Working Paper: NBER ID: w9912
Authors: Stephen T. Parente; David S. Salkever; Joan Davanzo
Abstract: In 1992, the United States Centers for Medicare and Medicaid Services (CMS) introduced new insurance coverage for two preventive services influenza vaccinations and mammograms. Economists typically assume transactions occur with perfect information and foresight. As a test of the value of information, we estimate the effect of consumer knowledge of these benefits on their demand. Treating knowledge as endogenous in a two-part model of demand, we find that consumer knowledge has a substantial positive effect on the use of preventive services. Our findings suggest that strategies to educate the insured Medicare population about coverage of preventive services may have substantial social value.
Keywords: Consumer Knowledge; Preventive Health Care; Medicare Benefits; Elderly
JEL Codes: I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Consumer knowledge of insurance benefits (G52) | Demand for preventive health care services (I11) |
| Consumer knowledge of insurance benefits (G52) | Perceived costs of preventive services (J32) |
| Perceived costs of preventive services (J32) | Demand for preventive health care services (I11) |
| Consumer knowledge of insurance benefits (G52) | Overestimation of out-of-pocket costs (H51) |
| Overestimation of out-of-pocket costs (H51) | Demand for preventive health care services (I11) |
| Consumer knowledge of insurance benefits (G52) | Risk exposure and effectiveness of preventive services (I13) |