Measuring recession severity and its impact on healthcare expenditure
- PDF / 481,342 Bytes
- 17 Pages / 439.37 x 666.142 pts Page_size
- 18 Downloads / 217 Views
Measuring recession severity and its impact on healthcare expenditure Conor Keegan · Steve Thomas · Charles Normand · Conceição Portela
Received: 3 July 2012 / Accepted: 7 December 2012 / Published online: 16 February 2013 © Springer Science+Business Media New York 2013
Abstract The financial crisis that manifested itself in late 2007 resulted in a Europe-wide economic crisis by 2009. As the economic climate worsened, Governments and households were put under increased strain and more focus was placed on prioritising expenditures. Across European countries and their heterogeneous health care systems, this paper examines the initial responsiveness of health expenditures to the crisis and whether recession severity can be considered a predictor of health expenditure growth. In measuring severity we move away from solely gross domestic product (GDP) as a metric and construct a recession severity index predicated on a number of key macroeconomic indicators. We then regress this index on measures of total, public and private health expenditure to identify potential relationships. Analysis suggests that for 2009, the Baltic States, along with Ireland, Italy and Greece, experienced comparatively severe recessions. We find, overall, an initial counter-cyclical response in health spending (both public and private) across countries. However, our analysis finds evidence of a negative relationship between recession severity and changes in certain health expenditures. As a predictor of health expenditure growth in 2009, the derived index is an improvement over GDP change alone. Keywords
Economic and financial crisis · Recession severity · Healthcare expenditures
JEL Classification
H120 · H510 · I180
Introduction The global financial crisis that manifested itself in late 2007 was without equal since the Great Depression of the 1930s. Pre-crisis there were long periods of ‘rapid credit growth, low risk premiums. . . soaring asset prices and the development of bubbles in the real estate sector’ (European Commission 2009). As a result of over-stretched leveraging positions,
C. Keegan (B) · S. Thomas · C. Normand · C. Portela Centre for Health Policy and Management, Trinity College Dublin (TCD), Dublin, Ireland e-mail: [email protected]
123
140
C. Keegan et al.
a correction in a relatively small corner of the financial system (the US subprime market) was sufficient to topple the whole structure. The financial crisis quickly transformed into an economic one with credit restraint and falling confidence resulting in EU real gross domestic product (GDP) shrinking by 4.3 % in 2009, the sharpest contraction in its history (European Commission 2009). The public finances of individual EU countries were consequently put under significant strain. State revenues declined as a result of falling tax revenues. Simultaneously, there was an increase in demand for public resources as unemployment increased and income levels declined. This resulted in ubiquitous and growing budget deficits throughout the EU. Compounding this, a distinctive fe
Data Loading...
