That's a microcosm of the effect of automation on the economy as a whole.
We can't have it both ways. We can't pretend like automation will never kill our jobs while simultaneously pursuing the dream of permeant vacation through automation. The very goal of automation contradicts the idea that we would and should always have jobs.
But we are very very far from that point. We have needs, like extending our life, that current technology cannot meet, and if we had excess time, most of us would trade it in exchange for more technological progress toward that goal. Fundamentally that is what's behind the increase in healthcare spending, and the growth in people employed in healthcare.
No they won't. If people work fewer hours, they'll simply be paid less, barring legal limitations like a minimum wage. Meanwhile, costs will remain the same.