Back to the real world of health care, et. al.
Last week, The Atlantic magazine reported that the US health care industry has supplanted manufacturing and retail to become the largest source of jobs in the US.
The article, by Derek Thompson, reports that for the first time in history, in the last quarter, there are now more jobs in health care than in the two industries that were the leading job engines of the 20th century.
According to Thompson, in 2000, there were 7 million more workers in manufacturing than in health care, and at the beginning of the Great Recession, there were 2.4 million more workers in retail than in health care.
Thompson says that there are three main drivers of the boom in health care jobs.
- First, Americans as a group are getting older. By 2025, one-quarter of the workforce will be older than 55 (your humble blogger). This will have doubled in just 30 years. It will have a profound economic and political impact, such as declining productivity and electoral showdowns between a young, diverse workforce and an older, whiter retirement bloc. [True in the last election.] The most obvious effect of an aging population will be that it needs more care, and more workers to care for them.
- Second, health care is publicly subsidized. The US spends hundreds of billions of dollars on Medicare, Medicaid, and benefits for government employees and veterans. [The recent tax bill passed will make substantial cuts to many of these programs, or outright privatize them.] The US also subsidizes private insurance through tax breaks for employers who sponsor health care.
- Third, two of the most destabilizing forces for labor in the last generation have been globalization and automation. They have hurt manufacturing and retail by offshoring factories, replacing human arms with robotic limbs, and dooming fusty department stores. Health care is resistant to both. While globalization has revolutionized supply chains and created a global market for manufacturing labor, most health care is local. A Connecticut dentist isn’t selling her services to Portugal, and a physician’s receptionist in Lisbon isn’t directing her patient to Stamford. [I take exception here, as many of you will too. It seems Mr. Thompson has not heard of Medical Travel, both inbound and outbound, and therein lies your problem.]
Finally, the growth in health care employment is more located in administrative jobs than in physician jobs. The number of non-physicians has exploded in the last two decades. Most of these jobs are administrative such as receptionists and office clerks. It is not clear that these workers improve outcomes for patients.
Robert Kocher, a senior fellow at the Schaeffer Center for Health Policy and Economics at USC said the following, “Despite all this additional labor, the most meaningful difference in quality over the past 10 years is the recent reduction in 30-day hospital readmissions from an average of 19 percent to 17.8 percent.”
One other point Thompson notes, is that categories like retail and health care are imperfect approximations, and that some categories are too restrictive, and some are too broad. He points out that there are more jobs in leisure and hospitality than in health care. [Which would explain why some in Medical Travel are more like travel agents, than medical professionals.]
So, while there is good news about the position of health care employment in the US, the downside is, at least as far as Medical Travel is concerned, that globalization may not have as much of an impact on health care as I, and others have thought, and that portends bad news for the industry.