Analysis: Is America overly dependent on healthcare for jobs? 5 thoughts

The healthcare industry has been a boon to the U.S. economy, employing one in nine people. President Donald Trump campaigned on the promise to add millions more jobs, but his ability to do so may directly conflict with his other campaign vow to repeal the ACA, according to an op-ed in The New York Times.

"[T]he country has grown increasingly dependent on the health sector to power the economy, and it will be a tough habit to break," wrote Chad Terhune, a senior correspondent for Kaiser Health News and California Healthline. "Thirty-five percent of the nation's job growth has come from healthcare since the recession hit in late 2007, the single biggest sector for job creation."

Here are five thoughts from Mr. Terhune on healthcare jobs in the U.S.

1. Because of the surge in job growth in healthcare since the recession, the industry represents fertile ground for further employment expansion. However, Mr. Terhune and others suggest adding more jobs — and paying for them — will only drive up healthcare prices more. This effect would be in direct opposition to the motives behind repealing and replacing the ACA.

"The goal of increasing jobs in healthcare is incompatible with the goal of keeping healthcare affordable," said Katherine Baicker, PhD, a health economist at Boston-based Harvard University's T.H. Chan School of Public Health, according to the article. "There's a lot of evidence we can get more bang for our buck in healthcare. We should be aiming for a healthcare system that operates more efficiently and effectively. That might mean better outcomes for patients and fewer jobs."

2. Hiring in the sector grew further since 2014, as hospitals and other healthcare organizations saw federal funding increase under the ACA. The law motivated hospitals, universities and companies to invest in hiring more and developing staff, as well as building new facilities. Overall, higher spending on healthcare has been good for some economically ailing areas of the country, especially those that have suffered from fewer coal and mining jobs, according to Mr. Terhune. In many communities, healthcare organizations are the single largest employers.

3. President Trump's decision to go after the ACA and revive legislative efforts to repeal and replace may be an indication of his administration's priorities. However, neither the ACA nor the Republican-authored bills have addressed what industry experts and economists cite as the core reason for soaring healthcare costs, according to Mr. Terhune: redundancy, inefficiency and the need to pay for an excessive number of administrative jobs.

4. Mr. Terhune wrote that labor accounts for more than half of the $3.4 trillion spent on healthcare in the U.S. Although medical providers such as physicians, nurses and advanced-practice nurses are in high demand, the complexity of the system has also increased the need for a myriad of administrative roles, such as data-entry clerks, revenue cycle workers and medical billing coders. For every physician there are 16 other healthcare workers, half of which are in nonclinical roles.

5. U.S. healthcare administrative costs are the highest of all developed economies, according to a recent report from the Organization for Economic Cooperation and Development, with more than 8 percent of domestic health spending going to administration. The global average is 3 percent.

"I find super-expensive drugs annoying, and hospital market power is a big problem," said Bob Kocher, a former official of the Obama administration who worked on the ACA and now serves as a partner in the venture capital firm Venrock, according to the article. "But what's driving our health insurance premiums is that we are paying the wages of a whole bunch of people who aren't involved in the delivery of care. Hospitals keep raising their rates to pay for all of this labor."

More articles on human capital:
Delaware County Memorial workers vote in favor of 3-year labor agreement
Fresenius Kidney Care workers authorize potential strike
6 Steps to an engaged workforce

© Copyright ASC COMMUNICATIONS 2020. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.


Top 40 Articles from the Past 6 Months