While doctors and hospitals would take a financial hit under Medicare-for-all, the outlook is even bleaker for the private health insurance industry, whose extensive workforce could be wiped out.

Health economists say that might not be such a bad thing, however.

Nearly 386,000 people were employed by health insurance carriers last year, according to federal labor data. The workforce is even larger if one counts jobs that exist because of health insurance, like administrators in doctor's offices and hospitals who negotiate prices. Economists have projected as many as 2 million jobs could be lost under a Medicare-for-all system that eliminated all private coverage.

Democratic presidential candidate Elizabeth Warren -- who backs Sen. Bernie Sanders's Medicare-for-all legislation and on Friday proposed a way to pay for implementing it -- acknowledged this much in an interview last week, when New Hampshire Public Radio reporter Casey McDermott pointed to job loss projections from University of Massachusetts Amherst researchers.

"Even supporters of that approach within the health policy world have said that would likely mean lost jobs in some form," McDermott told the Massachusetts senator.

"So I agree," Warren responded. "I think this is part of the cost issue and should be part of a cost plan."

A single, generous public plan replacing private insurance from companies like UnitedHealth Group, Anthem and Cigna would undoubtedly amount to a massive reshaping of the country's health-care system and a significant loss of jobs throughout the health-care sector. America's Health Insurance Plans (AHIP), insurers' powerful trade association, calculates the jobs of around 1.5 million workers in the industry would be jeopardized.

But defenders of Medicare-for-all argue -- and economists agree, to some extent -- that a reduction in health-care jobs is an upside, not a downside. Over the past few decades, the sprawling health-care complex has partly grown out of huge administrative burdens, as insurers and providers constantly haggle in a complex and wasteful payment system.

Merely trying to protect those jobs is at odds if the goal is to reform the U.S. health-care system to offer better-quality, high-value care, said Katherine Baicker, dean of the University of Chicago Harris School of Public Policy.

She stresses that the debate over whether Medicare-for-all is good policy shouldn't be driven by considerations of how many people would lose their jobs.

"It's just the wrong metric for evaluating health policy," Baicker told me. "There are lots of things that warrant really important consideration in these health reform plans, but the argument for or against can't hinge in jobs."

Baicker and other economists use innovations in agriculture as an example. Back in 1870, nearly 70% of the U.S. workforce consisted of farmworkers. By 2000, only 2% of Americans worked in agriculture. Just as that industry morphed to reflect innovations, so too should today's health-care industry transform into a sector that better serves patients, they argue.

"Now we are able to produce so much more food with so many fewer people," Baicker said. "That's a good thing. It means more people have more food and food is more affordable."

As a general rule, economies do tend adjust over the long run, and those who were laid off are able to find employment elsewhere. Such industry expansions and contractions are natural.

But that doesn't mean the short-term job loss from Medicare-for-all would be inconsequential, warned Michael Chernew, a professor of health-care policy at Harvard University. Some people would be absorbed into other sectors, but there would also be real dislocations and transitions played out over many years, he said.

A prime example: the decline of manufacturing jobs in the United States, which led to higher levels of unemployment in formerly thriving Rust Belt cities such as Detroit and Cleveland.

"It is a mistake to assume everyone who loses their job in the insurance industry is going to be unemployed," Chernew said. "But it is also a mistake to assume everyone in the insurance industry who become unemployed is going to be employed in another industry in a reasonable amount of time."

AHIP, which is part of an industry coalition fighting Medicare-for-all, makes an argument along those lines and takes it further: that the hundreds of thousands of people to be laid off would hardly be assured of easily finding other health-care-related employment, given that the Medicare-for-all framework proposes cutting payments across the sector.

"Who is going to have the extra dollars to spend on hiring them, given the caps on spending?" said AHIP spokeswoman Kristine Grow. "To just assume the jobs will disappear here and reappear somewhere else just doesn't hold water."

Make sure you never miss our editorials, letters to the editor and columnists. We’ll deliver the Journal’s Opinion page straight to your inbox.

Load comments