians in Florida during the period 1992–1995 to determine whether physicians respond to malpractice events by performing more cesareans, consistent with the notion that cesarean sections are employed as “defensive medicine.” Findings indicate that clinical events resulting in claims that lead to substantial indemnity payments have a significant, modest effect on physician practice behavior: physicians experiencing those claims increase their risk-adjusted cesarean rates by about one percentage point. Malpractice experience does not appear to affect patient mix, but claims with large payouts may affect patient volume