Now that the Steamroller has been shown that it may be necessary to remove some of the base course before a road’s surface course can be smoothed over, I’ve downloaded some detailed annual average data for 2005 to show why New York’s health care industry is so expensive. As I showed in this post – it isn’t because most health care workers, aside from hospital and nursing home workers represented by Local 1199 and perhaps some top administrators, are overpaid once the cost of living and overall wage levels are adjusted for. They are by and large either fairly paid (nurses) or underpaid (physicians, home care workers). The problem is there are so many of them in particular categories and, perhaps, in New York Medicaid is paying for services for the non-poor that elsewhere others do without or pay for themselves.
As shown in the attached spreadsheet, New York City had 6,385 private Health Care and Social Assistance sector workers per 100,000 residents in 2005, 32.1% higher than the national average of 4,835. At that national average, the city would have had 127,356 fewer people working in that sector. The actual New York City total was nearly 525,000. The rest of New York State had 5,796 private Health Care and Social Assistance workers per 100,000 residents, 19.9% more than the national average. At that national average the rest of the state would have had 106,774 fewer people working in the sector.
Health care now accounts for 17% of the U.S. economy and rises each year, taking away from the resources available for everything else. In part this is a choice, as new technologies allow longer, healthier and more productive lives, which people value more highly than other goods and services. But in part people have no choice — the money is taken from them up front by government tax collectors and private insurers, and they have only to decide whether they want to demand more or fewer of the services they will have to pay for anyway. The health care industry is always there to encourage them to consume more. In New York City they do consume more, but not in every category.
As the industry detail shows, the additional New York City workers are not in primary and preventive care industries. In industries such as the Offices of Physicians and Offices of Other Health Care practitioners the city’s employment was below the national average relative to population, often substantially so. This was only partially balanced by a relatively large number of people working in the Outpatient Care Center industry. The rest of New York State has more people working in health care offices and clinics than average, but these additional workers account for a small share of the area’s excess health care employment.
Both New York City and the rest of New York State have far more people than average working in industries that provide services to the disabled and troubled. For example, New York City had 216 people per 100,000 residents working in the private Residential Mental Health Facilities industry, compared with 167 nationally and 341 in the rest of the state. And NYC had 111 people per 100,000 residents working in the private Emergency and Other Relief Services, compared with 44 nationally and 53 in the rest of the state. Even so, the group homes and social work agencies only employ about 28,700 additional people in New York City and 30,000 in the rest of the state, about a quarter of the total overage.
Most of the overage is in two categories – Hospitals, and industries providing personal care for the elderly and, to a lesser extent, the disabled.
New York City’s private hospitals employed 1,825 people per 100,000 residents, 25.8% higher than the national average of 1,451; at the national average NYC’s hospitals would have employed 30,738 fewer workers. Some of this is explained by residents of other places that receive hospital care in New York City. Some of it may be explained by lower efficiency. And some of it is related to the city’s low employment in primary care, with city residents receiving care in hospitals that they could have received elsewhere.
The rest of New York State had 1,621 people working in hospitals per 100,000 residents, also above the national average, but this is misleading. As I showed in the spreadsheet attached to this http://www.r8ny.com/blog/larry_littlefield/new_public_employment_and_payroll_data_shows_spitzer_s_budget_the_best_of_the_three.html post, New York City’s high private hospital employment is compounded by high public hospital employment, with 488 full time equivalent local government hospital workers per 100,000 residents compared with a national average of 177. The rest of New York State totaled just 48, mostly offsetting higher private hospital employment. Still, given that many residents of Westchester and Nassau go to places like Montefiore and Long Island Jewish in New York City for hospital care, the rest of the state may have a smaller excess as well. Most of the excess, however, is in New York City (which accounts for 76 percent of NY State Medicaid hospital expenditures).
