Below is an in-depth synopsis of the book The Top Ten Myths of American Health Care – A Citizen's Guide by Sally C. Pipes. Although reading the book is highly recommended this synopsis is meant to give a quick overview of the lies being promulgated in order to sell the American public on massive changes to our health care system. Understanding the realities of these myths helps put the discussion in perspective. This is important so that we do not blindly allow our elected officials to sell us a bill of goods we really do not want, do not need and cannot afford.
References are provided for supporting information. Where a reference is simply a page number, it refers to the page number in the book.
Myth #1 – Government Healthcare is More Efficient
Think about health care in places like Europe; you know the "countries where a single-payer system works pretty well" (President Obama to the AMA, June 15, 2009). "Americans have a better survival rate for 13 of the 16 most common cancers. Among men, an American has nearly a 20-percent better chance of living for five years after being diagnosed with cancer than his European counterpart" (p. 9). If your father, brother or husband was diagnosed with cancer wouldn't an extra five years be worth something? You're less likely to get it if you live in Europe, but at least the care is free. There are countless other stories of people who have had to wait for surgery, wait for medication, go to other countries for treatment etc.
Another thought is that we already have government healthcare: it's called Medicare and Medicaid. How is that working out for us? It's costing us a lot of money but we don't realize it. It's been shown over and over that these government plans reimburse hospitals and doctors much less than what commercial insurers pay. "[C]ommercial payers subsidize the cost of Medicare and Medicaid, essentially through a hidden tax." (Hospital & Physician Cost Shift - Payment Level Comparison of Medicare, Medicaid, and Commercial Payers by Milliman Inc.). Is this what is planned for a government option?
Now try this, say "Government Healthcare is more efficient" out loud a few times. Then say "the DMV is more efficient", "the Post Office is more efficient", "the ___(Fill in your favorite government program)___ is more efficient." Repeat these statements a few times. Try saying, "I'd prefer Medicare or Medicaid over my current health insurance." Now, think about it, what does the government do effectively and efficiently? When you think of government do the words effective or efficient even come to mind? Lastly, the author asks a great question: "Does the IRS make paying your taxes simpler?"
Myth #2 – We're Spending too Much on Health Care
"In 1950, the average American spent about $500 a year on health care in 2006 inflation-adjusted dollars…healthcare costs accounted for a mere 5 percent of GDP." "By 2006, those same costs had risen to $7,026 per person, and accounted for 16 percent of GDP." The book is filled with statistics and examples about why we are paying more today than just 50 years ago. But the basic idea is that there is a difference between cost and value. It may cost more but what we get for that greater cost is a better, longer life than we had 50 years ago. The life expectancy during this time has increased by 9 years. The author asks a great question: "How much would you pay for an extra nine years of life?" Are we really spending too much or are we getting what we pay for?
Myth #3 – Forty-Six Million Americans Can't Get Health Care
This is my favorite myth. It is perpetuated in every news story about health care. All you hear about is "the 46 million uninsured", "the 15% of the population that is uninsured" or "the nearly 50 million uninsured". It was a popular quote in the 2008 campaign and was prominently displayed on Obama's website. But who are these 46-million uninsured people? And do we really have to drastically alter our health care system to provide benefits to them?
Well, let's look at who these people are. More than 10 million of these uninsured people are "non-citizens" (a.k.a. illegal aliens). So when we are talking about providing insurance for the 46 million uninsured Americans we're including 10 million illegal aliens and we are going to provide insurance for them? I'm not sure most Americans would be comfortable with their tax dollars funding health care for illegal aliens. Although we already do fund it through the added costs at emergency rooms, but that is a different topic.
"As many as 14 million of the 45.7 million uninsured – poor and low-income Americans – are full eligible for generous government assistance programs like Medicare, Medicaid, and SCHIP [State Children Health Insurance Plan] … they're just not enrolling in these programs." So when the politicians talk about the millions or as Obama says "nearly eight million children" without health insurance, they're not telling you that most of these children are eligible for government programs that their parents do not sign them up for. The author poses another good question: "If 14 million eligibles aren't availing themselves of taxpayer-funded coverage, then why should we think that a still bigger government health care bureaucracy will solve the problem?"
