Incorporating Psychosocial Variables into Health Care Policy: A Behavioral Economic Examination of Medicaid Expansion

Abstract

This paper incorporates a survey of psychosocial variables into a formal economic model of health care consumption. It suggests that consulting the literature in health psychology and intertemporal decision theory provides valuable material to explain certain findings in health econometrics. More significant, the lessons from this behavioral economic approach is particularly useful to Medicaid policymakers, who largely have neglected psychosocial variables in implementing a health insurance program that rests chiefly on orthodox economic assumptions.

The paper's chief contributions include an expansion of the behavioral economic approach to include a host of variables in health psychology, a behavioral refinement of empirical health economics, and a behavioral critique of Medicaid policy.

Keywords: Behavioral Economics, Health Economics, Health Care, Health Policy, Medicaid

JEL Classification: H51, I12, I18, I38, J24, Z13