Busted: Health Care Myths

Busted: Health Care Myths

No matter how hard we try, we can't seem to fix it. Our dysfunctional health care system (many would dispute the term “system”) has been at the heart of political debate since at least the 1910s, when the American Association for Labor Legislation organized the first national conference on “social insurance.”

This year's election brings a new round of teeth-gnashing, and with it a fresh supply of myths to explain why things are such a mess. To offset the spin,we asked experts in the SPH community to debunk some of the more dubious claims you can expect to hear in the coming months.

Myth #1

If everyone had health insurance, we'd be fine.

Even if everyone had health insurance, we'd still have wide health disparities. The reasons for this are:

  1. Health disparities are mainly caused by social, economic, and environmental factors, and not primarily by differential health-insurance coverage. People who live in houses that are not adequate for health, who live in segregated communities, who have very low-paying jobs, who have little education, who live in communities that are adversely affected by the outside environment, have poorer health status, and that has little to do with their access to health care.
  2. Even with similar health care coverage, all people would not have equal access to health care. Giving everyone an insurance card doesn't mean there's going to be a doctor near them, or a doctor they feel comfortable with or that they can get to the doctor's office if they have to travel, or that it will be open when they need it.
  3. Even with similar coverage and access to care, people of color and the poor would probably not be offered the same types of services that health providers offer more affluent white patients. We have strong evidence that if you take a black man and a white man with exactly the same health insurance, the same health problems, the same job, etc., they will get treated very differently—even if they see the same health providers—with the black man receiving less high-quality, high-technology care.

Richard Lichtenstein, Associate Professor, Health Management and Policy (Lichtenstein is collaborating with the Detroit/Wayne County [MI] Health Authority to get all eligible children in Wayne County enrolled in Medicaid or S-CHIP.)

Myth #2

If we could all get healthier, we could reduce health care spending significantly.

There is very little evidence that suggests that medical and public health interventions, including immunizations, actually reduce total spending in the health care economy—precisely because interventions that work frequently lead to patients' living longer, with associated old-age chronic diseases and health care costs. Based on a number of studies in the smoking literature, I conclude that getting people to quit smoking may reduce aggregate health care expenditures a tiny amount, but it's really quite inconsequential. The savings from reduced smoking-related illnesses will approximately equal the health care expenditures attributable to the non-smoking population's additional years of life. Of course—and this is the critical point—with no smoking, we will have more people living longer, healthier lives.

That—and not “making money”—should be the motivation for encouraging people to adopt healthy behaviors. What we should be looking for in health care, as we do in all other aspects of life, is cost effectiveness, not cost savings. When you buy a house, for example, your objective is not to end up with more money than you started with. Rather, you're trying to get good, comfortable housing at a reasonable price. The same holds for medical care: we want, and should get, high-quality care for a reasonable cost.

Kenneth E. Warner, Dean; Avedis Donabedian Distinguished University Professor of Public Health; Director, UM Tobacco Research Network

Myth #3

The insurers are the bad guys.

Insurers serve as the transaction processors and the overseers of expenditures in the U.S. system. Currently one out of every six to seven dollars in health care is spent on administrative costs (some people say it's as high as one in four). But we want someone in an oversight role. A system with no oversight functions, no one checking billing, would be one that could have even higher costs associated with it. We'd have even more fraud and excessive use.

Most large corporations are self-insured for their health benefits. Thus, insurance companies act on behalf of corporations—they're effectively in the companies' employ. Insurance companies process claims, review utilization, provide wellness programs, and provide consultation on tailoring benefits to a corporation's needs. It's more efficient for corporations to have an insurance company administer their health benefits than for every corporation to be its own insurance company. So when benefits are denied, it's often the employer making that decision, not the insurance company.

When insurance companies do bear risk, they are cautious about how much they spread this risk across groups of customers. If they spread the risk evenly across groups—charge everyone the same amount—low-risk groups will complain of being charged too much and drop coverage. If insurance companies don't spread risk and charge each group an actuarially fair premium, the absolute cost would be substantial for high-risk groups. Everyone would like to be subsidized by other groups, which is a nice thought, not a practical business practice.

