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The truth about health care 'truths'

David Gratzer
The Dallas Morning News
March 27, 2009

The high cost of health care "causes a bankruptcy in America every 30 seconds," we're told repeatedly by Barack Obama's administration. The president mentioned these exact words twice in recent weeks, before Congress and at the opening of his health care summit.

There's only one problem: It's completely false, drawing on four–year–old bankruptcy stats and a discredited paper co–written by an advocate of socialized medicine suggesting that half of bankruptcies are due to health expenses.

As Americans consider health care reform, it's important to get our basic facts right. So consider these bipartisan "truths":

American health care is an underperformer

Obama has said that we spend "50 percent more on health care than other industrialized nations. And yet, we don't have... better outcomes." By outcomes, the president meant measures like life expectancy. That's a theme repeated in the report accompanying the Democratic Party's convention platform. It claims: "We spend more on health care than any other country, but we're ranked 47th in life expectancy."

This much is true: Americans live fewer years than people in Canada, Britain and France. But how long a person lives isn't simply about access to health care but reflects various factors: tobacco and alcohol use, genetics, diet, crime rates. Economist Robert Ohsfeldt and John Schneider observe that deaths from accidents and homicides in America are much higher than in any other developed country. Exclude these unintentional deaths from the statistics, and Americans come out on top in life expectancy.

If we measure a health care system by how well patients are treated, American health care excels—besting the European systems in 13 of 16 cancers and boasting better survival post–transplantations.

Prevention saves money

Prevention is embraced by members of both parties. Republican Gov. Mike Huckabee explained that a focus on prevention "would save countless lives, pain and suffering by the victims of chronic conditions, and billions of dollars." Obama bemoaned the fact that "less than 4 cents of every health dollar is spent on prevention and public health" and pledged to do something about this.

Intuitively, prevention makes sense: Teach seventh- and eighth-grade students not to smoke, and the high costs of lung cancer care can be avoided. But in a review published in the New England Journal of Medicine, analyzing 599 papers, researchers found that most preventive care measures—like targeting adolescents with tobacco education—increase costs. In fact, less than one in five interventions save money; in some cases, costs can be increased and outcomes actually worsened.

Prescription drugs are a major driver of health-care costs

During the campaign, Sen. John McCain went so far as to describe them as the "bad guys." He wasn't talking about terrorists, though—he was referring to pharmaceutical companies. Obama has also bemoaned the high cost of prescription drugs, noting that they have driven up overall health spending. Both endorsed reimportation, a plan to bring in price–controlled medications from Canada and other countries.

But health care spending isn't quite so simple. Prescription drugs account for about 10 cents on every health care dollar. Pharmaceuticals have shown less growth (about 3.4 percent in 2008), by the way, than other areas, like hospitals (7.2 percent).

And reimportation is not a panacea: Even if all pharmaceutical-industry profits were eliminated, the savings would be small, equivalent to a one-time freeze in health care cost inflation of about three months.

Politicians are eager to take up health reform this year, and there are good reasons to do that: from rising costs to the uneven quality of American health care. But we need good medicine for an ailing system, not populist rhetoric.

David Gratzer is a physician and a senior fellow at the Manhattan Institute. He may be contacted through

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