[相关成本与价格] Smoking Response to Health and Medical Spending Changes and the Role of Insuranc [推广有奖]

Severe health shocks provide new information about one’s personal health and have been shown to influence smoking

behaviors. In this paper, we suggest that they may also convey information about the hard to predict financial consequences

of illnesses. Relevant financial risk information is idiosyncratic and unavailable to the consumer preceding illness, and the

information search costs are high. However, new and salient information about the health as well as financial consequences

of smoking after a health shock may impact smoking responses. Using variation in the timing of health shocks and two

features of the US health care system (uninsured spells and aging into the Medicare program at 65), we test for heterogeneity

in the post-shock smoking decision according to plausibly exogenous changes in financial risk exposure to medical spending.

We also explore the relationship between smoking and the evolution of out-of-pocket costs. Individuals experiencing a

cardiovascular health shock during an uninsured spell have more than twice the cessation effect of those receiving the illness

while insured. For those uninsured prior to age 65 years, experiencing a cardiovascular shock post Medicare eligibility

completely offsets the cessation effect. We also find that older adults’ medical spending changes separate from health shocks

influence their smoking behavior.