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Recession effects may be delayed, but still inevitable
Don't believe anyone who tells you the health care industry is "recession-proof," says Thomas E. Getzen, PhD, professor of risk, insurance, and health management at the Fox School of Business at Temple University in Philadelphia. Getzen also is executive director of the International Health Economics Association.
The health care sector may be the last to feel the effects of the recession, but it is not immune, he says.
"It would be more accurate to say that health care is inertial, responding only slowly over time to macroeconomic changes. That means that the impact of a recession may be delayed, even to the point that health care will feel the effects just as the rest of the economy begins to turn upward again."
The recession is likely to produce only superficial effects for health care risk management changes in 2009 and 2010, Getzen predicts. He says major layoffs, abandoned construction projects, physician bankruptcies, and sudden drops in price of care are unlikely. But further down the road, he says, there could be substantial changes in organization and financing, which then create structural shifts in employment and prices.
The near future provides a false sense of security for health care risk managers, he says. Getzen says he expects continued growth in health care employment throughout 2009 and then moderating in 2010 or after. Health care employment is not as vulnerable to the sudden ups and downs of the economy as some other sectors, he notes.
Spending for programs such as Medicare and Medicaid is set in advance, Getzen notes, which makes them less reactive to economic changes. Private insurance, however, is more responsive to current events. Even there, the effect usually is not dramatic, because premiums are set in advance. Changes usually are related to changes in medical expenses, he says.
For more information on the how the recession will affect health care, contact:
Thomas E. Getzen, PhD, Professor of Risk, Insurance, and Health Management, Fox School of Business, Temple University, Philadelphia. Telephone: (215) 204-6826. E-mail: firstname.lastname@example.org.