Per this New York Times article, “even during months of stubborn unemployment, the health care industry has provided a solid underpinning, reliably adding jobs in an otherwise dismal environment.”

Is this good news? Generally “reliably adding jobs” sounds nice. But the article concludes by quoting Joshua Shapiro, chief United States economist at MFR, Inc. (Global Economic Consultants): “If spending on health care continues at its current pace, it will choke out other vital sectors and end up hurting the rest of the economy. I think the path that we’re on now is clearly unsustainable.”  

One of the justifications for the high cost of health care as a component of GDP in the US is that it creates jobs. On a macroeconomic level, this may be the case, but at what cost. And what will the outcome be if and when costs moderate due to political or budgetary mandates. How many hospitals are built on the funds provided by Medicare and what power does this spending yield? A recent posting  on MCNTalk focused on tremendous discounting and write-off from list price of a Medicare bill. Presumably this example precedes additional pending Medicare cuts under consideration.

Not discussed in the article is the impact of cost shifting  to the private sector, including most significantly the private group health insurance market, as well as other systems including workers’ compensation, accident related care and other areas that are not under Federal pricing guidelines. If cost shifting is inevitable and significant, as we predict it will be, rational employers and payers will continue to decrease their contributions to their employees’ healthcare, leading to a higher likelihood of a national health payment scheme, as many are hoping for but significant constituencies have to date defeated.

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