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Posted by on Nov 4, 2007 in At TMV | 23 comments

Is Health Care Unaffordable or do Millions of Americans Just Have Other Priorities?

Today N. Gregory Mankiw, professor of economics at Harvard, writes in the New York Times about “true but misleading statements about health care that politicians and pundits love to use to frighten the public.”

Two of those statements are often used by Europeans to criticize the United States. One is about the infant mortality rate and the other about the 47 million Americans without health insurance. Mankiew on the latter statement:

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.

Given Mankiw’s analysis, the pro-American German blog antibuerokratieteam asks (rhetorically): “How bad is it that 47 million Americans don’t have health insurance?” I don’t know. It seems that health care is much more expensive in the United States, but also in many categories worse than in five other industrialized countries. Perhaps some households with $50,000 cannot afford health care, if they want to save money for the college education of their two kids? But that would still be their free choice, right? 

Well, the solution would obviously be a cheaper health care system. Two days ago, the New York Times ran another piece on health care by another Economist: Paul Krugman criticized Rudy Giuliani’s new radio ad attacking Democratic plans for universal health care. Giuliani claimed that the chances of surviving prostate cancer are much higher in the United States than in England. Krugman disagrees and concludes:

There’s very little evidence that Americans get better health care than the British, which is amazing given the fact that Britain spends only 41 percent as much on health care per person as we do.

Greg Anrig criticized Rudy Giuliani as well in the article “If it’s from Europe, forget it,” published in The Guardian three months ago: “Conservative dismissals of Democratic healthcare plans as ‘socialist’ explains a lot about the hole America is presently in.”

Anyway, Mankiw makes some good points. There are many reasons, why 47 million Americans don’t have health insurance. Europeans should not use that statistic to trash the United States as an inhumanely capitalistic country with widespread poverty and lack of minimum welfare.

Cross-posted from my blog.

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Copyright 2007 The Moderate Voice
  • Mankiw plays the usual dishonest numbers game of the apologists for our current lack of a health care system.

    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.

    If you’re going to say they make more than $50,000 doesn’t it matter how many of them make just barely over that amount and how many make a lot more? It is, after all, a gross income amount before income and payroll taxes. Doesn’t it matter how large that household is? Where do they live? How much does it cost to keep a roof over your head? If it is a family then the cost of adding your family to your health insurance makes a big difference in cost. He then does a Bush by mentioning an unrelated fact next to the other one just brought up to attempt to relate them in people’s minds, just as Bush did with Saddam and 9/11. When he mentions that a quarter of the uninsured have turned down coverage that has been offered he mentions it right after the $50,000 figure, to indirectly relate the two in the mind of the reader. In fact the number of people who turned down coverage includes those who make far less. It’s just as dishonest as everything else Mankiw has ever said on this subject.

  • Rudi

    There are many reasons, why 47 million Americans don’t have health insurance. Europeans should not use that statistic to trash the United States as an inhumanely capitalistic country with widespread poverty and lack of minimum welfare.

    These statistics speak to the “welfare” of the US. Why not include the number of prisoners and executions, the “Big Three” are the US, China and Iran. Ther US is also an exception to industrialized Western countries in inprisonment, healthcare and executions. Is this also something the US should be proud of?

  • BrotherAlpha

    http://www.nchc.org/facts/cost.pdf

    Average cost for health insurance was over $9000 in 2002 and over $14,000 in 2006, (estimated). If you are making $50,000 a year, $14,000 is a huge chunk of money.

    Take the average Canadian making $50,000 a year and they don’t pay that much in TOTAL federal income tax.

    Switching to a Canadian system would save the average American money.

  • George Sorwell

    I hope there will be a follow-up addressing the responses to this post.

  • domajot

    Here we go again. Throwing out a few menaingless figures like sand in the eyes.

    Cost of housing and utilities is not considered.
    The kind of insurrace offered (high deductibles and a long list of excluded costs) is not considered.

