The Healthcare Jobs Fallacy: Questioning Employment Growth in the Health Care Industry

June 7, 2012
by Doug Gavel

At a time of dismal job growth in America, the nation's burgeoning health care industry is one the few bright spots. But how should that reality affect the discussion about health care reform in the United States? That is the question asked in a new article co-authored by Harvard Kennedy School Professor Amitabh Chandra published in the latest issue of the New England Journal of Medicine.

"There is mounting evidence that our health care system could deliver better care without spending more and that there are tremendous opportunities for improvements in productivity — thus suggesting that the increase in resources devoted to health care has not generated commensurate value," write Chandra and co-author Katherine Baicker of the Harvard School of Public Health.

Baicker and Chandra dispute the notion that the growth of the health care industry is economically beneficial simply because it has created hundreds of thousands of new jobs in the U.S., arguing that important policy tradeoffs must be considered.

"Salaries for health care jobs are not manufactured out of thin air — they are produced by someone paying higher taxes, a patient paying more for health care, or an employee taking home lower wages because higher health-insurance premiums are deducted from his or her paycheck.\," they write.

"The goal of improving health and economic well-being does not go hand in hand with rising employment in health care," Baicker and Chandra argue. "It is tempting to think that rising health care employment is a boon, but if the same outcomes can be achieved with lower employment and fewer resources, that leaves extra money to devote to other important public and private priorities such as education, infrastructure, food, shelter, and retirement savings."

The article, "The Health Care Jobs Fallacy," is published in the June 6 issue of the New England Journal of Medicine.

Amitabh Chandra
is professor of public policy, and director of Health Policy Research at the Harvard Kennedy School. In 2011 he served as Massachusetts' Special Commissioner on Provider Price Reform. He is a Research Fellow at the IZA Institute in Bonn, Germany, and a Research Associate at the National Bureau of Economic Research (NBER). His research focuses on productivity and cost-growth in healthcare and racial disparities in healthcare.

Katherine Baicker is professor of health economics in the Department of Health Policy and Management at the Harvard School of Public Health. She is a research associate at the National Bureau of Economic Research and an elected member of the Institute of Medicine.

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Photograph of Professor Amitabh Chandra

Professor Amitabh Chandra

"The goal of improving health and economic well-being does not go hand in hand with rising employment in health care," Baicker and Chandra argue. "It is tempting to think that rising health care employment is a boon, but if the same outcomes can be achieved with lower employment and fewer resources, that leaves extra money to devote to other important public and private priorities such as education, infrastructure, food, shelter, and retirement savings."