BigGovHealth Improve and Strengthen Health Care for all Americans

Myths and Facts

Myth: Health care costs in the United States, already high, continue to increase because of rising health care premiums.

Fact: It is actually the other way around. Health care premiums are increasing because they are responding to the rising costs associated with providing health care services. According to PriceWaterhouseCoopers’ analysis, Factors Fueling Rising Healthcare Costs 2006:

• Premium increases closely follow health care spending increases over time. From 1993-2003, premiums great at an annual rate of 7.3 percent, while the cost of health care services great at an annual rate of 7.2 percent.
• Poor quality health care and litigation also increase health care costs. A 2002 Juran Institute study estimated that poor health care quality accounts for 30 percent of all direct health care spending as a result of overuse, misuse and waste. Another study estimated that the direct cost of litigation and defensive medicine increases health care spending by 10 percent.

Myth: Private health care plans spend too much on administrative costs and not enough on patient care.

Fact: According to PriceWaterhouseCoopers’ analysis, Factors Fueling Rising Healthcare Costs 2006, only 6 cents of every health care premium dollar is devoted to administrative costs, while 86 cents is applied to medical care such as prescription drugs, physicians and hospitals.

Myth: The Medicare Part D plan will hand over $800 billion of our tax dollars to the drug and health insurance industry.

Fact: The Centers for Medicare and Medicaid Services (CMS) reported that the cost of Medicare Part D is $189 billion less than predicted. The CMS cost estimates refer to program administration, not profit made by the pharmaceutical and health insurance industries. Insurance companies offering Medicare Part D plans are not-for-profit as well as for profit.

Myth: The elderly could end up paying more for their prescription drugs today than they did before Congress passed the Medicare Modernization Act.

Fact: An August 2006 Public Opinions Strategy poll revealed that, on average, seniors are paying less than half of what they paid monthly for medicines before Congress enacted Medicare Part D. “Only three million of the 23 million seniors who participate in the program will experience a gap in coverage – or the so-called ‘doughnut hole’ which kicks in after the senior and government have spent a combined $2,250” – according to the Kaiser Family Foundation survey. One million of these seniors will receive “catastrophic” coverage, while lower-income seniors are eligible to receive additional financial assistance.

Myth: Countries with government-controlled health care systems have free health care.

Fact: Government-controlled health care isn’t free – it comes at a great cost through higher taxes, wait times and denials of coverage. According to the OECD the French pay 20 percent more in taxes than Americans, while Canadians wait an average of 17.8 weeks from general practitioners’ referrals to treatment by a specialist according to the Fraser Institute. In the United Kingdom, according to BBC News, the National Health Service (NHS) has imposed a policy that denies treatments to patients if they exceed £30,000 a year.

Myth: Achieving universal health care coverage in the United States is possible only by implementing a government-run, single-payer system.

Fact: Nations with national health care systems, including Switzerland and the Netherlands, have achieved universal health care coverage using private health care plans.

Myth: Government-controlled health care systems provide better access then the employer-sponsored system in the United States

Fact: In Canada, for instance, the Fraser Institute reported in December 2006 that Canadians wait an average of 17.8 weeks from general practitioners’ referrals to treatment by a specialist. Most provinces have a Web site to calculate a patient’s wait time based on type of procedure and area. For example, at the time of publication, the wait for breast cancer surgery in South West Ontario could be as little as 24 days or as many as 110. According to another recent survey, nearly two-thirds of Canadian citizens and 85 percent of doctors agree that obtaining private insurance for services already covered under Canada’s single-payer system will result in shorter waiting times. It is illegal in Canada to seek private medical treatment. As for the United Kingdom, only 51 percent of patients were able to receive hospital treatment their doctors recommended in 18 weeks or less, while 12 percent have waited over a year according to the Department of Health.

Myth: The United States is ranked 37th as a health system by the World Health Organization (WHO), below Canada, the United Kingdom and France.

Fact: In 2000, the World Health Organization (WHO) ranked 191 countries based on data from 1997. The countries were evaluated by five factors, including the overall health of the population and distribution of health. In categories such as responsiveness and expenditures, the U.S. ranks number one, showing a commitment to deliver speedy health care to our citizens regardless of cost. Many factors such as obesity and smoking have lowered the health of Americans and, thus, lowered our ranking with WHO. Since 1997, the U.S. has made further improvements to the quality and accessibility of our health care, including the creation of Medicare Part D.

Myth: Healthcare Is Free in Canada, Germany, England, France

Fact: People in other health care systems often pay more than Americans do, sometimes in the form of taxes. And they may also incur high costs if they need a drug that is not covered by their health system or want to see a specialist.

