A number of studies have found that economic growth (in the short-run) has adverse affects on individual’s health and economic downturns actually cause health improvements. During an economic downturn, individuals work less, sleep more and reduce their alcohol and cigarette usage; all these actions have a salutatory effects on health.
For working adults, recessions decreased healthcare use through two pathways: i) a reduction in the number insured, ii) lower income available to purchase health insurance. Because seniors are insured by Medicare, this is not the case.
Do elderly individuals also experience improved health and decreased healthcare utilization during an economic downturn? It turns out the answer is no. McInerney and Mellor (2012) find the following:
“[From] 1994 to 2008…we observe a fairly robust pattern of countercyclical mortality in the senior population. Further, as state unemployment rates rise, we find that seniors on Medicare report worsening mental health, and we find no evidence that health behaviors improve.”
Thus, improvements in aggregate economic conditions result in decreases in mortality. Why does this occur? It could be the case that seniors are getting better access to needed medical care.
“Unlike younger adults who seem to use less healthcare as unemployment rates rise, seniors use more inpatient care…the rise in healthcare use may be tied to an increased willingness of healthcare providers to accept Medicare patients.”
Supply elasticities may be the cause of the decrease in mortality.
- Melissa McInerney, Jennifer M. Mellor. “Recessions and seniors’ health, health behaviors, and healthcare use: Analysis of the Medicare Current Beneficiary Survey” Journal of Health Economics, v31: pp. 744-751, 2012.