ACA To Bolster Healthcare Sector Employment

Posted: March 23, 2011 by Julie Ritzer Ross

The Patient Protection and Affordable Care Act (ACA) will spark a modest boost in healthcare sector employment, but will have only a minimal net effect on overall employment, according to a recent report by the Urban Institute. The report contradicts assertions that the new law would place an undue burden on individual business owners, inducing them to reduce their labor force.

On the healthcare front, the study indicates that total net employment in the sector should see somewhat of an uptick as a result of the ACA, with wage increases expected as well. “The expansion of health insurance coverage through new Medicaid coverage and income-related subsidies will increase federal spending on healthcare” to $938 billion over the 10-year period from 2010 to 2019, and mostly from 2014 through 2019, write study authors John Holahan and Bowen Garrett.”This will result in increased demand for labor in the health sector, including increasing use of medical equipment, new technologies, and pharmaceuticals, and could lead to wage and salary increases in the health sector.”

The total number of people employed in the sector should also see a jump as a result of the ACA, the study says, but not to the degree some might expect and likely mitigated by other factors.  Specifically, the authors note, a larger number of patients with health insurance might lead to greater demand for healthcare services, but that demand will likely be offset to some extent by cost-containment and other forces stemming from healthcare reform.

“Spending reductions in Medicare and other government programs will partially finance health(care) reform,” Holahan and Garrett purport. “These reductions will have the opposite effect, reducing the demand for labor and the purchase of services and equipment in the health sector. The net effect, however, will be positive – higher net spending on healthcare services and more employment in the health sector.”

Meanwhile, study data peg the total increase in spending under healthcare reform for the period spanning 2010 to 2019 at 0.25% of the Gross Domestic Product, an amount Holahan and Garrett deem too small to have much economic impact..“It is almost impossible for the ACA to have a significant effect on the overall economy or on unemployment simply because the effect of net new federal spending on healthcare (over and above reductions on spending on Medicare and other government programs) is very small relative to the size of the economy,” the authors conclude.

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