The Health Care Industry has Become a Major Employer in America Today

In this article, condensed from The Sunday New York Times, we learn that administrators essential to the proper dispensation of health care today have more than doubled hospital staffs, that these new employees are well paid and account for much of the skyrocketing increases in medical costs. Consequently it will be difficult to pare down the costs of health care without throwing lots of people out of work.

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By CHAD TERHUNE, April 23, 2017, for The New York Times

. . . But the country has grown increasingly dependent on the health sector to power the economy, and it will be a tough habit to break. Thirty-five percent of the nation’s job growth has come from health care since the recession hit in late 2007, the single biggest sector for job creation.

Hiring rose even more as coverage expanded in 2014 under the health care law and new federal dollars flowed in. The law gave hospitals, universities and companies even more reason to invest in new facilities and staff. Training programs sprang up to fill the growing job pool. Cities welcomed the development — and the revenue. Simply put, rising health spending has been good for some economically distressed parts of the country, many of which voted for Mr. Trump last year.

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The West Virginia University health system, for example, recently opened a 10-story medical tower in Morgantown and hired more than 2,000 employees last year. In Danville, Pa., the Geisinger Health System has added some 2,200 workers since July, and it’s trying to fill 2,000 more jobs across its 12 hospital campuses and insurance company. Out west, UCHealth in Colorado expanded its Fort Collins hospital and is building three new hospitals in the state.

In cities such as Pittsburgh, Cleveland and St. Louis, health care has replaced dying industries like coal mining and heavy manufacturing as a primary source of jobs.“The industry accounts for a lot of good middle-class jobs and, in many communities, it’s the single-largest employer,” said Sam Glick, a partner in the San Francisco office of Oliver Wyman, a consulting firm. “One of the hardest decisions for the new Trump administration is how far do they push on health care costs at the expense of jobs in health care.”

House Republicans, with backing from Mr. Trump, took the first swipe. Their American Health Care Act sought to roll back the current health law’s Medicaid expansion and cut federal subsidies for private health insurance. The plan faltered in the House, but Republican lawmakers and the Trump administration say they are again trying to draft a replacement for Obamacare.

Neither the Affordable Care Act nor the latest Republican bill tackles what some industry experts and economists see as a serious underlying reason for high health care costs: a system bloated by 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 American health care, and medical professionals like health aides and nurse practitioners are in high demand. But the sheer complexity of the system has also 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.

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For every doctor, there are 16 other health care workers. 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 Affordable Care Act and is now a partner in the venture capital firm Venrock. “I find super-expensive drugs annoying, and hospital market power is a big problem,” Mr. 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.”

Take medical coders. Membership in the American Academy of Professional Coders has swelled to more than 165,000, up 10,000 in the past year alone. The average salary has risen to nearly $50,000, offering a path to the American dream.

“The coding profession is a great opportunity for individuals seeking their first job, and it’s attractive to a lot of medical professionals burned out on patient care,” said Raemarie Jimenez, a vice president at the medical coding group. “There is a lot of opportunity once you’ve got a foot in the door.”

Some of these back-office workers wage battle 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.

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Administrative costs for the American health care system are the highest in the developed world, according to a January report from the Organization for Economic Cooperation and Development. More than 8 percent of domestic health spending is tied up in administration, while the average globally is about 3 percent. 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, data show. But it has provided good-paying jobs, which is why the talk of deep cuts in federal health spending has many people concerned.

Chad Terhune is a senior correspondent for Kaiser Health News and California Healthline, an editorially independent service of the California Health Care Foundation.

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