In the US, a family of four with an employer-based PPO will have around $15,609 total this year in health care costs. Of this amount, $9442 will be paid by the employer and the employee will contribute $3,492 in premiums and $2,675 on copays, etc. ¹ That’s about 6 percent of average family income. ²

In Canada, while the percentage of taxes used to provide health care varies, it is estimated that 22% of taxes collected went to the health system in 2004.³ Several provinces, including Quebec, Ontario, Alberta, and British Columbia, also charge additional premiums.⁴ Canadians also may spend money to receive private treatment for procedures or drugs that are not covered by the government system.

Citizens of the UK pay 11 percent of each pound they make in weekly income between £100 - £670 for the NHS, plus an addition 1 percent of income over £670 a week.⁵ Though the copay for drugs is low, many drugs are not covered, often because they not considered cost efficient. And anyone who uses their own money to buy powerful but expensive drugs not paid for by the NHS finds him or herself shut out of the NHS for having gone outside the system.

In Germany, coverage from a public sickness fund currently can range significantly in cost, from around 12.2 to 16.7 percent of income, with the employee paying a bit under half. As of fall 2008, premiums are to be standardized from the federal level and health care experts anticipate that they will be set around 15.5 percent.⁶ Private patients can generally expect to pay more than they would in the public system.

In France, employees contribute only to 0.75% of their salaries towards medical care, but also pay a 7.5 percent General Social Contribution, the majority of which is earmarked for the health system. This base coverage reimburses people for the majority of costs for doctors visits and for a portion of the costs of medications.⁷ On top of the government coverage, almost all French residents have supplementary coverage from a mutuelle, costing approximately 2.5 percent of salary.⁸

Myth: People with universal health care don’t go bankrupt paying for their medical treatment.

Fact: Not only do fewer people go bankrupt in the US than critics claim but people in other health care systems also incur high medical costs. Differences in the systems of various countries often make it impossible for debtors to go bankrupt and obscure the role of health care in their debts.

The oft quoted statistics that claim half of all American bankruptcies were contributed to by health care costs come from a single deeply flawed 2005 study that artificially inflates the number of medically linked bankruptcy through the use of sloppy definitions and over broad categories.

In tax funded systems like both the UK and Canada, it is virtually impossible to declare medical bankruptcy, because the substantial cost of taxes includes far more than health costs. British and Canadian citizens do, however, incur large debts by seeking treatment out of country or by paying for life saving medications out of pocket because they are not included in the government system.

In Germany and France, because the public parts of the system in both France and Germany obtain their funding from money deducted from paychecks and, in France, from taxes, it is made much less like that bankruptcies precipitated, at least in part, by such expenses would be listed as related to medical costs. And in both countries, people do cite the costs of illness or injury among the causes of indebtedness.

In both Canada and Europe, it is much more difficult and costly to declare bankruptcy than in the US so fewer people are likely to do so. Bankruptcy rates are, however, rising.

Myth: The US infant mortality rate is higher than that of other countries

Fact: The US’ infant mortality rate is not really higher, the rates of Canada and many European countries are artificially low, due to more restrictive definitions of live birth. There also are variations in the willingness of nations to save very low birthweight and gestation babies, as well as the effect of ethnicity in creating wide disparities in infant mortality rate.

The ethnic heterogeneity of the US works against it because different ethnic and cultural groups may have widely different risk factors and genetic predispositions.

The US is highly aggressive in trying to save all premature babies, even those born very early, other countries are less likely to do so, placing the decision on parents and may encourage palliative care instead.

Definitions of a live birth, and therefore which babies are counted in the infant mortality statistics very considerably. The US uses the full WHO definition, while Germany omits one of the four criteria. The UK defines a still birth “a child which has issued forth from its mother after the twenty-fourth week of pregnancy and which did not at any time after being completely expelled from its mother breathe or show any other signs of life.” ⁹

This leaves what constitutes a sign of life open and places those born before 24 weeks in a gray area. Canada uses the complete WHO definition but struggles with tens of thousands of missing birth records and increasing numbers of mothers sent to the US for care.¹⁰ France requires “a medical certificate [that] attests that the child was born ‘alive and viable’” for baby who died soon after birth to be counted, which may be difficult to obtain.

Myth: Americans don’t live as long as their counterparts in Canada and Europe

Fact: While the overall life expectancy of Americans is lower than that of people in a number of other nations, it the result of higher rates of homicides, accidents, and obesity, factors that are at best tangentially related to the health care system, as well as of the misleadingly high infant mortality rate.

