A Health Care Overhaul Could Kill 2 Million Jobs, And That’s OK

There was an op-ed that ran in the NYT a couple weeks ago arguing the merits of creative destruction in the context of a move to some sort of single-payer system. The underlying assumption, of course, is that SP would be designed in such a way that it pushes down health spending, which isn't really a given (for exactly this reason!).

The argument is essentially that if we push money and jobs out of the health sector, they'll be freed up to flow to other sectors and theoretically perhaps put to more productive use. This is similar to the popular of concept of "bending the cost curve" in heath care, except that the point there is to stop jobs and dollars from disproportionately flowing into health care and re-balance the economy on a prospective, go-forward basis.

Analysis: A Health Care Overhaul Could Kill 2 Million Jobs, And That’s OK

Some geographic areas would be hit particularly hard. A single hospital system is by far the biggest employer in many post-manufacturing cities like Pittsburgh and Cleveland. Hospitals and hospital corporations make up the top six employers in Boston and two of the top three in Nashville. Hartford is known as the insurance capital of the world. Where would New Jersey be if drugmakers took a big hit, or Minnesota if device makers vastly shrank their workforce? (That may be why some Democratic representatives and senators from these left-leaning states have been quiet or inconsistent on Medicare expansion.)

Stanford researchers estimate that 5,000 community hospitals would lose more than $151 billion under a Medicare for All plan; that would translate into the loss of 860,000 to 1.5 million jobs. A Navigant study found that a typical midsize, nonprofit hospital system would have a net revenue loss of 22%.

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“Yes, these are painful transitions,” said Baicker, who is now the dean of the University of Chicago’s Harris School of Public Policy. “But the answer is not to freeze the sectors where we are for all time. When agriculture improved and became more productive, no one said everyone had to stay farmers.”

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Baicker's great, but that's not a great analogy. If policymakers had said "we eat too much, let's burn 22% of the farms down" it would be more comparable to this situation. Working to expose the industry to the sorts of economic winds of change that would lead to the sort of organic restructuring over time she's referencing is exactly the approach we ought to be taking (and to some degree have started taking over the past decade). Intervening directly to put people out of work because we've decided they ought to do something we deem more productive is a very different beast.

Anyway, this reality is shaping some of the politics of the Medicare for All debate.

'Medicare for All' backers find biggest foe in their own backyard

Democrats who've made "Medicare for All" a top health care priority are running up against their toughest opponent yet: their own neighborhood hospitals. . .

That’s created a dilemma for Medicare for All champions who cast themselves as crusaders against a broken health care system full of greedy insurers and drug companies, yet remain wary of taking on hospitals that rank as top employers in many congressional districts and are seen by the public as life-saving institutions.

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"Every congressman has got a major hospital in their district, and that hospital is a major employer,” said Kevin Schulman, a professor of medicine at Stanford, who co-authored the JAMA article. “And so how hard we can push on hospitals given that is an open question.”

It’s a concern that’s left Medicare for All advocates walking a fine line, arguing for a dramatic reshaping of the health system while trying to avoid a brawl with their hometown health systems.

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The political danger of dropping a NAFTA-esque job shuffling on every region of the country, with white collar health sector jobs playing the role blue collar industrial jobs played in the Rust Belt 25 years ago, seems to me to be to be significant, even if one firmly believes that the pieces will eventually be put back together as something superior.

People are not multi-functional cogs that can be taken out of a machine with the certainty that they will find a place in another machine.

Yes it's ok. Or should the republicans who claim to hate socialism while they are handing out checks to farmers also start including checks to health care workers who lose their jobs too?

If the loss of two million jobs improved health care for a hundred million, so be it.

Mycroft said:

People are not multi-functional cogs that can be taken out of a machine with the certainty that they will find a place in another machine.

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Especially since those alternate employment opportunities are very unlikely to be in the same location.

Reducing 18% of GDP by up to 40% is proposing a huge economic upheaval. Perhaps that is why no M4A bill is being allowed to come to the House floor for a vote. M4A makes a much better conceptual "talking point" on the campaign trail than actually having a CBO scored piece of legislation describing the economic reality of the matter.

Mycroft said:

People are not multi-functional cogs that can be taken out of a machine with the certainty that they will find a place in another machine.

