Consumption Smoothing in the Demand for Health Care

38 Pages Posted: 18 Jan 2016

See all articles by Nicolai Kristensen

Nicolai Kristensen

Aarhus School of Business

Henrik Lindegaard Andersen

Danish Institute of Governmental Research

Abstract

We investigate how, in temporary economic hardship, agents change their consumption of health services, and how this depends on whether the service is universally free-of-charge visits to GP's or privately co-financed dental care. We find that own expenditures for dental care decrease. The decrease is mainly seen in preventive treatment, a durable good, but for the lowest income quartile there is also a substantial decrease in expenditures for curative dental care, although this is a consumption good with very low intertemporal substitution. The expenditures for GPs are unaltered. The findings indicate that consumption of health services critically depends on the existence of user charges versus universal coverage. The welfare loss associated with postponement of preventive care is considerably lower than the welfare loss related to a decrease in the use of curative dental care induced by economic hardship. The policy implication could be public support for means-tested curative dental services.

Keywords: health care systems, consumption smoothing, social gradient

JEL Classification: D1, D6, H23

Suggested Citation

Kristensen, Nicolai and Andersen, Henrik Lindegaard, Consumption Smoothing in the Demand for Health Care. IZA Discussion Paper No. 9655. Available at SSRN: https://ssrn.com/abstract=2716596

Nicolai Kristensen (Contact Author)

Aarhus School of Business ( email )

Haslegaardsvej 10
DK-8210 Aarhus, 8210
Denmark

Henrik Lindegaard Andersen

Danish Institute of Governmental Research ( email )

KĂžbmagergade 22
Copenhagen K, 1150
Denmark
+45 33344371 (Phone)

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