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The Simultaneous Effects of Obesity, Insurance Choice, and Medical Visit Choice on Health Care Costs

The Simultaneous Effects of Obesity, Insurance Choice, and Medical Visit Choice on Health Care Costs

Chapter:
(p.211) 7 The Simultaneous Effects of Obesity, Insurance Choice, and Medical Visit Choice on Health Care Costs
Source:
Measuring and Modeling Health Care Costs
Author(s):
Ralph BradleyColin Baker
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226530994.003.0008

While previous studies on obesity’s effects on healthcare costs conclude that obesity increases costs, they do not control for the endogeneity of insurance and estimate a tobit model for the corner solution when individuals have no medical expenditure. This study recognizes that there are unobserved heterogeneous factors that guide choices on health insurance, body mass index (BMI) and visiting a provider. Therefore, neither health insurance nor BMI can be treated as exogenous in estimating a cost function and a tobit model must be used to account for corner solutions when the individual does not visit a provider and incurs no medical costs. We find that obesity raises medical costs by $430.33, and that a 10% reduction in the BMI of each obese person would only lower costs by $45.28. The obesity elasticity with respect to cost is only .0115%.

Keywords:   obesity, insurance choice, BMI, medical spending

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