The impact of the great recession on healthcare utilization

The recent economic downturn in the U.S. represented the longest and, by most measures, the worst recession since the Great Depression.  At the individual level recessions are linked to lower income, higher unemployment, and increased debt.  This combination of lower wages, greater availability of non-work time, and loss of health insurance associated with job-loss and reduced labor supply would also be expected to affect individuals’ healthcare decisions.   This study provides some of the first evidence, based on recent data, on how the Great Recession has impacted individuals’ access to healthcare and their demand for routine and preventive healthcare. The study further assesses potential mechanisms underlying the changes in healthcare demand, as they relate to shifts in income and time constraints and reduced healthcare coverage.

Multivariate regression analyses are applied to pooled cross-sectional data from the Behavioral Risk Factor Surveillance System (BRFSS) spanning 1998-2013, the period that encompassed the recent Great Recession and the milder 2000-2001 recession.   The BRFSS is a national survey conducted by the Center for Disease Control and Prevention and features 5.5 million individual-level observations over this study period.  Data on state-level unemployment rates, as a proxy for local labor market conditions, are matched to the BRFSS based on state of residence and year of interview.  Empirical models exploit the rich information in the BRFSS, and control for a large set of important individual-level characteristics in addition to unobserved state factors and national trends, which may also drive changes in healthcare choices.

Estimates indicate a significant decrease in healthcare coverage as a result of the economic downturn.   Results also suggest that the Great Recession had a significant negative impact on healthcare utilization including routine and preventive care, with both the reduced income and the loss in healthcare coverage playing a significant role in driving these effects.  Estimates further suggest that there are also important external channels (for instance, stress-related or related to spousal job-loss) which are at play. Given that healthcare inputs have cumulative effects on health, forgoing preventive care and routine checkups may have adverse implications for health outcomes and costs over time.   In this context, the effects of the business cycle on healthcare decisions are not necessarily transitory, and may have longer-term consequences.