Healthcare and the Job Market

Looking for a bright spot in Friday’s dismal job report? Think how
bad it would have been had the health care sector not added 52,100 jobs
last month.

That’s right. While the rest of the economy was shedding nearly
600,000 jobs and the nation’s once-proud automobile industry went
begging for a bailout so it could continue to pay for, among other
things, its employees and retirees health care bills, hiring remained
robust at the nation’s hospitals, physician offices, diagnostic labs,
nursing homes, and home health care agencies.

This raises an interesting conundrum for health care reformers who
are primarily concerned about the unsustainable rise in health care
costs. Who in the midst of a deep recession will be willing to whack
away at medical waste when it is one of the only sectors generating
lots of new jobs for thousands of fearful Americans?

Waste warriors like Peter Orszag, President-elect Obama’s pick to
run the White House budget office, must realize that the anemic job
growth of the Bush years would have been far worse had it not been for
the health care sector. The economy added less than eight million new
jobs between the trough of the recession in 2002 and the present
cycle’s peak in October 2007. (By comparison, the economy added over 20
million new jobs during the Clinton years.) But of this decade’s total,
health care and health care-related social services accounted for 3.2
million new jobs or nearly 4 of every 10 new slots.

Indeed, health care job opportunities grew by nearly 26 percent in
this decade and now make up fully 13.9 percent of all U.S. jobs, up
from 11.5 percent in 2000. And this doesn’t include jobs in the
pharmaceutical, medical device and durable medical equipment
industries, which are considered manufacturing jobs and not included in
the “health care services” job estimates by the Bureau of Labor

The downturn is affecting some suppliers to the health care
industry. Drug firms, for instance, have been shedding salesmen and
researchers as sales growth slows and new drug approvals lag.

But the health care services sector – doctors offices, hospitals,
home health care, nursing homes, specialty clinics – have been largely
immune to the downturn that officially began a year ago. In November,
the month after the stock market crash, every one of those sub-sectors
of the health care economy added jobs. Amazing.

Indeed, while the nation as a whole has lost nearly 1.5 jobs in the
past year, health care managed to add nearly a half million slots. That
means the rest of the economy actually lost about two million jobs.

The bottom line is that there are no signs yet that this downturn is
affecting health care, which has been on a tear for decades. Since the
trough of the last recession, home health care has added 343,000 jobs,
making it the fastest growing field (up 54 percent). Outpatient
facilities and diagnostic labs added a combined 202,000 jobs in this
decade, a 37 percent hike. Firms that provide social assistance added a
whopping 644,000 jobs, a 34 percent increase.

Doctors and dental offices in this decade added more than 622,000
jobs, but that was slightly less (24 percent) than the sector as a
whole (26 percent). Hospitals and nursing homes were relatively slow
growers by comparison, adding “only” 700,000 jobs (17.5 percent) and
373,000 jobs (14.2 percent), respectively.

These jobs numbers will take on increasing significance as the
health care reform debate emerges next year. Health care reformers tend
to break down into two camps, and they speak very different languages.

On the one side are those that focus almost exclusively on access.
Their primary concern is the nearly 50 million Americans without health
insurance, and the insurance industry’s penchant for padding profits by
denying care to those with insurance and discriminating against those
with pre-existing conditions by refusing to sell them insurance.

To the extent this group focuses on cost issues, their ire is
usually aimed at the drug industry for charging high prices. Their goal
is to give government (Medicare and Medicaid) the right to negotiate a
better deal just like private insurers, although, as this new report
from the labor-backed Change to Win coalition points out, the pharmacy
benefits management industry in general and CVS Caremark, the nation’s
largest PBM, haven’t protected consumer interests very well.

The other camp in the health care reform debate is made up of system
reformers, who focus their attention on the vast disparities in health
care costs and quality across the U.S. They fret about the unneeded
services proffered by fee-for-service practitioners; the lack of
preventive health; the overemphasis on specialist care over primary
care; the lack of coordination in treating people with multiple chronic
diseases; and the entire system’s mid-20th century methods of
exchanging information.

To system reformers, insuring the uninsured, while important from an
medical, ethical, and social standpoint, will do little to improve
overall health care outcomes in the U.S. Lack of insurance leads to an
estimated 22,000 unnecessary deaths each year. Medical errors kill
nearly 100,000 – and most of those people were undoubtedly well

The lack of communication between the two camps was reflected in an op-ed in the New York Times
Thursday. Jonathan Gruber, a health care economist at the Massachusetts
Institute of Technology and one of the chief architect’s of that
state’s universal health care reform plan, argued for spending over
$100 billion of the coming economic stimulus plan on shrinking the
ranks of the uninsured. He would channel the money first through
expanding Medicaid and the children’s state health plans and then use
the rest to pass some version of the universal coverage plans that will
be introduced in Congress next year.

Besides freeing up state and local money for infrastructure projects
and creating new information technology jobs by increasing investment
in health IT, expanded coverage will, according to Gruber:

". . . drive demand for high-paying, rewarding jobs in
health services. . . These jobs could provide a landing spot for
workers who have lost jobs in other sectors of the economy.

Notably, Gruber does not address the question of mis-utilization of existing resources. Indeed, he asserts that:

Experts have yet to figure out how to restrain cost increases without sacrificing the quality of care that Americans demand.

In other words, employers, government agencies and taxpayers who
foot the tab for health will have to wait on controlling skyrocketing
health care costs, which even he admits is the “greatest fiscal threat
facing this nation.”

Given the grim prospects for the economy next year, it’s an argument
that the Obama administration will probably heed. Just as the financial
crisis turned health care reform into a backburner issue during the
primaries and general election, the full-fledged downturn that has
followed in its wake, even while increasing the chances of some form of
universal coverage passing next year, has decreased the likelihood that
it will be accompanied by more systemic reforms that might curb the
health care system’s voracious growth — and the jobs that accompany it.

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