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.

78 comments

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#3 would only be true if we had longer life spans than countries that spent less. You have extended the marketing mantra of “I’m worth it” to healthcare, forgetting that you have crossed from luxury consumption to necessities.

Take a look at recent Canadian crime statistics – the murder rates in the two countries are converging (still lower in Canada) yet the Canadians spend far less on health care and still live longer. Overall crime rates in Canada are very close to those in the US, which implies to me that stress and other health risks associated with crime would be similar.

Incomes have increased considerably since 1950, so even if the percentage of income spent on health care remained constant, the absolute spending would have increased. The reality is that the percent of income increased by a staggering amount, and incomes also rose. The combination should not be ignored and certainly is not a “symptom of success”. What is the logical end to this progression – will you declare total victory when health care costs are 50% of income? 95%? The percentage has tripled in approximately 60 years – in another 60 years, the percentage will be close to 50%. We can extrapolate this trend to mean almost 100% of income going to healthcare in 100 years time. Success? I have a 2-year-old – how can I live with myself knowing I have guaranteed she will be bankrupted by healthcare costs?

Would you like to revisit #3 with more persuasive arguments?

This article is “anti-reform by sound bite”. Shame.

Posted by David | Report as abusive

Very good points. I would suggest also, that much of the problem with the healthcare system is the fact that we already have at least the two large government run programs, Medicare and Medicaid and overregulation of the insurance industry. It is difficult for any private insurance company to provide and expand their offerings when they are competing against government programs that are subsidized by taxpayer money. It would be the death of all private insurance if a third ‘public option’ is mandated. Many folks that choose not to purchase insurance now also know deep down that they will get at least emergency care because government (our politicians) has mandated it… So, why should they bother? We don’t need more government regulation and programs. We need less.

Posted by Ann | Report as abusive

In my opinion is that “Peter J. Pitts” is not doing a good job to the american people, but is only his own opinion and of course not framed on a real and deep analisys of the american society in terms of social and especially about the health system, one thing that is of key interest to the prosperity of the americans as a country.

If USA wants to be a real great country must be great also in the “health system” giving to all, at affordable prices (specially to all american people, and of course the people who visit the USA).

I am an alien who visited a lot of countries as tourist, and traveled through many places of Canada and I know more or less the health system from this country.

I traveled much more through USA (east and west) and unfortunately I had to go to an hospital because I felt sick. I was there during 10 hours and they giving me a very poor attention (but giving an excessive attention to some other details, only to justify and catch a great amount of money in the end, at point that the final bill was so huge that I considered completely a robbery (I say this with great respect to all american people, but I think that this incident don’t deserve any respect). What I count here, in my country would be considered completely unacceptable.

The americans with less money deserve better, because waht I count here, is what happens to who don’t have enough money to pay for health (that wasn’t much my case), or even worse, because the “the doctors and insurances” present bills to pay much more that the service they provide to the people.

Sorry for this long text, but I think that I am providing a better service in order to inform the american people and making them to be more aware about this problematic.

Wow, what an amazing effort to obfuscate the facts about healthcare in America. I wonder which insurance lobby is paying Mr. Pitts.

Point 1 — while gun violence is clearly not a healthcare issue; the obesity epidemic and teen pregnancy certainly are. At a minimum they are serious public health issues, and any compentent nation would address these issues as part of a comprehensive approach to national health.

Point 2 — one can argue the numbers of the uninsured (and more seriously the underinsured who pay for worthless insurance), but that fact that a significant fraction of our population lacks insured access to appropriate health care is a moral blight. Shame on you Mr. Pitts for your “I have mine — too bad for you” attitude.

Point 3 — one word — France. Anyone that can argue that the US, by spending twice a much per person, but getting a fraction of the results is clearly on the insurance lobby payroll, pocketing the difference. It is not success to line insurance pockets instead of providing care.

What a shameful editorial, Mr. Pitts.

Posted by Jeff Hovis | Report as abusive

Wow! This article ought to be required reading for every legislator, with copies to His Highny.

Posted by Anson Galyon | Report as abusive

Health care is not a new car. it is not a luxury or a privilege to be based on class and income. the health and very lives of Americans is not a product.

