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The effect of the Great Recession on the demand for general oral health care and orthodontic care

Open AccessPublished:March 01, 2019DOI:https://doi.org/10.1016/j.adaj.2018.11.019

      Abstract

      Background

      This study was undertaken to quantify how the Great Recession impacted the demand for general oral health care and orthodontic care in the United States. The authors conducted an analysis to help dentists anticipate changes in demand for care during future economic downturns.

      Methods

      The authors analyzed Medical Expenditure Panel Survey data for the period 2003 through 2015. Data plotting for the various factors considered showed patient demand before, during, and after the Great Recession, including an indication of postrecession recovery. Statistical significance across time was determined using a χ2 test. The point estimates and statistical inferences took into account the complex survey design of the Medical Expenditure Panel Survey.

      Results

      General dentist visits declined slowly and steadily during the Great Recession, reaching a low of 38.4% in 2010, and have not shown significant signs of recovery. Orthodontic visits also declined to an all-time low of 2.5% in 2010, although they have somewhat recovered. Out-of-pocket expenditures were lower in 2015 than in 2003 for general dental and orthodontic care.

      Conclusion

      The effects of the Great Recession resulted in a decrease in the demand for oral health care, differing for general oral health care and orthodontic care.

      Practical Implications

      These findings, especially in combination with leading indicators for economic downturns, will allow dentists to better plan and use strategies for maintaining practice stability during periods of reduced demand for care.

      Key Words

      Abbreviation Key:

      FPT (Federal poverty threshold), GP (General practitioner), MEPS (Medical Expenditure Panel Survey)
      The demand for general oral health care and orthodontic care is a complex subject because its causes are multiple, in general, and specific and variable for people. Much has been written about “demand” at all levels of inquiry, beginning with the elementary level of economics texts, because demand is a key factor and “supply” determines the nature of markets. It is difficult to study the specific influence of individual factors that make up demand because they are multiple and act concurrently and therefore are difficult to isolate.
      There are 2 major factors that can influence the demand for general oral health care and orthodontic care. One is the prevalence of oral disease and abnormalities among the population. Although there has been a reduction in infectious dental conditions such as caries and periodontal disease in children and young adults in the United States, the prevalence of malocclusion, or misalignment of the teeth and jaws, has essentially remained the same.
      • Dye B.A.
      • Tan S.
      • Smith V.
      • et al.
      Trends in oral health status: United States, 1988-1994 and 1999-2004: National Center for Health Statistics.
      The other key factor affecting oral health care demand is the general state of the economy. The Great Recession (December 2007-June 2009) impacted the demand for oral health care, although the impact was different for general dental and orthodontic care. To understand the impact, it is important to isolate the effects of the economy’s state as much as possible and examine data from before, during, and after the recession.
      Beyond trends in oral disease and economic downturns, there have been relatively insignificant changes in several other factors that affect demand for oral health care, such as population data, availability of providers, and dental benefits plans. Therefore, a specific focus on the economy is warranted.
      This project was not an attempt to discuss the entire complex issue of demand or the multiple factors that determine demand but to study the effects of 1 factor in a manner that allows for a clear insight into that factor’s effects. Long-term trends are a separate issue from the effects of the Great Recession and were not the motivations of this study.
      Estimates of the number of dental visits and average expenditures on oral health care among children vary widely, depending on whether orthodontic care is included. One study reported that when orthodontic care was excluded for children 12 through 17 years of age, the average number of dental visits reported decreased from 3.4 to 1.8, and average dental expenditures decreased from $742 to $268.
      • Brown E.
      Children’s Dental Visits and Expenses, United States, 2003.
      A second study reported that among children 8 through 18 years of age, expenditures on orthodontic services accounted for 55.6% of total dental expenditures in 2004.
      • Guay A.H.
      • Brown L.J.
      • Wall T.
      Orthodontic dental patients and expenditures, 2004.
      In this study, we focused on trends in dental visits among the US population for general dentistry and orthodontics from 2003 through 2015, comparing visit rates and expenditures before, during, and after the Great Recession. We accounted for patient age and family income level.

