The Matter With Myths

With the fight over the future of the United States health care system now upon us, conservatives find themselves at a tremendous disadvantage. The Democrats are in control of the White House and Congress and they now count as allies many of the same special interest groups, such as insurers, who opposed the push for HillaryCare in 1993 and 1994. But the biggest obstacle conservatives face is that for decades they have allowed many myths and misleading facts about health care to permeate the national consciousness and rig the debate in the favor of those who want to expand the role of government. The only hope that conservatives have of winning the debate is to challenge fundamentally some of the leading assumptions people have about health care. While there is a lot of misinformation to parse, TAS has compiled a list of some of the most pernicious myths in need of debunking.

The Myth: The United States has a free market health care system.

Why It Matters: An April CBS News/New York Times poll found that 87 percent of Americans believe that the U.S. health care system needs to be fundamentally changed or completely rebuilt. While such numbers may differ depending on the poll, it’s clear that an overwhelming majority of the public believes the system requires substantial reform. Because Americans are given the false impression that the current health care system that they view as flawed is a free market, they are more open to remedies that involve an expanded role for government.

The Reality: Both in terms of direct spending and regulation, government plays a dominant role in health care and impedes the formation of a marketbased system in the U.S.

In 2007, the cost of all government health care programs at the federal, state, and local level added up to more than $1 trillion, representing 46 percent of the $2.4 trillion in total U.S. health care expenditures, according to the Centers for Medicare & Medicaid Services. That same year, an analysis of Kaiser Family Foundation data shows, 31 percent of those covered received their health insurance through the government. While the rest of the nation obtains its health care privately, government policies still distort the insurance market.

The most significant way the government meddles in the market is through the tax code, which discriminates against those who purchase insurance on their own to the benefit of those who are insured through their employers. The policy dates back to 1943, when the Internal Revenue Service ruled that workers did not have to pay taxes on health benefits purchased through their employers. With wage and price controls in place during World War II and labor scarce, many employers took advantage of the favorable tax status and offered health benefits to attract workers, and this later became enshrined in the tax code.

As a result, by 2007, 63 percent of the insured population was receiving their coverage through their employers. Having such a system restricts choice, because workers are limited to whatever health benefits are offered. It impedes mobility, because insurance cannot be taken from job to job. It compounds the problem of unemployment, because losing a job often means losing one’s health care. And ultimately, it drives up spending—since most Americans don’t have to pay the out-of-pocket costs for their medical care.

Roughly 6 percent of the covered population purchases its own insurance without the tax advantages enjoyed by those who obtain it through their employers, but even then they must navigate a highly regulated individual market that leaves them with few options. Many states impose onerous regulations on insurers requiring them to provide certain benefits. Some of the benefits insurance companies have been forced to cover include in vitro fertilization, morbid obesity treatment, and lockjaw disorders. Currently there are nearly 2,000 benefit mandates nationwide, according to the Council for Affordable Health Insurance, driving up the cost of polices by 20 to 50 percent, depending on the nature of the mandate.

That means that even if a person who is relatively healthy wants a cheaper, basic plan that would cover him in the event of a sudden catastrophic illness or freak accident, he’s still forced either to purchase expensive comprehensive coverage or go uninsured.

However one would describe the convoluted U.S. health care system, a free market it is not.

The Myth: 46 million Americans are without health care.

Why It Matters: Whether it’s in political speeches, commentary, newspaper features, or hard news stories, the statistic of 46 million uninsured is one of the most widely cited numbers in the health care debate. It promotes the idea that nearly one out of every six Americans does not have access to health care and it plays into the arguments of those calling for massive expansion of government to fix the problem.

The Reality: The ubiquitous statistic is not pulled out of thin air. It comes from an annual report by the Census Bureau, which most recently pegged the number of uninsured at 45.7 million for 2007. But the problem lies in the way the statistic is commonly cited and understood.

For starters, the statistic does not mean that there are 46 million uninsured Americans. Just a quick look inside the Census Bureau data shows that 9.7 million of the uninsured are not citizens of the United States. Liberals can argue that we still have a moral duty to cover non-citizens, but this doesn’t change the fact that as a matter of accuracy, the Census data only tells us that 36 million Americans are uninsured.

But this doesn’t fully convey the problematic nature of the statistic. As even the authors of the Census Bureau report themselves acknowledge, “health insurance coverage is likely to be underreported” in the Current Population Survey from which the health insurance data is derived. The reason is that when asked about their health coverage status in the prior calendar year, some may answer the question as intended, but others may cite their current insurance status, and others may say they were without insurance even if they only spent a portion of the year without coverage.

“[T]he estimate of the number of people without health insurance,” according to the report, “more closely approximates the number of people who are uninsured at a specific point in time during the year than the number of people uninsured for the entire year.”

In reality, a person who goes without coverage for a few months while between jobs is in a completely different boat from somebody who is permanently without insurance. But the broad citation of the headline figure would have you believe that there are literally 46 million people who never, ever, have coverage.

