Health Care in America: Employment Booms as Costs Skyrocket

For each physician, eight workers fill jobs unrelated to patient care

Partly due to the Patient Protection and Affordable Care Act (PPACA), the U.S. health-care industry now employs one in nine Americans––up from one in 12 in 2000, according to a report from Kaiser Health News. Moreover, an estimated 35% of the nation’s job growth has come from health care since the “great recession” hit in early 2007. Booming employment, however, has had its downside as a bloated system staggers under redundancy, inefficiency, and a growing number of jobs far removed from patient care.

Labor accounts for more than half of the $3.4 trillion spent on U.S. health care, and medical professionals from health aides to nurse practitioners are in high demand, the report says. But the sheer complexity of the system also has spawned jobs for legions of data entry clerks, revenue cycle analysts, and medical billing coders who must decipher arcane rules to mine money from human ills.

For every physician, there are 16 other workers in U.S. health care, and half of those 16 are in administrative and other nonclinical roles, according to Bob Kocher, a former Obama administration official who worked on the PPACA. He is now a partner at a venture capital firm in California.

“I find super-expensive drugs annoying, and hospital market power is a big problem,” Kocher said. “But what’s driving our health insurance premiums is that we are paying the wages of a whole bunch of people who aren’t involved in the delivery of care. Hospitals keep raising their rates to pay for all of this labor.”

Some of these back-office workers wage battles every day in clinics and hospitals against an army of claims administrators filling up cubicles inside insurance companies. Overseeing it all are hundreds of corporate vice presidents drawing six-figure salaries.

Administrative costs in U.S. health care are the highest in the developed world, according to a January report from the Organization for Economic Cooperation and Development. More than 8% of U.S. health spending is tied up in administration, while the average globally is 3%. America spent $631 for every man, woman, and child on health insurance administration for 2012 compared with $54 in Japan.

America’s huge investment in health care and related jobs hasn’t always led to better results for patients, but it has provided good-paying jobs, which is why the talk of deep cuts in federal health spending has many people concerned.

As President Donald Trump seeks to fulfill his campaign pledge to create millions more jobs, the health-care industry would seem a promising place to turn, the report notes. But Trump also campaigned to repeal the PPACA and lower health-care costs—a potential job killer. It’s a dilemma: one promise could run headlong into the other.

Source: Kaiser Health News; April 24, 2017.