      Methods

      We analyzed data from the Medical Expenditure Panel Survey (MEPS), managed by the Agency for Healthcare Research and Quality.
      Medical Expenditure Panel Survey: Household Component Sample Design and Collection Process. Rockville, MD: Agency for Healthcare Research and Quality.
      We focused on the period from 2003 through 2015, the most recent year for which data are available.
      The MEPS database allows for quantitative analysis of 1 factor’s effects and how those effects determine demand when acting in concert with other factors. A great opportunity would be missed if these data, difficult to duplicate artificially, were not analyzed in the context of a unique natural experiment.
      The MEPS includes data over time, including the period commonly agreed on to be the Great Recession (December 2007-June 2009), during which there are substantial negative changes in the general economy. During that period, other factors influencing demand did not change considerably. Therefore, the effect on demand by means of the general status of the economy can be isolated and studied.
      We compared trends in the percentage of the population who visited a general practitioner (GP) dentist during each year with the percentage who visited an orthodontist. During this analysis, we understood that an increasing amount of orthodontic care is being provided by nonorthodontists, but the MEPS data only report orthodontic visits to orthodontists; this characteristic of the data should be kept in mind as a possible limitation. We focused on orthodontic service use among children 8 through 18 years, the age group most likely to report orthodontic treatment. To examine differences by means of income group, we categorized children into 2 income categories: those whose family income was less than 200% of the federal poverty threshold (FPT) and those whose family income was greater than or equal to 200% of the FPT.
      We examined trends in general dental and orthodontic service expenditures for children 18 years or younger and adults 19 years or older. As recommended by the Agency for Healthcare Research and Quality, we used the gross domestic product deflator to adjust for inflation, and all expenditure estimates are expressed in terms of constant 2015 dollars. We examined expenditures on general dental and orthodontic services by means of the following sources of payment: out of pocket, private insurance, Medicaid/Children's Health Insurance Program, and other.
      We tested for statistical significance across time using a χ2 test. Our point estimates and statistical inferences took into account the complex survey design of the MEPS.

