The Effect of Health Care Cost Growth on the U.S. Economy. 3.5 Effect on Local Economies


As spending on health care accounts for a higher percentage of GDP, the health sector is a major and rapidly growing source of employment for U.S. workers.  According to the Bureau of Labor Statistics (2006), and as shown in Table 2 below, the health care sector employed over 10 million workers in 2006.  Over the period 1998 to 2006, employment in the health care sector grew by a staggering 21%. In contrast during this period of rising health care costs, employment across all occupations grew by only 6%. Further, according to projections made by the Bureau of Labor Statistics (BLS), home health aides are likely to be the fastest growing occupation category over the next decade growing by as much as 56% between 2004 and 2014 (Hecker, 2005). Hence, the healthcare sector can have a major impact on the local economy. For example, a recent Business Week article reports that since 2001, 1.7 million new jobs have been added in the health care sector, which includes related industries such as pharmaceuticals and health insurance; in contrast, the number of private sector jobs outside of health care is no higher than it was five years ago. With expenditures of more than $2 trillion, health care supports local job markets in the northeast, midwest, and south – the regions hit hardest by globalization and the collapse of manufacturing.

Conversely, researchers have found that government deficit spending, e.g. to finance public health expenditures, disproportionately harms export and capital goods industries, whereas payroll tax financing disproportionately harms consumer service industries (Monaco and Phelps, 1995).

Year Healthcare Practitioners
Technical Occupations




Total All
Healthcare as a percentage of total employment
Table 2: Employment in Healthcare occupations and in all occupations: 1998 - 2006
1998 5,831,260 2,562,280 8,393,540 124,704,600 6.73%
1999 6,001,950 2,970,780 8,972,730 127,274,000 7.05%
2000 6,041,210 3,039,430 9,080,640 129,738,980 7.00%
2001 6,118,970 3,122,870 9,241,840 127,980,410 7.22%
2002 6,185,020 3,173,400 9,358,420 127,523,760 7.34%
2003 6,173,760 3,208,770 9,382,530 127,567,910 7.35%
2004 6,359,380 3,271,350 9,630,730 128,127,360 7.52%
2005 6,547,350 3,363,800 9,911,150 130,307,840 7.61%
2006 6,713,780 3,483,270 10,197,050 132,604,980 7.69%
Source: Occupational Employment Statistics, Bureau of Labor Statistics, U.S. Department of Labor Available at:

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