The MIddle Class Bubble and the Long Term Implications for Care Management & Health Care

According to this 2011 article in The Atlantic, the middle class is in trouble.  The Disease Management Care Blog wonders if they are doomed. Either way, there are important implications for the population health and care management industry.

The amateur DMCB explains.

With the advent of the Gilded Age in the 1870s, the industrial revolution ushered in more than a century of heavy industry, railroads, mining, commercial farming and manufacturing that were powered by millions of skilled and unskilled workers. Wealth and power were still concentrated in an elite 1% plutocracy that had prevailed throughout most of human history, but a newly emergent “middle class” benefited from high wages and became an accepted part of the American political and cultural landscape.  Thanks to their labor, the quality of goods and services increased while simultaneously becoming cheaper.

While the middle class was in retreat at the turn of the millennium, The Great Recession suggests that their century-long party may be truly over. Global competition with the free movement of labor and capital combined with automation have made the costs of industry even cheaper. The plutocracy that has always been there can shrug off the effects of a recession, but the intrinsic value of traditional labor has popped, bubble fashion. 

In the last decade, persons in the nominal middle class with less than $90,000 a year in income have had flat wages and have been unable to increase their spending. Since 2000, American manufacturing – which has not only lost ground to China but become more mechanized – has lost about a third of its jobs. This has played itself out in geographic terms, where hubs around Washington DC, San Francisco and Boston job listings remain strong, while Detroit and Miami have been in the dumpster. In other words, much of the middle class is being hollowed out and being forced to downjob into personal services, retail and food preparation while leading lives that are at risk for financial stress, partner conflicts, single parenting and troubled children.

In the meantime, the billionaires so reviled by progressives are not any more numerous or fantastically wealthy.  The DMCB thinks that they’re only more visible.  It remains to be seen if government will be successful in moving wealth from the top 1% to the 99%.  History suggests otherwise.

Long term implications for the population health and care management industry:

Health care will sort into 1) high end, high touch, personalized care for a small elite that can not only afford it, but will be responsible for profitable top line revenue and 2) a strained publicly underfunded system with thin margins.  Care management providers will likewise sort into these two camps.  The first involves value, the second involves volume.  Given the disparate business models, it’s unlikely that single companies will be able to do both.

While universal access to affordable health insurance remains a bipartisan goal, high out of pocket costs combined with limited provider access for persons outside of the 1% will increase the popularity of cheap “DIY” care involving eHealth. This is a natural fit for the population health industry.

More workers than anticipated may be available as the U.S. population ages and the demand for personal health care attendants increase.

Classic “knowledge workers” may not be immune, since information tech and automation may enable machines to generate a differential diagnosis and read an x-ray, while cheap and highly trained remote labor may be able to deply robotics to perform routine surgeries.  For the care management industry, an on-line script that prompts a nominally-trained health educator may be able to replace nurse care managers.

Image from Wikipedia