US Healtcare Statistics

[Robert F. Smith]

An analysis by: N. Gregory Mankiw is a professor of economics at Harvard. He
was an adviser to President Bush and is advising Mitt Romney, the former
governor of Massachusetts, in the campaign for the Republican presidential
nomination. From OP/ED Sunday's NYTimes.

 

November 4, 2007

Economic View

Beyond Those Health Care Numbers 

By N. GREGORY MANKIW

 

WITH the health care system at the center of the political debate, a lot of
scary claims are being thrown around. The dangerous ones are not those that
are false; watchdogs in the news media are quick to debunk them. Rather, the
dangerous ones are those that are true but don't mean what people think they
mean.

 

Here are three of the true but misleading statements about health care that
politicians and pundits love to use to frighten the public:

 

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.

 

Americans are also more likely to be obese, leading to heart disease and
other medical problems. Among Americans, 31 percent of men and 33 percent of
women have a body mass index of at least 30, a definition of obesity, versus
17 percent of men and 19 percent of women in Canada. Japan, which has the
longest life expectancy among major nations, has obesity rates of about 3
percent.

 

The causes of American obesity are not fully understood, but they involve
lifestyle choices we make every day, as well as our system of food delivery.
Research by the Harvard economists David Cutler, Ed Glaeser and Jesse
Shapiro concludes that America's growing obesity problem is largely
attributable to our economy's ability to supply high-calorie foods cheaply.
Lower prices increase food consumption, sometimes beyond the point of
optimal health.

 

Infant mortality rates also reflect broader social trends, including the
prevalence of infants with low birth weight. The health system in the United
States gives low birth-weight babies slightly better survival chances than
does Canada's, but the more pronounced difference is the frequency of these
cases. In the United States, 7.5 percent of babies are born weighing less
than 2,500 grams (about 5.5 pounds), compared with 5.7 percent in Canada. In
both nations, these infants have more than 10 times the mortality rate of
larger babies. Low birth weights are in turn correlated with teenage
motherhood. (One theory is that a teenage mother is still growing and thus
competing with the fetus for nutrients.) The rate of teenage motherhood,
according to the O'Neill study, is almost three times higher in the United
States than it is in Canada.

 

Whatever its merits, a Canadian-style system of national health insurance is
unlikely to change the sexual mores of American youth

 

The bottom line is that many statistics on health outcomes say little about
our system of health care.

 

STATEMENT 2 Some 47 million Americans do not have health insurance. 

 

This number from the Census Bureau is often cited as evidence that the
health system is failing for many American families. Yet by masking
tremendous heterogeneity in personal circumstances, the figure exaggerates
the magnitude of the problem.

 

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?"

 

Mr. Hall and Mr. Jones forecast that the share of income devoted to health
care will top 30 percent by 2050. But in their model, this is not a problem:
It is the modern form of progress.

 

Even if the rise in health care spending turns out to be less than they
forecast, it is important to get reform right. Our health care system is not
perfect, but it has been a major source of advances in our standard of
living, and it will be a large share of the economy we bequeath to our
children. 

 

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. 

 

N. Gregory Mankiw is a professor of economics at Harvard. He was an adviser
to President Bush and is advising Mitt Romney, the former governor of
Massachusetts, in the campaign for the Republican presidential nomination.