Health Care Layoffs in Texas Feared, Obama ‘Stimulus’ Blamed

Published November 3, 2011

Texas’s health care industry is concerned about the impact of a federal debt reduction agreement and President Obama’s latest $447 billion stimulus plan, which include cuts to Medicare and Medicaid that could result in significant layoffs of health care workers.

Obama’s American Jobs Act promises something for teachers, construction workers, firefighters, and police officers in Texas and other states. Conspicuously absent, however, are health care workers, one of the few lines of employment that has weathered the protracted recession. They say they’re worried their jobs will be sacrificed to support jobs in the other areas—a kind of jobs shell game—if the savings to pay for the program come out of the nation’s twin behemoth health care plans.

“It gets hard to follow which shell has the peanut under it,” said Robert Collinge, a professor of economics at the University of Texas San Antonio. “They can confuse us all they want, but there is an appropriate cost for the creation of those jobs that has to come from somewhere.”

‘Huge Impact’ Expected

Texas health care organizations say it’s difficult to calculate an exact number of layoffs. The American Hospital Association recently estimated the number at 194,000 jobs nationally by 2021, citing a study by Tripp Umbach, a health care consultant.

“While we do not have specific figures on number of jobs that may be lost through cuts, it is clear that Medicare and Medicaid cuts to home health and hospice, and Medicaid cuts to personal care services, will have a huge impact on jobs, since this is a very labor-intensive business,” said Anita Bradberry, executive director for the Texas Association for Home Care & Hospice. “Further cuts to home health payments will have a significant and alarming impact on the financial viability of Texas home health providers.”

The Moran Company, a consultant for the home health care industry, calculated the federal government’s proposal to find savings in cuts in payments to health care providers would cause nearly 60 percent of home health agencies in Texas funded by Medicare to operate in the red. For those home care providers not driven out of business altogether, Bradberry said, the alternative would be cutting staff.

Significant Private Sector Effect

Nearly 1.2 million people work in the broad field of health care in Texas, from doctors to hospice care assistants, according to the latest figures provided by the Texas Workforce Commission. Nearly 1.1 million, or about 90 percent of those jobs, are in the private sector, and 125,401 are public, at the local, county, and state levels.

Private and public health care services employ roughly 600,000 of those workers, hospitals employ another 400,000, and about 175,000 people work in nursing and residential care.

Despite chronic 9 percent unemployment nationwide, the health care industry created 306,000 jobs in the previous 12 months ending in August, 30,000 of those in August alone, according to the latest survey by the federal Bureau of Labor Statistics.

Few Cuts in Public Sector

Health care employment by the state of Texas is also robust. Over the past five fiscal years ending in 2010, the Department of Health and Human Services grew by 21 percent, more than 9,500 employees, outstripping the 18.2 percent increase in public education employees and more than twice the increase in higher education employment, according to the state Auditor’s annual employment report.

In the past session, the Legislature cut more than $11 billion out of the budgets of the five agencies that make up Health and Human Services over the next two years. But nearly all of the 55,619 state health care jobs are safe, at least for now, department spokesman Stephanie Goodman said.

At the Texas Department of Aging and Disability Services, where their work processing Medicaid for those eligible in the Rio Grande Valley is being taken over by five managed care organizations, the budget called for the loss of 372 full-time positions.

Many of those positions were filled by temporary employees or were already vacant, spokeswoman Allison Lowery said. So far, just eight people have been laid off in the transition to managed care, she said. The agency also lost 60 inspection and investigation positions and another 40 in information technology, but all 100 were vacant at the time.

Jobs Bill Undermining Jobs?

How the private and public health care employment outlook might change depends on where the  congressional super-committee chooses to identify budget cuts to fund the jobs plan in addition to its legislated mandate of reducing the national debt. Opponents of Obama’s plan find it curious that a president who fought so hard for the expansion of government health care coverage would craft a jobs bill that could undermine it.

“As Congress looks for ways to cut the deficit, we urge lawmakers to first, do no harm,” said Rich Umbdenstock, president of the American Hospital Association, in a statement issued Sept. 12.  “Reject cuts to hospital services that could create devastating job losses to communities.”

Bradberry said those sentiments are shared throughout the health care industry.

“Further cuts to Medicare home health will drive home care providers out of business and threaten Medicare beneficiaries’ access to the most cost effective and preferred method of care,” she said.

Mark Lisheron ([email protected]) is Austin bureau chief for Texas Watchdog, where this article originally appeared. Reprinted with permission.