      Results

      As shown in Figure 1, the percentage of the US population with a visit to a GP dentist experienced a slow and steady decline throughout the period under consideration, including the Great Recession (December 2007-June 2009). The decline of GP dental visits during the recession was of a lesser degree than that of orthodontist visits, but recovery of GP dental visits was incomplete after the recession ended.
      Figure thumbnail gr1
      Figure 1Percentage of the US population with general practitioner (GP) and orthodontist visits, 2003 through 2015. Source: Medical Expenditure Panel Survey, 2003 through 2015.
      Medical Expenditure Panel Survey: Household Component Sample Design and Collection Process. Rockville, MD: Agency for Healthcare Research and Quality.
      Shaded portion represents the Great Recession period (December 2007-June 2009).
      The percentage of the US population with a visit to an orthodontist began to decline in 2003 and leveled off before the Great Recession. During the recession, the extent of visits resumed its decline, reaching a low of 2.5%. Since 2010, the percentage with a visit to an orthodontist increased from 2.5% to 3.1%, a level higher than that realized before the recession, but remained lower than the peak of 3.4% in 2003.
      Figures 2A and 2B show that during and after the Great Recession, the percentage of the population with a GP dental visit changed little, although there was a slight increase in the group 8 through 18 years of age and a steady decline in the group 19 years or older. The impact on orthodontist visits was most evident among adults 19 years or older. Within this age group, the percentage reporting a visit to an orthodontist decreased from 1.1% in 2008 to 0.7% in 2010 and increased back to 1.1% in 2014.
      Figure thumbnail gr2
      Figure 2A. Percentage of the US population with a general practitioner visit by age group, 2003 through 2015. B. Percentage of the US population with an orthodontist visit by age group, 2003 through 2015. Source: Medical Expenditure Panel Survey, 2003 through 2015.
      Medical Expenditure Panel Survey: Household Component Sample Design and Collection Process. Rockville, MD: Agency for Healthcare Research and Quality.
      Shaded portion represents the Great Recession period (December 2007-June 2009).
      Data for the percentage of adults 19 years or older with a general dental or orthodontic visit by means of family income level (not shown here) indicated that both income levels (< 200% and ≥ 200% FPT) followed the same pattern. We concentrated our analysis on children 8 through 18 years of age so that a more valid comparison between the numbers of visits can be made because that is the age range within which orthodontic treatment most commonly occurs.
      The percentage among children 8 through 18 years of age with a visit to a GP dentist varied by means of income group during the study period. In 2015, the lower-income group ended up slightly lower than the level in 2003, whereas the higher-income group experienced a steady increase in the number of GP dental visits throughout the study period, ending up at a higher level in 2015 than in 2003. For orthodontic visits, the higher-income group showed a decline for the first one-half of the study period and mostly recovered during the second one-half. The lower-income group experienced a slight increase in visits, ending up at a higher rate of visits in 2015 than in 2003 (Figure 3).
      Figure thumbnail gr3
      Figure 3Percentage of US children 8 through 18 years with a general practitioner (GP) and orthodontist visit by family income level, 2003 through 2015. Source: Medical Expenditure Panel Survey, 2003 through 2015.
      Medical Expenditure Panel Survey: Household Component Sample Design and Collection Process. Rockville, MD: Agency for Healthcare Research and Quality.
      Shaded portion represents the Great Recession period (December 2007-June 2009). FPT: Federal poverty threshold.
      Figure 4A compares 2003 with 2015 general dental expenditures by payer type. Private insurance expenditures increased slightly (by 2.2%) along with Medicaid/CHIP (by 3.9%). For orthodontic services (Figure 4B), private insurance expenditures declined by 8% from 2003 through 2015, while increasing by 8.3% for Medicaid/CHIP.
      Figure thumbnail gr4
      Figure 4A. Percentage of general dental expenditures by source of payment, 2003 and 2015. B. Percentage of orthodontic expenditures by source of payment, 2003 and 2015. Source: Medical Expenditure Panel Survey, 2003 through 2015.
      Medical Expenditure Panel Survey: Household Component Sample Design and Collection Process. Rockville, MD: Agency for Healthcare Research and Quality.
      For both services, out-of-pocket spending decreased slightly (4.8% for general oral health care and 0.04% for orthodontics). This difference may be explained by the contractual time payments often characteristic of orthodontic care that can moderate the effects of short-term demand changes. The significant increase in payments made by governmental assistance programs is evident for both types of services, indicating that these programs either signified insulation from general economic trends or increased in response to a downturn in the general economy.
      The Table shows changes from 2003 through 2015 in the number of patients reporting a visit with a GP dentist and an orthodontist and total expenditures for those services by patient age. Although not statistically significant, it is interesting to note the differences between general dentistry and orthodontics. The number of patient visits for general oral health care increased by 5.3% and expenditures for those services increased by 6.5% during the study period.
      TableOrthodontic and general dental patients and expenditures, 2003 versus 2015.
      Source: Medical Expenditure Panel Survey, 2003 to 2015.4 Expenditures are expressed in constant 2015 dollars.
      VARIABLE20032015
      Annual Per-Patient Mean, $No. of PatientsTotal Expenditures, $Annual Per-Patient Mean, $No. of PatientsTotal Expenditures, $
      Orthodontic
      18 y1,454.807,218,92010,502,144,8201,712.386,930,99811,868,523,641
      19 y8992,511,1042,256,524,4601,264.032,562,7813,239,420,216
      Total1,3119,730,02412,758,669,2801,591.359,493,78015,107,943,857
      General Dental
      18 y315.6532,463,46210,247,137,575305.9134,631,29110,594,171,572
      19 y58987,153,16551,332,899,801601.8091,327,78054,961,090,283
      Total904.65119,616,62761,580,037,376907.71125,959,07165,555,261,855
      Source: Medical Expenditure Panel Survey, 2003 to 2015.
      Medical Expenditure Panel Survey: Household Component Sample Design and Collection Process. Rockville, MD: Agency for Healthcare Research and Quality.
      Expenditures are expressed in constant 2015 dollars.
      For orthodontic care, the number of patients decreased by 2.4%, and expenditures for orthodontic services increased by approximately 18.4% in inflation-adjusted dollars during these 12 years. Although these changes over time were not found to be statistically significant, a breakdown of patients receiving care by age suggests an interesting situation. The number of people treated in 2003 and in 2015 remained approximately the same, whereas the population of the United States increased by approximately 28 million.

