The Healthcare Costs of Overnutrition

Obesity is a growing problem globally and domestically. Obesity is related to several chronic and noncommunicable diseases such as hypertension, type II diabetes, coronary heart disease, and some cancers. Both obesity and its related diseases are forms of overnutrition, which is the excess intake of nutrients that causes increased body fat to the point of impaired health. Using data from the Medical Expenditure Panel Survey (MEPS) from 2008-2016, this paper is the first to estimate the causal effect of overnutrition on medical expenditure by examining the effect of overnutrition diseases on health care costs, correcting for the endogeneity bias of body fat in medical expenditure and reporting error in the MEPS by identifying individuals’ BMI as an instrumental variable. I estimate that the marginal effect of overnutrition diseases on medical expenditure for individuals is $1,392.93 (in 2016 dollars), and the aggregate effect of overnutrition diseases on national health expenditures is $788.7 billion, or 23.9%, annually. I also estimate that overnutrition diseases are responsible for $287.1 billion, or 23.2% of Medicare and Medicaid health expenditures. My results indicate that the previous literature has underestimated the true impact of obesity and its related diseases on medical costs by not explicitly identifying the overnutrition diseases that are endogenous to obesity as the main explanatory variable