Then there is my favorite group of uninsured people. "Almost 18 million of the uninsured make more than $50,000 a year. And almost 10 million of them have an income of more than $75,000 a year." The median income in this country was just under $50,000 a year in 2006 (see Census report here). This includes a variety of people who just choose not to have insurance. Most of them do not feel the need to have comprehensive health insurance policies and would rather pay for a catastrophic policy if they were able (see myth 6 below). These are people that choose not to have insurance coverage for one reason or another. Forcing them to have health coverage they do not need or want will be like raising their taxes.
"There are roughly eight million of these chronically uninsured, and they really do need help." These are the people that we are really talking about. These are the people that we should be trying to help. Eight million is a lot less than "nearly 50 million" people. Furthermore, according to the Census Bureau, "the number of households with an annual income of less than $25,000 who lack health insurance has gone down steadily since 1998" (p. 40). "[T]he fastest-growing segment of the uninsured is households making more than $75,000 a year" (p. 40).
Myth #4 – High Drug Prices Drive Up Health Care Costs
"In 2007, the United States spent $286.5 billion on prescription drugs." "That same year, Pfizer … had revenues totaling nearly $50 billion" (p. 41). That's a lot of money, but is it too much? That depends on who you want to listen to. The politicians will use statistics like drug spending was only 5% of healthcare costs in the 1970's but is over 10% now (p. 41). The reality is that we are spending more on drugs but these drugs are helping people to avoid expensive procedures and costly hospital stays. Drugs help control chronic diseases (e.g., diabetes, cancer in remission, heart disease, etc.), which account "for about 85 percent of all U.S. health care spending" (p. 43). The more we spend on drugs for these diseases the less we spend on treating these diseases. This is a good thing, right? Then why are the drug companies being vilified as evil profiteers? Are these companies appropriately charging for their products?
These drugs cost a lot of money to develop. "One reason is that most drugs are complete failures that never make it to the pharmacy shelf" (p. 47). Companies need to recoup the money they spend developing the drug that makes it as well as the drugs that do not make it. "[I]t takes, on average, 10 to 15 years" to develop a drug and "it takes about $1.3 billion to bring a single new drug to market. And only two in 10 approved drugs earn enough to cover the cost of research and development" (p. 47). With odds like this, why do drug companies even bother? Because they can make money on the drugs that they do bring to market. This makes it worthwhile and we are the better for it.
Here is a different take on it. How many people remember when flat screen TVs were first introduced in the late 90's? Did you ever price one out? I went to a Circuit City to check one out. They did not have a display model because they were too expensive – over $10,000. Now you can go to Wal-Mart and buy one for under $500. It's hard to find an old tube TV now. So in about 10 years the price of these TVs has gone from over $10,000 to under $1,000. Why is that? Because some people paid the outrageous prices when the TVs were first introduced. This helped pay for the initial development costs of the product. As newer models are released the prices of the older models come down. As the technology improves the prices come down. However, nobody complained that they did not have flat panel TVs back when they were $10,000.
If we push the profit out of the drug companies we will push out the innovation and desire to produce new life-saving drugs. We will not have new life-saving drugs that we have come to expect from our drug companies. Is this what we want?
Myth #5 – Importing Drugs Would Reduce Health Care Costs
"In Canada, prices can be as much as 70 percent lower than in the United States" (p. 53). What? You're kidding, 70% cheaper? Let's open up the borders!! But first, shouldn't we ask why they are cheaper? In most cases foreign countries impose price controls and advanced drugs are not available in these countries. The problem is that only some brand-name drugs are actually cheaper but generic drugs are not. Paying $4 for generic drugs is probably not an option in most of these countries.
