CORRESPONDENCErnLetter FromrnPittsburghrnby Ralph R. ReikndrnThe War on Medicine CityrnThe bad news for Pennsylvania’s economyrnis that the Chnton health care planrntakes direct aim at the state’s two biggestrnemployers—the health care sector andrnthe restaurant industry. Pittsburgh’s singlernlargest private employer is the Universityrnof Pittsburgh Medical Center, arnworld leader in cancer research andrntransplant surgery with a staff of 12,000.rnOverall, one out of eight Pittsburgh jobsrnis now in health care. Pittsburgh “mayrnalways be known as Steel Town, butrnMedicine City would more accuratelyrndescribe its economy today,” said a recentrnNew York Times article. It should bernthe Pittsburgh Medics, not the PittsburghrnSteclcrs. “No other metropolitanrnarea,” reported the ‘limes, “has such arnhigh proportion of health workers.”rnThe job threat in the Clinton healthrncare plan comes from its emphasis onrnpreventic treatment and its shift awavrnfrom expensive new medical technologiesrnand specialties. Pittsburgh’s organrntransplants will take a back seat to homernvisits from para-nurses. And the D.C.rnbudget-cutters aren’t likely to fit Pittsburgh’srnheftv supply of hospital bedsrn(about 3,000 of Pittsburgh’s 10,600 hospitalrnbeds are vacant on any given night)rninto a health care scheme that reliesrnheavily on outpatient care. “It’s clearrnthat the health care sector here will notrnbe a major source of growth in the futurernif the Clinton plan goes through,” sasrnJudith R. Lave, a professor of health economicsrnat the University of Pittsburgh.rnWith politicians running a health carernsystem while also running for office,rnthere’s the danger that spending for arnglittery new community project with arnshort-run bang will take political precedencernover allocating funds to long-termrncancer research. This politicizing ofrnhealth care promises to kill jobs in thernhealth care industry. Already, the classrnwarfare rhetoric about medical profiteeringrnthat’s coming out of the OvalrnOffice has produced a free-fall in thernstock prices of insurance companies andrnpharmaceutical firms and an increase inrnlayoffs. “In all, fearful inxestors havernyanked roughly $200 billion in equityrnfrom companies that suppl- drugs, medicalrnequipment and medical insurance,”rnreports syndicated columnist TonyrnSnow. “Cash strapped firms have had tornfire upward of 60,000 employees andrnsuspend research on everything fromrndrugs that treat AIDS to optic lasers capablernof killing cancer cells.”rnThe bottom line is that a dynamic,rnproductive health care sector is beingrndismantled by a President who chargesrndrug manufacturers with extractingrn”profits at the expense of children.”rnWhile the rest of the wodd is pullingrnaway from radical cgalitarianism, statism,rnand the failures of central control. PresidentrnClinton is calling for a NationalrnHealth Care Board that would have thernpower to set “global budgets,” price controlsrnon insurance premiums, and guidelinesrnfor “reasonable” prescription drugrnprices. There’s no evidence, of course,rnthat the resulting socialized system willrnbe any more efficient or successful thanrnpublic housing, busing, welfare, governmentrnjob training, public high schools, orrnthe yast array of other well-intendedrngovernment programs that have wastedrnbillions of tax dollars and deliveredrnprimarily negative consequences.rnAfter health care, Pennsylvania’s secondrnlargest employer is the restaurantrnindustry, yvith 275,000 full-time jobs andrna plethora of part-timers. Here, thernWhite House insistence on employerprovidedrnhealth insurance is particularlyrndestructive of jobs because restaurantsrnare one of the most labor-intensi’e businessesrnin the economy. A full-time employeernin a grocery store, for instance,rncontributes annually an average ofrn$160,000 in sales to his company. A gasrnstation employee contributes $259,000rnin average sales, and a financial consultantrnbrings in sales of $890,000 per year.rnIn contrast, the average full-time restaurantrnemployee brings in $47,000 in yearlyrnsales.rnThe average pre-tax income for arntable-service restaurant is 4 percent ofrnsales. With sales of $47,000, the typicalrnrestaurant employee is producing $1,880rnin annual profits, before taxes. A neyv 7rnpercent payroll tax for health premiumsrnfor a $20,000 employee would pullrn$1,440 out of the bottom line and destroyrn77 percent of the restaurant’s profits.rnNo matter how a restaurant ownerrntries to cope with this, the result is increasedrnunemployment. If menu pricesrnare raised, business drops off and fewerrnemployees are needed. If prices aren’trnraised, the government takes a biggerrnpiece of the pie and a money squeezernproduces unemjjloyment.rnIn the presidential campaign, candidaternClinton said, “I will not add newrntaxes on small business. I know that 85rnpercent of the new jobs in this countryrnare generated by small business, and Irnam committed to helping them prosper.”rnMr. Clinton was right about thernkey role that small business now plays inrnthe economy. Between 1980 and 1990,rnFortune 500 companies cut over 400,000rnjobs annually, while America’s smallrnbusinesses created 14.8 million new jobs,rnor 3.6 million more jobs than wererncreated by Japan, Canada, and WesternrnEurope combined in those same years.rnNow, while campaigning for a mandatedrnpayroll tax on employers, Mr.rnClinton says that it’s higher taxes thatrnwill help small business prosper—andrnthat a new federal bureaucracy will holdrndown health costs. In Hayvaii, the onlyrnstate that requires employers to buyrnhealth insurance for employees, totalrnhealth care spending increased by 191rnpercent from 1980 to 1990, compared torna national increase of 165 percent.rnHawaii also led the nation in the growthrnrate of business bankruptcies last year,rndue in large part to the explosion inrnmandated health benefits, says SamrnSlom, president of Small BusinessrnHawaii.rnIn his address to the nation lastrnSeptember 22, President Clintonrnpromised a health plan “that does notrncripple small business and low-wagernworkers.” According to a recent NationalrnRestaurant Association survey, 67 percentrnof small restaurants (sales underrn$500,000 annually) don’t provide healthrninsurance to their employees, and it’srn36/CHRONICLESrnrnrn