A low-key social insurance reform-effects of multidisciplinary outpatient treatment for back pain patients in Norway

This paper estimates treatment effects for back pain patients using observational data from a low-key social insurance reform in Norway. Using a latent variable model, we estimate the average treatment effect (ATE), the average effect of treatment on the treated (TT), and the distribution of treatment effects for multidisciplinary outpatient treatment at three different locations. To estimate these treatment effects, we use a discrete-choice model with unobservables generated by a factor structure model. Distance to the nearest hospital (in kilometres) is used as an instrument in estimating the different treatment effects. We find a positive effect of treatment of around 6 percentage points on the probability of leaving the sickness benefits scheme after allowing for selection effects and full heterogeneity in treatment effects. We also find that there are sound arguments for expanding the multidisciplinary outpatient programme for treating back pain patients.