“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.”

this is what this says. it may as well be referring to a new development in air-bags.

there is a problem sir. a very large one. I will not copy and paste quotes and figures to express something which affects my life. the plain fact is the $98 dollar insurance you speak of is a joke. no American who tries for affordable insurance would agree that it benefits anyone but the company. these companies very foundations lie in the denial of payment, treatment administered to a client is referred to as a “medical loss” in their own terminology.

the average lifespan of Americans is affected by the lack of preventative medicine, a symptom of the aforementioned “medical loss” approach to the administration of medicine. to many Americans it is not an option unless they wish to go into insurmountable debt.

our system is nothing short of greed unchecked.

this is the only civilized nation on the face of the planet without socialized health care. we are not an island, we do not always know best. the systems implemented around the world in countries like England, whos currency is worth twice ours, is not only universal but highly successful for all parties concerned.

the question that arises in our country much too often is this: how much money do you really need?

Posted by jeremy | Report as abusive

Great article…it’s frightening to think what hasty politicians have done throughout history.

Posted by Mike | Report as abusive

#3 Yes, we are spending more because of advances in technology and more disposable income, but why are we spending so much more than other countries with high tech healthcare systems and high standards of living? It isn’t all because we are fat, bad drivers with guns. There is huge waste and inefficiency in a system that doesn’t provide any basic primary and preventive care to millions and then intervenes and spends the most healthcare dollars in the last days of life – when most want to die with dignity.

Posted by Stew | Report as abusive

We spend more because we take care of our seniors. We just buried my mother-in-law who had returned to her native country to live out the rest of her years. Universal Health Care killed her. The first night she went to the hospital they sent her home because saying she was dehydrated. The next morning she went back to another hospital to die. She had developed a hole in her intestines that had led to septic chock. My sister-in-law, an ICU doctor, read the reports from the first night and was in shock. In this country, the discharging doctor would have been facing criminal charges (let alone a lawsuit).

Sh was 75. So I guess she had a decent life expectancy – but she probably wouldn’t have died if she had been over there. The doctors in the European country (greece) just shrugged and said they would look into it (and to be fair, the government did order an autopsy because it was considered an unusual death) because there are no reprecussions. At least the private hospital that she went to on the second day did everything right – it was just too late to clean up the socialized one’s mistakes.

This is our future. Over 70, all bets are off.

Posted by Susan, NYC | Report as abusive

The Three Urban Myths the Insurance companies believe in.

1) We have the best system on earth and we don’t need change anything

2) Fantastic health insurance is cheap and everyone can afford the best health care in the world.

3) Insurance companies take care of their policy holders and never get between your doctor and yourself.

4)Your great policy will always be there for you even if you get seriously ill. (see: rescission)

5) Your policy will never get more expensive if you get sick and need that great care.

Posted by Ray | Report as abusive

It is obvious from the comments that one hears precisely what one wants to hear.

Posted by Ron | Report as abusive

It’s really quite humorous to read opinions regarding health care. I have a decent chunk of my paycheck go to healthcare and yet the company refuses all medical procedures I have gone for. I am going for preventative care, which apparently is not covered. And this came after trying to get treatment for a “pre-existing condition” (which they did not cover). So…the insurance giant does not cover care to stop pain before it begins nor do they cover care to stop pain once it starts. Remind me again why I’m paying? Did I mention they only cover less than 10% of my pharmacy costs at the moment? Thanks. Thanks for that, Aetna.

I would like to know who of the legislators and pundits who are anti socialised health care have actually gone without. I did for 5 years and it was a scary time, but since monthly coverage was more than my monthly income, I had to make do and assume the concussion wouldn’t kill me.

Posted by Caty | Report as abusive

I think health care would be much cheaper if the drug companies did not spend their dollars on TV advertising for various prescription drugs with the advise “ask your doctor”
TV time is expensive, and doctors time can be better spent than answering all the patients who want to be evaluated for drugs with serious complication.

This piece is an anti-reform political advertisement which does not deserve a place on a Reuters page.

Posted by Ralph Dratman | Report as abusive

Following the article:
1. Lower Life Expectancy:
This can be carried further. Higher rates of obesity, smoking, infant mortality, and physically destructive behavior are found in lower income groups where uninsured people are concentrated. Ditto occupational exposure to accidents and carcinogens and some differences in exposure due to place of residence.

2. 47 Million Uninsured:
“…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).”

