For decades, American policymakers have felt that too much of the nation’s economy was tied to healthcare. After all, the US spends much more on healthcare than other countries. The goal among many has been to reduce outlays tied to healthcare, with the logic being that diminished healthcare expenditures would free up resources for other parts of the economy.
We are now beginning to learn what the economic consequences of slower healthcare growth are and they are not unambiguously positive. Healthcare employment expanded last year more slowly than overall employment. In the past, healthcare employment has been a principal economic driver. The industry added jobs in every month from January 1990 through December 2013 except for 1 month in 2003.
In 2001, a year of national recession, total employment shrank 1.3 percent but healthcare employment expanded by 3.5 percent. But as reported in the New York Times, last year health industry payrolls grew by just 1.4 percent, almost a percentage point below the average annual increase during the decade prior to the 2007-2009 recession.