Thursday, April 17, 2008

Health care and the economy -Best Kept Secret: Health Care is Good for the Economy

For many residents of Bangor, the hospital is replacing the mill as the passport to the middle class. This trend extends nationally, and it could help blunt the faltering U.S. economy. Demand for health care tends to stay strong during recession. Cash-strapped consumes are more likely to cut back on new appliances or cars than visits to the emergency room.

Conor Doughtery, “Factories Fading, Hospitals Step In,” Wall Street Journal, April 15, 2008

To hear politicians tell it, health care in the U.S is in a doleful state – unfair, unaffordable, inaccessible, uncoordinated, and uncommonly and unnecessarily complicated.

Yet if you speak to the local chambers of commerce, business groups, employer recruiters, or economists-in-the-know, they’ll tell you health care is the biggest employer in town – bigger than oil in Houston, bigger than the Street in New York City, bigger than education in Boston, bigger than insurance in Hartford, bigger than the furniture industry in North Carolina, bigger in Nashville than state government, bigger in Arkansas than chicken , bigger than Hollywood in L.A., bigger than manufacturing almost everywhere you care to look.

In the U.S. from 1998 to 2007, manufacturing fell from 14% to 10% of those employed, while health care rose from 9.5% to 11.5%. Last year, manufacturing lost 310,000 jobs. Health care gained 363.000. In places like Duluth, health care now employs 20% of all workers, up from 14% five years ago. In Minnesota as a whole – thanks to United Healthcare, Medtronic, the Mayo Clinic, and countless other health related firms in Medical Alley – health care is by far the dominant employer. In Bangor, Maine, from 1990 to 2007, manufacturing jobs fell from 16% to 6%, while health care positions rose from 12% to 20%. And so it goes in almost every city and region in the US.

Health care differs in some ways from manufacturing. Entry level jobs pay less, and wage differentials from workers and top doctors and hospital administrators tend to be greater. Health care requires more education. You can’t just step off the street into a job.

And if Democratic politicians have their way, health care may grow even faster, as more federal monies are pumped into the system. It’s going to happen with Republicans, too, as market-based health care grows. There’s no getting around it. As Americans age, they require and demand more health care. So relax, you doctors out there. You’re in a growth industry

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