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How Business Cycles Affect the Healthcare Sector: A Cross‐country Investigation
Author(s) -
Cleeren Kathleen,
Lamey Lien,
Meyer JanHinrich,
De Ruyter Ko
Publication year - 2016
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.3187
Subject(s) - business cycle , health care , business , private sector , public economics , public sector , economics , economic growth , economy , macroeconomics
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. Copyright © 2015 John Wiley & Sons, Ltd.