Five Myths About Health Care, November 1, 2008, November 1, 2008

Sen. Barack Obama has drawn many voters to his side, thanks in no small part to his health care plan. Unfortunately, his proposals rest upon several falsehoods that are all too common in the health care debate. Using his own words, let’s take a look at the senator’s contentions–and debunk these all too common myths.

MYTH #1: “If I were designing a system from scratch, I would probably go ahead with a single-payer system.”

Many liberal policymakers believe that single-payer systems deliver superior medical care. While Obama’s plan won’t immediately impose socialized medicine upon all Americans, it will move our system substantially closer to that goal. The centerpiece of Obama’s plan is a publicly administered alternative to private health insurance modeled on Medicare.

Americans need only look abroad to see how poorly government delivers care. In my native country of Canada, more than 800,000 of the 33 million citizens currently languish on waiting lists for surgeries and other necessary treatments.

Doctor shortages and the waiting lists they engender lead to horrible health outcomes. Take cancer survival rates. American women who contract breast cancer have a survival rate of 83.9%. For British women, the survival rate is just 69.7%.

In fact, the entire world trails the U.S. in treating cancer. According to an August 2008 study published in Lancet Oncology, the renowned British medical journal, Americans have a better survival rate for 13 of the 16 most prominent cancers when compared to their European and Canadian counterparts

A single-payer system is a great idea–until you get sick.

MYTH #2: “One of the issues we must face and can’t ignore is the explosion of health care costs that is crushing families and businesses across our country.”

Americans do spend a great deal on health care–around 16% of GDP. But it’s important to remember the value that Americans get for their money.

Since 1950, American expenditures on health care have gone up 14-fold. But average life expectancy has also increased by nine years. It’s doubtful that Americans would accept a reduction in health expenses if it meant years off their lives.

Health care spending also brings huge economic gains by increasing individuals’ productivity. University of Chicago economists Kevin Murphy and Robert Topel determined that the longevity gains associated with medical innovation are currently worth $2.8 trillion annually. That’s larger than the GDP of the U.K.

Medical care doesn’t come cheap. But that doesn’t mean we’re not getting our money’s worth.

MYTH #3: “Under my plan, we’ll make sure insurance companies cover evidence-based, preventive care services–weight loss programs, smoking-cessation programs and other efforts to help people avoid costly, debilitating health problems in the first place.”

Politicians love to tout “preventive care” as a panacea for rising health care costs. But the evidence in support of the much ballyhooed initiatives to shrink our waistlines and stop us from smoking remains mixed at best.

Since Congress mandated nutrition labels on all packaged foods–ostensibly to encourage good eating habits–the percentage of obese Americans has increased by two-thirds.

And successful public health campaigns often increase health care spending. The average nonsmoker, for example, dies at age 84, while the average smoker passes at age 77. Contrary to popular belief, medical spending on the average smoker is $100,000 less than that on the nonsmoker.

An ounce of prevention may help Americans live longer. But it certainly won’t lead to reduced health care spending.

MYTH #4: “[John McCain] loves to talk about his tax credit. But what he doesn’t tell you is that he taxes health care benefits for the first time in history. ”

One of the biggest problems with America’s health care system is the tax treatment of health insurance. Businesses get a tax deduction, and their employees a tax benefit, for health insurance. Individuals, by contrast, do not. This makes life harder for small businesses, sole proprietors and those without employer-provided coverage. If they can even afford to purchase health insurance, they have to do so with after-tax dollars.

McCain proposes to fix this backward system by granting a $2,500 health insurance tax credit to all individuals ($5,000 for families). Employers keep their deduction for health insurance, meaning workers with coverage won’t lose their health benefits. And employees will find that they pay lower taxes when they file with the IRS.

By combining a credit with the modified tax treatment of employer benefits, as the McCain plan does, families at all income levels would pay lower taxes on average. Obama can’t say the same about his health plan.

MYTH #5: “I know the outrage we all feel about the 45 million Americans who don’t have health insurance.”

Obama is just one of many to claim that 45 million Americans–or 16% of the population–go without health insurance. That estimate isn’t in line with reality.

The popular statistic comes from the Census Bureau, which admits that “health insurance coverage is likely to be underreported.” That makes sense–some people may claim to be uninsured even if they lacked coverage for only a few weeks between jobs.

Nearly 18 million of the uninsured–38%–make more than $50,000 annually. More than nine million of those folks make more than $75,000 a year. Foolish as it may seem, a sizable number of financially comfortable individuals–particularly the young—opt against owning insurance. So long as insurance remains expensive, it’s unlikely they’ll change their minds.

Finally, as many as 12 million uninsured Americans are eligible for Medicaid and the State Children’s Health Insurance Program–but they haven’t signed up. Can we really argue that they don’t have health insurance?

FACT: Government control of health care is not the answer for America. Let’s hope Obama realizes this if he wins the election.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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