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A Project of The Annenberg Public Policy Center

Is Obamacare Causing Health Care Layoffs?

Rep. Cathy McMorris Rodgers blamed the Affordable Care Act for a recent loss of health care jobs, but she based her comment on a reported December downtick that was preliminary and minuscule at that, and that economists say had nothing to do with the new health care law.

In fact, the Affordable Care Act will increase health care spending, which is expected to increase health care jobs over time.

McMorris Rodgers, chair of the House Republican Conference, made her comments during a House Republican press conference (6:35 mark) on the heels of a monthly jobs report that noted a slight downturn in health care jobs in December.

McMorris Rodgers, Jan. 14: One of the things that stuck out for me in this jobs report was the fact that, for the first time in over a decade, the health care sector lost jobs, at the very time that we need more people; we need more doctors, we need more nurses, we need more therapists, across the board.

We’re seeing people lose their jobs in the health care fields; whether it’s hospitals or clinics, and it’s another impact of the president’s health care law on health care in this country and on people’s jobs. We can do better.

The monthly report from the Bureau of Labor Statistics offers a preliminary estimate that health care employment dropped by 6,000 jobs in December, and that is in fact the first time the health care sector has seen a monthly dip in more than a decade, as McMorris Rodgers said. But some perspective is in order. There were 14,661,300 health care employees in December, according to the BLS report. So a loss of 6,000 jobs is relatively small — a drop of just over 0.04 percent to be exact.

Economists say McMorris Rodgers is making a lot out of an awfully little.

“I think reading anything into a one month dip is silly,” Uwe E. Reinhardt, an economics professor at Princeton University, told us via email. “Statistical error alone could account for a good part of it.”

Dartmouth Economics Professor Jonathan Skinner noted that there has been “widespread skepticism” of the December jobs report, or at least views that it is an outlier. And the November and December figures from BLS are still preliminary.

“Most analysts expect the initial numbers to be revised, or at worst followed by strong growth in January and February,” Skinner told us via email.

Besides, Skinner said, when November (which saw a “robust” increase of 30,600 health care jobs) and December are combined, there was an average monthly increase of about 12,000 health care jobs.

BLS did note a slowdown in health care job growth in 2013. Employment gains in health care averaged 17,000 per month in 2013, compared with an average monthly gain of 27,000 in 2012, BLS reported. So the growth has been slower, but there has been steady growth nonetheless.

We have noted in the past that the growth of health care spending has slowed in recent years, a fact President Obama has frequently touted even though experts have said the main reason for slower growth in spending is the once-faltering and still-recovering economy, not the Affordable Care Act. As a result of that trend, economists say we should expect a commensurate slowing in the growth of health care jobs.

Reinhardt said McMorris Rodgers appears to suffer from “some uniquely American virus” that prevents people from seeing both sides of an economic equation — in this case, that lower health care spending is tied to health care jobs.

“For decades now we have thundered that we must control health spending and that health care breaks the federal budget,” Reinhardt said. “For reasons that have little to do with Obamacare, and that are still being researched and debated among health economists, the health care cost curve (really the annual growth in total and per capita health spending) has been bent downward, starting in 2002 and accelerating after 2007. Most economists now believe growth will not return to pre-2002 rates.

“So we should naturally have expected a slowing down of the growth in health care jobs (not the actual jobs), and even a dip in some years,” Reinhardt said.

Reinhardt believes that despite a small downturn in December, health care jobs will continue on an otherwise upward trajectory.

“My gut feeling is that health care jobs will continue to grow year after year in the future, but not at quite the rate as in the past 20 years, when health care was the greatest job creator in the U.S. economy,” Reinhardt said.

Economists say McMorris Rodgers was on even shakier ground when she tied the downtick to the Affordable Care Act. The new health care law is widely expected to increase health care employment.

The Centers for Medicare & Medicaid Services estimated that the Affordable Care Act would increase total national health care expenditures from 2012 to 2022 by about $621 billion.

CMS, National Health Expenditure Projections, 2012-2022: By 2022, the ACA is projected to reduce the number of uninsured people by 30 million, add approximately 0.1 percentage-point to average annual health spending growth over the full projection period, and increase cumulative health spending by roughly $621 billion.

Economists say more spending will mean more health care jobs.

Reinhardt said the ACA will increase health spending above what it otherwise would have been. “The added health spending is unlikely to translate itself just into higher prices,” he said. “Instead, the US health care labor force will be larger than it would have been in the absence of the ACA. If there had not been the other, non-ACA forces holding down the growth in recent-past and projected future health spending, then the ACA itself should make health care CEOs plan on an expansion of their workforce.”

The Congressional Budget Office did not estimate the number of jobs likely to be gained in the health care industry as a result of the ACA, but it has projected that the law will result in 32 million Americans gaining health insurance that they would not otherwise have, enabling them to buy more services from physicians and other health care providers.

Reinhardt said that “the ACA could be held responsible only if the hiring policies of providers of care were made in anticipation of the implementation of the ACA in 2014. But with newly insured patients coming on, why would anyone assume that fewer people are needed?”

Interestingly, a study often cited by Republican legislators from the National Federation of Independent Business Research Foundation — a report that dubiously projected 1.6 million job losses as a result of the ACA — estimated the law would result in 890,000 new health care jobs. (See page 20.)

NFIB Research Foundation, Jan. 26, 2009: The employer mandate would boost demand for healthcare goods and services, thereby increasing employment in healthcare-related sectors. The number of ambulatory healthcare professionals (physicians, dentists, and other healthcare practitioners) needed will increase by 330,000. An additional 327,000 staff will be required to work in hospitals. Some 157,000 more nurses (net of retirements) will be needed to staff doctors’ offices, outpatient clinics, and other provider locations. And payrolls at insurance companies will expand by 76,000 workers.

Skinner, the Dartmouth economics professor, said he didn’t know of “any evidence that doctors have lost their jobs because of Obamacare.”

We reached out to McMorris Rodgers’ press office for explanation of how the Affordable Care Act was responsible for a loss of health care jobs, but we did not hear back.

Update, Jan. 17: After we published our story, McMorris Rodgers’ office got back to us not with an answer, but with a question. “In December, for the first time in 10 years, the health care sector lost jobs,” said spokesman Nate Hodson. “Also, in December, for the first time in history, our health care industry was beginning to feel the consequences of a government-centered approach to health care reform that is impacting access to care. Coincidence?” As spelled out above, we concluded it is.

— Robert Farley