Monday, November 05, 2007

New York Times Gets It Right About Healthcare

The Instapundit linked a remarkable article that I'd never have expected to see in the New York Times.

Harvard economist N. Gregory Mankiw gives a rather thorough explanation of the origins of three healthcare statistics seen everyday in the press. The issues he discusses are often invoked to prove how superior the Canadian system of a single government payer is superior to the "system" we have in the states.

He demonstrates that:
  1. The longer life expectancies enjoyed by the Canadians compared to those in the U.S. have more to do with social factors outside the influence of medical care than with actual healthcare delivery.

  2. That although 47 million people in the United States are without insurance, this includes 10 million or more illegal aliens, millions of people who are Medicaid eligible but who simply won't sign up until they get sick, many millions whose employers offer them insurance but who decline to save money, and millions of people who make enough money to afford private insurance but who again elect not to purchase it.

  3. That the increased percent of our incomes (and our GDP) spent on healthcare do not necessarily reflect overpricing (gouging) but are instead more of a consequence of the wider range of expensive services medicine now has to offer patients.
Reporting on the misinterpretation of these facts is a very good thing. I would have also mentioned that the 47 million number discussed in point 2, did not represent people who won't ever be insured. In fact, around half of these people will have insurance within six months. Many people are without insurance only for the brief time they may be between jobs. In fact, very few of these 47 million people are the so-called "chronically uninsured" (see chapter five of The Cure).

I would have also added a fourth statistic seen often in the press but generally without the context that would have made it more meaningful. To demonstrate the deleterious impact of high healthcare costs, I often read that over 50% of all bankruptcies are due to the costs of medical illness.

This statistic came from a paper published in the journal Health Affairs in 2005. The result is probably true (although it was derived from survey data for which there was barely a 50% response rate) if you accept the researchers' definition of "medical bankruptcy". However most of us would be surprised to see exactly what that definition was.

They included anyone who:
  1. Went bankrupt and had uncovered medical expenses of $1,000 or more.

  2. Anyone who missed work two or more weeks due to medical illness.

  3. Bankruptcies due to the economic impact of the addition of a new family member (i.e. a new birth).

  4. The death of a family member.

  5. Alcohol, drug addiction, or uncontrolled gambling.

  6. Anyone who simply told the surveyor that their bankruptcy was due to medical illness.
I seriously doubt most people believe that owing only $1,000 or missing two weeks of work would be a serious enough problem to by itself trigger very many bankruptcies. I also doubt that bankruptcies due to the addition of a new family member or a death of a wage earner really constitute a medical bankruptcy in most peoples' eyes. Likewise, when alcohol, drugs or gambling leads to bankruptcy, most people don't think of that as a medical bankruptcy. They tend to attribute it to, you know...alcohol, drugs, or gambling.

As for criteria #6 I have this to say: At the risk of being politically incorrect, I'd suggest that many people look to factors outside their control to explain their personal misfortunes. Might some of these subjective assessments not be reflective of reality?

By using a definition of medical bankruptcy much broader than one most of us would use, it's almost as if the researchers were trying to support a specific narrative about the inequity of our healthcare system. It's almost eerie...

At any rate, I'm delighted that this article was published by the Times but I'm frankly puzzled as to why it's taken this long. Every element of Mankiw's analysis has been common knowledge in the healthcare economics field for several years and strictly speaking, none of this is really news.

I hope I'm wrong but I believe that Mankiw is tilting at windmills and that we will see the same misconceptions repeated over and over again in the run-up to the '08 elections.

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Blogger jessica22 said...

I think it is so refreshing that someone is taking a stance to defend the American healthcare system. As flawed as it is, it important to be accurate instead of emotional. That is why I am working to support AARP which is giving a voice to everday people. They are working to make realistic changes with Medicare by convincing Congress to give more control of it to its patients. Go to their website at and sign their petition to contribute today!

November 06, 2007 6:22 PM  
Anonymous Anonymous said...

Great post. I also found Mankiw's editorial refreshing -- things must going crazy at NYT to let it in. Hopefully he can make a real difference in the campaign by advising Mitt Romney as well.

And good luck with that, Jessica22. The AARP has not been one of the forces fighting for lower costs in the long run for health care lately.

November 09, 2007 7:25 PM  
Anonymous Anonymous said...

i say, if you dont like our healthcare system, move to mexico or canada, or try to do something positive to improve it, instead of bashing it

November 10, 2007 10:02 AM  

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