How natural disaster shocks to agriculture affect health care use and expenditure

Abstract

Farmers experience higher rates of disability and illness than the general population and face volatile incomes due to frequent crop and livestock losses from extreme weather events. Because they are often self-employed, many cannot enroll in publicly provided or employer-group health insurance, raising concerns that income shocks from natural disasters may reduce health care access. Using health care claims data from Taiwan’s Farmer’s Health Insurance Program and other administrative sources, we estimate the impact of disaster-related income losses on health care use and expenditure, as well as farm income elasticities of health care demand. Applying an instrumental variables approach to account for endogenous exposure to risk, we find that income elasticities for outpatient care and prescriptions range from 0.11 to 0.32. Additionally, farmers adjust their labor supply allocations to on-farm and off-farm work after natural disasters, increasing the time cost of seeking care. Disaster payments significantly mitigate reductions in health care demand, potentially lowering downstream hospital costs and offsetting part of the public expense of disaster relief programs.