Employment vs. Health Reform: A Real Conundrum

(MoneyWatch)  The House Democrats unveiled their full reform proposal today, and not a moment too soon. I say that not because of President Obama's deadline of having both houses of Congress pass bills before the August break. I say it because all the signs point to a continuing breakdown of the healthcare system. Just in the past week, for instance, it was reported that emergency rooms and community clinics in the greater Washington, DC, area are overflowing because the recession has cost so many people their health insurance. And in Michigan, the downturn is said to be dragging down the healthcare system, which had been one of the few bright spots in the state's sputtering economy.

On the other hand, the President's Council of Economic Advisors has just released a report predicting that healthcare jobs will be among those showing the biggest gains between now and 2016. A category called "other medical services and dentists," which includes employment in home health care, outpatient care and medical laboratories, is expected to add the most positions.

The healthcare industry has shed far fewer jobs than other industries in this recession. And the Obama Administration has been forecasting all along that reform legislation, by expanding coverage, will stimulate the healthcare sector. But if reformers really expect to cover the uninsured without increasing the budget deficit, they will have to raise taxes or whack a lot of healthcare spending. The House proposal would do both--although it's doubtful that the tax increase on the affluent will stick. If the tax hike doesn't survive the legislative process, the cost of government programs will have to be cut even more deeply. In that case, what will happen to the anticipated boom in healthcare employment? Don't hold your breath.

The reality is that real reform--financed mainly by improving quality and reducing the waste in the system--will eliminate jobs, not create them. Of course, we'll still need more home health aides and lab techs. But even in those areas, efficiencies will have to be introduced, because the current system is unsustainable.

The 1,000-page House bill contains some delivery-system reform, including pilot programs that would reward hospitals and doctors that improve their coordination of care. Meanwhile, the Senate Finance Committee is also delving into this essential area. We can only hope that a majority of both houses will emphasize a restructuring of the system in the final legislation. If they won't bite that bullet, then reform will go nowhere, and there will be more people overcrowding our ERs and public clinics. But even if they do, we will also have to figure out how to replace all of the jobs that will be wiped out as a result of reform.