    Most importantly, the number of workers in a family contributing to their total income is not considered.
    The fact that both parents work is having an alarming effect in the areas of education and the loss of children to the ‘drop out of sociey’ trends.

    Child care is expensive, and the time for child supervision in these overworked families is simply not there. Over and over, it is made clear that the stress on the middle class and the barely-above-poverty are damaging and create much higher costs to society in the long run than any remediation at the beginning point.
    Should parents have to choose between providing adequate child care and providing adequate health care?

    It’s insulting to anyone living in the real world of the not-wealthy to preach this kind of nonsense.

  • @ George and domajot

    What’s behind this statistic? “About a quarter of the uninsured have been offered employer-provided insurance but declined coverage. “

  • @ George

    “I hope there will be a follow-up addressing the responses to this post.”

    Which responses? Do you want me to repeat that health care is too expensive in the US? That it is cheaper and better in Britain, Canada, Germany and elsewhere?
    I wrote all this and provided links.

  • Well, the solution would obviously be a cheaper health care system.

    Yes, that’s exactly right. How do you get there?

    You can get part of the way by going to a single-payer system. That could remove something like 15% from the total costs. We’d still be paying more than twice as much per capita as the next highest-spending country (Switzerland).

    I can only envision two solutions. Either going to a fiat system which is more likely to create shortages than it is to reduce costs or sharply increasing the supply of healthcare.

    Increasing demand is unlikely to reduce costs.

  • @ Dave

    Thanks for your comment. Great to be debating with you again.

    “We’d still be paying more than twice as much per capita as the next highest-spending country (Switzerland).”

    Wow, that’s even more expensive than I thought.

    How do you want to increase the supply of healthcare? Should the government (or the Buffett/Gates/Soros foundations) set up insurance companies and hospitals?

  • Oh, and before I forget: My point is not at all to describe a socialised paradise in Germany and other European countries.
    Health care is damn expensive over here and not so good either. Thus, I am surprised that health care is more expensive in the US without being much better, but in fact worse in many categories, if the survey (linked to in this post) is correct.

  • How do you want to increase the supply of healthcare?

    Educate more physicians and nurses. Remove anti-competitive restrictions on hospitals. Increase the use of technology. Change work rules.

  • Entropy

    One might argue that longevity and infant mortality are poor measures of the “quality” and efficacy of a health care system – in fact, one might argue that rather persuasively.

    To start with, data collection on infant mortality is not standardized – the US counts deaths that other countries do not.

    Secondly, there are many causes for infants to die in their first year of life – many have nothing to do with a health care system.

    Third, data show there are strong social and demographic factors at play – factors that would not be eliminated through universal health care.

    So while one might argue that universal health care would lower the US infant mortality rate, exactly how much it would be lowered is a topic of some dispute. No one who makes the claim that the “high” infant mortality rate is caused by the health care system has bothered to run the numbers – perhaps because they realize the findings might not buttress their rhetoric as they would like.

  • “the US counts deaths that other countries do not.”

    Yes, that’s Mankiw’s point.

    Re #2: So what explains the difference?

    Re #3: Maybe not eliminated, but improved. What else explains the difference? The US climate?

    “One might argue that longevity and infant mortality are poor measures of the “quality” and efficacy”

    There are plenty of more measures. See the link in the post above :or click here

  • Re #2: So what explains the difference?

    There are any number of possibilities. One, mentioned by Mankiw, is babies whose weight is low at birth. This, in turn, is correlated to maternal drug and alcohol use during pregnancy.

  • Entropy

    As Dave suggested, there are many factors that go into infant mortality. The quite large differences in infant mortality between industrialized nations that DO have national healthcare systems demonstrates pretty definitively that there are other factors that greatly influence this particular statistic.

    As for statistical differences and methodology, I don’t normally like Wikipedia much, but I think it condenses and highlights some of the very real problems in making comparisons between the US and other countries.

