The three urban myths of healthcare reform

July 20, 2009

Peter Pitts– 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.


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“The [one and only] reason” health care costs have escalated is “not waste fraud and abuse but advances in medical technology and growth in incomes.”

“The” makes this a whitewash. “Growth in income” gives it away–whose? MD’s? Insurance companies? Get off it–if there were one and only reason it would be the unregulated medical system which allows waste, fraud and abuse and is as unaccountable as unregulated banks. Hitech med
helps too, no doubt. But until regulation and accountability we’ll never know the percentages.

Posted by Michael Kubara | Report as abusive

OK. I’ve seen BS on both sides of this argument. What is it exactly we are trying to fix? I could go on with endless anecdotes about health care delivery, but that doesn’t answer the question. If it’s coverage, easy enough..allow those looking for coverage to get it where it’s cheapest, whether inside or outside of their own state (that would be regulatory reform of insurance). If it’s cost of coverage, let’s figure out what the cost elements for the insurance pool are that is driving up cost and go after those (a government offering will not fix this by a susidized, artifically low premium). If it’s the actual cost of health care delivery, let’s look at the cost elements there (including government paperwork, malpractice insurance, and redundant testing).

Posted by wildbiker | Report as abusive

Americans don’t just spend their income on health care, they spend their debt and credit. Pitts give little to no proof of his third point. It is possibly the worst premise I have seen. An LSAT student could see that. Blaming the statistics is not the same as refuting them. Using social problems and stigmas to explain why our health care costs are so high is useless.

Pitts only good point is about the market for insurance coverage. Expanding the market would theoretically be beneficial for health care coverage. However, Pitts would not dare approve of actually regulating the insurance market to the extent needed to cover the remaining 25 million people without coverage. And coverage has no equivalence to low costs.

Posted by PJ | Report as abusive

Too bad Reuters did not identify CMPI or Mr. Pitts as the conservative shills they are. CMPI was born out of a conservative think tank, Pacific Research Institute, and is funded by pharmaceutical companies.

Do you wonder why Mr. Pitts contributes no real data or points to the health care discussion? He has a point of view he is paid to represent, not unlike when he was in a PR firm. Who pays? Check his organization’s web site carefully. You might also look to Don’t be fooled by organization names or mission statements. Remember the dictum: “Follow the money.”

Posted by William | Report as abusive

Our physicians make way more than they do in other countries.
we have far more diagnostic and imaging facilities than other countries. We use our health care, and take way more drugs than they do in other countries. Therefor our cost are much higher.
Our system of employer provided health care is a joke.
Everyone should buy their own coverage and they would
than be aware of the true cost.Than you will see cost come

Posted by pjack | Report as abusive

I firmly believe that moving from the current privatized system to a public health system will not change anything at all. We simply are mving from private insurance to a public plan that is run by the government. Nothing is being done to create the change that is necessary to bring down the cost and increase the availability of care. How about focusing on wellness? There are so many state and federal mandates right now that cause premiums to be higher. There are ways to fix the current system but it’s such a huge cycle that it’s going to take years if it’s properly. All the current government wants to do is stamp their name on this public option. Please, do your research. Don’t believe everything you read and hear on TV. It’s not all fact. Or will you be happy when there is a public plan and you aren’t able to choose your benefits? Don’t worry, someone that just got fired from Wendy’s will make that decision for you.

Posted by Shellie | Report as abusive

“Profits at 10 of the country’s largest publicly traded health insurance companies rose 428 percent from 2000 to 2007, while consumers paid more for less coverage. One of the major reasons, according to a new study, is the growing lack of competition in the private health insurance industry that has led to near monopoly conditions in many markets.”

“Pharmaceuticals again ranked as the most profitable sector in the United States, topping the annual Fortune 500 ranking of America’s top industries, released this month.”

“The single most profitable industry in the United States, the nine largest pharmaceutical companies generated profits of $30.6 billion in 2001. Over the past decade, drug company profits represented an 18.5% return on revenue, some 5.6 times greater that the 3.3% median return of Fortune 500 companies. And according to Fortune magazine, during 2001 — a year in which the Fortune 500 reported the worst financial performance in the magazine’s 48 year history (apart from 1992, which was complicated by a change of accounting rules) — the drug industry ranked first on all three of Fortune’s profitability measures, including return on revenues, return on assets, and return on equity.”

FierceHealthcare reports the following top 10 CEO salaries for 2008.