Here's another problem: "the United States produces the vast majority of the world's cutting-edge drugs precisely because the free market still plays a role here" (p. 57). So, we pay higher prices for these drugs while other countries impose price controls or do not make the drugs available to their citizens. We pay for the research and development of these drugs while other countries benefit from them. Why do the drug companies continue to sell to these countries? Well, countries like Canada have "promised that if U.S. companies refuse to sell drugs to Canada, it will retaliate by allowing generic companies to steal American patents and reproduce the drugs at a lower price" (p. 58). Wow, talk about strong-arming companies. Another reason drug companies agree to this is because they make their money back on selling the drugs to Americans and then can afford to sell the drugs at a lower price to foreign countries with price controls.
If we implement similar prices controls to artificially lower the cost of drugs we will eventually be left with no new drugs coming to market. Companies will not be able to cover their development costs, let alone make a profit. If there is no profit there is no reason to invest in new drugs and we will ultimately suffer.
Myth #6 – Universal Coverage Can Be Achieved by Forcing Everyone to Buy Insurance
This is a standard call by most politicians. Let's just mandate that everyone has coverage and it will happen. There are quite a few problems with this. In Myth #3 the author showed that there are a lot of people eligible for government health insurance but simply do not apply for it. Will a new law force these people to sign up? Not likely.
The author discusses some great points about this. She talks about the typical young person who does not need to pay for a comprehensive health insurance policy. They may only need a "catastrophic" policy that would cover them if they were injured or became seriously ill. This plan would be affordable but would not be available because that would not be "comprehensive". She also discusses the failures of the Massachusetts law that mandated insurance coverage. It turned out to be a failure and has been abandoned.
Another problem the author discusses is the amount of benefit mandates that are imposed by the states. These mandates require that an insurance policy sold within the state must provide certain benefits. If you want to buy health insurance in your state, because you cannot but it in another state, you must purchase insurance that includes coverage that you may not need but will drive up the cost of your premium. Some of the mandated coverages highlighted in the book are: Acupuncture, Athletic Trainer, Breast Reduction, Hair prosthesis and Massage Therapy.
The whole point is that mandates are not the answer. They only end up driving up the cost.
Myth #7 – Government Prevention Programs Reduce Health Care Costs
This myth is based on what every politician likes to claim – if we make people healthier we can reduce the cost to care for those people. It makes sense but is it really worth it? It turns out that informing people of the dangers of a certain behavior does not change that behavior. The author says: "On the surface, it seems logical to help people stay healthy … [S]tate-run programs to 'create good health' have had an abysmal payoff … They make us less healthy while wasting dollars that could have been better spent" (p. 82). She then continues to discuss some of the prevention programs relating to obesity, smoking, etc. and how they have not been effective. For example, "the federal Nutrition and Education Act mandated that nutritional and caloric readouts be placed on all packaged foods … Yet, since the program was launched … Americans have become fatter" (p. 85).
The interesting part of this discussion is that people who are healthier actually cost more in health care spending. "[M]edical spending on a nonsmoker who dies at the average age of 84 is, on average, $100,00 more than spending on a smoker who dies – presumably aided and abetted by his bad habit – at a relatively youthful 77" (p.89). So, by spending money on prevention programs we are actually increasing the health care costs not decrease them. However, I still believe that some of these programs are worthwhile and instead of being billed as ways to reduce health care costs they should simply be billed as educational programs.
Myth #8 – We Need More Government to Insure Poor Americans
This is the basic principle behind the "government option" that is being discussed today. The reasoning is that the poor need our help and the only way to help them is through the government. The fallacy with this argument is that the poor are already insured by government programs. Whether you believe that health care is a right or not, you are already paying for it. Medicaid is set up to insure the poor. SCHIP is set up to help insure poor children. Another government program is not the answer for insuring the poor people in America since they are already insured. If they are not covered by one of these programs then they simply have not signed up for it.
The problem with these options is that they stink. The quality of care is low. Most doctors do not accept the insurance so finding a quality doctor is hard. "Because it's often too difficult for Medicaid patients to find a doctor, they end up going to expensive emergency rooms, where they can't be turned away" (p. 97). As discussed in Myth #1 these programs do not reimburse at 100% so we all wind up paying more for our own care to subsidize these programs. When you add in the fraud that is inherent in Medicaid it adds up to a big, expensive, substandard mess. And the politicians think that another "government option" is the answer?
