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Research ArticleArticles

Dangerous Liquidity and the Demand for Health Care

Evidence from the 2008 Stimulus Payments

Tal Gross and Jeremy Tobacman
Journal of Human Resources, March 2014, 49 (2) 424-445; DOI: https://doi.org/10.3368/jhr.49.2.424
Tal Gross
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Jeremy Tobacman
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Abstract

Household finances can affect health and health care through several channels. To explore these channels, we exploit the randomized timing of the arrival of the 2008 Economic Stimulus Payments. We find that the payments raised the probability of an adult emergency department visit over the following 23 weeks by an average of 1.1 percent. This effect is difficult to reconcile with the Permanent Income Hypothesis. We observe little impact on avoidable hospitalizations or emergency visits for nonurgent conditions and no difference in effects as a function of health insurance coverage. By contrast, we show that the increase is driven by visits for urgent medical conditions, like drug- and alcohol-related visits. Complementary evidence suggests that consumers are not simply substituting from outpatient doctor visits to hospital care. The results thus suggest that liquidity constraints may not constitute a direct barrier to care, but rather that liquidity can increase health care utilization indirectly by increasing the need for care.

  • Received January 2012.
  • Accepted April 2013.
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Journal of Human Resources: 49 (2)
Journal of Human Resources
Vol. 49, Issue 2
31 Mar 2014
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Dangerous Liquidity and the Demand for Health Care
Tal Gross, Jeremy Tobacman
Journal of Human Resources Mar 2014, 49 (2) 424-445; DOI: 10.3368/jhr.49.2.424

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Dangerous Liquidity and the Demand for Health Care
Tal Gross, Jeremy Tobacman
Journal of Human Resources Mar 2014, 49 (2) 424-445; DOI: 10.3368/jhr.49.2.424
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  • Article
    • Abstract
    • I. Introduction
    • II. Background on the Stimulus Payments and Hospital Data
    • III. The Effect of the Stimulus Payments on Hospital Utilization
    • IV. Evidence from Expenditure Data
    • V. Discussion
    • Footnotes
    • References
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