Health insurance industry employment outpacing providers and all-industry growth rates

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Snapshot for September 19, 2007.

Health insurance industry employment outpacing providers and all-industry growth rates

by Ross Eisenbrey 

Economist Paul Krugman and many others have suggested that the health insurance industry has a lot to do with the excessive cost of U.S. health care. As Krugman describes the industry, an important part of its business model is collecting premiums while denying deserving claims and seeking out reasons to exclude patients from coverage they need. It takes a lot of extra employees to do this socially questionable work, and the industry's employment has grown like a weed over the past 10 years.

From August 1997 to August 2007, employment in the health insurance industry grew an astounding 52%, from 293,000 to 444,000.1 During the same period, employment among physicians, nurses, and others who provide health services or work to support them grew half as fast, by 26%, from 10,387,000 to 13,042,000. Employment in the economy as a whole grew even more slowly, by only 12% over the same 10-year period (see figure). The ratio of health insurance industry employees to health service providers grew from 28 insurance employees per 1,000 provider employers, to 34 per 1,000.

Endnote
1. Employment, hours, and earnings from the Current Employment Statistics survey (National).