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Hedgeye Health Care Live Q&A | Recession Risks for Health Care and Differences for 2020 Monday, December 2, 2019 @ 10 AM ET Healthcare & Health Policy Subscribers: CLICK HERE for event details (includes video link, materials link and dial-in). |
Important differences for Health Care in the next Recession: In the early days of the Great Financial Crisis of 2008-2010, Congress passed legislation that provided a 65% subsidy for 18 months to individuals to remain on their employer-based insurance (ESI) purchasing COBRA which delayed some of the pain until mid 2010 for many companies. In 2019, more US Medical Consumers who lose ESI have the option of Medicaid, now available to higher income levels in the 34 states that expanded eligibility, or through a subsidized commercial insurance plan available in an ACA Exchange.
With employment growth slowing, it is important to remember that two thirds of Americans are insured through their job. ESI is also the most profitable payor the US Medical Economy, with reimbursement rates 1.5X to 2.0X Medicare rates, while Medicare and Medicaid are offer only break-even to low single digit margins for many providers.
Medicaid Eligibility and Improper Payments : Adding to the risks to Health Care from employment and ESI slowing, federal and state policies are reducing Medicaid enrollment across several states, catching up to what has been lax eligibility enforcement since the ACA implementation began. Bad debt and charity write-offs could become an even greater problem and add to any recessionary headwinds that emerge in 2020.
POSITION MONITOR
This week there are no changes to the Hedgeye Health Care Position Monitor. ADP Health Care employment will update this Wednesday, giving us a high correlation preview for the jobs report from BLS and the key Health Care series that drive our Health Care Labor Demand model which forecast the strong 3Q19 earnings season. JOLTS Job Openings for Health Care won't update until December 17th, but we'll have most of what we need this week to update our sector outlook and for specific names such as THC, AMN other names in progress.
Thomas Tobin
Managing Director
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Emily Evans
Managing Director – Health Policy
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