* Ron Williams – Aetna – Total Compensation: $24,300,112.
* H. Edward Hanway – CIGNA – Total Compensation: $12,236,740.
* Angela Braly – WellPoint – Total Compensation: $9,844,212.
* Dale Wolf – Coventry Health Care – Total Compensation: $9,047,469.
* Michael Neidorff – Centene – Total Compensation: $8,774,483.
* James Carlson – AMERIGROUP – Total Compensation: $5,292,546.
* Michael McCallister – Humana – Total Compensation: $4,764,309.
* Jay Gellert – Health Net – Total Compensation: $4,425,355.
* Richard Barasch – Universal American – Total Compensation: $3,503,702.
* Stephen Hemsley – UnitedHealth Group – Total Compensation: $3,241,042.
Revenue $M %change Profit $M %chan
1 UnitedHealth Group
21 71,542 58 4,159 26
2 Wellpoint
35 56,953 26 3,095 26
3 Aetna
85 25,569 12 1,702 4
4 Humana
110 21,417 49 487 58

My God People! Wake up and smell the coffee. We are being taken to the cleaners by the insurance companies, the pharmaceutical companies, and the Care givers! To tell you the truth what is happening in Congress is not going to solve these Capitalistic abuses. Health care should not be a for profit industry left to itself and unregulated. The government needs to get a grip on these industries and manage their gouging of the American people. A government insurance option is not going to cut it! It is obvious that the Free Market is not working in these industries. Whether it’s due to not enough providers in the market (Oligopoly) or the fact that we are at their mercy or die or a combination of both it does not matter. It is not working! There are hundreds of billions these leaches are skimming off the sick and injured of this nation.

My solution is to capitalize it all.

I have been to Military Hospitals most of my life. While Triage is a pain, the rest is petty damn good. Good Dr. and nurses and a managed health system that is totally controlled by the government and it is a not-for-profit activity that is successful treating our men and women in uniform and their families. Next, stop giving drug companies exclusive rights to their drugs for so long. And Stop this crap of calling it a new drug because you added some Tylenol to it and renewing the patent. And let’s face it, if they want to sell their drugs they will have to sell them to the government so the hospital/pharmacy will dispense.

This is not as radical as it seems. If the government we so piss poor at running a hospital or pharmacy then they would not be doing it for our military. If it was cheaper and better for our boys and girls to get their treatment on the “Free Market” it would be happening. Get real people! The Government is already running hospitals and pharmacies across this nation. The model works! So stop listening to the spin Dr’s trying to make you believe the government can’t do anything right. The Department of Defense has been running hospitals and taking care of the sick and injured for more years than I have been alive.

Posted by B.Free | Report as abusive

it is obscene when someone can horde billions, more than hundreds of people could spend in a lifetime, when others barely get to afford the cost of their own lives. nobody asked to be here, and to cause suffering so you can horde more money than your entire family could truly use in several lifetimes is a crime against humanity. I’m not against rich, i am against obscenely, greedily rich. people who manipulate our government and our citizenry for such ends. yes, someone should get to put a cap on them, or at least make them pay for socialized health services so the rest of the people at least don’t have to suffer sickness on top of monotonous petty materialism.
Socialism causes apathy by itself.
capitalism causes gross class imbalance alone.
the two need to be mixed.
especially in the medical field.

Posted by jeremy | Report as abusive

When did health insurance pricing get so stupidly expensive? Exit the non profit BC/BS system educators formed so that they could get a health benefit that would not break the municipal budget. It was so wildly successful that it inevitably went to the for profit sector. Less than 10 years down the road (from the change) schools are trying to cut insurance benefits to families. So now what? Single payer SSI run healthcare.
I like it.

Posted by DanO | Report as abusive

1/Each country has affective factors that could as easily be summoned in using this argument.
2/Remove the illegal immigrants and you STILL have too many Americans without healthcare insurance.
3/Fine, spend it on docs and the third homes of the drug company VPs instead of tv’s IF you have the money.

America: A public health system for all is a human right if you are middle or upper class americans why worry you can opt out and go private its still about choice for you. But if your lower class or poverty stricken you need this system as its the only real healthcare for you. I am an Australian and you are falling beind the rest of the world do whats right look after your poor & disabled that is their right from those who have much to those who have not.
Charity can be hard to find certainty is an absolute for the poor, funny how its the rich who are against this the most they dont need to worry or is it a selfish greed not to pay more taxes to help their brothers in need.

I live in Canada, our system is great, anything bad you have ever heard about it is a lie.

Posted by Samuel | Report as abusive

Trying to convince people that spending 3 times more on healthcare then 50 years ago is a good thing, just shows scum like this author would sell his own mothers organs if the profit was big enough.

Posted by Moose | Report as abusive

This raises the question I had when Bill Clinton arrogantly declared that 16 percent of GDP (or maybe it was 17 percent then) was too much to spend on healthcare. Who is he to tell me how much of my own money I can spend for any given purpose? Obama should be made to answer the same question.

I’m 70 years old and until this year when I needed my Medicare “A”, no tax payer has ever spent a dime on me except when I was on active duty in the Army. Meanwhile, I keep contributing to Medicare “A” and “B” for others and when I finally need part “B”, I’ll be very angry if the promise is broken.

Posted by Roy | Report as abusive

I tell people who will listen that when my grandfather was alive and working, there was no health insurance. People paid for their health care from their own pocket. If they did not have enough, charity was abundant. When people died it was a tragedy but not a “moral imperative” that government swoop in and pick up the tab. We’ve grown accustom to others paying our bills and the right we declare to health care is but an economic right.

