How Much Could We Save From Investments in Preventive Child Health Care

This paper quantifies the returns to investment in preventive child health care regarding the reduction in the number of hospitalizations and emergency room visits in Bogotá, Colombia. Using administrative data for the years between 2003 and 2007, we construct a panel that includes consultation, emergency room visits and hospitalization at the individual level for children between the ages of 0 to 5. This panel allows us to follow all health services used by each individual throughout this period. We exploit the exogenous variation of an amendment to the legislation in 2004 that introduced the abolition of fees for preventive health care services for children under the age of one year for a specific health regime. We follow an instrumental variable approach to identify that an additional medical consultation visit, caused by the amendment benefits, reduces hospitalization in 0.039 units and emergency visits in 0.16 units in a given year. These results are robust to different time windows specifications. Moreover, long-term effects indicate that children who benefited from this reform have fewer hospitalizations and fewer consultations during their first five years of life, and a cost-benefit analysis concludes that the policy saves $64,533 per child yearly.