Healthcare Economy

Posted by: Michael Mandel on September 14

Take a look at my new cover story: “What is Really Propping Up the Economy”

Since 2001, the health-care industry has added 1.7 million jobs. The rest of the private sector? None
For years, everyone from politicians on both sides of the aisle to corporate execs to your Aunt Tilly have justifiably bemoaned American health care — the out-of-control costs, the vast inefficiencies, the lack of access, and the often inexplicable blunders.

But the very real problems with the health-care system mask a simple fact: Without it the nation’s labor market would be in a deep coma. Since 2001, 1.7 million new jobs have been added in the health-care sector, which includes related industries such as pharmaceuticals and health insurance. Meanwhile, the number of private-sector jobs outside of health care is no higher than it was five years ago.

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Reader Comments

Brandon W

September 15, 2006 09:03 AM

Also, a substantial number of jobs added since 2001 have been in real estate/construction. This means that outside of health care and housing there has been a substantial loss of jobs since 2001. With the housing boom over and all the jobs that go with new construction (including the explosion of real estate agents) falling away, we may see a deteriorating situation in the job market. If you're in health care, great. If you're in RE/construction it was great until about 6 months ago. Everyone else has been watching their jobs disappear for 5 years. Is it any wonder that, despite all the numbers claiming so many new jobs, so many people are pessimistic about the job market and the economy?

Those in construction and real estate are next. I've been saying for a couple of years that the unemployment number dropped so readily partially because so many people were going off the job market to go "play" real estate agent; that little game is over.

Brandon W

September 15, 2006 10:33 AM

An added thought: How much of this healthcare industry growth is due to aging baby boomers, and what happens to all those jobs when they pass on (i.e. die) in the course of a decade? Perhaps children being born today ought to be encouraged to build a career in funeral services?

George Martin, CRNA

September 15, 2006 07:59 PM

You did not mention the advance degree nurses. Their wages can be significantly higher than the the the basic RN. I know many people who would never consider nursing, especially males. Yet, male and female nrses, who are CRNA'S, can easily make six figure incomes.

Lord

September 16, 2006 12:32 PM

From 1980-2000 we have traded pay for jobs hoping eventually we would have both. Since 2000 we have traded jobs for goods. Those goods better keep getting cheaper because we are running low on jobs to trade.

The population is stablizing so healthcare should be stable in the future, or at least as stable as the economy, which probably won't be very stable at all.

david foster

September 16, 2006 05:41 PM

A thought-provoking article. It would be interesting to look at this from the standpoint of international trade:

1)Patient care: what is the balance of people coming to the US to seek treatment vs people travelling to non-US countries for cheaper surgery, etc?

2)Pharmaceuticals & medical equipment: what's the import-export balance?

mike

September 18, 2006 06:55 AM

"Also, a substantial number of jobs added since 2001 have been in real estate / construction."

That's a very good point.

A much better analysis awaits if Mr. Mandel makes the effort to separate those real estate and construction jobs from his overly-broad "non-health care" category.

Were that to be done, his readers could then compare real estate's influence on the economy since 2001 with health care's.

I suspect real estate related job growth would easily overshadow health care related job growth in terms of both people and dollars.

Jack Hellner

September 18, 2006 02:57 PM

This article states that healthcare has created 1.7 million jobs, Housing 900,000 net total 2.5 million from 2001-2006. This is blatantly false. Going to the Dept of Labor web site, civilion labor employment level shows that in August 2001 there were 136,241,000 jobs. In August 2006 there were 144,579,000 jobs. That is 8.3 million new jobs. When an article is written, facts should be used instead of made up numbers

Kartik

September 19, 2006 07:56 AM

There may be the same number of non-healthcare jobs as it early 2001, but that itself was an unusally high number (the unemployment rate was 4.0% at the time). So the same number as then is still very good, even despite population growth over the last 5 years.

VA

September 19, 2006 06:35 PM

The surprise for me was the steep decline in jobs in the high-tech sector. I work in the industry and things seemed relatively stable, or so I thought. Is that mostly outsourcing?

I didn't see a chart and am wondering if it's a continuing trend.

gab

November 2, 2006 01:46 PM

On the other side is a recent statement by he dean (?) of the University of Virginia Medical School that calls for more doctors and nurses to take care of the ever aging population.

Hoyt Hillman

March 21, 2007 02:30 PM

Since Housing is taking a tumble, Healthcare remains the only major grow business in the US.

OK, lets think about the macroeconomics of it.
I guess it is about time to try to run the healthcare business efficiently. Think of the government inefficiencies already in place and try to imagine Government run healthcare.

Best to improve on the processes we have in place. Current legislation and IRS regulations allow companies to set up direct reimbursement accounts that are FULLY DEDUCTIBLE and pretax for employees. The Insurance Companies and Banks keep promoting Health Savings Accounts because they make extra profit on them. The reason, an HSA is a low earning retirement gimmick that restricts the preventive expenses necessary to stay healthy, makes the employee pay the deductible if they do not stay healthy and earns a low interest rate if they do stay healthy.
Therefore the government wins because the employee pays for potential benefit coverage with after tax dollars, the insurance company wins because the employee has to pay for the first $1,000 or more and so
they do not incur the medical expenses, and the banks win because they are paying low interest for all this money they are accruing. The
employee and employer are the losers. What government does not realize is that the people and in the long run productivity, earnings and
revenue all fall and they lose far more than the taxes they were trying to grab.

A well run reimbursement program takes full benefit of pre-tax dollars, gives employees the
preventive care they need, increases productivity, by keeping them healthy, reduces medical expenses saving insurance companies money, teaches employees how to control expenses and invest in higher earning retirement accounts that accomplish four times more than an HSA, growing revenue for the company and value to the employee which in turn increases our Gross Domestic Product and earns the government more in taxes in the long run.

Take time to learn about it. Insurance Companies have done massive studies and report great successes with reimbursement plans, they help the employee and the employer control healthcare costs. They are not the most profitable products to sell so insurance companies and lobbyists do not promote them.

Thank you for your interest. This blog is no longer active.

 

About

Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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