Rapid Rise in Health Care Costs Linked to Job Losses and Lower Output

Posted by Digby, Hullabaloo at 2:41 PM on July 23, 2009.

In a first-of-its-kind study, the non-profit Rand Corp linked the rapid growth in U.S. health care costs to job losses and lower output. The study, published online by the journal Health Services Research, gives weight to President Barack Obama’s dire warnings about the impact of rising costs if Congress does not enact health care reform.

The Rand researchers examined the economic performance of 38 industries from 1987 through 2005, in an attempt to assess the economic impact of “excess” growth in health care costs on U.S. industries. Excess growth is defined as the increase in health care costs that exceeds the overall growth of the nation’s GDP—a yearly occurrence in the U.S. The team compared changes in employment, economic output and the value added to the GDP product for industries that provide health benefits to most workers to those where few workers have job-based health insurance.

After adjusting for other factors, industries that provide insurance had significantly less employment growth than industries where health benefits were not common. Industries with a larger percentage of workers receiving employer-sponsored health insurance also showed lower growth in their contribution to the GDP...

This study provides some of the first evidence that the rapid rise in health care costs has negative consequences for several U.S. industries,” said Neeraj Sood, the study’s lead author and a senior economist at RAND. “Industries where more workers receive employer-sponsored health insurance are hit the hardest by rising health care costs.

To rule out the possibility that the economic effects were caused by some other industry-wide factor, the researchers compared U.S. industries with their counterparts in Canada, which has publicly financed universal health care. They found no similar percent change in employment in the corresponding Canadian industries over the 19-year study period.

Sadly, I'm afraid that many people will feel that the only logical response to this is for fewer employers to offer health insurance.

Bring on the Cato Plan.

Tagged as: health, health care, health insurance, public option

Digby is the proprietor of Hullabaloo.