The Economic Consequences of Hospital Admissions

October 2015
Carlos Dobkin, Amy Finkelstein, Raymond Kluender, Matthew J. Notowidigdo

We examine some economic consequences of hospitalizations using an event study approach in which we link about one million individuals with a (non-pregnancy related) hospital admission to a 10-year panel of their consumer credit reports. For prime-age adults with health insurance, we find that hospital admissions increase unpaid medical bills, reduce access to credit, reduce borrowing, and increase bankruptcy rates. For uninsured, prime-age adults, we find much larger impacts on unpaid medical bills and bankruptcy, but similar effects on access to credit and borrowing; for elderly (65+) adults, we find impacts only on unpaid medical bills. Our results reject the null hypothesis that prime-age adults with health insurance are fully insured against adverse economic consequences from hospital admissions, and suggest an important role for uninsured income consequences in explaining this finding. Under a range of different assumptions, we estimate that for prime-age adults with health insurance, less than 20 percent of the adverse economic consequences from a hospital admission are due to uncovered medical expenses, as opposed to uninsured income consequences. We estimate that hospital admissions are responsible for 3 percent of the bankruptcies for insured, prime-age adults, and provide suggestive evidence that they experience average annual consumption declines of about 1-2 percent in the four years following a hospital admission.

Publication Type: 
Working Paper