Essays in Health Economics

Abstract

The dissertation contains three essays in health economics on people with limited resources. The first chapter assesses how low-income patients near the federal poverty line prioritize prescriptions with high health benefits when their out-of-pocket costs for prescriptions sharply increase. The second chapter evaluates how higher costs of visiting a physician affect low-income patients' access to prescriptions. The third chapter answers whether substantial cash-transfers at birth make up for some of the long-term disadvantages of poor health at birth. In the first chapter, I estimate how shifting more costs to patients, or increasing cost-sharing, encourages patients to prioritize cost-effective health care. The paper measures the effects of cost-sharing among older low-income patients, exploiting a discontinuity in eligibility for a prescription drug subsidy for those who lose access to the Medicaid-linked program. Higher drug prices resulting from patients losing the subsidy led to a 40% average reduction in total prescription expenditures, driven by a 16% reduction in the quantity of prescriptions filled. Patients economize on purchases of higher-priced drugs, irrespective of their health benefits. For example, patients reduce insulin purchases by 35%. There is no evidence that cost-sharing prompts switching from branded drugs to equally effective generics. This behavior suggests that prescription drug cost-sharing reduces prescription accessibility without enhancing cost-effectiveness. In the second chapter, I evaluate the extent to which out-of-pocket costs for physician visits impede older low-income patients' access to prescription drugs. For Medicare-Medicaid patients who lose Medicaid, there is a several month lag between the loss of health insurance subsidies and the loss of prescription drug subsidies. This allows for identification of how patients respond to higher out-of-pocket costs of visiting a physician while holding the costs of filling a prescription constant. Patients respond to an average out-of-pocket cost increase of $17 per office visit by reducing their number of visits by nearly 10%. The reduction in office visits leads to a 5% reduction in the quantity of prescriptions filled. This suggests even relatively small increases in the cost of visiting a physician have a meaningful effect on access to prescriptions. In the third chapter, we examine whether Supplemental Security Income targeted to low-income families with infants below 1200 grams in birthweight improves their long-run outcomes. Using newly linked administrative data, we document that low-income families in California with infants just below this birthweight cutoff receive cash benefits totaling about 27% of family income at ages 0-2, with lower amounts through age 10. Infants also experience a small increase in childhood Medicaid enrollment. Yet, we detect no improvements in health care use and mortality in infancy, nor health and human capital outcomes as observed through young adulthood for these infants. We also find no improvements for their older siblings.