Even with U.S. healthcare having the “most unfilled jobs of any industry,” the Biden administration is touting the highest “healthcare job growth in 32 years.” Job growth is always a good thing, or is it?
Much of this profligate spending went to healthcare, as evidenced by $4.5 trillion just on healthcare in 2023.
Consider who benefits when the commercial workforce grows. Three groups gain from such expansion: workers, consumers (also called customers, end-users, or patients), and the nation.
Hot-stock NVIDIA provides a useful demonstration. The company was founded in 1993 to bring 3D graphics to video games and the multimedia market. In the late 2000s, NVIDIA decided to leverage their coding expertise to become first-to-market leader in artificial intelligence (AI) technology. NVIDIA expanded its workforce creating a number of new jobs. (READ MORE from Deane Waldman: Medicaid Enrollees: The State Can Take Your House)
First, the new NVIDIA workers gain pride-of-employment as well as money. As a result of workers doing their jobs, consumers or in NVIDIA’s case end-users, gain value: they now have the advantages of AI in activities from purchasing and communication to decision-making in general as well as in military functions. All this commercial activity and consumerism increases Gross Domestic Product. National productivity goes up.
Does the same happen when healthcare jobs are created? It depends on the type of jobs created: clinical (doctors, nurses, physician assistants, nurse practitioners, aides etc.) or non-clinical (bureaucrats, administrators, rules, regulations, compliance, oversight, mandates, and enforcement, also known as BARRCOME).
A study of healthcare job growth from 1970 through 2009 shows the types of jobs that grew. The supply of physicians doubled, a 100 percent increase. Over the same time period, the number of healthcare administrators (non-clinical jobs) increased by more than 3,200 percent. In a sense, for every one new doctor, there were 32 new bureaucrats. Over the four decades, U.S. spending on its healthcare system increased by more than 2,400 percent.
The study cited above ended in 2010. It did not include effects of the Affordable Care Act (ACA) passed in 2010 but not implemented until 2014. The ACA greatly expanded healthcare non-clinical jobs at a cost of $1.76 trillion added to the national debt.
In 2023, the U.S. expended $4.5 trillion on its healthcare system, an amount greater than the entire GDP of Germany. Approximately half (!) of all U.S. healthcare spending went to pay for non-clinical jobs, which are paid first. What is left after bureaucrats are paid goes to pay providers. In other words, the healthcare system diverted two trillion “healthcare” dollars away from patient care.
As the government expands the non-clinical workforce, more healthcare dollars are diverted from care providers to pay for government bureaucrats and insurance profits. Less money for care means less access to care. So as the healthcare workforce expands, the end-users in healthcare — patients — experience reduced ability to get the care they need when they need it.
For the last four decades, Washington has been spending money at a faster rate than growth of GDP (Table 1). Much of this profligate spending went to healthcare, as evidenced by $4.5 trillion just on healthcare in 2023. This $4.5 trillion represented more than five times what was spent on national defense ($858 billion) in 2023.
In 1982, the U.S. for the first time had a national debt slightly more than $1 trillion, which was less than a third of GDP. It took 26 years for debt to exceed $10 trillion (2008) when debt was two thirds of GDP. Only nine years later, debt was slightly more than$20 trillion and debt was now greater — 102.6 percent — than GDP. Over the past six years, debt growth continued to outpace productivity, one definition of over-spending, with debt currently exceeding GDP (120 percent).
The U.S. is spending itself into the poorhouse. A large portion of this over-spending can be attributed to the expansion of the healthcare bureaucracy. This has badly damaged our ability to respond to national security needs such as China’s surging arms buildup and the collapse of our borders. In addition, this over-spending is dollar inefficient — it does not pay for what medical care is intended to do: provide care. (READ MORE: Insuring Illegals Takes Care from ‘Legals’)
Job creation in the expanding non-clinical healthcare bureaucracy is damaging to patients and to the country.
Deane Waldman, M.D., MBA is Professor Emeritus of Pediatrics, Pathology, and Decision Science; former Director of the Center for Healthcare Policy at Texas Public Policy Foundation; former Director, New Mexico Health Insurance Exchange; and author of the multi-award winning book Curing the Cancer in U.S. Healthcare:StatesCare and Market-Based Medicine.