THE DEMAND FOR PREVENTIVE ACTIVITIES AMONG OLDER ADULTS AND ITS ASSOCIATION WITH MEDICARE EXPENDITURES

In recent years, certain health policy makers have emphasized the need for an increase in preventive services interventions as means to improve health outcomes and cut health care costs. Oftentimes, the debate around the purported benefits of prevention centers on the need to cut the costs of highly costly systems such as Medicare. However, little is known about the factors that might actually influence the demand for preventive services among older adults, neither do we know much about how the dynamic for the demand for prevention plays out among older adults within the context of a household. Moreover, there is little evidence to support the belief that all preventive activities necessarily translate in cost savings. This dissertation examines the theoretical and empirical factors that influence the demand for prevention at the individual and household level. It also analyzes the associations between a diverse set of preventive services and Medicare expenditures in older adults. Using a panel data set from the Health and Retirement study linked to Medicare claims data, I find evidence that while lifestyle prevention such as physical activity, non-smoking and normal weight status maintenance are negatively associated with Medicare expenditures at ages 65-69, clinical preventive activities such as flu shot, cholesterol screening, mammography, Pap smears test and prostate cancer screening have at best no effect on expenditures, at worst they are positively associated; yet these findings may be biased due to uncontrolled unobservables. Also, I find that education, risk aversion, and long term planning are significantly associated with a higher demand for all preventive services. Finally, I find large bargaining effects between household members whereby spouses initiate and terminate preventive activities together. This result leaves room for policy makers to take advantage of spillover effects in the design of interventions designed with the purpose of increasing the demand for prevention.