FINANCIAL CRISIS AND HEALTH CARE

Financial Crisis and Health Care

Financial Crisis and Health Care

Introduction

As the collapse of the housing market and the related financial crisis have continued to unfold, the numbers of those struggling to meet mortgage payments, newly unemployed, or simply in financial distress due to lower home equity values or stock market values have continued to grow (Fleming 2006). These forces have affected consumers' economic well-being, and one by-product of this economic weakness has been a pullback in consumers' use of non-essential health care services.

Financial Crisis & the Health Industry

It has also hurt their ability to pay for health care services they do incur during these times, resulting in increases in the incidence of health care-related bad debt. While in past periods of economic weakness health care was fairly resistant to downturns, given the increased influence of managed care and higher amount of cost sharing in the form of co-pays and deductibles, this appears to be less the case now (Bond 1994). These factors have begun to ripple through the health care system, impacting hospital, medical equipment, and managed health care companies.

The economic crisis could affect health outcomes in a number of ways. First, occurrence of illness may be higher because of increased exposure to risk factors (both physical and psychological ones) stemming from the crisis. Second, the economic crisis changes the relative prices of commodities, which in turn will change household consumption patterns. Third, some health care inputs have high import components—for example, pharmaceuticals— whose prices are likely to increase substantially and whose availability may also be in question. Moreover, changes in employment patterns and incomes that occurred as a result of the crisis are also likely to have had an effect on health outcomes and the demand for health care. Thus, understanding the impact of the crisis on health care is a complicated and difficult matter (Fleming 2006). In this paper, we attempt to analyze the health information available through the SUSENAS to establish baselines against which to compare future trends and possible impacts on the health sector. We also discuss some possible hypotheses for how the crisis may be affecting health care utilization.

The paper starts with a brief description of the data sources followed by a descriptive analysis of trends in morbidity, household health expenditures and choice of health providers. The descriptive analysis revealed that the utilization of the public health services dropped much more than for the private sector (contrary to some of the hypothesis set a priori). The last part of the paper attempts to explain the reasons behind this drop in the public sector using a series of multivariate analysis. The results indicate that the deterioration in access and/or quality of the public services may explain the shift from public to private sector.

Over the course of the last four months, as forecasts for economic growth in all parts of the world have been revised ever downward, it has become increasingly clear that those predictions were only too ...