Cut Health Costs or Help Workers. You Can't Do Both.
The country seems fragmented as never before. And yet there are two things that everyone can seemingly agree upon: Something needs to be done about the parlous condition of the working class, and we need to get a handle on health-care costs.
Many a columnist has pointed out that neither party has a credible plan for actually addressing these problems, of course. Even in a year of surprising candidacies, there are no sound fresh ideas on these two fronts. All we have is solemn agreement that something ought to be done.
Allow me to suggest that the reason we have stalled out at the “something must be done” stage is that these two goals, seemingly as banal and uncontroversial as motherhood and apple pie, are in fact mutually exclusive. Each is a threat to the other.
Go to a Rust Belt city or a medium-size town somewhere and start talking to folks about how they’re doing. There’s something you’ll quickly notice about the people who tell you their family is doing OK: a whole lot of them work in health care. They are the registered nurses, the LPNs, the physical therapists, the home-health-care aides, the X-ray technicians, the phlebotomists. They work at a local hospital, or a nursing home, a doctor’s office, or maybe for the school system.
Their jobs are well-paid for their educational level and the local cost of living. The work is also very stable, for an aging society needs a lot of health care, and since it is generally reimbursed by third parties, demand does not fluctuate with the business cycle as strongly as, say, demand for hairdressing or construction. And if one employer should close down, there will always be another hospital or doctor’s office somewhere that needs workers.
Health-care jobs are for today what manufacturing jobs were for our grandparents: a guarantee that you’d never get rich, but never go hungry, either. (OK, some cardiac surgeons may get rich, but the majority of people working in the health-care field are doing something much less glamorous and well-remunerated.) There’s a defined set of skills and a clear career path. These jobs often involve an unpleasant amount of dealing with sick, cranky people and their bodily fluids, just as the manufacturing jobs of the 20th century involved an unpleasant amount of dirt and boredom. But they are “good, solid jobs” that you can count on for the next four decades or so, and you can't say that about many other fields.
I should say, you can count on those jobs if you believe, as I do, that the U.S. is not going to perceptibly cut health-care spending. Real savings would require cutting back on the number of those jobs, and the pay that those workers receive.
Much as we’d love to think that it’s all insurance company profits and outrageously priced “me too” drugs, the main reason that American health care costs so much is the number of procedures we do, and the price of those procedures. And health-care labor is a huge portion of those costs. For example, it makes up about half of hospital costs, despite the fact that hospitals are enormous buildings containing an awful lot of high-tech equipment and pricey medicines.
For the working class, cutting health-care costs would mean badly eroding one of the last islands of opportunity in an otherwise storm-tossed labor market. Fewer of those jobs would be available, and they would not pay as well.
That is apt to be unpopular. It is also apt to create problems in a community that already has quite enough of them.
We don’t have to worry about that, of course, when we’re in the “something should be done” stage. Then we can just paint a beautiful dream picture of a cheaper, better health-care system, serving, among others, a prosperous and stable working class. We can point to places and times when those things seemed to co-exist, and conjure up never-never policies to bring about that happy state.
But when it comes down to the serious business of actually making those things happen in the here and now, we may have to choose which one of those things we want more. And that will be a more bitter political fight than any we have yet seen.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the author of this story:
Megan McArdle at email@example.com
To contact the editor responsible for this story:
Philip Gray at firstname.lastname@example.org