Health care and jobs: Mixed news from Massachusetts

at 10:37 AM ET, 09/09/2011

The health care industry didn’t get much attention in President Obama’s jobs speech last night, but perhaps it should have. For over a year now, health care has led all other sectors in job creation. In August, health industries added 30,000 new positions, even as job creation in the overall economy flatlined. All told, the health care sector has created more than 300,000 jobs since this time last year, and that’s likely to continue: Just this morning, HHS Secretary Kathleen Sebelius announced $700 million in new funds for building community health centers.

Unfortunately, health-care job growth isn’t always good news — and oftentimes it can mean higher costs. A new report on Massachusetts’ experience with health reform, published in this week’s New England Journal of Medicine, offers a great case study on why this is.

On the surface, the NEJM study looks to be great news for Massachusetts: health care jobs in the state have grown much faster than in the rest of the country since its reform law passed. “Had health care employment in Massachusetts grown at the same rate as in the rest of the country, approximately 18,000 fewer people would have been employed in health care by 2010,” the study authors conclude. Here’s what that looks like, in graph form:

But the study actually isn’t good news when you look into what type of health jobs propelled this strong growth. Most of it, the study authors conclude, came from an increase in administrative positions, jobs like billing specialists and office support staff. It’s quite likely that more people with health insurance mean more resources necessary to bill insurance companies and administer the business of health care.

An increase in those kind of jobs is great for employment. But it’s not so great for health care costs. It’s part of the reason that American doctors have administrative costs four times higher than their Canadian counterparts. It likely contributes to growing health care costs that have eaten up nearly a decade worth of increased earnings. And it’s why, at the same time that health care jobs increase, we also have graphs like this:

 
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