Health Care and the Housing Crisis

24 Pages Posted: 7 Nov 2016

See all articles by Ben Gilbert

Ben Gilbert

Colorado School of Mines - Division of Economics and Business

Julian Wade

University of Wyoming, College of Business, Department of Economics and Finance, Students

Date Written: November 4, 2016

Abstract

We show that the percentage of people in a county without health insurance in 2005 is a strong and robust predictor of subsequent home value declines in that county during the housing crisis. Our preferred estimates indicate that a 10 percentage point increase in uninsured county residents in 2005 is associated with approximately 4 additional percentage points of home value decline between 2006 and 2010. We also provide evidence that this relationship was essentially nonexistent in Massachussets, where comprehensive health care reform was passed just before the housing crisis began. Our results contribute to the growing literature on the financial benefits of obtaining health insurance, but we are the first to show a link between health insurance and housing market outcomes. We also add to the literature on the household-level determinants of the recession; considering that uninsured households are likely to pay medical debt with consumer credit or home equity loans, our results shed light on one mechanism by which pre-recession household leverage may have exacerbated the recession. These results have important policy implications as the federal government considers a revision of the Affordable Care Act.

Keywords: Health Care, Health Insurance, Housing Crisis, Recession

JEL Classification: D10, D14, E20, I13

Suggested Citation

Gilbert, Ben and Wade, Julian, Health Care and the Housing Crisis (November 4, 2016). Available at SSRN: https://ssrn.com/abstract=2864950 or http://dx.doi.org/10.2139/ssrn.2864950

Ben Gilbert (Contact Author)

Colorado School of Mines - Division of Economics and Business ( email )

1500 Illinois Street
Golden, CO 80401
United States

Julian Wade

University of Wyoming, College of Business, Department of Economics and Finance, Students ( email )

P.O. Box 3985
Laramie, WY
United States

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