Income and Health Care Consumption: Evidence From Mortgage Payment Shocks

Hong Lee, Deokrye Baek and Joseph R. Mason

Health Economics, 2025, vol. 34, issue 10, 1853-1868

Abstract: During the Great Recession, monetary stimulus had asymmetric impacts on mortgages with different interest rate structures, leading to a significant and unexpected reduction in mortgage payments for adjustable‐rate mortgage (ARM) borrowers, which in turn increased their disposable income. Leveraging this quasi‐experimental setup, our analysis reveals that healthcare expenditures and medical service utilization increased in counties with a higher prevalence of ARMs. The heterogeneity between ARM and fixed‐rate mortgage (FRM) borrowers, combined with the more pronounced economic decline observed in counties densely populated with ARMs, allows our study to provide conservative lower bound estimates of the effects of income shocks on household healthcare consumption.

Date: 2025
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https://doi.org/10.1002/hec.70009

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Persistent link: https://EconPapers.repec.org/RePEc:wly:hlthec:v:34:y:2025:i:10:p:1853-1868

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