The effects of health insurance on the choice of medical procedures: Evidence from heart attacks and childbirths

This paper investigates the effect of health insurance on the use of alternative procedures to treat a given medical condition. In particular, we estimate the effect of health insurance on the use of bypass surgery after a heart attack and on the use of a C-section after a normal pregnancy. These procedures are the most expensive, compared to the alternatives. Theoretically, the demand for some procedures like bypass surgery is likely to be inelastic. In this situation, health insurance should have no effect on the use of the procedure. For other procedures such as C-section, demand may be more elastic, especially after a normal pregnancy without complications. We use a nationally representative dataset of inpatient hospital admissions from the United States and control for individual and hospital characteristics. The results from our empirical analysis support our predictions. For patients admitted to a hospital because of a heart attack, being uninsured has no effect on the probability of bypass surgery. However, for patients admitted for childbirth, the uninsured have a substantially lower probability of a C-section delivery.