The US healthcare workforce and the labor market effect on healthcare spending and health outcomes

The healthcare sector was one of the few sectors of the US economy that created new positions in spite of the recent economic downturn. Economic contractions are associated with worsening morbidity and mortality, declining private health insurance coverage, and budgetary pressure on public health programs. This study examines the causes of healthcare employment growth and workforce composition in the US and evaluates the labor market’s impact on healthcare spending and health outcomes. Data are collected for 50 states and the District of Columbia from 1999–2009. Labor market and healthcare workforce data are obtained from the Bureau of Labor Statistics. Mortality and health status data are collected from the Centers for Disease Control and Prevention’s Vital Statistics program and Behavioral Risk Factor Surveillance System. Healthcare spending data are derived from the Centers for Medicare and Medicaid Services. Dynamic panel data regression models, with instrumental variables, are used to examine the effect of the labor market on healthcare spending, morbidity, and mortality. Regression analysis is also performed to model the effects of healthcare spending on the healthcare workforce composition. All statistical tests are based on a two-sided \(\alpha \) significance of \(p\,<\) .05. Analyses are performed with STATA and SAS. The labor force participation rate shows a more robust effect on healthcare spending, morbidity, and mortality than the unemployment rate. Study results also show that declining labor force participation negatively impacts overall health status (\(p\,<\) .01), and mortality for males (\(p\,<\) .05) and females (\(p\,<\) .001), aged 16–64. Further, the Medicaid and Medicare spending share increases as labor force participation declines (\(p\,<\) .001); whereas, the private healthcare spending share decreases (\(p\,<\) .001). Public and private healthcare spending also has a differing effect on healthcare occupational employment per 100,000 people. Private healthcare spending positively impacts primary care physician employment (\(p\,<\) .001); whereas, Medicare spending drives up employment of physician assistants, registered nurses, and personal care attendants (\(p\,<\) .001). Medicaid and Medicare spending has a negative effect on surgeon employment (\(p\,<\) .05); the effect of private healthcare spending is positive but not statistically significant. Labor force participation, as opposed to unemployment, is a better proxy for measuring the effect of the economic environment on healthcare spending and health outcomes. Further, during economic contractions, Medicaid and Medicare’s share of overall healthcare spending increases with meaningful effects on the configuration of state healthcare workforces and subsequently, provision of care for populations at-risk for worsening morbidity and mortality.