Category: Health Care

Healthcare, Extractive Industries, and Wages

horvath

Looking ahead to 2015 there are three issues that will impact the economy in 2015: healthcare, extractive industries, and wages.

Healthcare
The healthcare industry may play an important role in the economy in 2015.
• First, there are shortages of workers in many key positions. This may affect the care consumers receive from their service providers and it may increase the costs of doing business.
• Second, providers are being pushed by Obamacare and insurance companies to reduce the fees they charge. In turn, this may reduce their margins.
• Third, it was recently announced that Colorado employers will face an 8% increase in the cost of insurance. Likely, a portion of that increase will be passed on to workers. That could reduce that amount of discretionary income, which in turn could reduce retail consumption.
• In addition, it has been announced that Connect for Health Colorado, will reduce subsidies. In other words, many Coloradans will have to pay significantly more for coverage, go without healthcare, or pay a fine to the government. Coloradans will face sticker shock when they get their health insurance bills in 2015.

Extractive Industries and Prices of Oil and Gasoline
The extractive industries will continue to face challenges in 2015. Fracking is still an issue in Colorado that will not go away. Local governments are pushing to have greater control over the way the extractive industries operate in their jurisdiction.

In addition, the price of oil has trended downward for the past six months. If these trends continue, it may impact production in Colorado, which will hit the smaller companies first. It will also impact severance taxes paid to the state government.

At the same time consumers have enjoyed lower prices at the pump. Their gasoline bills for 2013 and 2014 will be similar. If lower prices continue into 2015, consumers may notice a reduction in their annual gasoline bill in the range of $400 to $800 for the year.

If prices at the pump continue to decline Colorado consumers will be the benefactors, but state coffers suffer. Typically the negative impact for the state outweighs the positive impact on the consumer.

Wages
Typically, when unemployment dips below the natural rate of employment, 4.5% to 5.0%, there is usually upward pressure on wages. Overall that has not been the case in Colorado.

Between 2007 and 2014
• The Denver Boulder Greeley CPI  (DBG) increased at an annualized rate of 2.4%
• The Private Sector Average Weekly Wages (AWW) increased by an annualized rate of 1.7%.
Inflation for this period grew at a faster rate than private wages for this period.

Between 2013 and 2014
•  The DBG CPI is projected to increase by 2.8%/
• The Private Sector AWW will increase by 2.0%.

The Construction and Financial Activities are isolated sectors that have seen strong wage growth in the last couple of years because the demand for qualified employees has exceeded the supply of workers.

Construction Wages
• Between 2008 and 2012 AWW declined. In 2013 it increased by 11.0% followed by an increase of 11% in 2014. Construction businesses have found that it has been necessary to raise wages this amount to attract workers. Ultimately these labor costs will be passed on to consumers.
Financial Activities
• The financial activities sector has also had strong wage growth, 5.0% annualized growth, from 2007 to 2014. Between 2007 and 2010 Average Weekly Wages decreased, but they have increased significantly since.  AWW will increase by 7.3% in 2014

On the other hand, 2014 inflation growth will exceed the change in wages for Manufacturing, Tourism, and Professional and Business Services. These three industries are critical to the state economy for different reasons.

Watch for healthcare, extractive industries, and wages to impact the Colorado Economy in 2015 – and the impact may not always be positive.

 

Lola and Sir Germs-a-Lot Play a Role in Better Dental Care for Colorado Children

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The Denver Post recently reported that about 335,000 Medicaid adults will gain access to dental care in the spring of 2014 and tens of thousands will be added to insurance rolls through Obamacare. In addition, there may be thousands of privately insured children who will have access to dental care as a result of the state health exchange.

The good news is that benefits will be available to more state residents. Surveys indicate that more than 30% of Colorado adults haven’t seen a dentist in the past year, and 20% to 25% of children have high levels of decay-inducing bacteria.

The bad news is there will not likely be enough dentists to service the new patients. Quite often, dentists are not willing to service the patients because of the bureaucracy, paperwork, and lack of revenue from the government funded programs.

Data from the Bureau of Labor Statistics shows Colorado had about 2,700 dental establishments in 2012. The Post article indicated there are about 3,600 dentists, based on statewide surveys and licensure records. Only about 1,000 are actively enrolled as Medicaid providers.

To address this challenge the article indicated the Colorado Dental Association is encouraging its members to accept at least 5 Medicaid patients in 2014. While CDA is to be commended for their efforts, the initial impact will be minimal. To improve overall access there is a pressing need to minimize the hassle of dealing with the state and federal programs.

Other approaches to address the shortage of dentists focus on prevention.

Special interest groups have taken a somewhat draconian approach to addressing the issue of dental hygiene by waging a war on sodas, sugar drinks, boxed cereal, and other foods with heavy sugar content. These efforts include such measures as lobbying for increased taxation on targeted foods and advocating boycotts and reduced availability of them.

A logical approach includes efforts to educate youngsters about the values of good dental hygiene. This includes programs and demonstrations by dentists and dental hygienists to advise younger patients about the benefits of caring for their teeth and how to do that in a disciplined manner.

 

As well it includes fun, educational products such as the recently published children’s book, Lola and Sir Germs-a-Lot (Available on Amazon.com and Xlibris.com). The book tells a story of a young girl who became complacent about brushing her teeth – and she paid the price. Most parents and children can relate to Lola’s exploits. The author’s subtle approach provides a gentle reminder that kids must brush their teeth on a regular basis.

The bottom line is that proper dental hygiene is important to everybody and there are not enough dentists. Improved dental hygiene is a function of better diets, better prevention, and better access to quality dental care. Just ask Lola!

Sources: The Denver Post (“Flood of new dental patients in Colorado meets trickle of caregivers” November 29, 2013); Bureau of Labor Statistics.

©Copyright 2011 by CBER.

Health Care Adds 15% of Colorado Jobs in Past Two Decades

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In a state that regards its tourism and high tech cluster as primary drivers of the economy, it is somewhat surprising to note that the Health Care and Social Assistance (HCSA NAICS category) has accounted for 15% of net jobs added between 1991 and 2009. The sector has been recession proof, adding jobs every year during this period and it currently employs  one-in-ten Colorado workers.

HCSA is divided into four distinct groups: hospitals, physicians, nursing homes, and social care. Physicians, or ambulatory care account for about 36% of total HCSA workers, followed by 29% at Colorado’s 90 hospitals.

Roughly 19% of workers are employed at nursing and residential care facilities with the remaining 16% in social assistance programs.  The latter category includes service providers ranging from Head Start programs to commercial child care centers.

Population growth has been the driving force behind the steady expansion of the sector. Two of the four sectors are increasing at about the rate of population growth while the other half is expanding at a more rapid pace.

With continued population growth is on tap for the state over the next decade, increases in HCSA employment are likely to continue. Issues facing the sector include:
• Double-digit cost increases for health care coverage
• Change in the manner in which health care is distributed
• Increased emphasis on quality of service provided
• Changes in government health care policy
• Changing demographics
– Aging Baby Boomers
– Increased life expectancy
– Increasing number of minorities
– Rise in frequency of diseases, such as diabetes
– Increased number of lower income families
• Supply of nurses and dental hygienists
• Matching supply and demand for nurses and health care employees, particularly in rural areas
• Saturation of hospitals in some metropolitan areas
• Impact of efficiency gains on employment
• Continued population growth
• Increased demand for specialized medical care

While other sectors that have diminished in importance over time, that is not likely to happen for Health Care.

©Copyright 2011 by CBER.