Another Look at Jobs

In response to a recent blog about jobs (see below), Alan Maynard, the dean of UK health economists, asks whether the loss of health care jobs is a manifestation of expenditure control or efficiency. Here’s my answer.

If  hospitals and physician offices were bloated with employees, this decline in employment could simply be a move toward greater efficiency. But rare is the health care worker who is not stressed already. No, this is expenditure control or, more properly, it is cutting back on the payroll in response to relentless cuts in Medicare reimbursement, both directly and in the form of penalties for the failure to meet various quality and readmission standards now and in the future as the ACA is implemented. These job losses must be viewed in the context of what’s been happening to jobs over the past several decades.

The US has currently has about 1,225 fewer jobs per 100,000 of population than it did in 1990 – almost 3% less. The big losers have been manufacturing, mining and construction, which lost almost 4,000 jobs/100,000. Local governments and most services underwent little change, but together with retail, both federal and state governments and some other sectors, another 1,500 jobs/100,000 were lost. Even information technology lost jobs, as the internet gained but newspapers shrunk.

What made up for this deficit of 5,500 jobs/100,000? Only four sectors did. Together they added 4,300 jobs/100,000. Education accounted for 8%, leisure and hospitality 17%, professional and business services 35% and health care 40%. Yes, about 1/3 of the jobs deficit that resulted from a contraction of manufacturing and other slow or no-growth sectors was made up for by additional health care jobs. but this is threatened.

Meanwhile, there are enormous unmet health care needs, especially among the poor.

The problem is, of course, that health care, more than other sectors of the economy, requires cross subsidies from the rich to the poor. But the poor have been subsidizing the rich most of these past 35 years, so a change in direction might not be unwarranted. And a bit more investment in social infrastructure would be good, too. Together, these investments in health and social services would fuel the economy, employ the populace, enable healthier lives and strengthen our democracy.

But it can’t be done without physicians. Doctors are not everything in health care — there are only about 225 practicing physicians per 100,000. But they are the lynchpins of the health care system.

Or we could continue to cut health care spending, constrain the growth of physician supply and allow the nation’s major jobs engine to sputter. But why?

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