Dean Smith, Professor, Health Management and Policy; Director, Center for Value-Based Insurance Design, UM SPH and UM Medical School

Field Notes: When Claims Get Denied

Why is the insurer called the bad guy? Because either the care is turned down, because it is not included in the benefit package—which is not the insurer's decision, it's the employer's—or it's turned down because it's medically not necessary, based upon the best information with regard to the state of the art as far as medicine is concerned. Let me use an illustration:

Some years ago, Blue Cross Blue Shield denied payment for autologous bone-marrow transplants for breast cancer. We were sued and lost almost every case, even though the medical literature and the medical view was that autologous bone-marrow transplants were ineffective in treating breast cancer.

So what did we do? We went to the National Cancer Institute, who have a protocol for the treatment of breast cancers, and we said we would pay for autologous bone-marrow transplants if the patient met the NCI protocol. The suits went away, and the reason they did is because it wasn't Blue Cross making the decision, it was the protocol of NCI. People accepted it because it was scientifically based.

I'm not saying we never get it wrong. There are some insurance companies out there who survive on the basis of denying claims, and that's a problem. Blue Cross is highly regulated. Everybody is examining us constantly, but beyond that we try in all instances to run a highly ethical program, so that when we deny a claim, the denial is either because the benefit is not included in the contract, or because the scientific evidence is not there to support the payment of the claim.

People feel badly when their claims get denied. I would feel badly. I'd be on the phone calling everybody and their uncle. It's not a Myth—insurers are viewed as the bad guys. But don't shoot the messenger. Ask why the claim was denied.

Barney Tresnowski, B.S.P.H. '55
CEO, Blue Cross Blue Shield Association (1981–1995)

Myth #4

If we can get people out of the ER, we'll save money.

The ER is like a fire department—it is staffed for emergencies. Most of its people are salaried, so they're paid whether or not they have patients. The equipment, of course, sits there and is either leased or the cost is amortized, whether it's used or not. So, many of the costs in the ER are fixed costs that the hospital will have to pay whether they have one patient or a hundred patients. The extra cost, what we call the marginal cost, of another patient is determined by what services that patient needs.

Patients who come in and are really sick or seriously injured may cost a lot of money, because they need a lot of services. Patients who come in with what most people think are inappropriate needs—the standard story is the uninsured person on a Saturday night who has had a sore throat for several days and comes into the ER because they don't have insurance and a regular provider—what is the extra cost of treating that patient? A throat swab? The marginal cost of that ER visit is probably very, very low. The problem is that the hospital doesn't charge the marginal cost of that avoidable visit. They charge the average cost, which includes the costs of all those victims of car accidents, drug overdoses, heart attacks, people for whom that ER visit is entirely appropriate. So the people we would “get out of the ER” are likely to have very low marginal costs to the hospital, and getting them out will not reduce overall costs by very much.

As with anything, there is variation. Small ERs in small, for-profit hospitals in the suburbs may in fact be able to cut way back or even shut down if they are able to channel nonurgent visits elsewhere—such as to a nonurgent care “clinic” in the same hospital. High-trauma ERs can't do that. In addition, until doctors' offices and clinics are open between nine p.m. and nine a.m. and on weekends, there will always be non-emergency cases in the ER.

Catherine McLaughlin, Professor, Health Management and Policy; Director, Economic Research Initiative on the Uninsured (2001–2008); Vice Chair, Citizens Healthcare Working Group (2005–2006)

Field Notes: Three A.M. in the Emergency Room

While serving as the president of the American College of Emergency Physicians in 1992, I was invited to the White House to discuss the Clinton health reform program. When I met with President Clinton, he complimented emergency physicians but said, “The only thing is the high cost. We have to figure out a way to get people out of the emergency rooms who do not have actual emergencies.” His comment was the genesis of my doctoral research as a Pew Fellow at UM SPH from 1990 to 1994. My major finding, which has been widely cited and discussed, was that the marginal cost of an ED visit was actually very small.