Where New York City really stands out is in at-home care services for the elderly. New York City had 558 Home Health Care industry workers per 100,000 residents, more than double the national average of 276, and more than 23,000 workers than it would have had at that average. And the city had 1,003 workers in the (non-medical) Services for the Elderly and Disabled industry per 100,000 residents, 6.6 times more than the national average of 151, and nearly 70,000 more than would have been employed at that average. The latter industry corresponds with the Personal Care category of Medicaid expenditures. Despite the huge number of people working in at-home care, the city also had slightly more Nursing Home industry workers per 100,000 residents than the national average. As noted in prior posts, I’m skeptical given this experience that more at-home care can reduce nursing home costs. People only go to nursing homes when they have to, particularly to rooms with double occupancy. Evidently they have a greater needs housecleaning, shopping, cooking and similar domestic services in New York City than elsewhere, whether they require nursing home care or not.
The rest of New York State had 287 employed in the Services for the Elderly and Disabled industry per 100,000 residents, nearly double the national average, and slightly more home health care workers as well. Nonetheless, the rest of the state also has 740 Nursing Home workers per 100,000 residents, nearly 40% more than the national average of 530. And that is in the private sector — some upstate counties have public nursing homes as well, like the one I volunteered at when I was in college.
Because Medicaid Nursing Home costs are concentrated outside New York City, the state only forced local governments to pay 10% of the total. Because Medicaid home care costs and hospital costs are concentrated inside New York City, the local share is 25%. This provides a strong incentive for the rest of the state to prefer nursing homes to home care, if there is in fact a tradeoff between them, to minimize the cost they have to pay. On the other hand, the state as a whole could benefit from having those who really require nursing home care housed in low-cost Upstate, where workers could enjoy a lower cost of living and the state could pay less for care.
What are we to make of all this? Perhaps in New York State the elderly, like schools in the rest of the state, count for much more than taxpayers, children in New York City, and the future, and funds are allocated accordingly. Perhaps families in New York State are more likely to consign the care of their aging relatives to the government than those elsewhere in the country, a dilemma I wrote about here http://www.r8ny.com/blog/larry_littlefield/medicaid_the_family_of_last_resort_dilemma.html . The issue of the care of the frail elderly is perhaps the most importance we face as a society. If it is decided the way similar issues are being decided, then the generation or two before mine will get anything it wants, and borrow money to pay for it. My generation and those afterward will have to work to pay that money back, and will in the end be lucky to get medical marijuana followed by legal assisted suicide when our health declines. And that’s under the Democrats — the Republicans won’t allow us to do that well.
There is another way to look at the high level of health care and social assistance employment throughout the state, just as there is another way to look at the high level public school employment in the portion of the state outside New York City. Perhaps it is a form of income redistribution to those with the extra jobs, not an additional service to the purported beneficiaries. Certainly those pushing for more money in Albany aren’t the purported beneficiaries, they are those with the income stream.
If it is a job program, it is one with consequences. While working on the Citywide Industry Study, at the Department of City Planning, I tried to find out if changing consumer expenditure patterns were responsible for the shift from goods to services in the U.S. economy. It wasn’t — I was surprised to find out that people were spending just as much on stuff relative to services at that time as they had been 50 years earlier, according to federal data. One thing that had changed was the composition of government spending — from the military and infrastructure to health care and social assistance.
The former employed lots of men, the latter lots of women, and the employment prospects of less educated men and women have shifted accordingly, something to think about when considering what some see as a black male employment crisis. Not that a huge increase in infrastructure expenditures today would employ many unskilled men anyway. New York City construction workers are now enormously paid (including benefits) and highly skilled, so that $150,000 that would provide an income to four hospital workers would be lucky to support one construction worker. The original subway was dug by hand by thousands of workers, mostly unskilled, with dynamite, picks, shovels and hods. The Second Avenue Subway will be dug by a few sandhogs with enormous machines.
This is a discussion that could be had. But perhaps shouldn’t be had. In a city of high taxes, high debts, and unmet needs, how about allocating scarce public dollars according the fairly allocated needs and preferences of the entire public, rather according to who wants to work where? That is how those who work in public and publicly-funded organizations allocate their private wages after all, and those in the private sector are forced to change employment to meet those choices.