04/05/2009 05:12 am ET Updated May 25, 2011

Is Health Reform a Job Killer?

Reformers interested in making American medicine more efficient should never ignore the story of Philadelphia department store magnate John Wanamaker, who's remembered for saying, "Half the money I spend on advertising is wasted; the trouble is I don't know which half."
We've progressed a bit in the decades since. Advertisers are now more sophisticated, which partly explains why Wanamaker's has disappeared (absorbed into Hecht's which subsequently became Macy's) and the Philadelphia newspapers that got the bulk of his advertising dollars are now at death's door.

At a time when the health industry is the largest employer in the Philadelphia area - and one of the very few adding jobs nationally - health research showing that better than 30% of Medicare spending is wasted or that America is spending $2100 more per person than it needs to should be viewed as a two-edged sword.

You don't have to be a Luddite or union organizer to acknowledge that efficiency inevitably costs jobs. Anyone who worked as a telephone operator, travel agent or stock broker a quarter century ago can provide evidence. And rhetoric about how such changes ultimately lead to a more robust economy doesn't put food on the table of those whose jobs disappear.

One of the few things that all reformers -ranging from Obama and Daschle and Orszag to Gingrich and the free marketeers of the right - agree on is that the system is inefficient, although they disagree on strategies on how to squeeze out the waste.

There's no doubt that our economy would progress and America would be more competitive if we could cap or even shrink the percentage of our national income - which now exceeds 16 percent, which the most any nation has ever spent and growing - allocated to health. Many people worry about that. Alarmists wonder whether spending 25 percent would be tenable.

But it is equally obvious that controlling costs by enhancing efficiency will cost jobs - popularly known as good jobs at good wages, often for minorities in inner cities who work in hospitals that the local economy depends on. No one talks about that.

Just a few years ago when economists where worrying about upcoming labor shortages, it was easy to contemplate how other employers would quickly soak up former health employees who became victims of the quest for greater efficiencies. Things look a bit different right now.

That's yet another reason why reforming the system in today's economic conditions will require a very delicate balancing act.

The majority of Americans with insurance are already understandably wary about making major changes. Telling them that hospitals may follow the path now being negotiated by newspapers and department stores will not allay their concerns.

Unless the plan responds to the layoffs that will ultimately be required public apprehension will grow and complicate the politics of the issue even further.

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