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What Difference Does a Diagnosis Make? Evidence from Marginal Patients -- by Mattan Alalouf, Sarah Miller, Laura R. Wherry

Over the past 30 years, the criteria used to diagnose many illnesses have been relaxed, resulting in millions more relatively healthy individuals receiving treatment. This paper explores the impact of receiving a diagnosis of a common disease among such “marginally ill” patients. We apply a regression discontinuity design to the cutoff in blood sugar levels used to classify patients as having diabetes. We find that a marginally diagnosed patient with diabetes spends $1,097 more on drugs and diabetes-related care annually after diagnosis, but find no corresponding changes in self-reported health or healthy behaviors. These increases in spending persist over the 6-year period we observe the patients. These marginally diagnosed patients experience improved blood sugar after the first year of diagnosis, but this improvement does not persist in subsequent years. Other clinical measures of health, such as BMI, blood pressure, cholesterol, and mortality show no improvement. The diagnosis rates for preventable disease-related conditions such as diabetic retinopathy, neuropathy, and kidney disease increase following a diagnosis, likely due to more intensive screening. Our results imply that a small relaxation in the diagnosis cutoff would increase total spending on diabetes-related care by about $2.4 billion annually and minimally impact patient health.