Healthcare expenditure rationing: evidence from tax records

We study income-related differences in tax-reported out-of-pocket healthcare expenditure using a unique database of more than 6 million tax records over five years. Individuals in the lowest income tax bracket report about €1,212 lower annual healthcare expenditure, excluding NHS tickets and disability expenditure, than those in the highest bracket after controlling for observable factors. Individual fixed-effects estimates show a positive within-taxpayer association between income and tax-reported healthcare expenditure, although these estimates should be interpreted as descriptive evidence rather than as causal estimates of unmet need. The income gradient is stronger among older taxpayers, and healthcare-expenditure income elasticities are up to three times higher in the lowest than in the highest income bracket. These patterns are consistent with the possibility that poorer taxpayers face tighter financial constraints in accessing private healthcare services. Higher-income individuals also report higher average costs for medical procedures and drugs, suggesting income-related differences in the composition and value of reported healthcare consumption. Since tax records measure declared, deductible and unreimbursed expenditure rather than actual healthcare needs or total healthcare consumption, the results should be read as evidence consistent with, but not definitive proof of, implicit healthcare expenditure rationing.