      Discussion

      As reported by Vujicic,
      • Vujicic M.
      The “invisible hand” and the market for dental care.
      before 2002, demand for care was growing at a faster rate than the supply of dentists. From 2002 through 2008, demand for care grew more slowly while the supply of dentists remained constant. In 2012, the increase in the supply of dentists began to considerably outpace demand for oral health care. The relationship between patient demand and supply of dentists was clearly shown during the years considered in this analysis. The Great Recession showed a reversal of the supply-and-demand relationship for dental services and its effect on dentist income.
      • Vujicic M.
      The “invisible hand” and the market for dental care.
      According to the American Dental Association’s Survey of Dental Practice, the median net income of private practice GP dentists and orthodontists during the study period shows a similar pattern in both groups: an increase before the Great Recession and a subsequent decline after the recession.
      • Guay A.H.
      • Wall T.P.
      Simple indicators for projecting short-term dental market fluctuations.
      ,
      Health Policy Institute
      Income, Gross Billings, and Expenses: Survey of Dental Practice (2003-2015).
      The effects of the Great Recession differed for GP dentists and orthodontists in terms of patient visits. Orthodontic visits declined at a higher rate than general dental visits during the period from 2007 through 2010. After 2010, the rate of orthodontic visits recovered, surpassing the lowest level during the recession by 2011 and continuing to increase. On the other hand, recovery for general dental visits was not as complete, despite the fact that the recession did not have as large an impact on general dental visits. The 2015 rate of general dental visits remained lower than the level experienced at the start of the recession.
      These conflicting trends in general dental and orthodontic visits emphasize the importance and immediacy of economic factors on the demand for care, although more so with orthodontic care than with general oral health care.
      The increases seen in the group 15 through 18 years, along with decreases reported for younger children, were perhaps owing to postponement of treatment. It is not clear how much of this trend was owing to the Great Recession or how much was owing to an underlying shift in the age distribution of orthodontic patients, driven by means of a preference to begin treatment at a later age. The relatively large decrease in the percentage of older people with an orthodontic visit during the Great Recession and the rapid recovery in this group after the recession ended suggest that economic factors may play an important part in behavior and demand for this group.
      We found an increase in the percentage of children 8 through 18 years from lower-income families receiving orthodontic services from 2003 through 2015, whereas the number of visits among people from higher-income families declined from 2004 through 2008. It is likely that children from lower-income families had treatment costs subsidized by means of assistance programs, which generally do not respond to cyclical general economic factors, unlike out-of-pocket costs, which generally do. It can be said that patients with subsidized payments for care offer a degree of demand stability during periods of economic stress. During the same period, the percentage of orthodontic expenditures covered by Medicaid doubled. Although this period includes a relatively dramatic increase in Medicaid expenditures for orthodontic services in Texas, we think that by 2015, any possible problems were uncovered and dealt with.
      • Domino D.
      OIG: Texas owes $133 M for unallowable Medicaid orthodontic services.
      Studies have shown state-to-state variation regarding all factors associated with Medicaid orthodontic care, including eligibility, patient selection, and funding levels.
      • El-Gheriani A.
      • Ehrmatrout Z.
      • Oesterie L.
      • Berg R.
      • Wilkerson D.
      Medicaid expenditures for orthodontic services.
      For example, Medicaid reimbursement as a percentage of private practice fees varied by means of region from a low of 50% in the middle Atlantic states (New Jersey, New York, Pennsylvania) to a high of 74% in the east south central states (Alabama, Kentucky, Mississippi, Tennessee).
      It will be interesting to see how the demand for general dental and orthodontic care evolves in the short and long term. Will growth in demand increase primarily among older patients and those subsidized by means of government assistance programs? Will an increase in out-of-pocket costs among those in private dental benefit plans affect demand negatively? How will market changes affect dentist earnings? Will the differential effects of national economic conditions on general dentists and orthodontists continue, decrease, or increase?
      According to Simon,
      • Simon H.A.
      The Sciences of the Artificial.
      business firms operate in 2 environments: inner and outer environments. The inner environment includes the individual characteristics of the firm, including its capabilities for adaptations. The outer environment is concerned with the state of the market and the general economic environment. This applies to dental practices. The key is how these environments interact, especially how the dental practice can design and implement appropriate adaptations to challenges from the outer environment. The information in this study should be helpful in considering adaptations.
      Ongoing monitoring as well as periodic analysis and reporting should be on the agenda of organized dentistry. Observation and analysis of recent history and the status quo will be important. The ultimate goal should be to anticipate economic and behavioral changes on the oral health care industry before they manifest.
      • Guay A.H.
      • Wall T.P.
      Simple indicators for projecting short-term dental market fluctuations.

      Conclusions

      The downturn in the status of the general economy during the period of the Great Recession resulted in a decrease in the demand for general oral health care and orthodontic care in the United States. There were differences in the nature of the reduction its intensity, and the postrecession recovery between the 2 categories.

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        • Dye B.A.
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        • et al.
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        • Brown E.
        Children’s Dental Visits and Expenses, United States, 2003.
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        Orthodontic dental patients and expenditures, 2004.
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        Am J Orthod Dentofacial Orthop. 2007; 132: 728.e1-728.e8
        • Simon H.A.
        The Sciences of the Artificial.
        3rd ed. MIT Press, Boston, MA1996

      Biography

      Dr. Guay is the chief policy advisor emeritus, American Dental Association, Health Policy Institute, 211 E Chicago Ave, Chicago, IL 60611.
      Mr. Blatz is the senior research and data analyst, American Dental Association, Health Policy Institute, Chicago, IL.