Obamacare’s Perverse Job Creation Program

doctor-with-familyThe latest jobs report gave the stock market a boost and injected some optimism into public sentiment about our economic prospects. Unfortunately there’s a problem with the current employment situation that few understand: Obamacare has likely led to too many jobs in health care, drawing labor from more productive functions.

Dan Diamond of Politico reports jobs in health care have grown 23 percent since 2005, while jobs overall have grown only 6 percent. Much of this was driven by the collapse of non-health jobs in 2008-2010, while health jobs remained undisturbed. As the economy recovered, Obamacare kept layering jobs onto health care that did not actually improve health care:

“We knew our economy spends more than it should on health care,” says Bob Kocher, a venture capitalist who served as a special assistant to the president in 2009 and 2010 and helped shape the Affordable Care Act. “And we had good battles inside the White House” over whether to preserve health jobs — which were one of the biggest drivers of those costs, but kept Americans employed at a bleak economic time.

The resulting law — born at the very moment the economy was bottoming out — ultimately came down on the side of saving jobs.

Many of those jobs are effectively waste. “For every doctor, there are now 16 FTEs that are non-doctors,” Kocher said. “Nine of them are administrators — and it’s jumped from six” in the past few years.

(Dan Diamond, “Obamacare, the secret jobs program,” Politico, July 13, 2016.)

The article emphasizes cutting health costs will be difficult if more and more people are employed in health care. I would challenge that. If those jobs are in billing and administration, with relatively low incomes but good job security, they can be expanded while cutting health spending by imposing government policies that harm innovation. Price controls on prescription drugs or regulation impeding the adoption of labor-saving information technology (e.g. remote monitoring of patients at home) would be examples of such policies.

Let’s put it this way: If the federal government had controlled farming two hundred years ago the way it controls health care today, it would have sought to preserve all farming jobs. Today, 72 percent of the population might still be farming (instead of two percent). Just think of all the markets that would never have arisen.

Comments (5)

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  1. Big Truck Joe says:

    So apparently, if there are 16 FTEs per Doctor, the govt just needs to bring in more doctors and the unemployment rate will be 0. I just solved all our employment problems – ergo ipso facto ad infinitum.

  2. PJohnson says:

    @JohnG Some of your wording is awkward and unclear. You’re not suggesting price controls on drugs are you? A really bad idea as are price controls, period. What is clear is the explosion of non-doctors, particularly administrators under Obamacare. Lastly you cite there are other more productive jobs than healthcare. I don’t doubt that (and I was once a bench virologist in a major hospital). Can you list some of those in rank order.

    • Not at all. Policies that harm innovation, such as price controls, are politically easy because dollars saved can be used to beef up bureaucratic jobs that rely on government intervention to exist. Those office-holders will vote for the politicians that maintain the system.

  3. VA Surgeon says:

    Having seen an explosion in jobs creation at the VA in non-Clinical positions, I can attest to the obscene inflation of jobs in the government “Health Care” sector. Using the metric of “number of other employees per provider (Now that is MD, DO, PA & NP) is just a smoke screen. The Central Office of the Veterans’ Health Administration- in just 10 years- went from 800 employees to 11,000 employees! Mind you- not a single one of these people in the Health Care Field touch a single patient. This has allowed the Bush & Obama administrations to keep the unemployment figures low- while bloating our federal deficit to unsurvivable levels. A collapse WILL occur- on whose watch I do not know……

  4. […] disproportional increase in health services jobs deliberately caused by Obamacare may not be as big as previously […]