Health care fix may hurt city

April 10, 2008|By Jim Jaffe

News this week that treating a dying Medicare patient at the Johns Hopkins Hospital costs 60 percent more than care at the Mayo Clinic - without yielding any extra health benefits - prompted Congressional Budget Office Director Peter R. Orszag to suggest health care may be "the least efficient sector of our economy."

The problem isn't that expensive hospitals charge more for a given test or procedure, but rather that they do a lot more of them. Efficiency means doing fewer marginal ones.

Raising this issue at a time of economic stress highlighted new data showing that job growth in America today is basically confined to the health and education sectors. That raises a red flag about the painful cost of imposing efficiencies in these areas despite chronic and growing public concerns about rising bills.

This is particularly true in Baltimore and other major cities that have become increasingly dependent on education and health, viewing them as opportunities rather than problems.

In the past decade, the number of jobs in the Baltimore area has grown by about 10 percent. But employment in education has increased more than twice as fast, and hospital employment - generally seen as good jobs with good wages and benefits - including health insurance, jumped 18 percent.

One in five jobs created here over the past decade is in health, education and other social services.

As a rule, when organizations become more efficient, they tend to add jobs more slowly than other fields do, a trend seen in agriculture a century ago and in airlines and autos in the past decade. Often, the number of jobs actually declines. The reformation of American medicine won't be able to avoid this rule.

Politicians are sensitive to the human cost of creating a more efficient medical system, but they seldom speak of it. Instead, they speak in general terms about reform and tend to focus on the need to expand services for the uninsured and to help the insured pay their bills.

It is possible to imagine a nation with universal health coverage that kept total costs and employment at current levels. But that wouldn't solve the budget-busting problem Mr. Orszag worries about.

In the political debate, some stress the need to make care more affordable to those now insured while others focus on expanding coverage. Efficiency offers a way to accomplish both these goals, but it won't be any more painless than it has been in other industries that have undergone major transformations.

Over time, the people squeezed out will find other jobs - just like those forced off the farm more than a century ago - and the economy will ultimately be a bit more competitive than it is now. But getting from here to there won't be easy.

There's an understandable reluctance to begin the process. During good times, we stretch a bit to pay for the inefficiencies to the system. During bad ones, like now, it seems callous and counterproductive to encourage a wave of job-losing reorganizations such as those occurring in financial services and construction.

Politicians won't talk seriously about it during the current campaign. Ultimately, though, we'll have to.

Jim Jaffe is public affairs vice president at the Center for the Advancement of Health, a non-partisan Washington health think tank. His e-mail is jimjaf@gmail.com.

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