Health care demand elasticity in a recession -- many warning signs

Both the New York Times and the Wall Street Journal have had heart-wrenching articles in the last few days about how employees and dependents lose their health insurance and access when they lose their jobs. Both newspapers focused on Ashland, Ohio, where Archway Cookies closed abruptly and filed for bankruptcy. The company was self-insured, and didn't have enough reserves to pay for health care already delivered, so some of its employees are facing bills of tens of thousands of dollars. Some patients tried to get their health care needs met before the closure (like early induction of pregnancy, early gallbladder surgery, and rapid purchase of insulin pump); the company's self-insured status probably means even those patients will be out of luck.

I've also talked to a number of senior hospital executives over the last few weeks, and they are reeling from
(1) Slowdown in philanthropy, with some donors not coming through with pledged funds
(2) Increase in accounts receivable, as payers have slowed down payment
(3) Increase in bad debt, as patients lose their insurance
(4) Decrease in revenue, as patients are not coming in for elective procedures, including orthopedic surgery, CT scans and MRI scans. Making this still worse, these elective procedures provide the highest margin for hospitals.

This is one more blow against the notion that health care is "recession-proof."

(Note the WSJ link will work for ~5 days -- after that, use this URL).