Another problem with citing the 46 million figure is that many of those who are identified as uninsured are actually eligible for existing government programs but simply never bothered to enroll. In 2003, a BlueCross BlueShield Association study esti mated that about 14 million of the uninsured were eligible for programs such as Medicaid and SCHIP. These people would be signed up for government insurance if they ever made it to the emergency room.

In addition, some of the 46 million could theoretically afford health coverage, but chose not to purchase any. In 2007, 17.6 million of the uninsured had annual incomes of more than $50,000 and 9.1 million earned more than $75,000. As Sally Pipes notes in the Top Ten Myths of American Health Care: A Citizen’s Guide, those making more than $75,000 per year are part of the fastest-growing segment of the uninsured population.

The Census figures also show that 18.3 million of the uninsured were under 34. Some in this age group may have simply determined that they are young and healthy and thus can do without coverage.

When all these factors are put together, the 2003 BlueCross BlueShield study determined that 8.2 million Americans are actually without coverage for the long haul, because they are too poor to purchase health care but earn too much to qualify for government assistance. Even being without insurance still doesn’t mean they won’t have access to care, because federal law forbids hospitals from denying treatment to patients who show up at the emergency rooms.

The Myth: Universal health care will save money, because we’re already picking up the tab for the uninsured when they obtain care they don’t pay for.

Why It Matters: By stressing that covering the uninsured will reduce the reliance on free care, it assuages concerns about the cost of achieving universal coverage. Raising alarm over emergency room costs also fuels the push for mandates requiring that individuals either obtain insurance or pay a fine.

The Reality: The government can reduce the costs of uncompensated health care by expanding coverage, but those “savings” are more than offset by the expense of insuring more people.

The total cost of uncompensated care at hospitals, physicians’ offices, and community providers was $56 billion in 2008, according to Kaiser Family Foundation estimates. While that isn’t chump change, it represents only about 2 percent of the nation’s overall health care expenditures. By contrast, the cost of the type of health care plan being envisioned by President Obama and Democrats in Congress has been estimated to be in the range of $1.2 trillion to $1.5 trillion over 10 years. So even assuming these uncompensated costs could be completely eliminated through universal health care, it wouldn’t come close to covering the cost of increasing coverage. However, experience at the state level suggests that expanding coverage would cut only a fraction of such costs.

In 2006, Massachusetts enacted a landmark health care reform that increased coverage by expanding Medicaid eligibility and providing subsidies for citizens to purchase coverage on a state-run insurance exchange. As more people obtained insurance to comply with a mandate, uncompensated care declined by 38 percent between 2006 and 2009 (projected), saving the state $246 million. However, the Commonwealth Care subsidy program created as a result of the 2006 reform is projected to cost $820 million in 2009 alone, and during the same time period, the state’s expanded Medicaid program saw its price tag swell by $1.1 billion. So in other words, while costs declined by a quarter of a billion dollars in one area, they increased by nearly $2 billion in other areas.

Whatever arguments may be made in favor of universal health care, the idea that it is fiscally prudent does not stand up to close scrutiny.

The Myth: Investing in preventive care will save money in the long run.

Why It Matters: President Obama has emphasized reducing costs in his push for expanding the role of government in health care, and he has cited preventive care as a key to cutting the nation’s medical expenses in the long term. The idea that by preventing illnesses we can avoid costly treatments down the road sounds intuitive. It’s a way of convincing the American people that there are certain commonsense measures we can take to save money and make people healthier at the same time, and thus justify the huge price tag of expanding health care coverage through government.

Obama spoke about the savings potential of preventive care during his campaign, and boasted that this year’s $787 billion economic stimulus package made “the largest investment ever in preventive care, because that is one of the best ways to keep our people healthy and our costs under control.”

The Reality: While the costs of treating an individual for a given illness may be exorbitant, the costs for testing, screening, and providing early treatment for millions of other people is often much higher.

As H. Gilbert Welch, a professor of medicine at the Dartmouth Institute for Health Policy and Clinical Practice, wrote in a New York Times op-ed last year, “Increasing the amount of testing for an ever-expanding list of problems always identifies many more people as having disease and still more as being ‘at risk.’ Screening for heart disease, problems in major blood vessels and a variety of cancers has led to millions of diagnoses of these diseases in people who would never have become sick.”

Overdiagnosis, Welch noted, in addition to incurring unnecessary costs, results in treatment such as surgery or prescription medication, both which have risks and potential side effects.

An article published in the New England Journal of Medicine last year took a more nuanced approach. Co-authors Joshua T. Cohen, Peter J. Neumann, and Milton C. Weinstein argued that preventive care can save money in certain instances, but it depends on the type of illness and who is being targeted.

