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Myths about Health Care

1. The uninsured are the very poor. The uninsured are basically three groups, (1) the very poor who aren't aware they qualify for Medicaid, (2) healthy people who can afford health insurance, but gamble they won't need it, (3) working poor who make too much for Medicaid, but whose employer, typically a small business, doesn't offer health insurance. Others include those with pre-existing conditions and changing jobs, who fall through loopholes in the laws designed to protect them.

2. The uninsured don't get health care. People without insurance go to the emergency room, where doctors are required to treat patients without regard to ability to pay (which the rest of us pay for, and is an expensive and inefficient way to deliver health care).

3. Malpractice premiums are high because of high awards in lawsuits. High damage awards by juries in tort lawsuits that make the news are unusual, and are usually reduced on appeal (which doesn't make the headlines). Recent studies have shown that tort reform has not reduced malpractice premiums, and recent high premiums are due to insurance companies trying to recoup investment losses when the premiums were invested.

The premiums are stable during economic booms, and go up after busts so insurance companies can recoup their investment losses. This needs to be kept in perspective - malpractice premiums are less than 1% of total health care costs (although a much larger percentage of doctor's costs). The use of expensive defensive medicine by doctors because of fear of malpractice suits has often been cited, but a more likely explanation for defensive medicine is that the technology is available and patient expectations have risen.

4. Health care shouldn't be rationed. Health care is rationed, and must be to be practical. There can't be a CAT scan for every headache. HMOs ration health care with red tape and waits, such as making patients go to a primary physician first. Other countries do the same through their national health care systems. Insurance companies ration by deciding what procedures are covered.

5. Insurer profits are outrageous/minimal. Critics point to record HMO and health insurance profits in the last few years, combined with much greater than inflation increases in premiums. Insurers like to say their profits are low by pointing to numbers from the 90s and early 2000's when many insurers were losing money. A big reason insurers lose money is due to their investments of premiums, not just the claims they pay out.

6. Drug costs are the problem. Drug costs get lots of media attention, but are only 10% of health care costs (without even counting insurance administrative costs). Although high prices contribute to the problem, addressing this alone is a small part of the solution. They have, however, increased from 5% to 10% of the costs in the last few decades, and will continue to climb, especially with the new Medicare coverage.

7. Regulation favors health care consumers. Actually, the ones with money to lobby congress are the health insurance companies, drug companies, etc. Is it a coincidence that the prescription requirement for drugs often is dropped by the FDA when the patent expires, rather than when the drug has been shown to be safe? [see Direct to Consumer Advertising, Ronald F. White]. Do you really think that insurance companies have been required to cover hair prosthesis at the behest of bald men, or was it lobbying by the likes of HairClub® for Men?

8. New patented drugs are better than old generic alternatives. Drug companies have a large profit incentive to promote new, patented drugs more than older, generic drugs which they can't make much money on. The FDA currently only requires comparison to a placebo for new drug tests, not comparison to existing inexpensive drugs. Since much of a drugs development cost is clinical trials, testing just for safety before approval may be just as informative. Comparisons to older drugs could be done after approval.

It has been proposed that the FDA not approve new patented drugs unless a study showed it was measurably better than existing generics. This will drive studies, allowing patients to get the most effective drug, not the most expensive. The FDA currently only requires comparison to a placebo. Drug companies don't want to market generics because there is more money in new drugs, even if they are not as effective. The Consumers Union has recommended that the FDA require comparisons of new drugs against existing drugs, not just placebos. Comments of the Consumers Union before the Food and Drug Administration Science Board, April 15, 2005.

9. US higher infant mortality and lower life expectancy than other countries means worse health care. These are actually partly the same thing, since the higher infant mortality brings down the life expectancy numbers. While the US is good at high tech procedures, they are not as good with low tech, labor intensive pre-natal care that affects infant mortality. Many people without insurance simply don't have it. This is an indictment of a particular area of care, other areas of care appear to be superior to other countries. People come to the US for complex, cutting edge procedures. Many non-health care factors affect life expectancy, such as more gun deaths, which has been estimated to shave 100 days off the US life expectancy, and higher obesity rates.

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