Cut Health Spending And We'll All Be Unemployed

A blog about business and economics.
Sept. 30 2012 10:05 PM

If We Reduced Health Care Spending, What Would Everyone Do?

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Ambulances are seen outside Muelligen Swiss Post center on late September 4, 2012 in Schlieren.

Photo by JEAN-MARC RAMEL/AFP/GettyImages

Here's a quick look at health care sector jobs as a share of the overall labor force:

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As you can see, it's both large and steadily growing over the period for which we have data. And yet if you compare the US in 2012 to the US in 1992, Americans on average possess more manufactured goods than we did twenty years ago. We have access to better food. Our houses are larger. There's less crime. So transferring all of these workers out of the health care sector and into something else looks pointless.

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Which is just another way of emphasizing that contemporary political rhetoric's obsession with constraining the overall volume of health care spending is misguided and arguably dangerous. This sector is the lynchpin of American employment growth. These days a medium-sized city is, to a first approximation, just the place where the hospitals are. We should worry about the cost-effectiveness of our spending, but we ought to do so for exactly the same reason we shouldn't worry too much about overall spending volumes—Americans have a very high material standard of living already, but we're not the healthiest people around and better health outcomes would be extremely valuable to have.  

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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