Economic recessions: Good news for health?

Guest Blog by Janani Krishnaswami, a second-year resident in internal and preventive medicine at UCSF and Kaiser Permanente – San Francisco, and former PLoS Medicine intern

The United States spends a huge proportion of GDP on healthcare dollars, yet lags behind on health and equality metrics compared to its industrialized, relatively cost-conscious peers.

In January, the Center for Medicare and Medicaid Services released a report indicating that healthcare spending growth (4.4% in 2008) in the U.S. is at an all time low – a likely consequence of the nation’s economic recession. (1,2)  But how does the United States’ economic recession – and decreased outflow of healthcare dollars – affect outcomes of health?

The answer might be surprising. In a historical analysis published in the Canadian Medical Association Journal in September 2009, Dr. Bezruchka (University of Washington) argues that economic downturns are connected with better health. In rich countries, he finds “economic recessions have paradoxical effects on the mortality trends of populations…mortality is procyclical, meaning it goes up with economic expansions and down with contractions.” (3)

Such results, Bezruchka notes, hold only for industrialized nations earning more than $5000-$10,000 per person. In poorer countries, an economic downturn carries the expected effect of worsening health outcomes.

Bezruchka’s analysis is among several confirming this counterintuitive health-economics connection. In the United States and Great Britain, studies repeatedly link macro-level economic contraction to better outcomes: improved infant mortality/overall mortality, fewer preventable episodes such as car accidents and episodes of influenza and pneumonia. (4) One analysis even quantified this impact, suggesting that a 1% increase in the unemployment rate was connected with a 0.5% decline in mortality. (5)

This phenomenon runs in parallel with two other healthcare truths. First, as Bezruchka points out, richer countries are not necessarily healthier.   The United States is a prime example: it has the highest GNP (gross national product) per capita in the world, but average life expectancy in the US is lower than nearly all rich nations – and some poor.  More infants die within the first year of age in the United States than in Cuba, a nation whose infant mortality rates rival those in many monetarily-rich nations.

The second corollary is that more healthcare spending does not necessarily improve health.  A fascinating analysis of US Medicare/Medicaid spending by the Dartmouth Institute showed that, US communities with high healthcare spending suffer from poorer health.  Prodigious spending on healthcare often resulted in excessive scans, tests and procedures which turned out to undermine a community’s health (7, 8).

The root of all this perhaps lies in the specter of inequality.  The United States has the highest poverty level of any rich nation (and some poor nations) and is unique in its large proportion of uninsured citizens. (9) Epidemiological studies (published in PLoS Medicine, among others), find a near 35-year life-expectancy gap separating the richest and poorest U.S. counties. (10,11) Contrast this with Japan, a nation which Bezruchka describes as “a modern example of economic growth that was shared to reduce poverty, achieving today what are the best health outcomes in the world.”

Inequality is a logical determinant of health: overall health will suffer if only an elite fraction of citizens receive proper healthcare.  Healthcare reform critic Timothy Noah (slate.com) suggests that perhaps in economic recessions, social programs reduce such inequality, leading to improved health. (12) This occurred during the United States’ Great Depression, a time corresponding with reductions in infant mortality and inequality. And in Canada and Sweden, nations with “social safety nets” and narrower gaps between rich and poor, the association between economic growth and poor health is weaker than in the United States.

The link between recessions and improved health in the developed world may at first seem counterintuitive, but exploring the basis of this phenomenon reveals basic principles grounded in common sense. Fundamentally, a nation’s overall wealth accumulation and growth only boosts health if the impact is felt among all tiers of the population. Inequality, in short, undermines health – and health reform in developed nations should focus on narrowing the access and wealth gap between rich and poor.

1: Hartman et al. Health Spending Growth At A Historic Low In 2008. Health Affairs.2010; 29: 147-155

2: “National health expenditures 2008 highlights.” Center for Medicare/Medicaid Services. PDF document available at http://www.cms.hhs.gov/NationalHealthExpendData/downloads/highlights.pdf

3. Bezruchka, S. “The effect of economic recession on population health.” CMAJ September 1, 2009; 181(5)

4. Tapia Granados JA. Increasing mortality during the expansions of the US economy, 1900–1996. Int J Epidemiol 2005;34:1194–202

5. Ruhm CJ. Are recessions good for your health?Q J Econ 2000;115:617–50.

6. Bezruchka S. Epidemiological approaches. In: Raphael D, Bryant T, Rioux M, editors. Staying alive: critical perspectives on health, illness and health care. Toronto (ON): Canadian Scholars’ Press; 2006. p. 13–33.

7. Fisher ES, Bynum JP, Skinner JS. Slowing the growth of health care costs — lessons from regional variation. N Engl J Med 2009;360:849-852.

8. Fisher ES, Wennberg DE, Stukel TA, Gottlieb DJ, Lucas FL, Pinder EL. The implications of regional variations in Medicare spending. 2. Health outcomes and satisfaction with care. Ann Intern Med 2003;138:288-298.

9. Even employing a stricter definition of “poverty”, ie those earning < 50% median adjusted disposable income, US still has the highest proportion of individuals living in poverty. Note that the U.S. poverty line is defined as 27% of median income (2002) – contrast to other nations (ie UK) where poverty line is nearer to 60% median income. See analysis by Smeeding, T: “Poor People in Rich Nations: The United States in Comparative Perspective.” Journal of Economic Perspectives—Volume 20, Number 1—Winter 2006—Pages 69–90

10. Murray CJ et al. “Eight Americas: investigating mortality disparities across races, counties, and race-counties in the United States.”PLoS Med. 2006 Sep;3(9):e260.

11. Ezzati M, AB Friedman et al. “The reversal of fortunes: trends in county mortality and cross-county mortality disparities in the United States.” PLoS Med. 2008 Apr 22;5(4).

12. Noah, Timothy. “Bernie Madoff, M.D.: Is the recession good for your health?” Jan 7, 2010. Slate.com publication. http://www.slate.com/id/2240841/