5 Myths About Our Ailing Health-Care System
With Congress ready to spend $700 billion to prop up the U.S. economy, enacting health-care reform may seem about as likely as the Dow hitting 10,000 again before the end of the year. But it may be more doable than you think, provided we dispel a few myths about how health care works and how much reform Americans are willing to stomach.
1. America has the best health care in the world.
Let's bury this one once and for all. The United States is No. 1 in only one sense: the amount we shell out for health care. We have the most expensive system in the world per capita, but we lag behind many developed countries on virtually every health statistic you can name. Life expectancy at birth? We rank near the bottom of countries in the Organization for Economic Cooperation and Development, just ahead of Cuba and way behind Japan, France, Italy, Sweden and Canada, countries whose governments (gasp!) pay for the lion's share of health care. Infant mortality in the United States is 6.8 per 1,000 births, more than twice as high as in Japan, Norway and Sweden and worse than in Poland and Hungary. We're doing a better job than most on reducing smoking rates, but our obesity epidemic is out of control, our death rate from prostate cancer is only slightly lower than the United Kingdom's, and in at least one study, American heart attack patients did no better than Swedish patients, even though the Americans got twice as many high-tech treatments.
Moreover, the quality of health care is different in different parts of the country. The Centers for Medicare and Medicaid Services have issued a list of 26 measures of quality, such as making sure that heart-attack patients being discharged from the hospital get a prescription for a beta blocker or aspirin to help reduce the risk of a second attack. It turns out that quality is all over the map, and it isn't necessarily better in the places we might expect, such as academic medical centers. Worse still, according to the Congressional Budget Office (CBO), there appears to be no connection between how much Medicare and other payers spend on patients in different parts of the country and the quality of the care the patients receive. You are no more likely to get that beta blocker or aspirin in Los Angeles than in Portland, even though Medicare spends twice as much per beneficiary in Los Angeles.
2. Somebody else is paying for your health insurance.
Nope. Even when your employer offers coverage, he isn't reaching into his own pocket to cover you and your fellow employees; he's reaching into your pocket, paying you lower wages than he would if he didn't have to pay for your health insurance.
Rising health-care costs are partly to blame for stagnant wages. Over the past five years, health insurance premiums have risen 5.5 times faster on average than inflation, 2.3 times faster than business income and four times faster than workers' earnings. Four times. That's why wages have been nearly flat since the 1980s, even as U.S. productivity has been going up. In effect, about half the money you should be earning for being more productive is being sucked up by ever more expensive health-insurance premiums.
If you pay taxes, you're also paying for the health care provided through state and federal programs such as Medicare, Medicaid, the Veterans Administration and the military. All told, the average family of four is coughing up $29,000 a year for health care through taxes, lower wages and out-of-pocket medical expenses.
3. We would save a lot if we could cut the administrative waste of private insurance.
The idea that we could wring billions of dollars in savings this way is seductive, but it wouldn't really accomplish that much. For one thing, some administrative costs are not only necessary but beneficial. Following heart-attack or cancer patients to see which interventions work best is an administrative cost, but it's also invaluable if you want to improve care. Tracking the rate of heart attacks from drugs such as Avandia is key to ensuring safe pharmaceuticals.
Let's just say that we could wave a magic wand and cut private insurers' overhead by half, to what the Canadian government spends on administering its health-care system -- 15 percent. How much would we save? Not as much as you may think. Private insurers pay a little more than a third of what we spend on health care, which means that we'd cut a little more than 5 percent from our total budget, or about $124 billion. That's not peanuts, but it's not even enough to cover everybody who's currently uninsured.