Nearly everything costs less in Iowa, attributing the difference in medical care costs to regulations in NY is disingenuous. Wouldn’t insurance costs reflect the state of residence? The suggestion also gets states out of regulating health insurance and places it in Washington only. Why does a nominal conservative advocate that? When most of us consider a more efficient medical care system, we didn’t have in mind reducing lobbying expenses.

3. We Spend “Too Much” on Healthcare :
Countries like Germany use more expensive modern medical technology too. Yet they spend a lower percentage GDP on medical care with equal or better results. The US medical care system is not a result of capitalism and markets – it’s a product of decades of pay to play in Washington and state capitols plus tax payer funded basic R&D. Medicine and the financial sector will take 1/4 US GDP in a year or so and are gobbling up the US economy required to support them.

The US medical care/insurance system seems to be the biggest reason for the lack of employment for Americans over 50 or so. That is a real reality disconnection – no economy can pay for increasing lifespans and decreasing workspans.

A little OT – pharma companies are now actually betting billions that they will discover drugs that will retard and treat human aging as such. First likely out of the gate will be Resveratrol derivatives. My guess is that the pharma companies will attempt to limit the distribution of Resveratrol as a drug and sell their derivatives for very high prices.

We might actually start to see a marked separation in life and health spans from income levels. That would add a new dimension to the idea of social and economic classes that could be destabilizing. However, many of the benefits of Resveratrol can apparently be gained by lifestyle changes, especially caloric intake restriction. So the benefit of Resveratrol-based drugs might be to allow the user to live like a slob and survive anyway. People will accept that as a result of ability to pay for the drugs. They may not accept too expensive lifespan extending drugs otherwise nor really expensive but very effective cancer treatments only available to very high incomes.

Posted by maguro_01 | Report as abusive

As one of the few surviving black men in his 20′s left in America after the great (stereotype) gang wars, I must contest: I have never declined employer offered medical nor have I, despite applying twice, been approved for Medicaid.

So what you’re saying is I should just go love myself sidewards and die so you can squeeze in another latte before lunch?

I’ll take genuine reform of an obviously broken (for those of us that fall into that 40-million uninsured) system over your baseless, statistically inaccurate and stereotypical opinion any day.

Posted by Jarrett | Report as abusive

I think people should be aware that Center for Medicine in the Public Interest receives some of it’s funding from the pharmaceutical industry. I think the influence of that funding is evident in the bizarre belief that “increasing expenditures could just as well be a symptom of success”. I guess Mr. Pitts is unaware or unconcerned that medical related costs is the leading cause of bankruptcy in this country.

Posted by Sean | Report as abusive

Buying health insurance across state lines is a facile argument, usually pushed by those who think that deregulation is the answer to everything. It would remove almost all the consumer protections currently in place, giving insurance companies free reign to overpromise and underdeliver.

On the face of it, the lower premiums seem attractive, but the investment banks did a stellar job last year of showing us how well unregulated industries do when it comes to protecting their customers and stakeholders.

Lets lay the problem of health care costs where it belongs. At the feet of the trial lawyers and punitive damages. We should establish a fund for providing care to the people that were abused by doctors, hospitals and business that need to be punished for their crimes and negligence. Individuals can draw from this fund to maintain quality of life. Limit the ambulance chasers to a percentage of actual damages rather than the amount of punitive damages. This would reduce liability insurance to doctors and hospitals, reduce the number of ‘cover your ass’ tests and ultimately reduce the costs. While we are on the subject, we should drive the doctors out of the profession when they exhibit performance that clearly demonstrates that they are more concerned with the money they can make than the wellness of their patients. The insurance companies have a database on every individual that is fed information from the health professionals. Why not do the same for the doctors that are continually sued for malpractice. You might get rid of a lot of crackheads this way. There is no one, NO ONE that can get a decent doctor to tell the truth about a incompetent physician. Doctors are people, people make mistakes but some doctors are forever making the same mistakes. How many doctors have their licenses to practice medicine revoked? It is a crime the way these spineless sycophants will not testify against doctors that are doing a disservice to the profession by failing to offer the truth.

Posted by Ed Smith | Report as abusive

The fastest way to lower health care costs in America is to simply put a 2 million unmoveable cap on lawsuits and require insurance companies to pass the reduced cost to customers. The major reason doctors costs are so high is the extreame cost of thier malpractice insurance which is forced by the unrealistic law suit awards.

Posted by Les Thompson | Report as abusive