Recession and the Rising Cost of Healthcare in the U.S. Economy

Healthcare is a big slice of the pie in the U.S. economy and is not immune to the effects of recession. The cycle is that employers cut back employees. Employees lose their healthcare insurance. Health care maintenance organizations (HMOs) have to increase their enrollment to either break even or stay profitable. So they seek government dollars from Medicaid and try to encourage enrollment through state welfare plans. Meanwhile, employers offering health benefits to their employees are charged higher premium prices that they pass to their employees. Each month, more of the employee’s paycheck goes to paying healthcare premiums. And the cycle continues. The rising cost of healthcare continues to erode spending power of the American consumer which further contributes to the recession plaguing the U.S. economy today. Americans need some real answers and those answers are not necessarily found in the vague promises of a politician. Let’s look at how Americans will probably deal with healthcare as it relates to the recession:

There will probably be a rise in medical tourism. When people need treatment but cannot afford the copayments and deductibles, more of them will opt for getting the medical care they need from overseas or right across the border in Mexico. That is more consumer dollars helping an economy external to the U.S. economy and will only fuel the recession fire more.

More medicines will be purchased outside of the U.S. borders. Opponents to those buying medicines outside of the United States argue that that these drugs are weaker and not FDA-approved. Yet when an American struggling for his or her very survival has the choice, these issues and their effect on the U.S. economy will be irrelevant. Especially when they find out that many medicines sold overseas are manufactured by U.S. companies but sold under different brand names at a fraction of the cost.

Some doctors have begun to respond to the rising costs of medical care in America by shaking off the HMOs and getting together to form what is known as the doctor co-operative. Doctors form business partnerships and offer an alternative for self-pay patients. This arrangement could actually make beneficial contributions to the U.S. economy by giving the uninsured affordable medical treatment choices.

Elective surgery will be on the decrease or there will be times it will spike. When the uninsured are faced with a choice of paying bills or having an elective surgery performed, they more than likely pay bills. Elective surgery depends on consumerism just like other products and services. The U.S. economy and the end of the recession are dependant on high-markup services like knee replacement, cosmetic surgery, and other surgeries that raise the patient’s quality of life.

Of course the HMOs will try to minimize the effects of the U.S. economy recession on their business. Underwriting departments will add more qualification criteria to the pricing mix. Certain employer membership groups will pay higher premiums because they may have had historically higher usage. In the end, it means the employee will have to pay more in terms of monthly premiums and copayments if they happen to be in one of those employer groups.