TY - JOUR AU - Almond,Douglas AU - Doyle,Joseph J., Jr. AU - Kowalski,Amanda E. AU - Williams,Heidi TI - Estimating Marginal Returns to Medical Care: Evidence from At-Risk Newborns JF - National Bureau of Economic Research Working Paper Series VL - No. 14522 PY - 2008 Y2 - December 2008 UR - http://www.nber.org/papers/w14522 L1 - http://www.nber.org/papers/w14522.pdf N1 - Author contact info: Douglas Almond Department of Economics Columbia University International Affairs Building, MC 3308 420 West 118th Street New York, NY 10027 Tel: 212/854-7248 Fax: 212/854-3239 E-Mail: da2152@columbia.edu Joseph J. Doyle, Jr. MIT Sloan School of Management 100 Main Street, E62-515 Cambridge, MA 02142 Tel: 617/452-3761 Fax: 617/258-6855 E-Mail: jjdoyle@mit.edu Amanda E. Kowalski Department of Economics Yale University 37 Hillhouse Avenue Box 208264 New Haven, CT 06520 Tel: 203/432-3521 E-Mail: amanda.kowalski@yale.edu Heidi L. Williams MIT Department of Economics 50 Memorial Drive Building E52, Room 274C Cambridge MA 02142-1347 Tel: 617/324-4326 E-Mail: heidiw@mit.edu AB - We estimate marginal returns to medical care for at-risk newborns by comparing health outcomes and medical treatment provision on either side of common risk classifications, most notably the "very low birth weight" threshold at 1500 grams. First, using data on the census of US births in available years from 1983-2002, we find evidence that newborns with birth weights just below 1500 grams have lower one-year mortality rates than do newborns with birth weights just above this cutoff, even though mortality risk tends to decrease with birth weight. One-year mortality falls by approximately one percentage point as birth weight crosses 1500 grams from above, which is large relative to mean one-year mortality of 5.5% just above 1500 grams. Second, using hospital discharge records for births in five states in available years from 1991-2006, we find evidence that newborns with birth weights just below 1500 grams have discontinuously higher costs and frequencies of specific medical inputs. We estimate a $4,000 increase in hospital costs as birth weight approaches 1500 grams from above, relative to mean hospital costs of $40,000 just above 1500 grams. Taken together, these estimates suggest that the cost of saving a statistical life of a newborn with birth weight near 1500 grams is on the order of $550,000 in 2006 dollars. ER -