As Health Jobs Grow, a Prescription for Smart Growth

While health care moved the political agenda in 2010, jobs — and the nation’s lack of them — have become the overarching issue of 2011.

Both last year’s health reform law and this year’s jobs-creation proposals remain bound up in partisan debate. Last week, the Senate stalled on President Obama’s $447 billion proposal, which would be partly funded by $320 billion in health care cuts and has received no Republican support. However, the GOP’s own jobs proposal — which was released last week and would expressly repeal last year’s health reform law — isn’t expected to move forward either.

When it comes to health jobs, there’s no debate: The sector is booming.

The Bureau of Labor Statistics’ most recent employment report found that the health industry added nearly 44,000 jobs in September. For every eight jobs lost since the Great Recession began in December 2007, one new job has been created in the health care industry — the only sector to consistently add jobs each month. The rest of the U.S. economy has collectively lost 8.18 million jobs across that time. 

Looking at past BLS reports reveals that the gain in health jobs isn’t a short-term boom. The health sector has grown by 36% since September 2001. That’s a near-inversion of the U.S. manufacturing sector, which has shrunk by 33% across a decade.

BLS also forecasts that health care will add more than two million jobs by 2018. This is partly due to demographics; the agency predicts a surge in home health aides and nurses to care for an aging population.

Health Care’s Productivity Gap

Clearly, health care is the one sector that doesn’t need a jobs bill. But experts say the sector’s workforce model direly needs reforms.

Writing in the New England Journal of Medicine, Robert Kocher and Nikhil Sahni note several characteristics that are unique to the health workforce. More than half of U.S. spending on health care last year — about $1.46 trillion — went toward wages for the nation’s 16.4 million health care workers. Wages for these workers also grew at a 3.4% compounded annual rate between 2005 and 2010, even as they fell across other sectors.

But the industry’s boom is partly because today’s health workers aren’t any more productive than they were in 1990, the authors conclude. Measuring “output” as the number of tests, treatments and other encounters, the health sector has “experienced no gains over the past 20 years in labor productivity … unlike virtually all other sectors of the U.S. economy,” Kocher and Sahni write.

Instead, health labor productivity has declined by 0.6% annually since 1990, while manufacturing productivity — partly reflected through the sector’s shedding millions of jobs — annually rose by 4.7%.

Speaking with the Washington Post‘s Sarah Kliff, Kocher blamed fee-for-service reimbursement for health care’s productivity dip. For example, physicians “make more money by having more visits and doing more things” under fee-for-service, Kocher told Kliff. While the Affordable Care Act was designed to change payments and incent greater productivity, there’s no guarantee that its reforms will work as intended, he added.

In fact, while critics of the ACA’s cost generally focus on the law’s expansion of health insurance, Kocher and Sahni warn that the impact on health jobs will be a major driver of spending, too. If 34 million uninsured Americans receive health coverage as predicted — and the health workforce grows at a proportional rate without productivity improvements — the authors conclude that total U.S. health care costs will grow by $112 billion.

Getting Smarter on Workforce Planning

A new effort from the Bipartisan Policy Center — a think tank founded by four former Senate majority leaders from both political parties — echoes these concerns and proposes several initial solutions.

The first report from the BPC’s Health Professional Workforce Initiative recommends a more-coordinated approach to national workforce planning, partly through standardizing the methodology of jobs measurement and more direct federal guidance for states. The BPC also suggests conducting more evidence-based scenarios on the optimal mix of health care staffing.

Kocher and Sahni further suggest redesigning some of the reimbursement rules and requirements tied to staffing and practice, which can be extremely complex and add unnecessary staffing costs. For example, all imaging centers must have a physician constantly available for the 1-in-1000 chance that a patient will have a severe allergic reaction to a test; “surely other health care professionals could be trained to respond effectively” in such a scenario, they write, which would free physician time for more productive tasks.

Here’s a look at what else is happening in health reform.

On the Hill

  • Last week, the House Ways and Means Committee voted 23-12 to replace the federal health reform law’s method of calculating Medicaid eligibility with a more restrictive standard, which would make it harder for U.S. residents to qualify for the program and insurance subsidies under the reform law. The reform law states that an individual’s modified adjusted gross income — a calculation that excludes some Social Security benefits — will be used to determine Medicaid eligibility (Pecquet, “Healthwatch,” The Hill, 10/13).
  • Last week, Republicans unveiled a jobs-creation proposal that includes a provision to repeal the federal health reform law. The plan comes in response to criticism from President Obama that Republicans have not offered an alternative to the White House plan (Hennessey, Los Angeles Times, 10/13).
  • Last week, the House voted 251-172 to approve a bill (HR 358) that would amend the federal health reform law to increase restrictions on insurance coverage of abortion care. The bill also would expand protections for health care providers and facilities that refuse to provide abortion services (Attias, CQ Today, 10/13). The bill also would stop the government from withholding overhaul funds from providers because they refuse to participate in abortion care (Steinhauer, “The Caucus,” New York Times, 10/13).