Take the example of a child with a mild asthma attack. If the attack occurs at three o'clock in the afternoon, and the child can be seen in a private physician's office or clinic as an additional “add-on” patient, the marginal cost will be quite small. However, if the attack occurs at three o'clock in the morning, and the private physician has to reopen the office, the marginal cost will be very high. By comparison, in the early morning hours, hospital EDs are fully staffed and generally not very busy. The marginal cost to see an additional patient with a minor problem or non-urgent condition during this time period is very small.

Many EDs today are seriously overcrowded, with long waiting times, and more and more ED patients are uninsured. Certainly hospital EDs are not the optimal setting for the management of chronic medical conditions or minor illnesses.

Robert M. Williams, M.D., Dr.P.H. '94, Chairman, Emergency Consultants Inc., Traverse City, Michigan

Myth #5

The pharmaceutical industry is gouging everyone.

The myth is that our rising health care costs are due to the cost of prescription drugs. The reality is that prescription drug prices had been increasing at a very high rate, but in the past couple of years we've had a lot of generic entry in the marketplace because patents have expired, and we haven't had the introduction of many new blockbuster drugs.

Now that prescription drugs are covered as a standard part of health insurance plans, their proportionate use has increased. From 2000 to 2004, prescription-drug use increased 15 to 16 percent per year, but that still accounts for only a one-percent increase in our health insurance cost. Drug prices are high, but the cost of drugs isn't necessarily a bad thing. We are appropriately spending a lot more on drugs than we used to. We now have people on drugs to control hypertension and diabetes that are highly effective in maintaining the health of the public. We're saving bundles of money on hospitalizations by having people control their health through medications.

For many individuals, the cost of prescription drugs can be devastating, but not for the health care economy as a whole. Drugs cost what they do because of our patent laws, which protect exclusive rights, and secondly, because the government has decided not to negotiate prices with drug companies. If it wanted to address this issue, our government could set prices, and I suspect that sooner rather than later they will, at least for Medicare.

Our challenge going forward is going to be the novel drugs that are more tailored for individuals, particularly the biotech products. If you have one drug that works for 300 million people that's produced from mixtures of chemicals, it can be produced cheaply. If you have one drug that is tailored to fit the DNA of 500 people, it's going to be extraordinarily expensive on a per-person basis.

Dean Smith, Professor, Health Management and Policy; Chair, UM Pharmacy Benefit Oversight Committee; Director, Center for Value-Based Insurance Design, UM SPH and UM Medical School

Field Notes: The Drug Price Tag

Patients who do not spend a large portion of their income on prescription drugs—healthy patients, those with higher incomes, and those with generous health benefits—tend to be more likely to fill prescriptions, even if cost-sharing amounts increase. But people who spend a much larger portion of their income on prescription drugs—chronically ill patients, lower-income patients, or the uninsured—are more likely to feel the effects of higher costs and to reduce or stop taking their medications. This can lead to higher costs down the line. In our research on the utilization and spending patterns of individuals with employer-sponsored health insurance, we've found that when patients consistently take prescribed medications to manage certain chronic conditions, it can result in savings in other types of medical-care spending, due to lower levels of hospitalization, emergency-room visits, and other services.

Teresa Gibson, M.S. '90, Ph.D. '03
Director, Health Outcomes, Thomson Healthcare; Lecturer, Health Management and Policy

Myth #6

The reason health care costs are so high is because there's too much waste in the system.

No question—there's lots of waste in health care. We can, and should, improve efficiency by bringing health care into the information age, by eliminating pervasive redundancies and bottlenecks, and much more.

However, we also need to recognize that the steep rise in health care costs from year to year is not rooted in inefficiencies. Rather, it's primarily the result of our collective desire for the latest and best in health care. We live in a time when more and more among us seem to expect health care to remedy all that ails us, to the point of making death itself appear infinitely postponable.