We pay a lot for “health care” today mostly to extend our lives. The length of our lives should not be determined by the amount of money a society can extract from its citizens. Health care reform is not about health at all, but rather who pays the bills – private companies or the government. In either case, the health of someone goes unchanged. We spend tremendous amounts of money treating diseases, many brought upon ourselves because of lifestyle choices. Spending increasing amounts of money to treat self-inflicted disease seems ludicrous at best.

Most of us frown upon stealing from another regardless of the reason and regardless of the wealth of either individual. When a government does it in the name of reform we seem to go numb.

I have a right to life which includes a right to dispose of the fruits of my labor as I see fit. To deny me this right is to deny me the right to support my life. There is no such thing as ‘partially’ destroying a right. You can not create some new medical “right” (which is an actually a declared economic “right” rather than an unalienable one provided in the Constitution) without negating the right to property, and thus the right to life. This is true of any so called economic ‘right.’ If someone receives without working, then someone has worked without receiving. If the “work without receiving” was not voluntary, that man or woman is a slave. This is wrong and needs to be called wrong for the right reasons. It is to bleed dry the life from the healthy and productive in the name of fighting disease. This is true in all economic endeavors that place the so called interests of group or “society” above the actual, self evident, rights of the individual. It is especially ugly to do so in the name of health.

The government has no more business in the health care insurance arena then it does in running banks or car companies. We often forget the words of our founding fathers. James Madison said for example:

“Government is instituted to protect property of every sort…. This being the end of government, that alone is not a just government,…nor is property secure under it, where the property which a man has in his personal safety and personal liberty is violated by arbitrary seizures of one class of citizens for the service of the rest.”

If i’m making enough of a living for myself that I can spend the extra money on health care for myself and my family that i deem acceptable – who do any of you think you are to say i should share my hard earned piece of pie?? If you are too poor to pay for a primary care insurance, you can qualify for state medicaid. If you’re elderly, you have medicaid. If you get fired, you will have a severance package coverage for a period of time that should allot you the time needed to find a new job and insurance. If you can’t qualify for any of that, you need to re-prioritize.
For anyone to tell me that my next door neighbor should get his diabetes meds paid for by me because he drives to mcdonalds 10 times a day to get 10 meals and can’t lift a finger unless it is carrying food to his trap because he’s ‘poor and helpless ‘, you need to do some serious reconsideration.
I am lucky enough to live in Colorado where I have mountains in my backyard and a very active life style. I rarely get sick. The last major medical event in my life involved a basketball game where my leg was fractured. I went to the ER and… brace yourself… paid for everything myself! I didn’t need a handout. I didn’t whine about how other people should pay my bill for me because I chose to play in an aggressive basketball pick up game.
I am in no way, shape or form responsible for illegal immigrants who don’t even pay taxes. I’m not responsible for those too lazy to get a job, or for those who have lost them. I’m financially strapped as a recently graduated college student – I can hardly afford myself, let alone the medical bills of the rest of America.

Posted by IlikeMyRights | Report as abusive

Everyday I drive my father out to the nursing home for a visit with my mother. The most direct route to the “home” takes us through an area that is basically a black area. By 10:00 in the morning there are hundreds of men hanging out on street corners, in front of the party stores and car stereo equipment stores. They are healthy men. Another thing I see on Sundays. After church gets out, they walk the elderly black women home, not leaving them on their own. I see a community. It really hurts me and leaves me wondering…what did we do to our African American brothers and sisters? We took them out of one kind of slavery…but couldn’t wait to put them into another. The liberal left, for generations, has forced them into abject poverty, low self worth and have victimized them for votes. They don’t see it because they’re in it. They have healthy bodies and the potential to have healthy minds. They can’t work their physical bodies to the point of falling into peaceful sleep at night because they haven’t used up the energy their body has stored in their muscles. Are their diets full of fats, sugars, salt, as it appears to be? My heart just cries for them. We’ve made them slaves to a system that they can’t get out of and into a culture of victims. How did we let this happen? Did we vote into office people that we trusted only to find out that they only care about $$$$ instead of raising up a Nation of hard workers, family oriented adults, with a standard of values that will ensure success and prosperity…for votes? It will my life’s commitment to raise up my brothers and sisters regardless of their color and give them the vision of self esteem, victory over emotional and economic slavery and to realize that color is not an obstacle to self fulfillment. In God’s eyes we are all weighty, like gold.

I can’t believe what I am reading here. Nobody seems to have a solid grasp of the problem so the solution has escaped you.
Read some of the following articles:
How to Make Healthcare Cheaper — ow-to-make-health-care-cheaper.html
Understanding the Healthcare Debate — nderstanding-healthcare-debate.html
Watch a simple video that adds to the discussion Here — hat-does-healthcare-really-cost.html

Healthcare is a big issue that needs careful thought and consideration. It also needs to be adaptable and fitting for the user. Government one size fits all approach isn’t going to cut it. Look over all the real issues and then tell your congressmen to to fix what needs fixing.