Health Care: Great for the Economy Today, Terrible Later

A BLEAKER FUTURE

In the short term, the Affordable Care Act will create even more health care jobs. But over the long term, it is likely to push down salaries, not in­­- flate them.

Some 40 million uninsured Americans stand to benefit from the law’s new subsidies in the next 10 years. And evidence suggests that once they get insurance, they’ll seek more care. At the same time, the programs to reduce utilization will exert significant downward pressure on health spending. Hospitals have begun facing penalties if too many patients who leave the hospital return within 30 days. Soon, doctors will begin earning bonus payments based on how their care measures up to quality standards.

In doctors’ offices, health care professionals are trying to work “at the top of their license.” Nurses, instead of doctors, administer flu shots. Medical assistants, instead of nurses, take patients’ vital signs. Medical assistants can check blood pressure. This transformation may not reduce the total number of jobs, but it could push the distribution of health professions down the income scale. You don’t need an M.D. to phone a patient and ask him his weight or remind him to come in for a blood test. Indeed, the fastest-growing subspecialty is home health. Aides in this field require minimal training and command low salaries, but they can help prevent the kind of catastrophic health problems that lead to expensive hospitalizations.

Sciulli, the young pharmacist, is already part of this experiment. Traditionally, hospital pharmacists have been cloistered in basement labs, where they accept orders, review charts, and fill prescriptions. Sciulli, by contrast, practices on a patient floor alongside doctors and nurses. He visits his patients daily to catch medication side effects, and he meets with them before they’re discharged so they understand what drugs they will need to take at home. “We’re able to follow the patients much more closely,” Sciulli says. The hope is not only that pharmacists’ increased involvement will reduce costly errors but also that it will shift some work traditionally done by doctors, who are more expensive. Meanwhile, pharmacy technicians—cheaper still—can do the simpler work of compounding and distributing drugs.

Recent evidence suggests that it may be possible to have a strong health care sector without cost spikes. The growth in national health care spending has been unusually low over the past three years, according to the Health and Human Services Department. In 2011, the most recent year with complete data, the growth matched that of the economy overall. Traditionally, labor costs have represented the majority of health spending, but in the future, hospital systems might be able to add jobs without adding as much total cost. The downside may be middle- and lower-class positions that will feel the economic pinch. According to an analysis by the local Service Employees International Union, which is trying to organize health workers in Pittsburgh, the median “health support” job in the region already pays less than what local economists deem a “self-sufficiency standard” in the state, a wage of $12.50 an hour. At those rates, workers are often struggling to pay their rent and leaning on public assistance, not boosting other industries.

Jim Staus, 51, has been working at UPMC’s Presbyterian Hospital in supplies—stocking hospital floors with syringes, gauze, and other essentials—for seven years. Born in Pittsburgh, he pursued an associate degree in a health care field because he thought it was where the opportunities lay; he came to his position after 10 years in a similar job at West Penn. But Staus still earns just $11.81 per hour, and his family relies on food stamps, heating assistance, and food pantries to make ends meet. It’s cause for disillusionment, he says. He’s hoping to organize with his colleagues and join SEIU, but for now, he doesn’t see himself leaving or getting promoted anytime soon. “With the economy the way it is, and the job situation, I’m kind of stuck,” he says.

Jeffrey Romoff, the CEO of UPMC, has overseen the rapid growth of his organization from a small community-hospital group into a health system with international clout. So far, his strategy has focused on leveraging payment systems to maximize revenue—building up high value Medicare services and using a consolidated market to extract maximum payment from private insurers. But he realizes that the old models will not yield continued growth in the new payment environment. Romoff hopes UPMC can pioneer other ways to thrive—and then sell those models to other hospitals. It has already started managing international hospitals, including facilities in Italy and Ireland. And Romoff sees steel as a cautionary tale: He watched a dominant industry that provided good-paying jobs essentially disappear after it failed to adjust to market changes. “You can’t argue in a growing economy for sustaining the status quo when the status quo is unsustainable,” Romoff says.

So while Pittsburgh and the country will enjoy the stimulative boost of health care spending for a few years more, a correction is coming. The economy will need to find other sources of growth or else face major problems.

Southwestern Pennsylvania may have already found its next big business, as local exploration has discovered the region’s rich energy reserves. Perhaps Sciulli’s children, too, may pave their own way—this time as “frackers.”

CLARIFICATION: An earlier version of this story reported Tia Tomasic’s salary as “about $45,000.” She told National Journal she earns between $40,000 and $50,000.

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This report is part of a series supported by a fellowship from the Association of Health Care Journalists.

This article appears in the Feb. 2, 2013, edition of National Journal as The False Promise.

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