The homicide rate in the US was 5.9 per 100,000 population in 2004, according to the US Department of Justice. In contrast, it was 1.99 per 100,000 in Canada, 1.66 in France, .98 in Germany, and 1.63 in England and Wales (approximately 1.71 including Scotland.) ¹¹

In the US, in 2006 there were 14.24 fatalities per 100,000 people from auto accidents.¹² Canada had 9.25 fatalities per 100,000 population,¹³ France 7.4,¹⁴ Germany 6.19,¹⁵ and 5.39 in Great Britain (UK excluding North Ireland).¹⁶ In general, injuries of all kinds accounted for 47 deaths per 100,000 in the US in 2002 but 26 in the UK, 29 in Germany, and 34 in Canada. Only France, at 48 per 100,000 was equivalent. ¹⁷

While Americans are not the most likely to be overweight, that is have a BMI between 25 and 30, they are more likely to be obese than people in other nations. While critics of the US system often try to drag the issues of obesity into the realm of health care failures, it is the result of complex factors related to culture and economics as much as to health.

The US has a very heterogeneous population with many ethnicities and nationalities represented. With this diversity comes not only genetic differences but also cultural and lifestyle ones that can affect health and life expectancy. African-Americans in particular have low life expectancies, well below those of other ethnic groups. Life expectancy can often be correlated to country of origin, with those from nations with high expectancies showing equivalent, or even greater, life expectancies.

1. ¹ “Average 2008 Employee Out-of-Pocket Costs for Family Health Care to Increase 10.5%, According to Milliman Index,” Medical News Today, 16 May 2008, http://www.medicalnewstoday.com/articles/107699.php.
2. ² Kevin Sack, “Clinton Details Premium Cap in Health Plan,” The New York Times, 28 March 2008.
3. ³ Jay Lehr, “Canadian Health Care is No Model for US: Claims That Canada’s Single-Payer Health System Is More Efficient or More Compassionate than Ours Are Just Plain Untrue,” Health Care News, 1 June 2004, available at http://www.heartland.org/Article.cfm?artId=15034&CFID=4911814&CFTOKEN=64059852
4. ⁴ OECD, “Taxing Wages 2006/2007: Special Feature: Tax Reforms and Tax Burdens,” (2008).
5. ⁵ OECD, “Taxing Wages 2006/2007: Special Feature: Tax Reforms and Tax Burdens,” (2008).
6. ⁶ “Beiträge können kräftig steigen,” Süddeutsche Zeitung, 7 January 2008, http://www.sueddeutsche.de/wirtschaft/artikel/401/151024/.
7. ⁷ David G. Green, Ben Irvine and Ben Cackett, “Health Care in France,” Civitas, (2005), http://www.civitas.org.uk/pubs/bb2France.php.
8. ⁸ David G. Green, Ben Irvine and Ben Cackett, “Health Care in France,” Civitas, (2005), http://www.civitas.org.uk/pubs/bb2France.php.
9. ⁹ Births and Deaths Registration Act 1953, paragraph 41, modified by Still Birth Definition Act 1992.
10. ¹⁰ Lisa Priest, “Canada’s U.S. baby boom,” The Globe and Mail, 5 May 2008; Caroline Abraham, “Red tape denies baby Sonja her brief life; To the dismay of parents, thousands of births go undocumented in Ontario,” The Globe and Mail, 22 July 2006.
11. ¹¹ http://www.unodc.org/documents/data-and-analysis/CTS9_by_country_public.pdf.
12. ¹² “Fatality Analysis Reporting System Encyclopedia,” http://www-fars.nhtsa.dot.gov/Main/index.aspx.
13. ¹³ Calculated using population figure from 2006 Canadian Census, http://www12.statcan.ca/english/census06/data/popdwell/Table.cfm?T=101 and 2005 auto accident data from “Transportation in Canada 2006,” http://www.tc.gc.ca/pol/en/Report/anre2006/tc2006ar-e.pdf
14. ¹⁴ Calculated from population data as of 1 January 2007 from ISEE, http://www.insee.fr/fr/ffc/chifcle_fiche.asp?ref_id=CMPFPS02136&tab_id=378 and fatality information for 2006 from “Routes-Moins de morts sur les routes en 2006,” LCI, 10 January 2007, http://tf1.lci.fr/infos/france/societe/0,,3379338,00-moins-morts-sur-routes-2006-.html.
15. ¹⁵ Calculated using population data as of 1 January 2007 from ISEE, http://www.insee.fr/fr/ffc/chifcle_fiche.asp?ref_id=CMPFPS02136&tab_id=378 and statistics on car crash mortality for 2006 from the Statistische Bundesamt, http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/DE/Content/Statistiken/Verkehr/ Verkehrsunfaelle/Tabellen/Content75/UnfaelleVerunglueckte,templateId=renderPrint.psml.
16. ¹⁶ Calculated using population numbers from the National Statistics Office for 2006, http://www.statistics.gov.uk/cci/nugget.asp?ID=6, and car crash mortality data from Department of Transport, “Road Casualties Great Britain:2006-Annual Report,” table 8, available from http://www.dft.gov.uk/pgr/statistics/datatablespublications/accidents/casualtiesgbar/roadcasualtiesgreatbritain2006.
17. ¹⁷ WHO data for 2002.