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And? We gonna fight to maintain whaling jobs and swordsmiths?

ttwtt78640 said:

Reducing 18% of GDP by up to 40% is proposing a huge economic upheaval. Perhaps that is why no M4A bill is being allowed to come to the House floor for a vote. M4A makes a much better conceptual "talking point" on the campaign trail than actually having a CBO scored piece of legislation describing the economic reality of the matter.

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"Saving money is bad because it hurts the economy" certainly is a new hot take.

If those jobs only exist because of inefficiency in the system, then they're jobs that never deserved to exist in the first place.

Deuce said:

And? We gonna fight to maintain whaling jobs and swordsmiths?

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Did some government suddenly declare that whalers and swordsmiths would, from some moment on, be out of a job?

Mycroft said:

People are not multi-functional cogs that can be taken out of a machine with the certainty that they will find a place in another machine.

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That's a great point. This is why manufacturing should be socialized...to ensure that capitalism doesn't replace the human work force with automation. Way to think like a socialist!

OlNate said:

That's a great point. This is why manufacturing should be socialized...to ensure that capitalism doesn't replace the human work force with automation. Way to think like a socialist!

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LOL!!

So...instead of the OP suggesting that people are interchangeable machine cogs under government control, you suggest that the machines be under government control.

Me? I reject the government control thing.

Deuce said:

"Saving money is bad because it hurts the economy" certainly is a new hot take.

If those jobs only exist because of inefficiency in the system, then they're jobs that never deserved to exist in the first place.

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Yep, thank you for your 15 years of service as medical biller/coder now go pick strawberries, mow lawns or deliver pizzas. It's odd that folks don't often say the same about the jobs lost from the efficiency of Walmart or Amazon much less those that offshore their production facilities to lower labor cost nations.

Mycroft said:

LOL!!

So...instead of the OP suggesting that people are interchangeable machine cogs under government control, you suggest that the machines be under government control.

Me? I reject the government control thing.

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lol...hoped you'd get a laugh out of that.

And don't worry, I know.

Mycroft said:

Did some government suddenly declare that whalers and swordsmiths would, from some moment on, be out of a job?

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Whaling bans had an impact on whaling jobs, yes.

If healthcare jobs exist solely because our system is inefficient, then those jobs don’t deserve to exist. They’re redundant administrative jobs. We’re not talking laying off a million doctors and nurses here.

Administrative jobs can be more easily shifted to other industries.

ttwtt78640 said:

Yep, thank you for your 15 years of service as medical biller/coder now go pick strawberries, mow lawns or deliver pizzas. It's odd that folks don't often say the same about the jobs lost from the efficiency of Walmart or Amazon much less those that offshore their production facilities to lower labor cost nations.

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How about education assistance and long term unemployment while they transition?

Is your argument seriously “we should do things less efficiently because that supports jobs?” Because I wouldn’t mind flying half as much for the same pay. Just hire twice as many pilots.

Deuce said:

If healthcare jobs exist solely because our system is inefficient, then those jobs don’t deserve to exist.

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If you define the existence of these jobs as an inefficiency, then this is just a tautology.

Anyway, there seems to be a certain causal assumption underlying what you're saying that I don't think is correct. One can imagine some single or series of technological breakthroughs or new processes being devised such that some class of jobs is legitimately rendered unnecessary and the people in those roles are displaced. That's a natural, organic evolution based on the labor needs and/or productivity of an industry changing. And not an uncommon story historically. To the extent SP creates some administrative simplification, that would be part of the story here.

But that's not the real driver here. The driver would be giving an organization a 22% cut to its budget and saying "good luck, make this work." The useless class of redundants you're imagining would presumably be swept up in the resulting labor purge, but there's no basis for assuming it's restricted to them. That's the difference between organic evolution and indiscriminate, arbitrary cutting detached from any particular change in market conditions. "Financial clerks" as an occupational category in BLS data (which includes all billing and posting clerks) constitute about 1% of wages in hospitals. Streamlining billing processes, even if it allowed you to lay off every one of those people, doesn't get you to a place where you can weather a 22% revenue reduction.

In other words, it doesn't necessarily follow that just because you've intentionally created a financial situation in which mass layoffs become inevitable every one of those jobs eliminated in response is useless and doesn't "deserve" to exist.

That said, what does it mean for a job to "deserve" to exist? Who makes that determination?

Greenbeard said:

If you define the existence of these jobs as an inefficiency, then this is just a tautology.

