For the first time in U.S. history, health care is the country’s largest employer. Five of the 10 fastest-growing occupations over the next decade are in health care, and projections say the sector will soon create one-third of all new jobs. While this progress has been a celebration for many, unchecked job growth in health care has also been the primary driver of America’s skyrocketing health care prices, and hasn’t translated into better outcomes for patients.
Capitol Hill policymakers, who could help remedy the situation, are more likely to tout the growth in health care jobs in their home states as an economic win than to ask the hard question of whether these jobs are good for the nation’s health.
Even as retail and manufacturing positions were lost to globalization and automation, health care jobs remained resilient. Enrollment for Medicare and Medicaid increases during recessions, so federal health care programs like these don’t just bolster the safety net, they keep health care jobs robust even in economic downturns — the number of health care jobs rose every month during the Great Recession.
The cost of labor makes up more than half of the total cost of delivering health care. So as health care employment rises, it pulls up health care prices. Expenses are passed down to employers and patients in health insurance premiums, which are escalating at a rate outpacing inflation.
More jobs and higher prices haven’t translated to better health care. The rapid growth in employment has largely come from adding administrative and management jobs, rather than from adding clinicians responsible for direct patient care. Administrative costs in U.S. health care are the highest in the developed world, accounting for more than 25 percent of spending in the sector. Yet even as U.S. health care prices surge relative to other industrialized countries, Capitol Hill policymakers tend to stay on the job-growth bandwagon.
How did we get here? Congressional apathy on hospital growth can be traced to political arm-twisting during passage of the Medicare Prescription Drug, Improvement, and Modernization Act — usually known as the Medicare Modernization Act (MMA) — in 2003 and to an obscure provision added to the bill, the Section 508 waiver. It allowed hospitals to apply for an increase in their Medicare payment rates.
The waiver was intended to boost revenue for hospitals in places where health care labor was more expensive. It also proved useful for congressional leaders aiming to persuade reluctant policymakers, especially those whose districts could benefit from health care industry growth, to vote for the bill. Researchers found that hospitals in the districts of congressional representatives who voted in favor of the MMA were five times more likely to receive a Section 508 waiver than hospitals in the districts of representatives who voted against the MMA.
Hospitals that got waivers increased hiring, payroll, executive bonuses, technology use, intensity of patient care, and political lobbying, with an overall increase in total spending of more than $100 million annually. Many hospitals are their district’s largest employer.
While these investments did not appear to have paid off in terms of improved patient outcomes, they did pay off for lawmakers. A working paper from the National Bureau of Economic Research found that, following passage of the MMA, lawmakers with a Section 508 hospital in their district received a 22 percent increase in total campaign contributions and a 65 percent increase in individual contributions from employees in their state’s health care industry. The health care industry has spent nearly $1 billion lobbying politicians over the last two years. As job growth and industry consolidation leads many hospitals to become their district’s largest employer, politicians will see less and less incentive to bend the cost curve of health care.
Despite recent proposals from policymakers and think tanks to rein in health care spending and make care delivery more efficient, the compounding effect of health care job growth and misaligned political incentives make it unlikely that any federal policy to address this will come to fruition in the near future.
Instead, actions outside of Washington, including leaner workflows for care delivery and reimbursement, along with new technologies that improve efficiency and eliminate redundant jobs, may help keep the health care sector from facing runaway spending.
Venture capitalists have been pumping substantial funds into digital health companies with each passing year. In 2017 alone, $482 million was invested in startups that aim to infuse technology into nonclinical operations, such as billing and scheduling. By automating away some of the bureaucracy in the health care system and liberating clinicians to practice at the top of their licenses, such efforts could help slow the growth of health care spending.
But that won’t be enough to unravel the link between politics and the growth of health care jobs. Ultimately, Congress needs to advocate for evidence-based policies that value productivity rather than growth, and stop thinking about health care policy as a jobs program.
Nisarg A. Patel is a fourth-year student at the Harvard School of Dental Medicine and the co-founder of Memora Health, a technology startup that automates discharge and follow-up workflows for health care organizations.