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Why Health Care Job Losses May Not Be A Bad Thing

One bright spot in the generally gloomy economy is the health care sector. It’s a growth industry, and its jobs often pay well. So one of the criticisms of the push to reduce health care spending is that cutting costs will kill jobs. But a new article in the New England Journal of Medicine says our growing health care workforce may not be something to celebrate.

WBUR’s All Things Considered host Sacha Pfeiffer spoke with one of the study’s co-authors, Kate Baicker, a professor of health economics at the Harvard School of Public Health, and asked her how more health care jobs could be a bad thing.

Kate Baicker: One of the arguments for continuing to spend more and more on the health care sector is that it’s the only area where we’re seeing job growth. But that comes at a cost. It comes at the cost of health care being less affordable for everybody. It means your premiums are higher. It means your wages after premiums are lower. It means your taxes are higher. If we can get health care spending more efficient, that might result in fewer jobs – but those jobs would go to other sectors that were producing other important things – education, shelter, food.

Sacha Pfeiffer: So is the idea that some job losses in the health care sector might free up the money previously spent on those salaries for money spent on other worthwhile things, including worthwhile things that would be good for our health?

Yes. If health care reform resulted in fewer health jobs but more health, that would be a good thing for the economy. Now, I don’t want to pretend that there are no losers in a scenario in which health care spending goes down and that means there are fewer health care jobs. There are workers who will lose their jobs and they very much need help in transitioning to other, more productive sectors of the economy.

Now, of course, we are already losing jobs because health care costs are too high. You know, employers say they’re cutting back or they’re not filling positions or maybe they’re simply not giving raises. So is there any way to tell which scenario results in more job losses? Do we lose more jobs by spending too much money on health care or by spending less money on health care?

It’s hard to know how health care reforms are going to affect the net number of jobs in the health care sector. I think research suggests that if we could spend our health care dollars more efficiently, we might have a very different mix of the health care workforce. Maybe we’d have more generalists and fewer specialists. Maybe we’d have more nurse practitioners and fewer hospital administrators. The endpoint isn’t nearly as important as ensuring that we’re getting the most health that we can for all of our health care dollars.

You know, in Massachusetts, health care is a big part of the economy, and that makes this a political question as well as an economic one. How do you navigate the politics of this?

I try not to! That’s why I’m an economist.

But then how would you, for example, advise a politician to try to persuade hospitals that these health care reforms and this cost cutting might cause you to lose jobs, but that’s okay?

Saying that we want to devote our health care resources to propping up jobs in a sector that isn’t producing as much health as it could is a really inefficient way to promote job growth, and a really inefficient way to provide health care.

Below, you can read the full report, which was co-authored by Amitabh Chandra of Harvard’s Kennedy School of Government:

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