Anyway, there seems to be a certain causal assumption underlying what you're saying that I don't think is correct. One can imagine some single or series of technological breakthroughs or new processes being devised such that some class of jobs is legitimately rendered unnecessary and the people in those roles are displaced. That's a natural, organic evolution based on the labor needs and/or productivity of an industry changing. And not an uncommon story historically. To the extent SP creates some administrative simplification, that would be part of the story here.

But that's not the real driver here. The driver would be giving an organization a 22% cut to its budget and saying "good luck, make this work." The useless class of redundants you're imagining would presumably be swept up in the resulting labor purge, but there's no basis for assuming it's restricted to them. That's the difference between organic evolution and indiscriminate, arbitrary cutting detached from any particular change in market conditions. "Financial clerks" as an occupational category in BLS data (which includes all billing and posting clerks) constitute about 1% of wages in hospitals. Streamlining billing processes, even if it allowed you to lay off every one of those people, doesn't get you to a place where you can weather a 22% revenue reduction.

In other words, it doesn't necessarily follow that just because you've intentionally created a financial situation in which mass layoffs become inevitable every one of those jobs eliminated in response is useless and doesn't "deserve" to exist.

That said, what does it mean for a job to "deserve" to exist? Who makes that determination?

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Medicare for all will increase the demand for health care services. So you tell me, where are these million jobs being lost from?

Deuce said:

Whaling bans had an impact on whaling jobs, yes.

If healthcare jobs exist solely because our system is inefficient, then those jobs don’t deserve to exist. They’re redundant administrative jobs. We’re not talking laying off a million doctors and nurses here.

Administrative jobs can be more easily shifted to other industries.

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I don't want the government making those decisions just because they want to take over an entire industry.

Deuce said:

Medicare for all will increase the demand for health care services. So you tell me, where are these million jobs being lost from?

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To be clear, the projections of net job losses are based on the assumption that single-payer would be designed to lower health spending. I don't personally believe that to be a justifiable assumption precisely because large-scale layoffs directly traceable to a government edict just don't strike me as being politically feasible.

If we were to ever go to something single-payer-like, I think the correct assumption is that it would lock in more or less whatever the status quo health spending/revenue is at that point in time and heavily constrain its growth going forward. The exact "bending the cost curve" approach health policy types have been pushing for many years.

In any scenario the mix of particular jobs and roles in the health sector is likely to evolve over time. The clinical and admin pieces of the pie can change their relative proportions over time in a very organic, evolutionary way (although growing utilization could create more utilization management roles in addition to more clinical roles, it all depends). I wouldn't expect that to occur in the short run; it takes time to train clinicians and admin roles could be pared over time without large-scale layoffs. That's not so much cause for concern.

The scenario contemplated in the OP is one in which we shrink the pie to start deflating the health sector. I've said before, SP is the inverse of a union: it's a monopsony buyer of labor that could be used to drive down wages and employment to save money. Some proponents talk about SP as though this is the way it'll be used; as I've said, I don't think it's likely to be used quite so aggressively, which is another way of saying I think the likely cost-savings are often over exaggerated (savings relative to our current spending level, I mean; savings in the long-run under SP due to lower growth relative to baseline could be quite real and substantial, though not quite as sexy as outright lower spending).

My point was that if you shrink the pie to an arbitrary size, there's no particular reason to think that the people you're losing to make the finances/math work are only those made obsolete by the concurrent changes you're making to administration. The two things are disconnected from each other.

Or, to your point about it just affecting jobs that don't "deserve" to exist, as Clint Eastwood said:

Mycroft said:

I don't want the government making those decisions just because they want to take over an entire industry.

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How about because they want to reduce the cost and make sure all citizens have access to a basic necessity.

Greenbeard said:

To be clear, the projections of net job losses are based on the assumption that single-payer would be designed to lower health spending. I don't personally believe that to be a justifiable assumption precisely because large-scale layoffs directly traceable to a government edict just don't strike me as being politically feasible.

If we were to ever go to something single-payer-like, I think the correct assumption is that it would lock in more or less whatever the status quo health spending/revenue is at that point in time and heavily constrain its growth going forward. The exact "bending the cost curve" approach health policy types have been pushing for many years.

In any scenario the mix of particular jobs and roles in the health sector is likely to evolve over time. The clinical and admin pieces of the pie can change their relative proportions over time in a very organic, evolutionary way (although growing utilization could create more utilization management roles in addition to more clinical roles, it all depends). I wouldn't expect that to occur in the short run; it takes time to train clinicians and admin roles could be pared over time without large-scale layoffs. That's not so much cause for concern.

