Working Paper: NBER ID: w26443
Authors: Irina B. Grafova; Alan C. Monheit; Rizie Kumar
Abstract: We use data from the Medical Expenditure Panel Survey (MEPS) for the years 2004 - 2012 to examine the impact of economic shocks on the family’s out-of-pocket health care spending burden. We define this burden as the share of family income devoted to out-of-pocket health care spending. In contrast to static, cross-sectional analyses, our study examines how the within-family change in spending burden over the two-year MEPS observation period responds to losses in family income, insurance, and employment. We also consider the impact of such losses on single-mother and two-parent families. To do so, we apply fractional response and health expenditure models using the correlated random effects (CRE) method to control for time-invariant, unobserved heterogeneity across family units. We find evidence that the change in the out-of-pocket spending burden is sensitive to income shocks, and that income changes rather than changes in health spending per se appears to drive changes in the out-of-pocket burden.
Keywords: economic shocks; health care spending; out-of-pocket burden; family income
JEL Codes: I11; I13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Decline in family income (J12) | Increase in out-of-pocket health care spending burden (H51) |
| Economic shocks (F69) | Increase in out-of-pocket health care spending burden (H51) |
| Change in income (E25) | Change in out-of-pocket burden (H22) |
| Economic shocks (F69) | No significant change in total health care spending as a share of income (H51) |