Health financing and socio-economic predictors of financial vulnerability: Empirical evidence from the United States

Abstract

Purpose: This study examines how health insurance coverage and medical cost burden, alongside key socioeconomic and demographic factors, predict financial vulnerability in the United States, with implications for sustainable household financial protection aligned with SDG 3.8. Methodology: A repeated cross-sectional design was employed, using three waves of the US National Financial Capability Survey (NFCS: 2018, 2021, 2024), covering the pre-pandemic, post-pandemic, and recovery periods, respectively. A multidimensional Financial Vulnerability Index (FVI) was constructed following a three-dimensional framework (sensitivity, resilience, exposure) and operationalised as a binary variable using a composite standardised scoring approach. Binary logistic regression models with pairwise comparisons among all predictor categories were estimated for each survey wave. Results: Uninsured individuals face 37-50% higher odds of financial vulnerability relative to uninsured counterparts, while individuals with high medical cost burdens face over four times the odds (OR = 4.18-5.34) across the survey waves. Household income emerges as the single most powerful predictor, with individuals earning less than $25,000 being 8.83 to 16.0 times more likely to be financially vulnerable than those earning$200,000 or more. Education, financial literacy, and household dependency exhibit threshold effects: meaningful protective differences emerge only upon attainment of university-level education or reduction to zero dependents. Theoretical contribution: The study extends Grossman's (1972) Health Capital Model into the domain of financial vulnerability by demonstrating that market-based health financing structures interact with socioeconomic position to generate structural exposure to financial hardship. Rather than adopting a unidimensional index, the application of multidimensional FVI in this study advances methodological practice in financial vulnerability research and reveals threshold effects previously masked in the literature. Practical Implications: The findings call for health and fiscal policy frameworks that extend beyond aggregate economic metrics to address distributional consequences of health financing arrangements. Targeted interventions, including expanded insurance coverage, income support for low-income households, financial literacy programmes, and strengthened social protection for working-age adults, are identified as critical for reducing persistent financial vulnerability and advancing financial sustainability. Sustainable Development Goals (SDGs): SDG 3: Good Health and Well-being; SDG 10: Reduced Inequalities; SDG 1: No Povert