RT Journal Article
SR Electronic
T1 Dangerous Liquidity and the Demand for Health Care
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 424
OP 445
DO 10.3368/jhr.49.2.424
VO 49
IS 2
A1 Gross, Tal
A1 Tobacman, Jeremy
YR 2014
UL http://jhr.uwpress.org/content/49/2/424.abstract
AB 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.