The New York Times today reports rising concerns that the role of healthcare in fueling economic growth may be in jeopardy due to cuts contemplated in Medicare and Medicaid. This is old news for those who read my post a month ago. But today I want to focus on the implications of these trends for individual healthcare workers.
For almost 50 years, unemployment rates among males working in hospitals or other parts of the health services industry have been lower than for their counterparts in the rest of the economy (figure 16.3a). For these data, non-hospital health settings include nursing homes in addition to physician offices or other ambulatory settings.
In 2009 the overall male unemployment rate was 10.3 percent, compared to only 3.0 percent among hospital workers and 5.3 percent among those working in the non-hospital health services sector. In 2010, overall male unemployment had risen slightly to 10.5 percent, whereas unemployment among male hospital workers had grown to 3.3 percent and male unemployment elsewhere in the health services industry had climbed to 6.4 percent. In short, males in the health sector continued to have a margin of advantage over workers in the general economy, but the margin’s size had shrunk. By July 2011, overall male unemployment was down to 9.2 percent (not seasonally adjusted), and hospital worker unemployment among males was back to its 2009 average of 3.0 percent. Male unemployment among non-hospital health services workers was even lower than 2009, at 4.3 percent.
Will this margin of advantage in unemployment for male workers in the healthcare industry disappear anytime soon? Probably not. First, as I’ve explained previously, it is unlikely that Medicare payments to physicians will be slashed by 29.5 percent this January even though current law requires it. Indeed, the prospect is so unlikely that the Congressional Budget Office’s alternative fiscal scenario used to make long-term budget projections is based on the assumption that such cuts do not occur. Likewise, the Medicare actuary has estimated that if the massive cuts contemplated for Medicare are put into effect as scheduled under this new law, Medicare and Medicaid payment rates for inpatient hospital services will by 2020 be 40 percent below the rates paid by private health insurers. Does anyone seriously believe cuts this severe are likely to happen?
Second, even the baseline projections made by the Medicare actuary (i.e., assuming all these cuts do proceed as statutorily required) show that health spending will be higher if the new health law is fully implemented than if it were not. However, if the 2012 elections or a Supreme Court decision result in the law’s being eviscerated entirely, this will only reduce the average annual rate of growth in health spending by one-tenth of a percent over the next 10 years. In short, regardless of what happens to the healthcare law, the health economy is projected to grow well in excess of growth in the general economy. Thus, the mix of employment in healthcare may vary depending on whether or not hospitals sustain deep cuts in Medicare or Medicaid payments, but the overall number of people employed in healthcare seems destined to rise faster than number of civilian workers overall.
None of this implies a guarantee against layoffs for individual male workers in the health sector. But the odds of facing the unemployment line are assuredly lower than for other male workers, and this is a pattern likely to remain for many decades. Next week I will explain how this story differs for women employed in the health services industry.
Christopher J. Conover is a research scholar at Duke University’s Center for Health Policy and Inequalities Research and an adjunct scholar at AEI. The charts shown are from his new book American Health Economy Illustrated, to be released in January 2012 by AEI Press. See PowerPoint version of Figure 16.3a and Excel spreadsheet on unemployment by industry and sex for data, sources, and methods.