Effect of air pollution on health care expenditure: Evidence from respiratory diseases

Health Econ. 2021 Apr;30(4):858-875. doi: 10.1002/hec.4221. Epub 2021 Feb 8.

Abstract

Recent reports show that at least 95% of the world's population is breathing polluted air. However, the impact of air quality on air pollution-related medical expenditure and utilization is sparse. This study estimates the short-term health care cost impacts of air pollution using a meteorological phenomenon-thermal inversion-as an instrumental variable for air quality. Using information on outpatient care for respiratory diseases from universal health insurance claim data in Taiwan during 2006-2012, our estimates suggest that a one-unit reduction in the air quality index (AQI) leads to NT$2.3 billion (nearly US$74 million) of savings in respiratory-related outpatient expenditure per year. Given that the average AQI is equal to 32 during our study period, completely removing air pollution would reduce the national health expenditure by approximately 8% annually. Our results provide the important implication that the cost of controlling air pollutant emissions can be offset by curtailing health care expenditure.

Keywords: Taiwan; air pollution; health care expenditure; respiratory disease.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Air Pollutants* / analysis
  • Air Pollutants* / toxicity
  • Air Pollution* / statistics & numerical data
  • Health Expenditures
  • Humans
  • Particulate Matter / analysis
  • Particulate Matter / toxicity
  • Taiwan / epidemiology

Substances

  • Air Pollutants
  • Particulate Matter