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Measuring recession severity and its impact on healthcare expenditure

  • Conor Keegan
  • Steve Thomas
  • Charles Normand
  • Conceição Portela
Article

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 

Notes

Acknowledgments

The authors declare that they have no conflict of interest.

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Conor Keegan
    • 1
  • Steve Thomas
    • 1
  • Charles Normand
    • 1
  • Conceição Portela
    • 1
  1. 1.Centre for Health Policy and ManagementTrinity College Dublin (TCD)DublinIreland

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