How Do Economic Shocks Affect Family Health Care Spending Burdens?

We used data from the Medical Expenditure Panel Survey (MEPS) for the years 2004–2012 and examined the impact of economic shocks on the family’s out-of-pocket health care spending burden. We defined 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 examined how the within-family change in this spending burden over the 2-year MEPS observation period responded to losses in family income, insurance, and employment. To investigate the change in spending burden, we applied generalized linear health expenditure models using the correlated random effects method to control for time-invariant, unobserved heterogeneity across family units. We found evidence that the family’s out-of-pocket spending burden increased with income losses, but that the change in total health care spending and in out-of-pocket spending were generally not sensitive to income shocks. These findings suggest that in the short run, income changes rather than changes in health spending per se appeared to drive changes in the out-of-pocket burden.