Writing during last year’s election, the authors concluded that: “Our findings suggest that the broad generalizations made by many presidential candidates can be misleading. These statements convey the message that substantial resources can be saved through prevention. Although some preventive measures do save money, the vast majority reviewed in the health economics literature do not.”

Again, there are arguments to be made in favor of such measures, and no price can be put on a person’s peace of mind if they test negative for a devastating illness, but it is misleading to speak of preventive care as a magic bullet that will substantially reduce our nation’s health care costs.

The Myth: Other countries spend less than the U.S., but get better health care in return.

Why It Matters: If Americans are convinced that government-run health care systems do a superior job of delivering and financing health care, they’ll be more open to the idea of expanding the role of government in the U.S.

“At the rate we’re going, we are expected to spend one-fifth of our economy on health care within a decade,” Obama said in May. “And yet we’re getting less for our money. In fact, we’re spending more on health care than any other nation on earth, even though millions of Americans don’t have the affordable, quality care they deserve, and nearly 46 million Americans don’t have any health insurance at all.”

The Reality: Other systems frequently cited by advocates of government-run health care don’t have magic wands; they set budgets and ration care to the sick. Tests such as CT scans and MRIs that are routinely performed in the U.S. are done with much less frequency in other systems. But while other nations may be able to keep the costs of medical care lower, they have other drawbacks.

When actress Natasha Richardson suffered a head injury in Quebec’s Mont Tremblant ski resort in March, she was forced to take a two-and-a-half hour drive to the nearest trauma center, in Montreal, because a helicopter was not available. After her death, Daniel LeFrançois, director of Quebec’s prehospital care, told the Montreal Gazette that helicopters were expensive, and they weren’t used because medical resources were allocated according to “the biggest gain for the biggest need.” Shortly after Richardson’s death, CNN reported that a seven year- old Ohio girl, Morgan McCracken, survived a similar brain injury. McCracken was rushed by helicopter to a Cleveland hospital from her local emergency room in six minutes even though it would have only been a 30-minute ambulance ride.

To be fair, there’s no way of knowing whether Richardson would have survived even if she were airlifted, or if McCracken would have died if she weren’t. But the incidents are a telling illustration of the differing philosophies in America’s approach to health care and Canada’s single-payer system. America is more geared toward the individual, resulting in high costs in the pursuit of saving a single life, and greater inequality. The Canadian system has a collectivist mentality, in which greater equality and lower costs are achieved by making decisions based on the medical needs of the entire population, often at the expense of individuals.

The collectivist mindset in government-run systems also means longer wait times for treatment. A 2005 ruling by the Supreme Court of Canada struck down a law in Quebec banning private health care. The case was brought by a Quebec resident after he was put on a one-year waiting list for hip-replacement surgery. “Access to a waiting list is not access to health care,” Chief Justice Beverly McLachlin wrote in the decision.

It’s not just Canada. In March, an investigation by Britain’s Healthcare Commission found that between 400 and 1,200 people died as the result of “appalling care” at hospitals in Staffordshire. Japan is suffering its own emergency room crisis, because government isn’t paying doctors enough, resulting in a shortage. In January 2008, a man who was injured in a traffic accident in Osaka died after being rejected by five overcrowded emergency rooms, according to the Japan Times. A month before that, an 89-year-old Osaka woman died after being denied emergency care by 30 hospitals. Sweden suffers from severe waiting times. The situation became so bad that the country’s own prime minister had to wait more than eight months for hip surgery in a period spanning from 2003 into 2004, and he even had to cancel travel plans on which he was supposed to meet with foreign officials. In Germany in 2006, 20,000 doctors went on strike to protest low pay. In France in 2003, nearly 15,000 people died in a heat wave, a crisis exacerbated because many doctors were on summer vacation at the time.

Defenders of government-run systems often point out that the U.S. has lower life expectancy and higher infant mortality rates than other industrialized countries, but neither are reliable indicators. In both cases, statistics are skewed by genetics and ethnicity. And life expectancy is also affected by factors unrelated to the quality of the health care system, such as diet and homicide rates in a given area.

AS CONSERVATIVES PUSH BACK against the prospect of a government takeover of health care in the U.S., it’s imperative that they educate Americans on the true nature of the crisis. For instance, once a person understands how much government already tinkers with the current system, or what is actually behind the statistic of 46 million being uninsured, he will be more open to arguments in favor of a truly free market system. In such a system, the tax status of health insurance could be made fairer, so that individuals enjoy the same benefits for purchasing coverage on their own as others do when getting their health care through their employers. This would also allow them to take their insurance with them from job to job. In addition, they would also have more choices among plans if they could purchase insurance across state lines and not be held hostage by onerous regulations that force them to purchase more insurance than they need. And if they understood the actual costs and tradeoffs involved in moving toward a government-run system, they would be less likely to embrace one. Conservatives may still have a difficult time blunting the momentum in the current health care fight, but they won’t stand a chance unless they attack the underlying premises of the other side.

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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