Myth #9 – Health Information Technology Is a Silver Bullet for Reducing Costs
The idea behind Health Information Technology (HIT) is that if we computerize all of our health records we can reduce costs. This is probably true but implementing it correctly is a problem. Can we confidently rely on government to implement this for us? Another problem is the cost to implement it versus what it would save us. According to one study, with properly implemented HIT we could save $77 billion a year but we spend $2.3 trillion a year on health care (p.113). This amounts to a savings of 3.3%. The author continues with some examples of hospitals that have implemented systems. One saves about $1 million a year while the system cost them $300 million. That seems like a bad return on investment. It's a good idea, not so much for the cost savings, but because it will reduce errors and improve patient care in the long run. All in all the savings from HIT are not as large as the politicians would like us to believe.
Myth #10 – Government-Run Health Care Systems in Other Countries are Better and Cheaper than America's
This myth is constantly perpetuated in the media and by the politicians. Obama claimed that "there are countries where a single-payer system works pretty well." However, when his press secretary was asked which countries those were, he responded "I don't know exactly the countries. I think if you talk to the people in the countries that have that system, they think their health care is pretty good." Really? That's the best these politicians can come up with? If there are countries where this works then let's hear from them. Don't quote unnamed countries and tell us that "their health care is pretty good." On top of that, our health care is excellent not "pretty good". I for one would prefer to keep it excellent versus dropping it to "pretty good".
This is a very important topic because the politicians and media "experts" will tell us that our health care is very expensive and the results are very poor compared to other countries. They cite statistics from the 2008 CIA World Factbook that says the US ranks 42nd in infant mortality (the number of deaths per 1,000 live births) putting us behind many countries, including Cuba (p. 121). And how about coming in at 29th for life expectancy? That's horrible, right? Not quite.
First off, the author relays a personal story about an uncle living in Canada who had cancer. A drug that could have helped him was not available in Canada. If he wanted it he would have had to travel to the US. He was not able to do so and was dead in 6 months (p. 123). She also talks about her mother in Canada who was denied services because she "was too old and too sick to merit the highest quality care" (p.123). Stories like this are abundant. Just do a search on the internet. It's out there for people that want to be informed.
The author then goes on to discuss the economics of health care for all. One of her main points is the concept of no responsibility. If health care is "free" then you have no reason to watch what you eat, drink or smoke. If you need a new liver, the government pays for it. Drugs? No problem – the government is there for you. Responsibility? No need for it when you're not paying. The point is that when individuals are responsible for paying they are typically more responsible in their behavior. Maybe that explains the decay that is so prevalent in government housing, but that's a topic for another day.
She then goes on to discuss the concept of waiting lists and rationing. It's a fact of life under government run health care. It happens in all of those "countries where a single-payer system works pretty well". When there are only so many doctors to service people there will be waiting lists and rationing. One of the best headings in the book is "Access to a waiting list is not access to health care". The author provides countless examples and statistics from Canada and Europe that show long waits for procedures and a lack of access to services and drugs. She quotes a physician from Canada who said Canada "is a country in which dogs can get a hip replacement in under a week and in which humans can wait two to three years" (p. 125). There are many reasons for rationing and waiting lists including: too many people needing service, a lock of doctors, a lack of resources and a lack of money. Waiting lists and rationing are coming with the "government option" – it's a reality that we will be forced to deal with.
As for the statistics about life expectancy and infant mortality there are many factors that influence these numbers. The author calls these numbers "crude indicators" that "don't reflect the quality of a health care system". Life expectancy is influenced by a variety of factors including the homicide rate and accident rates. America's homicide rate was 5.9 per 100,000 in 2004 versus 1.95 in Canada. We also had 14.24 fatalities per 100,00 people from auto accidents in 2006 versus 9.25 in Canada (p. 132). These numbers, although not good, impact the life expectancy numbers. And the infant mortality rate is reported by the individual countries. The US follows the World Health Organization's definition of a live birth as being 'any infant that, once removed from its mother, "breathes or shows any other evidence of life such as beating of the heart …" ' (p. 133). Other countries are more conservative in their definitions. This causes the numbers for those countries to be higher and make the numbers look better. Talk about comparing apples and oranges and deciding that we are inferior. It's amazing what you can do with numbers.
