A Spoonful of Sugar Helps the Medicine Go Down: the Relationship Between Food Prices and Medical Expenditures on Diabetes

We investigate the impact of changes in the relative price of low- and high-carbohydrate foods on medical expenditures for diabetes care using Nielsen Homescan price data merged to the 2000-2005 Medical Expenditure Panel Survey. We find that an increase in low-(high-)carbohydrate food price increases (decreases) both the likelihood of a diabetes diagnosis and the level of medical expenditures among those with diabetes. We also find small impacts of food prices on body mass index that differ by gender. Policy simulations suggest that subsidizing the low-carbohydrate food purchases of people with diabetes could result in significant reductions in health care costs.