The Employment Cost of Health Care Reform

At a time when many congressional conservatives are worrying about the cost of proposed health reforms, their liberal colleagues seem surprisingly unconcerned about the human cost, the inevitable loss of ten of thousands of good jobs at good wages that the nation’s older cities are increasingly dependent on.

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Efforts to make American medicine more efficient threaten many of these jobs, and blacks and other minorities are likely to be the ones most affected if and when those jobs disappear.

Reformers argue that spending nearly 20 percent of the nation’s GDP on health hinders our international competitiveness—because other countries spend less on health care—and that the nation’s medical bill could be cut substantially reduced while actually improving our health if incredible amounts of waste—in the 30 percent range—could be eliminated.

Much of this waste involves doing things—ranging from prescribing drugs to doing tests to surgery—that don’t improve our health and is sometimes actually dangerous. Surgery is always risky. Scans and X-rays expose the patient to radiation that can later cause problems.

Squeezing our waste will translate into reducing employment. Reformers don’t talk about that. Their reluctance is understandable, especially in today’s economy, where the health industry is not only the nation’s largest employer, providing more than 14 million jobs, but is also one of only two areas—the other is education—now reporting steady employment growth.

In the past year, according to Bureau of Labor Statistics data, Detroit lost more than 7 percent of its jobs, but employment in health and education rose by 1 percent. Not surprisingly, these fields are already larger than manufacturing and pulling away. Nationally, general employment dipped by 3.8 percent despite job growth of 2.3 percent in these areas.

Health and education are the largest employers in Boston, Philadelphia and Pittsburgh, where they are the only sectors to add more than a thousand jobs in the years ending in March 2009. (Employment there actually increased by 5,400, consistent with a pattern that’s added more than 76,000 jobs in this category since 1990.) In New York, this category is the second largest.

So when the Wrangler plant in Texas closed a few years ago, the federal jobs program made it a priority to retrain those workers to be medical assistants.

Everyone wants a more efficient health system; it would be safer and cheaper than what we have today. Electronic medical records would eliminate duplicative tests done because prior results aren’t readily available, but would eliminate jobs filled by the technicians who are now doing these tests.

Skipping unneeded procedures would put some of those now staffing surgical suites out of work.

A better insurance reimbursement system would eliminate the mountain of paperwork that’s pushed between provider, patient and payer. It would also put the jobs of an army of paper pushers, many of whom work for hospitals that provide fringe benefits like health insurance, at risk.

Recent experience in areas ranging from telecommunications to financial services cement the link between greater efficiency and fewer employees needed to service a given number of customers. Indeed, it is very hard to imagine a more efficient American health system that doesn’t include a smaller number of jobs than the current one.

Raising this issue is not a defense of today’s clunky system that doesn’t seem to be serving anyone terribly well. It is, instead, an acknowledgement that any such change inevitably has winners and losers and that a big change like this one will have more than a few losers. How to help them make a transition to other, equally satisfying jobs is an issue that merits some thought now. As things stand, it appears that minority communities will be both the biggest winners and biggest losers if reforms are enacted. Drastically reducing the number of uninsured Americans will confer a great benefit because they are a disproportionate share of this population that is currently at risk.

But there will be a similar tilt in resulting job losses. Some doctors may see their incomes reduced a bit, but their discomfort won’t begin to match that of those who will lose jobs their families depend on.

Jim Jaffe is a former congressional staffer who worked on economic, tax and health issues.