Healthcare Shows High Job Growth, Low Productivity

Is this growth in healthcare good for the rest of society? Carnevale says healthcare is among the least productive sectors of the economy.*

"There is a dilemma here and it gets at the root of the healthcare issue in general. We are paying twice what other advanced industrial nations for healthcare. They are at 9% of GDP and we are at 18% and headed for 20%," he says. "We've built a huge sector, but the productivity growth has been negative for a while. Our estimates on the productivity growth are basically -1%. In manufacturing productivity is +8%. We are supporting a huge apparatus in healthcare and no doubt there are huge inefficiencies."

Carnevale believes the healthcare sector cost and job growth are byproducts of an inefficient and fragmented healthcare system.

"One of the criticisms of healthcare is that it is a supply-driven system. The more doctors we have the more healthcare we consume," he says. "There is not much doubt that the American healthcare system is a Rube Goldberg device where there really is no natural means for price controls. We are only now beginning with the intervention of the federal government which is now up for grabs to try and make some sense of this."