Friday, November 09, 2007

Health Care Ain't Broke

Validating the law of averages, the best recent healthcare op ed appears -- get this -- in Monday's NY Times! It's less of a shock given the author is Harvard Economics Prof Greg Mankiw, whose econ-focused blog I often link. Mankiw's article goes Beyond Those Health Care Numbers to dethrone three healthcare myths; here's an excerpt:
  • STATEMENT 1 The United States has lower life expectancy and higher infant mortality than Canada, which has national health insurance. The differences between the neighbors are indeed significant. Life expectancy at birth is 2.6 years greater for Canadian men than for American men, and 2.3 years greater for Canadian women than American women. Infant mortality in the United States is 6.8 per 1,000 live births, versus 5.3 in Canada.

    These facts are often taken as evidence for the inadequacy of the American health system. But a recent study by June and Dave O’Neill, economists at Baruch College, from which these numbers come, shows that the difference in health outcomes has more to do with broader social forces.

    For example, Americans are more likely than Canadians to die by accident or by homicide. For men in their 20s, mortality rates are more than 50 percent higher in the United States than in Canada, but the O’Neills show that accidents and homicides account for most of that gap. Maybe these differences have lessons for traffic laws and gun control, but they teach us nothing about our system of health care. . .

  • STATEMENT 2 Some 47 million Americans do not have health insurance. . . .To start with, the 47 million includes about 10 million residents who are not American citizens. Many are illegal immigrants. Even if we had national health insurance, they would probably not be covered.

    The number also fails to take full account of Medicaid, the government’s health program for the poor. For instance, it counts millions of the poor who are eligible for Medicaid but have not yet applied. These individuals, who are healthier, on average, than those who are enrolled, could always apply if they ever needed significant medical care. They are uninsured in name only.

    The 47 million also includes many who could buy insurance but haven’t. The Census Bureau reports that 18 million of the uninsured have annual household income of more than $50,000, which puts them in the top half of the income distribution. About a quarter of the uninsured have been offered employer-provided insurance but declined coverage.

    Of course, millions of Americans have trouble getting health insurance. But they number far less than 47 million, and they make up only a few percent of the population of 300 million.

    Any reform should carefully focus on this group to avoid disrupting the vast majority for whom the system is working. We do not nationalize an industry simply because a small percentage of the work force is unemployed. Similarly, we should be wary of sweeping reforms of our health system if they are motivated by the fact that a small percentage of the population is uninsured.

  • STATEMENT 3 Health costs are eating up an ever increasing share of American incomes. In 1950, about 5 percent of United States national income was spent on health care, including both private and public health spending. Today the share is about 16 percent. Many pundits regard the increasing cost as evidence that the system is too expensive.

    But increasing expenditures could just as well be a symptom of success. The reason that we spend more than our grandparents did is not waste, fraud and abuse, but advances in medical technology and growth in incomes. Science has consistently found new ways to extend and improve our lives. Wonderful as they are, they do not come cheap.

    Fortunately, our incomes are growing, and it makes sense to spend this growing prosperity on better health. The rationality of this phenomenon is stressed in a recent article by the economists Charles I. Jones of the University of California, Berkeley, and Robert E. Hall of Stanford. They ask, “As we grow older and richer, which is more valuable: a third car, yet another television, more clothing — or an extra year of life?”
I've previously urged Mankiw's conclusion: "As we look at reform plans, we should be careful not to be fooled by statistics into thinking that the problems we face are worse than they really are."

MORE: here.


Amicus said...

For Statement #1
I doubt that the WHO isn't aware of these criticisms ...

Can we also adjust numbers another ways, ranking the U.S. lower because it has less of a 'health-care' gradient to face than nations who cannot afford clean water systems, for instance?

For Statement #2
What is the source for this claim, do you know? "About a quarter of the uninsured have been offered employer-provided insurance but declined coverage"

Also, I'm unaware that the Census Bureau records a statistic for those who could be enrolled for medicaid but are not - where did that supplemental estimate come from, do you know?

Statement #3
This is a conjecture about health care expense growth, not economic analysis.

Carl said...


I've answered here.