Job loss claims are misleading, and substantial boosts to job quality are often overlooked
By Josh Bivens
Economic Policy Institute, March 5, 2020
Fundamental health reform like “Medicare for All” would be a hugely ambitious policy undertaking with profound effects on the economy and the economic security of households in America. But despite oft-repeated claims of large-scale job losses, a national program that would guarantee health insurance for every American would not profoundly affect the total number of jobs in the U.S. economy. In fact, such reform could boost wages and jobs and lead to more efficient labor markets that better match jobs and workers. Specifically, it could:
- Boost wages and salaries by allowing employers to redirect money they are spending on health care costs to their workers’ wages.
- Increase job quality by ensuring that every job now comes bundled with a guarantee of health care—with the boost to job quality even greater among women workers, who are less likely to have employer-sponsored health care.
- Lessen the stress and economic shock of losing a job or moving between jobs by eliminating the loss of health care that now accompanies job losses and transitions.
- Support self-employment and small business development—which is currently super low in the U.S. relative to other rich countries—by eliminating the daunting loss of/cost of health care from startup costs.
- Inject new dynamism and adaptability into the overall economy by reducing “job lock”—with workers going where their skills and preferences best fit the job, not just to workplaces (usually large ones) that have affordable health plans.
- Produce a net increase in jobs as public spending boosts aggregate demand, with job losses in health insurance and billing administration being outweighed by job gains in provision of health care, including the expansion of long-term care.
The upshot: M4A creates a small amount of manageable churn but increases the overall demand for labor and boosts job quality.
The job challenge relating to a fundamental health reform is managing a relatively small increase in job churn during an initial phase-in period. Most Medicare for All plans explicitly recognize and account for the costs of providing these workers the elements of a just transition. This sort of just transition is far easier when health care is universally provided.
Besides this challenge, the effect of fundamental reform like M4A on the labor market would be nearly uniformly positive. The effect of a fundamental reform like M4A on aggregate demand is almost certainly positive and will therefore boost the demand for labor. The number of jobs spurred by increased demand for new health care spending (including long-term care) will certainly be larger than the number displaced by realizing efficiencies in the health insurance and billing administration sectors.
Finally, the introduction of fundamental health reform like M4A—particularly reform that substantially delinks health care provision from specific jobs—would greatly aid how the labor market functions for typical working Americans. Take-home cash pay would increase, job quality would improve, labor market transitions could be eased for employers and made less damaging to workers, and a greater range of job opportunities could be considered by workers. The increased flexibility to leave jobs should lead to more productive “matches” between workers and employers, and small businesses and self-employment could increase.
Fundamental health reform would benefit typical American families in all sorts of ways. Importantly, contrary to claims that such reform might be bad for jobs, this reform could substantially improve how labor markets function for these families.
Full report (13 page PDF):
By Don McCanne, M.D.
We frequently hear about the economic catastrophe that would occur if we wiped out employment in the private health insurance industry. But is that true?
This important report by Josh Bevins of the Economic Policy Institute describes the tremendous societal benefit from moving those jobs to more productive sectors while eliminating job-lock, giving individuals much more freedom in choosing their occupations, including more options for self-employment and small business development. The gain in employment in the health care delivery system should provide greater job satisfaction because you are helping people with their health care needs rather than being stuck in an administrative occupation in an industry that profits by reducing patient access to health care – not exactly a job that generates pride in your work.
This report should be downloaded to be used in your advocacy work for health care reform. The health insurance industry job loss that people worry about is far more than offset by the beneficial impacts of this transitional job churn. Not only would everyone have affordable health care though single payer Medicare for All, society will also benefit from the positive effects on the labor market.
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