August 17, 2011
Cuts in Health Care May Undermine Role in Labor Market
By REED ABELSON and KATIE THOMAS
Even during months of stubborn unemployment, the health care industry has provided a solid underpinning, reliably adding jobs in an otherwise dismal environment.
For example, hospitals, nursing homes and the like added about 430,000 jobs during the recession, as the country shed 7.5 million jobs. With the latest government reports showing a meager overall gain of 117,000 jobs in July, health care remained a significant contributor with an additional 31,000 jobs for the month, a tad higher than an average monthly addition of 25,000 health jobs in the last year. Hospitals, which had a slight decline in June, added 14,000 jobs in July.
While few experts can predict how the stock market’s gyrations and government cutbacks this month will affect the health industry, several health industry analysts warn that the sector is showing signs of economic sluggishness that has long kept other business sectors beleaguered.
The situation has led many in the health industry to caution that it cannot be relied upon to keep hiring workers. “It’s not realistic to believe that we’re going to continue to generate job growth when you’re speaking about Medicare and Medicaid reductions in the hundreds of billions of dollars over the next few years,” said Daniel Sisto, president of the Healthcare Association of New York, which represents the state’s hospitals and health systems.
Companies that rely on government spending have been bracing for deeper reductions, and President Obama recently alluded to another round of belt-tightening from one of the industry’s bedrock payers — Medicare.
Signs of a gloomier outlook have been surfacing in various spots, from a slowing in new construction plans to falling share prices of nursing home companies to announced layoffs among hospital support staff.“Nobody is sure what will happen,” said Alan M. Garber, a physician and health policy expert at Stanford. The cuts in government programs like Medicare and Medicaid, and pressure to reduce costs, are thwarting health care employers in trying to meet the rising demand for their services.
“The health care industry is facing greater uncertainty than in any time in memory,” Dr. Garber said.