Essays in Health Economics

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 sharplyincrease. The second chapter evaluates how higher costs of visiting a physician affect lowincome patients’ access to prescriptions. The third chapter answers whether substantialcash-transfers at birth make up for some of the long-term disadvantages of poor health atbirth.In the first chapter, I estimate how shifting more costs to patients, or increasing costsharing, encourages patients to prioritize cost-effective health care. The paper measuresthe effects of cost-sharing among older low-income patients, exploiting a discontinuity ineligibility for a prescription drug subsidy for those who lose access to the Medicaid-linkedprogram. Higher drug prices resulting from patients losing the subsidy lead to a 40% averagereduction in total prescription expenditures, driven by a 16% reduction in the quantity ofprescriptions filled. Patients economize on purchases of higher-priced drugs, irrespectiveof their health benefits. For example, patients reduce insulin purchases by 35%. There isno evidence that cost-sharing prompts switching from branded drugs to equally effectivegenerics. This behavior suggests that prescription drug cost-sharing reduces prescriptionaccessibility without enhancing cost-effectiveness.In the second chapter, I evaluate the extent to which out-of-pocket costs for physicianvisits impede older low-income patients’ access to prescription drugs. For Medicare-Medicaidpatients who lose Medicaid, there is a several month lag between the loss of health insurancesubsidies and the loss of prescription drug subsidies. This allows for identification of howpatients respond to higher out-of-pocket costs of visiting a physician while holding the costsof filling a prescription constant. Patients respond to an average out-of-pocket cost increaseof $17 per office visit by reducing their number of visits by nearly 10%. The reduction inoffice visits leads to a 5% reduction in the quantity of prescriptions filled. This suggestseven relatively small increases in the cost of visiting a physician have a meaningful effect onaccess to prescriptions.In the third chapter, we examine whether Supplemental Security Income targeted toxilow-income families with infants below 1200 grams in birthweight improves their long-runoutcomes. Using newly linked administrative data, we document that low-income families inCalifornia with infants just below this birthweight cutoff receive cash benefits totaling about27% of family income at ages 0-2, with lower amounts through age 10. Infants also experiencea small increase in childhood Medicaid enrollment. Yet, we detect no improvements in healthcare use and mortality in infancy, nor health and human capital outcomes as observedthrough young adulthood for these infants. We also find no improvements for their oldersiblings.