The bottom line is that the US has the best health care system in the world. It is certainly better than the "countries where a single-payer system works pretty well". It is not universal care which it why it remains the best.
The author states: "None of the preceding chapters is meant to suggest that America's health care system is perfect. It's not" (p. 139). I have to agree. There are a lot of problems with our health care system, especially with the government's involvement. There are some real reforms that could be implemented that would help alleviate the problems but they do not include the government taking over. If politicians really wanted to reform health care to make it more affordable and more available to all, they'd consider some of the solutions discussed in this book and elsewhere. Here are the ones highlighted in the book:
Change the tax code
Currently employers are able to deduct health insurance premiums that they pay for their employees. Employers started providing this benefit after World War II because wage controls made it hard for employers to attract employees. This results in employer-provided health care that is paid with pre-tax dollars. This introduces several problems. The first is that it makes it harder for people to change jobs. If people leave their employer they risk losing their health insurance. People do not start new businesses because they would have to get their own coverage. If they have a pre-existing condition that is almost impossible. Also, when employees do not pay for their coverage we have the same problem with government provided insurance – no responsibility. The employee just takes what the employer gives them and does not look at other alternatives. The other thing employees think is that they are getting "free" health insurance. The problem is that it is not free; they just pay for it with reduced wages. Several ideas that are floated are to change the tax code so that individuals could deduct their health care expenses.
Reduce costly government mandates and regulations
This is a simple one: less government is always better. "According to the Council for Affordable Health Insurance, mandated benefits can increase the cost of health insurance by up to 50 percent" (p. 142). Can you imagine paying half of what you currently pay for health insurance? Some amount of mandates is necessary but we need to draw the line somewhere.
Allow the purchase of insurance across state lines
To further the mandate reduction argument, consider that we cannot purchase insurance from another state because the mandates from state to state are so different. "Take the case of a hypothetical 25-year-old man from New Jersey. According to the Commonwealth Fund, he would have to shell out roughly $5,580 each year for a standard health insurance policy. A similar policy in Kentucky – which has far fewer mandated coverage benefits than New Jersey – would run him just $960 annually" (p. 143). Now some may call this cherry picking because Kentucky has a lower cost of living than New Jersey so of course the insurance policy would be cheaper. While that may be true, $4,600 a year is a huge difference. One also must consider that the lawsuits in New Jersey are a lot more prevalent than in Kentucky (see Tort Reform below).
Expand Health Savings Accounts (HSA)
"An HSA is a tax-free, interest-accruing savings account that can be used to pay for routine medical expenses" (p. 143). These accounts normally go along with a catastrophic insurance policy and can turn into a retirement savings account. They give people more control over their health care decisions. The limits on contributions need to be increased and restrictions on these accounts need to reduced so that these accounts would become more popular and more powerful.
Support retail health clinics
Recently, large retail stores and pharmacy chains are offering retail health clinics. These clinics are often open 24 hours a day making them convenient for people to visit after hours. They are also reasonably priced, at around $50 per visit. With insurance co-pays at $30 to $40 these prices are not that far off. A lot of patients attending these clinics do so without health insurance. In most cases patients are seen by a nurse practitioner. Unfortunately, these clinics are not well supported by the AMA and legislators.
Implement tort reform
This would seem obvious but the 1,000+ page House plan does not include any of it. It's a simple process, litigation adds to the costs of health care. "Malpractice insurance can cost specialty physicians as much as $240,000 per year" (p. 146). This like a hidden tax and should be reformed.
Provide vouchers for the working poor and chronically uninsured
This is the same concept as school vouchers. Give a voucher to people who really need help and let them purchase their own insurance. It does not need to be a government option. It can be done with a free market. There are truly people that need help and any compassionate person would agree that we should help them. But let's put the power in their hands and not in the government.
