Recessions can’t shake a stick at healthcare

Since the Second World War ended in 1945, the US has experienced 13 recessions due to wars, disease, government policies, and more. Economists expect that the US is either currently (August 2022) in a recession or will likely experience one due to its efforts to tame the high inflation. While recessions impact employment, enterprise performance, investments, and a population’s overall quality of life, they are non-secular. They do not impact all industries equally, and some like healthcare are immune from it.

This perspective focuses on the potential impacts on US healthcare based on the learning from the four recessions since 1990 in Exhibit 1. As we explore the impacts from a macro, industry, and enterprise lens, we lay the groundwork to show that recessions do not have any positive or negative impact on healthcare.

Exhibit 1: The last four recessions had different causes and recovery patterns

Data: Federal Reserve Bank of St. Louis
Source: HFS Research, 2022

Macroeconomics suggest healthcare is immune to recessions

Per-capita spending is perhaps the cleanest metric for measuring the growth of a segment of the economy. It reflects the demand and the quality of supply. Irrespective of the ferocity, cause, or length of the recession, per-capita spending in healthcare has been positive over the last 30 years at a compound annual growth rate (CAGR) of 5.3% (see Exhibit 2).

Exhibit 2: Growth is the only trajectory seen for US per-capita healthcare spending

Data: National Health Expenditure, Kaiser Family Foundation, Altarum
Source: HFS Research, 2022

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