The three urban myths of healthcare reform

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July 20th, 2009

The three urban myths of healthcare reform

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By: Peter J. Pitts

Tags: General, Barack Obama, healthcare, Peter J.Pitts, private health

insurance, The Great Debate

- Peter J. Pitts is president of the Center for Medicine in the Public

Interest and a former FDA associate commissioner. The views expressed are

his own. -

 

When it comes to healthcare reform, as Aldous Huxley said, " Facts do not

cease to exist because they are ignored. "

 

Three of the most common " urban myths " of American healthcare are that:

1. The lower life expectancy in the U.S. " proves " the total inadequacy of

our system;

2. There are 47 million uninsured Americans - proving the inequity of our

system; and

3. We spend " too much " on health care - proving the wastefulness of our

system.

 

As the Ol Perfessor used to say, " Let's look at the numbers. "

 

1. Lower Life Expectancy: According to N. Gregory Mankiw, Professor of

Economics at Harvard University, " The United States has lower life

expectancy and higher infant mortality than Canada, which has national

health insurance. "

 

This fact, according to Mankiw, is often taken as evidence for the

inadequacy of the U.S. health system. But a recent study by June and Dave

O'Neill,

economists at Baruch College, from whom these numbers come, shows that the

difference in health outcomes has more to do with broader social forces.

 

Americans are more likely than Canadians to die by accident or by homicide.

For men in their 20s, mortality rates are more than 50 percent higher in the

United States than in Canada, and the O'Neills show that accidents and

homicides account for most of that gap. Maybe these differences have lessons

for traffic laws and gun control, but they teach nothing about the U.S.

system of health care.

 

Americans are also more likely to be obese, leading to heart disease and

other medical problems. Among Americans, 31 percent of men and 33 percent of

women have a body mass index of at least 30, the dividing line between

overweight and obese, versus 17 percent of men and 19 percent of women in

Canada. Research by the Harvard economists David Cutler, Ed Glaeser and

Jesse Shapiro concludes that the growing obesity problem in the United

States is largely attributable to its ability to supply high-calorie foods

inexpensively.

 

Infant mortality rates also reflect broader social trends, including the

prevalence of infants with low birth weight, which is correlated with

teenage motherhood. Whatever its merits, a Canadian-style system of national

health insurance is unlikely to change the sexual mores of American youths.

 

2. 47 Million Uninsured: This number from the Census Bureau is regularly

cited by President Obama and almost every proponent of " universal

healthcare " as evidence that the health system is failing for many

families. Yet by masking tremendous heterogeneity in personal circumstances,

the figure exaggerates the magnitude of the problem.

 

The 47 million includes about 10 million illegal immigrants. And all the

current legislation being considered in Congress specifically excludes

illegal immigrants from government healthcare. The " Big Number " also

includes millions of the poor who are eligible for Medicaid but have not yet

applied. They could be insured, on the government's dime, tomorrow. And

about a quarter of the uninsured have been offered employer-provided

insurance but declined coverage, often because of cost. The solution to this

isn't Uncle Sam, MD, but smarter insurance regulation.

 

A new study by University of Minnesota economists Stephen Parente and Roer

Feldman shows that Congress could boost by more than 12 million the number

of people who have health insurance without spending taxpayer dollars. The

change required is to allow people to buy health insurance across state

lines, so they can shop for less expensive policies. For example, a typical

health-insurance policy in heavily regulated New York costs more than three

times as much as in less regulated Iowa ($388 a month versus $98 a month for

the same coverage).

 

3. We Spend " Too Much " on Healthcare : In 1950, Americans spent about 5

percent of their income on health care. Today the share is about 16 percent.

According to Harvard's Mankiw, " many pundits take the increasing cost as

evidence that the system is too expensive. But increasing expenditures could

just as well be a symptom of success. "

 

And he hits a homerun with a clear, concise, and common sense explanation.

" The reason Americans spend more than their grandparents did is not waste,

fraud and abuse, but advances in medical technology and growth in incomes.

Medical science has consistently found new ways to extend and improve lives.

Wonderful as they are, they do not come cheap. "

 

Consider the question posed by economists Charles Jones of the University of

California and Robert Hall of Stanford: " As we grow older and richer, which

is more valuable: a third car, yet another television, more clothing - or an

extra year of life? "

 

As the old saying goes, everything you read in the newspaper is true, except

for those things you know about personally. Healthcare reform is too

important (and too complicated) to permit reform by sound bite.