Friday, February 26, 2016

The tension between helping the working class and cutting healthcare costs

Go to a Rust Belt city or a medium-size town somewhere and start talking to folks about how they’re doing. There’s something you’ll quickly notice about the people who tell you their family is doing OK: a whole lot of them work in health care. They are the registered nurses, the LPNs, the physical therapists, the home-health-care aides, the X-ray technicians, the phlebotomists. ...

Their jobs are well-paid for their educational level and the local cost of living. The work is also very stable, for an aging society needs a lot of health care, and since it is generally reimbursed by third parties, demand does not fluctuate with the business cycle as strongly as, say, demand for hairdressing or construction. And if one employer should close down, there will always be another hospital or doctor’s office somewhere that needs workers.

Health-care jobs are for today what manufacturing jobs were for our grandparents: a guarantee that you’d never get rich, but never go hungry, either. (OK, some cardiac surgeons may get rich, but the majority of people working in the health-care field are doing something much less glamorous and well-remunerated.) ...

Much as we’d love to think that it’s all insurance company profits and outrageously priced “me too” drugs, the main reason that American health care costs so much is the number of procedures we do, and the price of those procedures. And health-care labor is a huge portion of those costs. For example, it makes up about half of hospital costs, despite the fact that hospitals are enormous buildings containing an awful lot of high-tech equipment and pricey medicines.

For the working class, cutting health-care costs would mean badly eroding one of the last islands of opportunity in an otherwise storm-tossed labor market.
--Megan McArdle, BloombergView, on one man's cost being another man's revenue