    Also, I did not argue that infant mortality would not be improved by some kind of universal healthcare program – my argument relates to the degree that it would be improved and the implication – or assumption – that the principle reason the US lags behind is because we don’t have nationalized/universal healthcare. If the implication so often given is true, then I expect to see some definitive evidence for it instead of unsupported claims of causality. Instead, the evidence for such causation is weak and problematic.

    Also, as Dave has mentioned frequently on his blog, a big problem here in the US is a shortage of healthcare at almost all levels. Nationalization will not, by itself, solve that fundamental problem. In the “International Dialog” post which you linked, two of the metrics the US ranked last in on the chart in that post are significantly, and possibly even primarily, influenced by this shortage and are likely factors in the other metrics as well.

    So, one might wonder what would have the bigger impact – a nationalized system, or an end to the healthcare shortage. I would argue that both would be good, but it seems to me that implementing universal healthcare without solving the shortage could be disastrous. There are only a few possible outcomes from a large increase in patients with no corresponding increase in providers and none of those outcomes are good.

  • George Sorwell

    Joerg–

    The title of your post is “Is Health Care Unaffordable or do Millions of Americans Just Have Other Priorities?” I added some emphasis there, to indicate that presented just two possible choices.

    Reading it, I see that you come down on the side of Americans having other priorities:

    Perhaps some households with $50,000 cannot afford health care, if they want to save money for the college education of their two kids? But that would still be their free choice, right?

    In response to this, Jim Satterfield (Comment #1), discusses the misleading $50,000 income threshold. Brother Alpha (Comment #3) discusses costs in the US versus Canada (where costs are lower). In other words, they suggest the issue may not be as either/or as you indicate.

    Of course you don’t have to follow up if you don’t want to.

  • Jeorg,

    As was mentioned by domajot there are some other factors that are not considered when you are talking about household income.

    If a family is making $50,000 to $60,000, let us say, by having both parents work they have to have day care. Do you know what that costs in this country with no government subsidy? I live in the Kansas City area, far from the most expensive place in the U.S. and here it costs at least $150 for a child who isn’t in school and half that during the school year. So one child who hasn’t entered school will cost $7800 a year for day care. This also means that every child in day care will cost $150 a week at least part of the year, when school isn’t in session. That means over two months in the summer and during any holiday periods that long. And of course there is a pro-rated increase when you have a holiday of less than a week.

    In addition there is little mass transit in much of the United States and if you want a job you’d better have a car, which means car payments, insurance (mandated by law), gas and maintenance. A very common job interview question here is whether or not you have reliable transportation to work. Being late often enough even if it is really due to breakdowns will get you fired. How much that might cost you varies tremendously but just gas and insurance will get you into several thousand a year.

    So anyone who tries to make $50,000 for household income sound like something that leaves lots of money to spare is either being disingenuous or is hopelessly ignorant of the real world of the American middle class.

    When it comes to private insurance versus public the figure that American conservatives hate to hear is that administrative overhead for Medicare and Medicaid is about one-quarter of that of the corporate health insurance that they admire so much. Public spends 3% and the private ones are between 12% and 14%. They do their best to spin it and make excuses for it. Think about it. When you consider the huge amounts spent 12% is a huge amount. And that amount doesn’t even take into account the number of people that doctors and hospitals have to hire to wade through the insurance red tape maze they create. And were you aware that these companies actually have employees whose only full time function is to examine claims looking for a loophole to help them avoid paying out the money they’ve agreed to pay? They also take months to pay the doctors and hospitals the money they are owed, a practice they would never tolerate on the part of those who owed them money. Then there is the question of acceptable profits and growth for publicly held companies in the United States. They’d better be big. Very big. And the executive compensation will match. For those reasons I do not believe that there is any way for corporate health care to provide less expensive health care that will still actually do what it is meant to do.