Our collective longing for medical miracles is catered to and abetted by a huge biomedical and medical-equipment industry producing a steady flow of new diagnostic and treatment technologies, machines, wonder drugs, and interventions, all of them ever more costly, even when they're not that much more effective than whatever they're replacing.

As long as our health care system continues to absorb this never-ending stream of advances, no matter how small and expensive, the steep increase in health care costs will continue unabated. That's true even if we had the most efficient, waste-free health care system in the world.

Leon Wyszewianski, Associate Professor, Health Management and Policy

Field Notes: Wait Times and Overcrowding

A multidisciplinary team, working together, can reduce waste, eliminate waiting time, and increase revenue. At Henry Ford and three or four other institutions we've been able to eliminate wait times in the emergency room by managing patient flow. We eliminated the bottlenecks for patient admissions by carefully managing the use of beds in the institution. We changed the way surgery is scheduled, so that an emergency surgery doesn't create a total backup in the organization. Instead of admitting everybody who was in emergency right away, we created a clinical-decision unit where people can be observed up to 24 hours. In many cases they can be released instead of being admitted to a bed.

We've implemented a coordinated and disciplined process for discharging patients on time so beds get free. Another important change is that nowadays most well-run ERs have a very good IT system that tracks patients—where they are, how long they've been there, which services they're going to get, and which ones they've received. That helps to eliminate overcrowding as well. Some institutions also have ways of handling what are often called “frequent flyers”—people who come into the ER almost every day. We manage them in groups, because we know they're going to come there, and if they've got a chronic illness such as diabetes, they all have similar treatment needs.

Gail Warden, MHA '62, President Emeritus, Henry Ford Health System; Professor, Health Management and Policy

Myth #7

If we have universal coverage, we won't need to ration health care.

Rationing is not only inevitable, we already have it. Patients who join a managed-care network understand that there are limits on how much care will be available and who will provide it. Managed care tries to limit access to specialty care, for instance, and commercial health insurers are increasingly unwilling to pay for care that is not medically indicated.

When managed care first became a viable option and then the dominant model, the expectation was that Americans would have a broad dialogue about the need to restrict levels of care. Part of that has to be a frank discussion of patient demands for futile care; patient demands for the highest, most advanced technological care; and patient demands for all care, whether it's needed or not. The failure of managed care was not in its design, not in its goals of restricting—or call it what it is, rationing—health care. Instead, managed care failed to initiate the dialogue.

In sum, the problem is how health care is rationed, not that limits are imposed. Policymakers should make sure that patients receive the most appropriate care, using the least amount of resources, at the lowest level possible.

Peter Jacobson, Professor, Health Management and Policy; Director, UM SPH Center for Law, Ethics, and Health

Field Notes: The Massachusetts Model

One thing that we are doing by investing in near-universal coverage in Massachusetts is we are reducing the sharp edge of rationing for many vulnerable persons. Still, there are limits to how much money the state can put on the table to pay for this—no governmental entity anywhere has unlimited resources So in enacting the 2006 Massachusetts health reform law, the governor and state legislature must make choices—choices between investments in health care vs. education vs. environmental protection vs. transportation vs. criminal justice vs. on and on. And then choices within health itself: how much do we put into long-term care vs. acute care? How much do we fund children vs. adults? We have to make choices about cost-sharing. We make choices about what technologies to cover.

We have to make an infinite number of choices every day that free up or impose contraints, based on financing. The notion that there is any system on the planet, including the U.S., that doesn't ration in countless ways every day is ludicrous.

John McDonough, DrPH '96
Director, Health Care for All, Boston, Massachusetts

Myth #8

The high price of malpractice suits drives up our health care costs.

“Mal” or “bad” practice is practice below the standard of a reasonably prudent practitioner which causes patient injury. All hospitals and competent practitioners strive to provide good quality care. The rate of malpractice cases has been going down, and the cases account for only a very small percentage of the cost of health care. Most cases are due to failed expectations and not frank malpractice. Those cases that are due to true malpractice should be and are settled quickly. Health care costs are not driven by malpractice but really are driven by the costs of providing excellent care using expensive technology. Malpractice generally accounts for less than one percent of a hospital's budget.

