America's Health Care Industry No Longer Viewed As Recession Proof

November 5, 2008 9:18 a.m. EST

Washington, D.C. (AHN) - It seems that nothing is recession proof in America, including the health care industry.

Conventional wisdom has been that when people are sick they have to have health care and that, therefore, jobs and salaries in the health care sector would continue to grow because they were viewed as being safe from recessionary pressures.

Belief in that theory made investments in pharmaceutical stocks seem a safe bet. But as the recession has deepened more Americans with health insurance have found themselves little better than those without health insurance because they have been too cash-strapped to afford the co-pay to have prescriptions filled.

The problem is expected to get worse as more stressed businesses are expected to deal with lagging profits by either raising employee's share of health insurance costs or stop offering health insurance.

On top of that is the rising number of Americans who are losing health insurance because they have lost their job, or who find themselves having to choose between paying their mortgage or paying their health insurance premium.

That has meant that health insurers are less able to pass rising costs on to employers or policy holders because it would cause them to lose more business.

The combination of problems has dragged down profitability of pharmaceutical and other health care stock, including hospitals.

There are currently around 50 million Americans, or 17 percent of the population, without health insurance, while an estimated 25 million more with health insurance can't afford the deductibles or co-pays to utilize it.

If the past is any indicator, as layoffs continue most Americans who lose their health insurance in this recession won't regain health insurance, which will potentially increase the number of uninsured Americans.

When president elect Sen. Barack Obama (D-IL) takes office on Jan. 20, along with the estimated 50 million uninsured Americans, he will inherit a deficit that could be as high as $1 trillion and an economy in recession.