Is More Care Better? Economic Returns to Treatment Intensity Preliminary: Do Not Cite

This paper examines the effect of elective surgery receipt on paid and unpaid labor supply amongst older adults. I find that osteoarthritic patients receiving elective hip or knee replacements in hospital referral regions with high rates of elective procedure use, where the marginal surgery is believed to be more discretionary, increase participation in paid work and volunteering after surgery. The response to surgery occurs primarily on the extensive margin, a 5.9 percentage point increase in work and an 11.6 percentage point increase in volunteering. I show that high and low intensity regions perform surgery on patients with similar levels of disability, but amongst patients who do not receive surgical intervention, levels of disability are higher in low intensity regions. I also find returns to medical management for paid work in low intensity regions only, evidence that regions specialize in particular treatment styles. Findings suggest that there are important economic effects of medical treatment intensity. ∗[email protected]. I am grateful for funding from the National Institute on Aging through grant AG000221-17 and grant UL1RR024986 from the National Center for Research Resources. This content does not represent the official views of the National Institutes of Health and all errors are my own. Morris Hamilton and Meaghan Hafner provided excellent research assistance. I appreciate helpful comments from Charlie Brown, Ken Langa, Courtney van Houtven, and David Weir as well as seminar participants at RAND, the University of Michigan, and Umea University.