Health care reform that controls costs and modernizes American health care could create between 2.5 million and 4 million new jobs in the next 10 years, according to a new report by the USC-based Leonard D. Schaeffer Center for Health Policy and Economics and the Center for American Progress.
Neeraj Sood, director of International Programs at the Schaeffer Center and associate professor at the USC School of Pharmacy, and co-author David Cutler of the Center for American Progress examined the potential impact of current federal health care reform bills on job creation.
The study combines Sood’s model for estimating the health care costs’ effect on employment growth with Cutler’s work estimating the impact of reform on health care costs and insurance premiums.
The analysis predicts job creation under two scenarios. In the first, health care reform that succeeds in rapidly reducing growth in premiums leads to 400,000 new jobs annually. In the second, premiums are affected more slowly, resulting in 250,000 new jobs added per year. In both scenarios, declining insurance premiums trigger new employment opportunities across industries. For example, by 2016, reform could create more than 200,000 new jobs in manufacturing and nearly 900,000 jobs in the service sector.
“The real opportunity of health care reform is that the more aggressively it seeks to slow health care costs growth, the more jobs that could potentially be created,” Sood says.
The report, released January 8, identifies two important ways of lowering employer-provided health insurance premiums. The first is to establish insurance exchanges in which competition and lower administrative expenses help reduce premiums. The second is to change how hospitals and physicians are paid, a step often referred to as “provider payment reform.” The goal of supply-side provisions — such as paying for quality, but not paying for mistakes — is to create incentives that promote higher-quality, more efficient care.