This Issue Brief discusses
factors that contribute to the growth of health care
expenditures and the reasons that many individuals,
employers, and policymakers consider health expenditures
too high. In addition, it describes various industries
that make up the health care delivery system and their
role in the U.S. economy as employers, producers,
exporters, and suppliers of research and development. The
report also discusses the economic implications of rising
health care expenditures for individuals, employers, and
the federal government and the potential impact of
proposed health care reform on the health care sector and
the U.S. economy as a whole.
Health care delivery industries
supplied 16 percent of net new jobs between 1980 and
1990. Related industries such as pharmaceuticals and
medical equipment suppliers have higher than average
research and development levels, in addition to a
positive balance of trade. Moreover, while the total
number of jobs in the private sector declined between
1990 and 1993, the number of jobs in the relatively high
paid health services sector continued to grow.
In aggregate, employer spending on
health care represents only 6.6 percent of total labor
costs. In comparison, wages and salaries represent 83
percent of total labor costs. Consequently, the growth
rate of health care expenditures has a smaller impact on
the growth rate of total compensation than does the
growth rate in wages and salaries.
Using job multipliers developed by
the U.S. Department of Commerce, it is estimated that the
18,600 health care services jobs in Rochester, Minnesota
in 1993 created another 32,000 jobs in the area. Any
contraction of the health care sector in cities that have
a large concentration of employment in health services
would result in reduced employment in restaurants, retail
stores, janitorial services, and other local businesses./li>
EBRI's simulations estimated that
between 200,000 and 1.2 million workers could become
unemployed as a direct result of a mandate that employers
provide health benefits to their employees, assuming that
wages and salaries did not adjust at all. Others find
that approximately 50,000 individuals would lose their
jobs, assuming that wages and other labor costs adjust
downward to completely account for increased costs. As is
apparent, the estimates of job loss (and of the total
costs of the policy) are extremely sensitive to the
assumptions used in the simulation.