The scenario contemplated in the OP is one in which we shrink the pie to start deflating the health sector. I've said before, SP is the inverse of a union: it's a monopsony buyer of labor that could be used to drive down wages and employment to save money. Some proponents talk about SP as though this is the way it'll be used; as I've said, I don't think it's likely to be used quite so aggressively, which is another way of saying I think the likely cost-savings are often over exaggerated (savings relative to our current spending level, I mean; savings in the long-run under SP due to lower growth relative to baseline could be quite real and substantial, though not quite as sexy as outright lower spending).

My point was that if you shrink the pie to an arbitrary size, there's no particular reason to think that the people you're losing to make the finances/math work are only those made obsolete by the concurrent changes you're making to administration. The two things are disconnected from each other.

Or, to your point about it just affecting jobs that don't "deserve" to exist, as Clint Eastwood said:

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So we’re not going to save money but a bunch of jobs are going to evaporate. Where the ****s the money go?

Deuce said:

So we’re not going to save money but a bunch of jobs are going to evaporate. Where the ****s the money go?

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No. To repeat: the projections of net job losses are based on the assumption that single-payer would be designed to lower health spending. If we lose the assumption that SP is going to save substantial amounts of money (i.e., if we accept that our health system costs $3.5 trillion and will continue to), then there won't be large-scale net job losses.

Greenbeard said:

No. To repeat: the projections of net job losses are based on the assumption that single-payer would be designed to lower health spending. If we lose the assumption that SP is going to save substantial amounts of money (i.e., if we accept that our health system costs $3.5 trillion and will continue to), then there won't be large-scale net job losses.

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Every single instance of universal healthcare on the planet costs substantially less than our current system. I see no reason to expect there would be no cost savings.

Deuce said:

How about because they want to reduce the cost and make sure all citizens have access to a basic necessity.

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I still don't want the government making those decisions.

Look, basic supply/demand/price tells us that an equilibrium point is reached when all three parts are only affected by consumer choice. When something other than consumer choice, say...government, decides to affect any or all of those parts, it causes problems. Equilibrium moves to an artificial point.

For example,

If government sets a price below equilibrium, demand increases and supply decreases. More people wanting health care and less of it being available.

If government sets demand above equilibrium and keep price the same, supply decreases. More people wanting health care and less health care is available.

If government sets supply lower than equilibrium and keeps price the same, demand decreases. Less health care is available.

That article is advocating the last example. Less people get health care. Is that what you REALLY want?

I don't understand what this guy is getting at, like at all. I feel that he doesn't understand the issue, and that's why it's so confusing.

There is no reason why people working in the pharmaceutical industry or hospitals would have to lose their jobs, aside from corporate BS. The only people who are really at risk of losing their jobs due to Medicare For All is the health insurance industry - which is all just administrative work, something that's easily transferable.

As others have already mentioned, the problem with our current healthcare system involves pricing being insane because of the for-profit system. People will still need healthcare, and the amount of people actually using hospitals or needing prescription medications is likely to increase, so I don't see why it would be a good idea to even think about getting rid of people in those areas. If this is actually an issue, and we're going to say that corporations being dicks is going to result in the loss of 2 million jobs, then we can just make it a fully nationalized system and take the profit motive out entirely.

:

Mycroft said:

I still don't want the government making those decisions.

Look, basic supply/demand/price tells us that an equilibrium point is reached when all three parts are only affected by consumer choice. When something other than consumer choice, say...government, decides to affect any or all of those parts, it causes problems. Equilibrium moves to an artificial point.

For example,

If government sets a price below equilibrium, demand increases and supply decreases. More people wanting health care and less of it being available.

If government sets demand above equilibrium and keep price the same, supply decreases. More people wanting health care and less health care is available.

If government sets supply lower than equilibrium and keeps price the same, demand decreases. Less health care is available.

That article is advocating the last example. Less people get health care. Is that what you REALLY want?


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Adorable Econ 101 there. ‘Everyone has access to healthcare’ somehow ended up with fewer people getting healthcare.

And it didn’t occur to you at all that maybe you are looking at this in an outrageously oversimplified fashion.

lets ask this: whats the demand for continuing to be alive?