  • Thanks for your comments and helping me understand the US system

  • Over at my blog, a reader pointed me to column by Bob Herbert:

    There are 47 million Americans without health insurance and another 17 million with coverage that will not pay for the treatments necessary to fight cancer and other very serious diseases.

    The bottom line, said Mr. Seffrin, is that “the number of people who are suffering needlessly from cancer because they don’t have access to quality health care is very large and increasing as I speak.”

    Wow. Those 17 million (and counting). That’s a real shocker.

  • domajot

    Entropy,
    I don’t see what the value is in trying to explain away the bad US statstics on infant mortality and other indicators

    The fact is, that 17 million don’t have insurance, and the consequences of that are apparent without knowing the why’s and wherefor’s.

    This uninsured are contributing to the high cost of healthcare, because when they can’t pay their hospital bills, the costs are distributied among the rest.
    We should actually add the millions who have ‘bare bones’ insurance, because when they. too rack up hospital bills they can’t pay, it adds to the cost of health care for everyone.
    Add also that the number one reason for bankrupcy is health care bills.
    Add also that that the sick con’t work and don’t contribute, etc.etc.

    There is an attitude that universal health care is a means of doing some people an undeserved favor. From another viewpoitn, the nation would be doing its economy a favor by finally dealing with this problem.

    Even if our higher stats on infant deaths could all be attributed to the mother’s alcoholism or drug abuse (and you’d need some comparative figures to make the case), the uninsured and the costs they bring to bear on the economy would not disappear.

  • doma reminds me again of another “feature” of our system. Medical bills forcing people into bankruptcy. Since medicine is a business if you don’t pay the bill the provider hires professional bill collectors to try and get the money from you. They report it to credit reporting agencies. In the United States this makes it difficult to get a job, buy a home or rent a home. And the financial services companies recently succeeded in their quest to make it much more difficult for people to file for bankruptcy as well. This can happen to people with insurance as well given income levels and the complex structure of insurance systems that can still leave people with large amounts owed. Bills can also be turned over to collection agencies and show up on your credit rating while the insurance companies take their time paying money to providers. Remember my pointing out how they can take many months to pay? I’ve gotten bills for things that insurance has just taken too much time to pay for and found myself making calls to confirm that it had been submitted to the insurance company only to find that it had but months after the fact still hadn’t paid what they were obligated to cover.

  • Entropy

    Doma,

    Don’t mistake my arguments as support for the current system. I know the current system is flawed. What I object to is that the most vocal supporters of universal healthcare justify it will poor and flawed arguments that are designed to be emotionally appealing.

    That is not “explaining away” infant mortality. Sorry, but variations in statistical methodology matters whether you choose to believe it or not.

    This uninsured are contributing to the high cost of healthcare, because when they can’t pay their hospital bills, the costs are distributied among the rest.

    If they were insured tomorrow those costs would still be distributed “among the rest” because those previously uninsured would not be paying a lot into the system but they’d be using a lot more services.

    And no one who supports universal health care here seems interested in discussing the very real problem of the SHORTAGE of doctors, nurses, beds, etc. If you add 50 million people and no doctors under a universal healthcare system, what do you think is going to happen? Nothing good.

    I could easily support universal healthcare coverage. I want to support it. But so far the arguments and justifications used to support it are rather weak and proponents seem incapable of addressing legitimate questions opponents raise. Nationalization cannot magically create more doctors, bring costs down and provide timely and quality service equitably without solving underlying problems of the system. Why is it that the most vociferous proponents of universal healthcare show no interest in even acknowledging such conditions exist?

  • Entropy is right about how part of any meaningful universal healthcare system will have to address the need for more professionals in the field. This means that the system where anyone graduating from medical school is burdened by crushing debt that governs their career choice more than their desire to provide care for those who need it. The existing programs that forgive debt only if doctors serve in areas of perceived greater need are inadequate. But a national policy is the only thing that can solve this issue. Of course it’s not only doctors that are needed but the same kind of problems exist in training other professionals.

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