Healthcare, a “Safer” Haven

There’s no question that, whatever label you place on its current state of malaise, the U.S. economy is not in good shape.

The question is asked whether health care should remain a safe haven.  After all, there is a downward pressure on prices and there is a latent need for serious reform.  At this point, let’s think only from the non-judgmental perspective that excludes a consideration of what ought to be the case and simply looks at what is the case.

Until health care can become a commodity in relative abundance, like corn or wheat, there remains huge and growing demand.  Maybe healthcare, by virtue of all those forces working against it as a safe haven, has indeed become less safe, but by comparison to a whole lot of other places you can put your money, it remains safer by a good margin.  And any margin is better than none.  So, as we have seen before and will invariably see again, when the general economy heads south, money flows into healthcare.

For as long as this writer has been looking at healthcare markets, it has been the case that healthcare represents, in the long haul, a safer investment than many others.

What will change this?

  • The presidential election?   The biggest variable.  What plan for healthcare reform would either candidate ultimately sign?  What will be that plan’s short, medium and long-term impact?  Like monetary policy, the complex, multivariate healthcare system has too many stakeholders, too many interrelationships to be readily changed without either brilliantly complex or elegantly simple solutions.  But, in the words of HL Mencken (if I am quoting correctly), “Complex problems have simple, easy to understand, wrong answers.”
  • A change in demand?  How can we (not “we” as elected officials but “we” as patients) ever demand less healthcare?
  • An increase in supply?  This is just the flipside, since there will always be inadequate supply while we have such abundant demand.
  • Safer investments than healthcare, particularly during recessionary times?  There will certainly be investments that are at least temporarily safer than healthcare, even in down economies.  Can we even measure the current demand for alternative fuels or other solutions to the high cost of oil?  But, again, one might certainly have a case that current high oil prices represent a shorter term problem than the persistent need to satisfy healthcare demand.

Healthcare shouldn’t cost so much or represent so much of our healthcare spending.  But it does, and until there is some fundamental change in the nature of technology that dramatically increases healthcare supply and/or there is a simarly fundamental change in the nature of disease or trauma, healthcare will be characterized by prices that stimulate investment of one form or another, almost regardless of anything else going on in the economy.

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