The medical care costs of obesity and severe obesity in youth: An instrumental variables approach

This paper is the first to use the method of instrumental variables to estimate the impact of obesity and severe obesity in youth. on U.S. medical care costs. We examine data from the Medical Expenditure Panel Survey for 2001-2015 and instrument for child BMI using the BMI of the child's biological mother. Instrumental variables estimates indicate that obesity in youth raises annual medical care costs by $907 (in 2015 dollars) or 92%, which is considerably higher than previous estimates of the association of youth obesity with medical costs. We find that obesity in youth significantly raises costs in all major categories of medical care: outpatient doctor visits, inpatient hospital stays, and prescription drugs. The costs of youth obesity are borne almost entirely by third-party payers, which is consistent with substantial externalities of youth obesity, which in turn represents an economic rationale for government intervention.