Administration Actions

  • Last week, HHS announced that the National Health Service Corps — a federal program that places clinicians in underserved communities — has almost tripled in size from about 3,600 members in 2008 to 10,000 this year (Baker, “Healthwatch,” The Hill, 10/13). The program provides scholarships and loan repayments to health care providers who commit to practice for two to four years in underserved communities (Aizenman, Washington Post, 10/13). Funding provided by the federal health reform law and the 2009 economic stimulus package has allowed HHS to provide about $900 million to the providers, who serve about 10.5 million patients in underserved areas (“Healthwatch,” The Hill, 10/13).
  • Earlier this month, HHS postponed a decision on whether to grant a medical-loss ratio waiver to Georgia. Under the MLR rule in the federal health reform law, private insurers are required to spend at least 80% in the individual market or 85% in the group market of their premium dollars on direct medical costs. Georgia expected HHS to make a decision last week, but the agency delayed the verdict until Nov. 9 or earlier (Pecquet, “Healthwatch,” The Hill, 10/7).

Challenges to Reform

  • Last week, the National Federation of Independent Business — one of the plaintiffs in the multistate lawsuit challenging the federal health reform law — filed a brief with the U.S. Supreme Court reiterating that the law’s individual mandate is unconstitutional. The group said a federal appeals court opinion in August correctly ruled that the mandate exceeds congressional authority. NFIB also noted that if the mandate is upheld, “well-established precedent holds that there would be no judicially recognizable limit on what purchases Congress could compel” (Norman, CQ HealthBeat, 10/14).

In the States

  • Several Democratic governors are seeking to implement measures that go beyond the requirements of the federal health reform law, but they face a complicated task of implementing the law and seeking permission to opt out of certain elements. For example, Oregon has approved its own health reform plan — which would overhaul physician payments and allow public employees to enroll in Medicaid — but needs the Obama administration to grant the state waivers to pursue such reforms. Meanwhile, Montana Gov. Brian Schweitzer (D) announced plans to apply for a waiver from the overhaul’s mandate to establish a state-based health insurance exchange to create a single-payer health insurance system in the state. The Obama administration maintains that it is open to ideas that diverge from the federal health reform law (Kliff, Washington Post, 10/16).

Rolling Out Reform

  • Last week, House Republicans questioned a proposed regulation under the federal health reform law that would require insurers to submit claims data to justify extra payments for plans that cover large numbers of individuals with serious illnesses. Rep. Tim Huelskamp (R-Kan.) and other representatives sent a letter to HHS Secretary Kathleen Sebelius urging her to reject the proposed rule. In a blog post, Steve Larsen — director of the Center for Consumer Information and Insurance Oversight — explained that the proposed rule outlines “general options for collecting information” and added that CCIIO has not begun work on the project (Pecquet, “Healthwatch,” The Hill, 10/13).
  • Last week, HHS sent consumer groups an email cautioning them about a private website that poses as an official information hub for the federal health reform law’s Pre-Existing Condition Insurance Plan. The email states that consumers are “strongly urged not to submit any personal information requested by this website under the assumption that it is a government website.” Although the website includes a small disclaimer that it is not maintained by the PCIP program or any government agency, it does not disclose who runs the website or provide any additional contact information beyond a toll-free number (Millman, Politico, 10/12).
  • Last week, the Obama administration announced that 37 states and the District of Columbia have expressed interest in participating in demonstration projects designed to improve health outcomes for U.S. residents eligible for both Medicaid and Medicare (Pecquet, “Healthwatch,” The Hill, 10/11). In July, the CMS Medicare-Medicaid Coordination Office — which was created by the federal health reform law — asked states to participate in efforts to improve care for the estimated nine million dual eligibles (Daly, Modern Healthcare, 10/11). States had until Oct. 1 to indicate interest in a pilot program to test new payment and service delivery models (“Healthwatch,” The Hill, 10/11). A CMS spokesperson said the agency plains to refine the states’ proposals this fall and implement them next year (Modern Healthcare, 10/11).

Studying Reform Law’s Effects

  • A recent American Action Forum study suggests that the federal health reform law will dramatically reduce the number and variety of health care plan choices and benefits available to Medicare Advantage beneficiaries, leading to a “huge reduction” in enrollment. According to the study, enrollment in MA — currently 12 million — will be reduced by half by 2017. It also found that changes to MA plan payments under the overhaul will result in 152 U.S. counties losing all access to MA plans and beneficiaries having on average 66% fewer plans from which to choose. Further, the study found that by 2017, the average MA beneficiary who enrolled prior to the health reform law will lose about $3,700 in health care services annually (Reichard, CQ HealthBeat, 10/13).

Opposition to Reform

  • Repealing the federal health reform law is the most popular of a number of federal deficit-reduction proposals that the Tea Party Debt Commission plans to present during a congressional hearing next month. The commission was established by FreedomWorks, a leading tea party organization led by former House Majority Leader Dick Armey (R-Texas). To develop the proposals, the commission gave presentations on the budget deficit at nine hearings with tea party supporters across the country. The group also solicited suggestions to address the deficit. About 93% of the more than 40,000 visitors who voted on the deficit-reduction suggestions on the commission’s website supported repealing the health reform law (Zernike, New York Times, 10/17).
  • Republican groups are making plans to dismantle the federal health reform law in the event that the GOP wins control of the Senate and White House in the 2012 elections. Advocates are urging the GOP presidential candidates to commit to fully repealing the overhaul, while conservative health care experts are developing an alternative to the law to deflect criticism that the GOP’s reform plans would leave millions of U.S. residents without health coverage. At this point, none of the leading Republican candidates have offered a replacement health reform plan (Levey, Los Angeles Times, 10/17).

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