This paper is the first to provide an empirical analysis of the short run and long run effects of carbon dioxide (CO2) emissions on health care spending across U.S. states. Accounting for the possibility of non-linearity in the data and the relationship among the variables, the analysis estimated various statistical models to demonstrate that CO2 emissions led to increases in health care expenditures across U.S states between 1966 and 2009. Using quantile regressions, the analysis displayed that the effect of CO2 emissions was stronger at the upper-end of the conditional distribution of health care expenditures. Results indicate the effect of CO2 emissions on health care was relatively stronger for states that spend higher amounts in health care expenditures. The primary policy message of the paper is that there can be tangible health related benefits associated with policies that aim to reduce carbon emissions across U.S. states.
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