The Fiscal Costs of Public Health Crisis: Lessons from Zika in the United States

Yusun Kim and Judith Liu

Public Finance Review, 2025, vol. 53, issue 4, 506-542

Abstract: How do public health crises affect public health spending at different levels of government in a federal system? This study shows that small outbreaks of communicable diseases can have sizeable fiscal impact on federal and state governments through public health insurance and intergovernmental grants. We examine the case of the Zika virus outbreak in the United States using nationwide county-level data from 2010 to 2019. Our event study and difference-in-differences estimates show that public medical assistance transfers immediately increased in areas with a higher likelihood of local transmissions but gradually decreased in counties with a larger share of reproductive-age women or Hispanic population. Medicare reimbursement to the elderly increased temporarily, coinciding with the federal decision to cover diagnostic tests under Medicare. The Zika outbreak also increased county government spending on health and welfare in Florida and Texas, much of which was financed by intergovernmental transfers.

Keywords: Government expenditures and revenues; public finance; state and local government; public health (search for similar items in EconPapers)
JEL-codes: H51 H53 H75 I18 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/10911421241240546 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:53:y:2025:i:4:p:506-542

DOI: 10.1177/10911421241240546

Access Statistics for this article

More articles in Public Finance Review
Bibliographic data for series maintained by SAGE Publications ().