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How Business Cycles Affect the Healthcare Sector: A Cross-country Investigation

Cleeren, K., Lamey, L., Meyer, J-H. and de Ruyter, K. (2016). How Business Cycles Affect the Healthcare Sector: A Cross-country Investigation. Health Economics, 25(7), pp. 787-800. doi: 10.1002/hec.3187

Abstract

The long-term relationship between the general economy and healthcare expenditures has been extensively researched, to explain differences in healthcare spending between countries, but the midterm (i.e., business cycle) perspective has been overlooked. This study explores business cycle sensitivity in both public and private parts of the healthcare sector across 32 countries. Responses to the business cycle vary notably, both across spending sources and across countries. Whereas in some countries, consumers and/or governments cut back, in others, private and/or public healthcare buyers tend to spend more. We also assess long-term consequences of business cycle sensitivity and show that public cost cutting during economic downturns deflates the mortality rates, whereas private cut backs increase the long-term growth in total healthcare expenditures. Finally, multiple factors help explain variability in cyclical sensitivity. Private cost cuts during economic downturns are smaller in countries with a predominantly publicly funded healthcare system and more preventive public activities. Public cut backs during contractions are smaller in countries that rely more on tax-based resources rather than social health insurances.

Publication Type: Article
Additional Information: This is the peer reviewed version of the following article: Cleeren, K., Lamey, L., Meyer, J. -H., and De Ruyter, K. (2016) How Business Cycles Affect the Healthcare Sector: A Cross-country Investigation. Health Econ., 25: 787–800., which has been published in final form at http://dx.doi.org/10.1002/hec.3187. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Publisher Keywords: business cycle, healthcare expenditures, mortality, healthcare systems
Subjects: H Social Sciences > HD Industries. Land use. Labor
R Medicine > RA Public aspects of medicine
Departments: Cass Business School > Management
URI: http://openaccess.city.ac.uk/id/eprint/15745
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