Diabetes Treatments and Moral Hazard

20 Pages Posted: 23 Jul 2005 Last revised: 29 Jan 2010

See all articles by Jonathan Klick

Jonathan Klick

University of Pennsylvania Law School; Erasmus School of Law; PERC - Property and Environment Research Center

Thomas Stratmann

George Mason University - Buchanan Center Political Economy; George Mason University - Mercatus Center; CESifo (Center for Economic Studies and Ifo Institute)


In the face of rising diabetes rates, many states passed laws requiring health insurance plans to cover medical treatments for the disease. Although supporters of the mandates expect them to improve the health of diabetics, they have the potential to generate a moral hazard to the extent that medical treatments might displace individual behavioral improvements. Another possibility is that the mandates do little to improve insurance coverage for most individuals, as previous research on benefit mandates has suggested that often mandates duplicate what plans already cover. To examine the effects of these mandates, we employ a triple differences methodology comparing the change in the gap in body mass index (BMI) between diabetics and non-diabetics in mandate and non-mandate states. We find that mandates do generate a moral hazard problem with diabetics exhibiting higher BMIs after the adoption of these mandates.

Keywords: Insurance, Mandates, Obesity, Offsetting Behavior

JEL Classification: I12, I18, J32, J38

Suggested Citation

Klick, Jonathan and Stratmann, Thomas, Diabetes Treatments and Moral Hazard. Journal of Law and Economics, Vol. 50, p. 519, 2007, FSU College of Law, Law and Economics Paper No. 05-21, FSU College of Law, Public Law Research Paper No. 159, Available at SSRN: https://ssrn.com/abstract=766825

Jonathan Klick (Contact Author)

University of Pennsylvania Law School ( email )

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Thomas Stratmann

George Mason University - Buchanan Center Political Economy ( email )

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George Mason University - Mercatus Center ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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