The Economy's Steady Pulse

Health-Care Sector Is Poised to Keep Expanding, but So Are Its Costs

Health care has become the beating heart of America's economy.

In the past 15 years, the health-care economy has pumped out 4.5 million new jobs, including related fields such as drug development and health insurance. A dozen of the 30 fastest-growing occupations are related to health care. Even last month -- as the unemployment rate took its biggest jump in 22 years -- health care continued to add thousands of jobs.

No other industry matches this rapid growth spurt. Globalization has closed factories. New technologies have shrunk retailers and agriculture operations. Few jobs have been created in the finance and insurance industry recently, with the exception of health and real estate. Then the housing bubble burst.

And despite the flashy success of Web 2.0 companies such as Google and Facebook, the current tech economy -- telecom, software, electronics and throngs of techie start-ups -- still employs fewer Americans than at the height of the dot-com boom.

The health-care economy is only bound to grow larger. The aging baby boomer population is about to spur a new wave of health-care needs. Advances in technology are improving the survival rate of terminally ill and injured patients, who need extended therapy and care.

The health-care economy now employs about 16.5 million Americans. In the past three decades, the total national spending on health care has more than doubled to 16 percent of the gross domestic product. The Congressional Budget Office forecasts that by 2082, rising health care costs will push that spending to nearly 50 percent.

On Monday, the Senate Finance Committee will host a day-long summit on health care, meant to help prepare legislators to wrestle with how they might approach reforming it.

Clearly, health care comes at a steep cost to the public and individuals. At the same time, it has brought about economic benefits, such as creating a second life for older manufacturing cities. Manufacturing, as a percentage of the GDP, has been cut in half in the past 30 years.

The auto industry has been steadily shrinking in greater Detroit, for example, shedding tens of thousands of car manufacturing jobs in the past decade. Ford plans to cut white-collar salary costs 15 percent by August, laying off an unspecified number of workers.

Next year, the Henry Ford Health System, named after the father of the modern assembly line himself, plans to open a $350 million community hospital that will employ 1,600 new hires.

Cleveland has emerged as a prime location for medical care and research. Longtime manufacturers, like machine-tool behemoth Warner & Swasey, that once dominated the region's economy, been replaced by the Cleveland Clinic and University Hospitals, two of the state's largest employers, and more than 500 companies providing medical goods and services.

"In this global economy, we knew we needed to stimulate a new economy in what we have skills in," said Baiju Shah, president and chief executive of BioEnterprise, which has helped develop the region's health-care industry. "Health care is one of those shining spots for Cleveland."