Thesis (Ph.D.) - Indiana University, Kelley School of Business, 2019This dissertation studies how individuals respond to the incentives in policies that aim to improve health outcomes and reduce risky behaviors. My research design exploits variation in individuals’ out-of-pocket (OOP) medical prices generated by large insurance expansions. In Chapter 1, I study the effect of prices on the utilization of opioids and other prescription painkillers. I find that new users have a relatively high price elasticity of demand for prescription opioids, and that consumers treat over-the-counter painkillers as substitutes for prescription painkillers. My results suggest that increasing OOP opioid prices, through formulary design or taxes, may reduce new opioid use. Chapter 2 examines whether increased access to pharmaceuticals improves elderly people’s functional outcomes and reduces their dependence on long-term care. I exploit the introduction of Medicare Part D, which reduced OOP drug prices and expanded drug utilization among the elderly. I find that the policy increased seniors’ capacity to perform activities of daily living and reduced the amount of time spent on informal caregiving by non-elderly caregivers. Chapter 3 explores unintended effects of policies that expand prescription drug coverage. Economic theory predicts that lowering people’s OOP health care costs may protect them financially from the consequences of their unhealthy behaviors. I use detailed data on individuals’ food consumption and find that drug coverage worsens people’s diets. In Chapter 4, I exploit the Affordable Care Act (ACA) dependent coverage provision to assess the impacts of health insurance on consumption among young adults. I find that expanded insurance eligibility increased total spending, particularly in the categories of food, alcohol, and contraceptives. I provide evidence that increases in consumer purchasing power may be an important spillover effect of health insurance expansions. Chapter 5 analyzes the effects of the Medicaid expansions facilitated by the ACA on racial and ethnic disparities in cancer outcomes. We find that the Medicaid expansion had no detectable effect on cancer screenings for the overall population or for any specific race, but that the incidence of early stage diagnoses increased for Whites and by Hispanics; there was no detectable change for Blacks or other non-Hispanic races.