Health Care Among Industries That 'Seem Best Able To Endure' Economic Downturn

Main Category: Health Insurance / Medical Insurance
Also Included In: Pharma Industry / Biotech Industry;  Public Health
Article Date: 04 Nov 2008 - 6:00 PDT

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The AP/Minneapolis Star Tribune on Saturday examined major industries that "seem best able to endure" the economic downturn, including the health care industry. "With an aging population and the largest health care spending in the world, the nation's medical sector could fare perhaps best of all" in the current economic climate, the AP/Star Tribune reports. According to David Wyss, chief economist of Standard and Poor's, sales of prescription drugs and medical devices tend to be steadier than sales of nonessential goods. He said, "People get sick and need medical care regardless of the state of the economy."

However, the AP/Star Tribune reports that "recent earnings show that pharmaceutical companies aren't immune from slumping sales that have plagued their peers in the retail and auto industries." Experts say that prescription drugs "are more vulnerable to economic cycles because employers have shifted more of the financial burden for care to patients, with higher copayments and deductibles," according to the AP/Star Tribune. Paul Ginsburg, president of the Center for Studying Health System Change, said, "With consumers having more cost-sharing in their benefits, you're going to see a greater effect on their health care spending right away." The economy and higher unemployment rates also have made it more difficult for health insurers to increase premiums to offset higher costs and investment losses, the AP/Star Tribune reports.

According to the AP/Star Tribune, "Health care companies least affected are those that sell inexpensive medical products directly to hospitals." Aaron Vaughn, an analyst with Edward Jones, said, "The products they offer aren't high-tech things. They are health care staples that people need." Some companies that focus on developing high-cost biotechnology drugs also have been faring well (Perrone, AP/Minneapolis Star Tribune, 11/1).

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