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ELLEN ANDREWS

While President Trump disagrees, a recent survey found that three in four economists expect the US economy to enter a recession by 2021.

Recessions are a natural part of the economic cycle – it’s not a question of whether it will happen, but when. The last recession, in 2008, hit Connecticut especially hard, and in many respects, we still haven’t recovered. Connecticut has only recovered 80% of the jobs lost in the last recession, well behind other states’ recoveries. So far this year, Connecticut has already lost jobs and the recession hasn’t hit yet. On many indicators, our economy is behind other states. 

Healthcare is unique among economic sectors. Consumers and taxpayers pay all healthcare bills through our taxes, lost wages, and directly from our wallets, but the costs are shielded from us. It is nearly impossible to shop around for the best price, to figure out what care you really need, or what is worth the price.

During recessions when people lose their jobs, the uninsured rate rises and families have less money to devote to healthcare. Connecticut’s uninsured rate is already starting to increase, even before the coming recession. People now without coverage and with lower incomes are more likely to delay needed care, including care for chronic conditions. Already, one in 10 Connecticut adults can’t get needed care due to cost and at least one person in 20% of state households misses filling a prescription, splits pills or skips a dose due to cost. These understandable but unwise short-term saving strategies lead to predictable and costly long-term problems. We all pay for this in higher healthcare prices, higher premiums, higher taxes, and lower wages. Unfortunately, these higher costs cycle back to making coverage less and less affordable.

In recessions, as Connecticut residents lose jobs and household incomes drop, more people qualify for Medicaid, stressing the state budget. The 2008 recession increased Connecticut Medicaid rolls by 177,000, far more than the 113,000 increase from the 2014 Obamacare Medicaid expansion. But because fewer people are working, income tax revenues drop in recessions, also stressing the state budget. Just as the need rises, resources fall.

The 2008 recession had a small silver lining for Connecticut. Healthcare jobs tend to weather recessions well. One in eight Connecticut workers is in healthcare. It is hard to outsource care and demand for healthcare is rising as our population ages and chronic illnesses rise. The 2008 recession eased our state’s nursing shortage because many nurses couldn’t afford to retire.

Connecticut policymakers have to resist their historical tendency to ignore economic warning signs and ramp up spending. Current state budget surpluses are very tempting, but we should save for rainy days ahead. Our state Medicaid program leads the nation in cost control; we should do nothing to jeopardize that. Unfortunately, the Department of Social Services is determined to expand PCMH Plus, a Medicaid payment model experiment that is costing us more and doing nothing to improve quality. We can’t afford costly, risky experiments right now.

Connecticut’s economy is different than it was in 2008 and no one is sure what economic sectors will bear the brunt of the next recession. Connecticut should hope for the best but prepare for the worst.



Ellen Andrews, PhD, is the executive director of the CT Health Policy Project. Follow her on Twitter @CTHealthNotes.

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