Need a job? In most American towns and cities, the best place to find new employment opportunities is in healthcare.
It's been that way for a long time. For most of the past half century, the U.S. economy has relied on healthcare job growth to ride out recessions.
Each time the general economy went into a tailspin, the great healthcare job machine kept puttering along. In the parlance of the dismal science, the sector served as an economic stabilizer.
During the worst of the last recession in 2008 and 2009, the U.S. economy lost 8.8 million jobs. But the economic dislocation was actually far worse. If you leave out healthcare, more than 14 million Americans lost their jobs. It was only a gain of 5.5 million jobs in the healthcare sector that prevented the Great Recession from becoming a second Great Depression.
The backwash from that financial sector-driven, economic fiasco still haunts the political landscape. Whatever one thinks of Donald Trump, one cannot dissociate his political rise from the collapse of the housing market and construction employment, and the elimination of more than 2 million manufacturing jobs during the last downturn.
Unfortunately, the semi-skilled workers who lost those jobs don't have the skills for the new jobs being created in local hospitals or physician offices. When they do wind up in healthcare, they often find themselves in housekeeping, maintenance or food service, which offer less pay than a typical manufacturing job. Even that doesn't paint a full portrait of the inadequacies of moving to healthcare work as an economic strategy for semi-skilled workers. The fastest-growing sector in healthcare is home health. Its average pay is $17.56 an hour. Pay for home health workers has even gone down in some years, and is now just two-thirds of the average manufacturing wage.
The bottom line is that healthcare isn't an economic savior. It's an economic stopgap. It can play that role for one simple reason: It has built-in funding mechanisms that are barely touched by recessions.
More than half of all healthcare bills are paid by the federal and state governments. Medicare and Medicaid are entitlements. No matter how poorly the economy performs, those bills keep getting paid. In fact, more people go on Medicare and Medicaid during downturns, as displaced workers take early retirement, or look for government assistance to help support their families.
The private insurance system, in concert with healthcare providers, has its own built-in mechanism for continuing to grow through downturns. Too many people not paying their bills? Raise prices and rates.
Employers—the frontline purchasers of health insurance—ought to serve as a brake on such behavior, but have chosen instead to pass those costs along in the form of lower wages. High-deductible health plans are just the latest permutation of this strategy.
When we enter the next recession—and financial markets are signaling that the business cycle is alive and well—can we count on these automatic stabilizers to continue operating as they have in the past? Should we? The most socially responsible answer to both those questions is no.
Since passage of the Affordable Care Act, most providers and payers have come around to the understanding that volume-driven medicine is going away. High-quality, affordable care with less waste is coming. The buzzword is value.
Progress in moving from volume to value has been slow. But the system is moving inexorably in that direction and will, because payers at every level can't afford a return to the days where healthcare spending rose faster than the rest of the economy.
From a societal perspective, it makes no sense to let healthcare continue to serve as the employer of last resort. At the end of the day, healthcare is about caring for the sick.
Energy. Education. Transportation. Infrastructure. I can think of so many alternatives to serve as economic stabilizers that would better meet the needs of 21st-century America. It's time for healthcare to let some other sector have a turn.