Ed Goldman, Adjunct Assistant Professor, Health Management and Policy; Associate Vice-President and Deputy General Counsel, UM Office of the General Counsel, Health System Legal Office

Myth #9

The uninsured in America are a) jobless, b) lazy, c) clueless, d) illegal immigrants.

The number of Americans who experience at least one spell in a given year without insurance is close to 65 million—that's one in four of us. Lots of people lose coverage during job transitions, for example. So it's not just the chronically uninsured who are a policy problem—it's the sporadically uninsured. Both rates are highly correlated with the job market, but to say the uninsured are jobless and lazy is flat-out wrong. Only 18 percent of the uninsured are in nonworking families. One out of five uninsured persons is in a family with two or more full-time workers. Forty-five percent have one full-time worker in the family. So the overwhelming majority of the uninsured are family members with one or more full-time workers. These aren't lazy, shiftless people. These are people who are going out and getting full-time jobs and trying to support their family, but their full-time job doesn't bring with it the privilege of health insurance.

Clueless? It's a problem for everybody that we've got this odd system of insurance tied to your job. Take beauticians, for example. Beauty salons almost never offer health insurance to their employees. You spend years in school, learning about cutting, coloring, and styling hair, and then you're 32 and you discover a lump in your breast. Should you have known better, and at 18 decided to go to college, acquire different skills, and get a job with a large company that offered insurance, so that when you32 and get a lump, you're covered? Seventeen-year-olds aren't fully aware of the consequences of those choices.

Illegal immigrants? In 2005—and I don't think it'd be much different in 2008— 75 percent of the non-elderly uninsured were U.S. citizens. Five percent were immigrant citizens, and 20 percent (one in five) were immigrant noncitizens. So it turns out that three out of four uninsured were nonimmigrants.

Catherine McLaughlin, Professor, Health Management and Policy; Director, Economic Research Initiative on the Uninsured (2001–2008); Vice Chair, Citizens Healthcare Working Group (2005–2006)

Field Notes: Underinsurance

In Detroit, at a community meeting with the Citizens Healthcare Working Group, we had a man who had been an insurance agent. When he turned 60 he decided to retire, so he knew he'd have five years of trying to buy insurance for him and his wife before they qualified for Medicare. He looked carefully at all the policies, read the fine print, and purchased a policy he felt good about. Two years later his wife developed breast cancer and needed to go on oxygen. It was only then that he discovered the insurance company would not pay for her oxygen tanks. When he challenged it, they sent him reams of paper that he had never seen before, and it took him a while to find this little clause that says oxygen tanks were durable equipment, and the company refused to pay for durable equipment. When we met him he was paying out-of-pocket hundreds of dollars a month for his wife's oxygen, eating into their retirement funds. So even for a very careful person who has some expertise, you can become underinsured and then reall be in trouble. We heard stories like that everywhere we went.—CM

Myth #10

We have the best medical care in the world, so don't mess with it.

People often think that Americans get a lot more of the best medical care, and whenever it's been researched that's been shown not to be true. We spend over 50 percent more than the next closest Western country, predominantly because the prices of what we get are much higher. We don't have more physicians, we don't have more CT scanners, we don't have more hospitals than they do—it's just that each one of them costs more. The very same pill often costs 50 percent more in the U.S. than it does when it's purchased in other countries, even though the pill may have been made in the U.S.

The complexity of the health care system, the amount that's spent on marketing, and payments for services lead to it being much more expensive to deliver health care here. We will never contain health care costs in the U.S. until we deal with that.

Rod Hayward, M.D., Professor, Health Management and Policy; Professor, Internal Medicine, UM Medical School; Director, VA Center for Practice Management and Outcomes Research

Illustration by James Steinberg, theispot.com

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