Healthcare anchors strong October jobs report

The healthcare industry's employment spree has continued into autumn with an increase of 44,900 jobs in October.

Healthcare has now created almost 407,000 jobs so far in 2015, which almost equals the 410,000 jobs the industry added in 2013 and 2014 combined. Nearly 11% of all U.S. nonfarm jobs are now in healthcare.

When factoring in upward revisions from August and September, healthcare actually added 61,000 new jobs, according to preliminary figures from the Bureau of Labor Statistics. Hospitals again led the way by hiring 17,800 people in October and have added almost 148,000 people to their payrolls this year.

However, the continued growth of healthcare jobs, many of which are high paying, brings the nation's healthcare tab into question. Spending on healthcare services has increased at historical lows the past few years, but those expenses have inflated more quickly in 2014 and thus far in 2015. Prescription drugs and health insurance administration have fueled some of the uptick. More money is also being used to pay healthcare's growing labor force.

“It's not sustainable,” Paul Hughes-Cromwick, a senior health economist at the Altarum Institute's Center for Sustainable Health Spending, said of job growth in healthcare. “You don't have to be a health economist to say this raises alarms.”

The healthcare hiring blitz really began in the middle of 2014, said Ani Turner, deputy director of the Altarum Institute. That's when the Affordable Care Act's expansion of health insurance began in earnest.

From 2010 onward, mass layoffs in healthcare were commonplace. Hospitals were shedding jobs by the hundreds to keep expenses under control.

But starting last year, millions of people have bought health insurance on the public exchanges or received Medicaid through the ACA's expansion program. The private sector has also continued to expand its workforce as well, which typically means more employer-sponsored health benefits. For hospitals, those factors meant fewer uninsured were walking through their doors and, consequently, more payments from insurers.

“That increases the volume of care that you're seeing,” Turner said of the hospital hiring boom. “It also increases your margin.”

Eventually, if national health spending moderates further, “we expect the hiring boom to abate,” Turner said. That doesn't mean there will rashes of layoffs. Instead, the rate of job growth will have to go down, she said.

The nation's unemployment rate stood at 5% in October. The positive gains in jobs and wages could prompt the Federal Reserve to raise interest rates as early as next month, according to economists.