title: The economic downturn and its lingering effects reduced medicare spending growth by $4 billion in 2009-12.
abstract: Previous work has found a strong connection between the most recent economic recession and reductions in private health spending. However, the effect of economic downturns on Medicare spending is less clear. In contrast to studies involving earlier time periods, our study found that when the macroeconomy slowed during the Great Recession of 2007-09, so did Medicare spending growth. A small (14 percent) but significant share of the decline in Medicare spending growth from 2009 to 2012 relative to growth from 2004 to 2009 can be attributed to lingering effects of the recession. Absent the economic downturn, Medicare spending would have been $4 billion higher in 2009-12. A major reason for the relatively small impact of the macroeconomy is the relative lack of labor-force participation among people ages sixty-five and older. We estimate that if they had been working at the same rate as the nonelderly before the recession, the effect of the downturn on Medicare spending growth would have been twice as large.
authors.affiliation: David Dranove (d-dranove@kellogg.northwestern.edu) is the Walter McNerney Professor of Health Industry Management at the Kellogg School of Management, Northwestern University, in Evanston, Illinois.
authors.forename: David
authors.initials: D
authors.lastname: Dranove
authors.affiliation: Craig Garthwaite is an assistant professor of mangement and strategy at the Kellogg School of Management, Northwestern University.
authors.forename: Craig
authors.initials: C
authors.lastname: Garthwaite
authors.affiliation: Christopher Ody is a research assistant professor of health enterprise management at the Kellogg School of Management, Northwestern University.
authors.forename: Christopher
authors.initials: C
authors.lastname: Ody
mesh_terms: D057172:Economic Recession / Q000706:statistics & numerical data* / Q000639:trends; D005102:Health Expenditures / Q000706:statistics & numerical data / Q000639:trends; D006296:Health Services / Q000191:economics; D006801:Humans; D007348:Insurance, Health / Q000191:economics / Q000706:statistics & numerical data; D006278:Medicare / Q000191:economics* / Q000706:statistics & numerical data*; D058991:Patient Protection and Affordable Care Act / Q000191:economics; D014478:Unemployment; D014481:United States
keywords: Elderly; Financing Health Care; Health Economics; Health Spending; Medicare