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Where will all the employees go? By Eric Novack

A quick question:  With calls for a substantial increase in government involvement in health care by so many—and, among the major justifications is the claim of high administrative overhead in the private sector relative to government—what do the proposals plan to do with the hard working people currently working in the health insurance industry?The insurance workforce is estimated at close to 2.5 million.  It would be not unreasonable to say that 25% of that is health care related.  And that does not even include the people working on health insurance related issues on the provider/ hospital end—a number that absolutely exceeds 600,000.So, put another way: what do the reformers plan to do (a) for, (b) with, the potential displacement of over 1 million workers?Just asking, but could it be that the claimed efficiencies will not materialize and they will stay employed?  Could it be that the costs of ‘retraining’ and financial support for these families will exceed the ‘savings’ claimed?  Which group really will be displaced—will the size of the in-office, and in-hospital administrative workforce even be counted when looking at ‘streamlined’ administrative costs?  Will many of the displaced workers simply end up working as government employees in a similar capacity?I would hope that supporters of the Obama plan, the Clinton plan, and the single-payer plan would weigh in here with real specifics—and not ad hominem attacksEric Novack

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ClaudiaRickmattDonald E. L. JohnsonHealth Punk Recent comment authors
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Claudia
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Claudia

Well, I am sure that when the many industries pulled out the plug for the sake of cheaper labor power elsewhere in the world, in no small part due to high health care costs (e.g. auto industry) there was less soul searching about what workers would do with their lives than there is now about workers in the health insurance sector. Of course this does not mean that their fate is unimportant, but it would be interesting to find out why anybody would stress out about them while they can live with buying much cheaper Japanese or Chinese products of… Read more »

Rick
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Rick

Good points, all, but going back to Eric’s original question, these kinds of shifts are nothing new in America, going back to the buggy-whip manufacturers and beyond. Some more recent relevant examples: after the 1987 Wall Street crash, which coincided with the advent of electronic and program trading, there were 100,000 job losses in Manhattan’s financial district alone. I saw the effects in that it was much easier for me to get a seat on the subway at rush hour in the late ’80s than in the early ’80s. A college buddy of mine got his broker’s license a week… Read more »

matt
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matt

While my heart cries out for the prospectiver loss of underwriters, brokers and other assorted middlemen displaced by reform of the insurance industry, the broader issue is that healthcare reform – if it works – will slow the growth of the healthcare industry overall.
For the last few years, job growth in this country has been propped up by the healthcare industry. Since 2001, the health-care industry has added 1.7 million jobs. The rest of the private sector? None.
Hospitals are the largest employers in many metro areas.
http://www.businessweek.com/magazine/content/06_39/b4002001.htm?chan=top+news_top+news+index_businessweek+exclusives

Peter
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Peter

“They’re promising to make health care affordable and control the profits of insurers.”
Wow! What a scary thought.
“The bottom line is that they would impose even more stringent wage and price controls on providers and utilization limitations on patients than HMOs and PPOs ever did in the 1990s.”
Ok Donald, how would you stop the cost juggernaut from getting to 20% GDP? Maybe when YOU can’t even afford coverage?

Donald E. L. Johnson
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Read the Obama and Clinton health insurance schemes carefully. They’re promising to make health care affordable and control the profits of insurers. The bottom line is that they would impose even more stringent wage and price controls on providers and utilization limitations on patients than HMOs and PPOs ever did in the 1990s. This means that the bureaucracy in government and the private sector will double or triple in size, and the current bureaucracy will be in charge. This is why I continue to believe that Obama and Clinton are promising benefits and lower costs that they can’t deliver, and… Read more »

Peter
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Peter

Barry, job loss from Qualy-Metrics (I think that’s what you call it) and less end of life care is a long way off. What may cause more direct job loss faster is if health budgets (will we ever see one?) start to reduce oversupply of doctors in some markets. But I imagine that those docs will be able to retrain as they say other displaced workers should do, after all it’s easy to trade a lifetime of training to start a new career at 50 something :>) Hey Eric, you seem to be the type of guy that supports the… Read more »

Health Punk
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I hear there will be jobs galore building a huge wall separating the US and Mexico. Seriously, though, the increasing aging population and impending lack of sufficient health services should lead to more jobs on the provider side, and if a blended approach is created (private/gov’t), there will be many health plan functions that will still have to take place. It’s just that the risk pools they manage will be larger. In any case, if it boiled down to a choice between improved health status and lower costs for everyone else, versus a loss of 1 million health plan jobs,… Read more »

Barry Carol
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Barry Carol

Direct line care givers will see no loss of jobs Peter – What if we ever went to global budgets (capitation) whether under single pay or not? What if we do a much better job of eliminating a lot of care that does little or nothing for patients, and what if we become much less aggressive toward end of life care? If we ultimately succeed in significantly driving down utilization, which is where the big potential savings are, we shouldn’t need nearly as many direct line workers even if we achieve universal health insurance coverage. Moreover, to the extent we… Read more »

rbaer
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rbaer

Wait a second, I know that medicaid often is administered by HMOs, but medicare is a government affair, isn’t it?
And further, do you mean that you think that there are no administrative savings to be expected? Just administrators being indirectly paid by federal sources, but still the same numbers employed by private insurances? I’d hope not.

Catron
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Will many of the displaced workers simply end up working as government employees in a similar capacity?
Most would migrate to the Fiscal Intermediaries that will inevitably administer any single-payer system. What most of the people who advocate “Medicare-for-All” and similar schemes don’t seem to realize is that the government doesn’t manage programs like Medicare and Medicaid. CMS farms that out to intermediaries.
And what sort of organization gets the FI contracts? Why, insurance companies, of course. And, guess what? The FI’s have admin costs that will not magically disappear simply because we go with a government-run system.

Ron
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Ron

I’m not particularly worried about these workers. Most have skills that would make them relatively inexpensive to train for new careers. Many would simply transition to other segments of the insurance industry (auto, property and casualty, life…). This really seems to be a non-issue.

rbaer
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rbaer

Sorry for the sloppy writing, should read:
“hey, let’s not end war XY, because how should we ever employ the homecoming soldiers?”

rbaer
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rbaer

I often wondered about that. If we assume that the administrative work is not productive work that serves anyone, one could make the point that these employees have to get into more productive lines of work. It seems to me like a lazy defense of the status quo – hey let’s not end the war XY, what should we employ the homecoming soldiers?

Peter
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Peter

Glad to see you’re concerned about workers loosing their jobs as a result of a re-aligning of the economy. Were (are) you as concerned about auto workers displaced by free trade with Mexico and Chinese competition, or textile, furniture, and garment workers about job loss also to the Chinese? What about engineers and computer programmers job loss to India or customer service workers also to India? If we go (fat chance) to single-pay gov. run I still see a need for ex insurance workers to carry out the needed paper shuffling. Direct line care givers will see no loss of… Read more »

Russ
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Russ

They will gradually move into new jobs. The American economy is flexible and dynamic and will find a place for them. Unlike healthcare, this is one area where the free market works pretty well.
Will people face hard times? For a while. But on balance, I think most people would rather deal with a million temporary job seekers than 45 million permanently uninsured people and millions more who face bankruptcy, death, or worse when they can’t get healthcare.