D. Dowd Muska


The United States of Healthcare?

August 25, 2011

Farmers, scrap your tractors. It was nice while it lasted, architects. Auto assemblers, hand in the safety goggles. You had a good run, stockbrokers.

Sorry, but the American economy will soon consist of a single industry: healthcare.

Don’t believe it? The New York Times reports that “hospitals, nursing homes and the like added about 430,000 jobs during the recession, as the country shed 7.5 million jobs. With the latest government reports showing a meager overall gain of 117,000 jobs in July, health care remained a significant contributor with an additional 31,000 jobs for the month, a tad higher than an average monthly addition of 25,000 health jobs in the last year. Hospitals, which had a slight decline in June, added 14,000 jobs in July.”

In September 2006, BusinessWeek documented the same phenomenon. “Since 2001,” wrote economist Michael Mandel, “1.7 million new jobs have been added in the health-care sector, which includes related industries such as pharmaceuticals and health insurance … . Meanwhile, the number of private-sector jobs outside of health care is no higher than it was five years ago.”

Bureau of Labor Statistics research reveals that between 1990 and 2010, healthcare jobs ballooned by 68 percent. That’s nearly three times the rise in population, and three and a half times faster than the increase in all employment.

The Congressional Budget Office (CBO), in a June analysis of the federal government’s runaway debt and unfunded liabilities, provided a longer perspective: “Measured as a total percentage of the nation’s gross domestic product … total spending on health care services and supplies increased from 4.8 percent in 1960 to 9.8 percent in 1985 and 16.5 percent in 2009.”

Okay, it’s an exaggeration to say that healthcare is on its way to becoming the only line of work in the U.S. But there are no indicators in the demographic data that indicate any retrenchment. Enhanced life expectancies mean that Baby Boomers will increase their visits to the doctor, swallow more prescription meds, and move into eldercare facilities at an accelerated pace. The old are getting older, and the young are getting fatter. According to the Centers for Disease Control and Prevention, “Obesity now affects 17 percent of all children and adolescents in the United States -- triple the rate from just one generation ago.”

Healthcare is an honorable profession/calling. Many of us who earn a living outside the field can’t imagine performing its everyday chores -- e.g., processing insurance forms, cleaning bedpans, refereeing spats between quarrelsome codgers, slicing into human bodies.

But there are legitimate concerns about the drag healthcare puts on innovation and economic growth. If a disproportionate share of the workforce is devoted to caring for the sick and aged, that’s fewer employees and entrepreneurs to invent new technologies, debug software, manufacture spacecraft, harvest timber, extract mineral resources, craft new investment strategies, record music, and write screenplays.

Two shifts are required to halt healthcare from enveloping the economy. The first involves self-control. Nanny State warriors are indeed a repellent lot, but their anecdotes and talking points are fueled by unarguably irresponsible behaviors. If more Americans drank in moderation, tossed out the cancer sticks, cut back on Ring Dings, intensified their exercise regimens (or for some, started to move long-dormant muscles), cultivated meaningful social interactions, and boosted prayer/meditation/relaxation, medical bills would plummet.

A certain measure of hard-livin’ is hardwired in the national psyche, but abusing our bodies would be less of an afterthought if we were forced to face the full cost of our recklessness. That’s why market-oriented reforms are the second essential tool to keep the healthcare-industrial complex in its proper place.

The CBO’s June report found that in 2009, an appallingly tiny 13 percent of healthcare expenses were directly paid by consumers. Charities picked up a smaller amount, with insurance companies meeting 34 percent and government reimbursement covering a staggering 50 percent. As economists John F. Cogan, R. Glenn Hubbard, and Daniel P. Kessler observed, “Using third parties to pay for health care is so pervasive that we accept it as a natural part of the health-care system. Yet there’s nothing natural about it. Food and shelter are even more basic to our well-being, but we don’t use insurance to buy bread or repair broken windows.”

The junk-policy pronouncements of central planners notwithstanding, there’s no “right” portion of the country’s economy that “should” be dedicated to healthcare. But liberals, neoconservatives, and libertarians largely agree that the trendline is scary. We can’t all be doctors, nurses, orderlies, pharmacists, physical therapists, claims adjusters, and Obamacare bureaucrats.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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