Health and Labor Market Consequences of Low-Value Care: The Role of Practice Style

The paper presented in this Mannheim Applied Seminar investigates how differences in physician practice style can impact the health and labor market trajectories of individuals who experienced a sudden mental health shock: the loss of a close relative. The authors link Dutch general practitioners' (GPs) records to administrative data on labor market and health insurance expenditures, identifying approximately 120,000 individuals who lost a close relative between 2010 and 2019. For identification, they employ the exogenous assignment of patients to GP practices and then a dynamic difference-in-differences model to compare the health and labor market trajectories of individuals treated by GPs with different propensities to prescribe benzodiazepines after the death of a close relative. The findings indicate that patients treated by GPs with a higher propensity to prescribe benzodiazepines experience larger increases in healthcare expenditure, reduced wages, and an increased likelihood of unemployment and disability benefits for up to six years after this negative life event.