The Economic Consequences of Hospital Admissions

Abstract

We use an event study approach to examine the economic consequences of hospital admissions for adults in two datasets: survey data from the Health and Retirement Study, and hospitalization data linked to credit reports. For non-elderly adults with health insurance, hospital admissions increase out-of-pocket medical spending, unpaid medical bills and bankruptcy, and reduce earnings, income, access to credit and consumer borrowing. The earnings decline is substantial compared to the out-of-pocket spending increase, and is minimally insured prior to age-eligibility for Social Security Retirement Income. Relative to the insured non-elderly, the uninsured non-elderly experience much larger increases in unpaid medical bills and bankruptcy rates following a hospital admission. Hospital admissions trigger less than 5 percent of all bankruptcies.

Longitudinal Determinants of End-of-Life Wealth Inequality

“…The findings regarding health shocks are consistent with the view, described for example in Barcellos and Jacobson (2015) and Dobkin, Finkelstein, Kluender, and Notowidigdo (2018), that Medicare protects most of the over-65 population from substantial burdens associated with health shocks. This may be particularly true for those low in the wealth distribution.…”

“…Poor health can lead to reduced labor supply as well as higher levels of health-related spending. Dobkin, Finkelstein, Kluender, and Notowidigdo (2018), using several merged administrative data sets, find that hospitalizations among those under 65 are associated with reduced earnings and elevated debt levels. Our findings are 21 supportive, and suggest that even after conditioning on lifetime income quantile, there are negative effects of a chronic health condition on wealth at retirement.…”

Red-State Medicaid Expansions — Achilles’ Heel of ACA Repeal?

“…Indeed, looking across individuals, healthier people have far higher employment rates and earnings, as depicted in Figure 21. Moreover, research has documented that adverse health shocks cause sharp reductions in employment and earnings, strongly implying that at least some of this cross-sectional relationship between health status and labor market outcomes reflects the effect of health status on labor market outcomes, rather than the effect of labor market outcomes on health status (Fadlon and Nielsen 2015;Dobkin et al 2016). There is particularly compelling evidence that coverage gains for children improve educational attainment and earnings.…”

Health Shocks, Human Capital, and Labor Market Outcomes

“…At the other end of the spectrum, Mohanan (2013) and Thomas et al (2006) use experimental and quasi-experimental variation in treatment (iron supplements) and health shocks (bus accidents), respectively, to estimate a reducedform effect of health on the labor supply and household finances. Dobkin et al (2018) use an event study framework to investigate the economic effects of hospitalizations.…”