Estimating the Economic Cost of Obesity

Using 2001-2016 Medical Expenditure Panel Surveys (MEPS) data from working adults, a paper by Cawley et al. (2021) find that:

 Adults with obesity in the United States compared with those with normal weight experienced higher annual medical care costs by $2,505 or 100%, with costs increasing significantly with class of obesity, from 68.4% for class 1 to 233.6% for class 3. The effects of obesity raised costs in every category of care: inpatient, outpatient, and prescription drugs. Increases in medical expenditures due to obesity were higher for adults covered by public health insurance programs ($2,868) than for those having private health insurance ($2,058). In 2016, the aggregate medical cost due to obesity among adults in the United States was $260.6 billion. The increase in individual-level expenditures due to obesity varied considerably by state (e.g., 24.0% in Florida, 66.4% in New York, and 104.9% in Texas).

The authors used a two-part model of medical cost that separately estimates (i) the probability of 0 spending, and then, (ii) estimated spending levels conditional on having positive medical expenditures during the year. This approach addresses the challenges of a large mass of individuals having $0 cost and having the cost data be right-skewed. Moreover, the authors used an instrumental variables analysis to estimate the causal effect of obesity on outcomes. Specifically, the authors instrument for respondent BMI with the BMI of the individual’s biological child. The logic is that weight is heritability and has a large genetic component.

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