Health Care: Reliable Jobs Machine

November 30th, 2011 at 9:04 pm

Here’s a graph for an upcoming presentation that’s worth a look (hat tip: SC).

Source: BLS

We’ve just been through the worst job loss period of most of our lifetimes, and yet, every month, health care added jobs.  What’s that about and how should it inform our thinking?

The figure below plots employment by major sector, with health care broken out separately.  Each series is indexed to 100 in Dec 07, the month the great recession officially began.  All the other sectors do some version of a cliff dive, but the health sector is just a straight line up.  Total employment is still down 6.5 million since the recession started; health care employment is up 1.4 million.

How come?

  • government has a deep footprint in health care, accounting for about half of the sector’s expenditures, so that’s obviously made a difference in its immunity to recession (and another e.g. of why the conservative meme “government doesn’t create jobs” is so foolish and wrong);
  • our aging demographics certainly generate increasing demand for health services;
  • demand for health care tends to be pretty inelastic…I’m sure there’s a falloff in cosmetic surgery in recessions, but you get sick enough, you’ll go to the doctor, regardless of the unemployment rate (at least, you will if you have coverage);
  • health services tend to be  non-tradable; also, jobs there are less susceptible to replacement by labor saving technology—a home-health aide isn’t likely to be replaced by a robot anytime soon…at least I hope not.

I’m not saying this is an efficient result, btw.  Conventional wisdom is that we waste a lot of health care expenditures on tests and procedures with dubious effectiveness.  But even if we squeeze some fat out of the system—a laudable goal given the relentless rise in health care spending—we will continue to create a lot of jobs in the sector.  And that’s a good thing.


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2 comments in reply to "Health Care: Reliable Jobs Machine"

  1. James Edwards says:

    I’ve often thought that lawsuits are really the largest cause of our health costs, but not in the way Republicans frame it. Consider this:

    I go to the hospital for surgery and the doctor makes a mistake. I could let bygones be bygones and let him correct the mistake. But what if I have future complications? The doctor is going to claim it’s unrelated and my insurance will say it’s pre-existing. Or what if I don’t have insurance? Now, I’m sick and I can’t continue working, but I get no benefits for the salary I now don’t have until I finally fall so far that I hit that ever lower safety net. So rather than let bygones be bygones I need to sue for the worst case scenario, plus legal fees, plus the time and effort to get the case to court, plus I still have the original problem. Because of the “you’re on your own” mentality of our system, I better get all I can just in case. So doctors double, triple, quadruple check every possibility. Sometimes this is good, but often it’s a waste of time.

    I’ve also admired the NTSB and how air investigations are handled. If you are a pilot, you CANNOT lie to NTSB. In return, claimants CANNOT use what you say to the NTSB in court. The entire investigation is dedicated to finding the truth and preventing it from happening in the future. This creates checklists and procedures based on actual evidence that a rule change would improve safety. Information overload is exactly one such problem in accidents and so the rules are self streamlining.

    In short, a system dedicated to a strong safety net and universal access to health care coupled with a dedication to preventing mistakes rather than profiting from them would drastically reduce costs not only in health care, but all other industries with health related lawsuits.

  2. save_the_rustbelt says:

    I’ve been on the conference circuit with health care executives, CPAs and lawyers.

    Many providers are preparing contingency layoff and realignment plans in anticipation of Medicaid and (permanent) Medicare cuts, plus rachet down pressure on private insurance rates per procedure.

    Providers are also scratching their heads over the regulatory blizzard coming from DHHS-CMS and of course changes from PPACA.

    ACOs? Bundling? PQRS? RAC? blah blah blah

    Complexity is the enemy of real reform.