The Mythology of Health Care Reform
Friday, March 03, 2006
By Michael Tanner
Health care is once again moving to the top of the national political agenda. The early evidence is that this debate will be dominated by misinformation and misconceptions. Advocates of a government-run, national health-care system will do everything they can to frighten Americans and discredit consumer-directed health care. But we would be advised to look at the facts and not the scare tactics.
The Claim: The U.S. spends too much on health care.
The Facts: It is true that the United States spends more on health care than any other country. Why is that a bad thing? There is no “right” amount to spend on health care or anything else. The United States spends more on athletic shoes than any other country. No one speaks of the athletic shoe crisis.
Economists consider health care a “normal good,” meaning that spending rises or falls with income. As incomes rise, people demand more and better health care. America's wealth determines its spending on healthcare.
The real problem is the fact that the people spending the money are not the people paying the bills. Because those purchasing health care are able to pass the bill onto third parties, the usual market disciplines don’t apply. True health-care reform would focus on giving consumers a greater stake in the decision-making process.
The Claim: Though we spend more, we get less.
The Facts: America offers the highest quality health care in the world. Most of the world’s top doctors, hospitals and research facilities are located in the United States. Eighteen of the last 25 winners of the Nobel Prize in Medicine either are U.S. citizens or work here. U.S. companies have developed half of all the major new medicines introduced worldwide over the past 20 years. And Americans played a key role in 80 percent of the most important medical advances of the past 30 years.
If you are diagnosed with a serious illness, the United States is the place you want to be. Tens of thousands of patients from around the world come to this country every year for treatment.
Critics of American health care often point out that other countries have higher life expectancies or lower infant mortality rates, but those two indicators are bad ways to measure the quality of a nation’s health-care system. In the United States, very low-birth-weight infants have a much greater chance of being brought to term with the latest medical technologies. Some of those low-birth-weight babies die soon after birth, which boosts our infant mortality rate, but in many other Western countries, those high-risk, low-birth-weight infants are not included when infant mortality is calculated.
Life expectancies are also affected by other factors like violent crime, poverty, obesity, tobacco, and drug use, and other issues unrelated to health care. When you compare the outcome for specific diseases like cancer or heart disease, the United States outperforms the rest of the world.
The Claim: A government-run health-care system would expand access to care.
The Facts: The one common characteristic of all national health care systems is that they ration care. Sometimes they ration it by denying certain types of treatment altogether. More often, they ration indirectly, imposing cost constraints through budgets, waiting lines, or limited technology. One million Britons are waiting for admission to National Health Service hospitals at any given time, and shortages force the NHS to cancel as many as 100,000 operations each year. Roughly 90,000 New Zealanders are facing similar waits. In Sweden, the wait for heart surgery can be as long as 25 weeks. In Canada more than 800,000 patients are currently on waiting lists for medical procedures.
The Claim: Health care is too complex for average Americans to make decisions about price and quality.
The Facts: Health care is increasingly high-tech and complex, but so are many other products and services that Americans purchase everyday without specialized expertise. A consumer does not need to know how an internal combustion engine works in order to buy a reliable car, or how silicon chips are manufactured before he selects a computer. When consumers have good information about product prices, quality and safety, they naturally gravitate toward the goods and services that offer the highest value for the lowest price.
There are numerous studies that show health-care consumers make decisions about price and quality. The current problem with the healthcare sector is that there isn’t enough good information available for consumers to make sound decisions about which healthcare provider or facilities offer the best value. But that’s rapidly changing as providers respond to increased consumer empowerment.
At the same time, patient advocacy companies are springing up to help health-care consumers make informed choices. When consumers, rather than insurers or employers, control the money, markets naturally respond.
The U.S. health-care system represents one-seventh of the American economy, and is literally a matter of life and death for millions of Americans. Here's hoping that they'll be able to sort the facts from the fallacies in the coming debate.
Michael Tanner is the director of health and welfare studies at the Cato Institute and director of Cato's Project on Social Security Choice.
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