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Home > Free-Market Toolkit > Fifty Fallacies About Health Care
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Fifty Fallacies About Health Care

By Richard E. Ralston

Following are some of the most common arguments with suggested responses that apply the principles discussed in American Health Care: Essential Principles and Common Fallacies.

1. "The quality of health care in America is ranked lower than 36 other countries."

When you hear this, always ask, "Ranked by whom and how?" In 2000 United Nations bureaucrats at the World Health Organization sent a survey to "officials and experts" selected by the U.N. Why should we be surprised to learn that government "officials and experts" in France thought that their government-run health care system was the best in the world? The scoring of these surveys also made them meaningless. For example, 25 percent of the scoring was weighted based on the assessment of how "fair" the financing was in each country. For "fair," read socialist—the list was largely a ranking of how socialist each country's system is.

2. "Medicare and Medicaid are far more efficient and less wasteful than private insurance, spending only three percent on administrative overhead."

When you hear this, always ask, "Why is the administrative cost always given as a percentage?" One reason is that, due to the age of covered patients, the average Medicare and Medicaid reimbursements are higher than those of private insurance—and administrative costs are therefore a lower percentage of the larger amount paid. Another reason is that the huge cost of contending with 130,000 pages of Medicare regulations is pushed onto the providers. The cost of the more than 100,000 employees of the Internal Revenue Service who collect Medicare taxes are also omitted from Medicare's "administrative overhead." But the biggest reason is that the government programs make no effort to minimize expense or fraud. Fraud counts for about $50 billion in Medicaid expenses every year—as high as $18 billion in New York alone. Total spending has been going through the roof for more than 40 years, but the government's administrative cost of burning money is quite low. That does not prove that the government is efficient or prudent. Private insurance companies, on the other hand, need to keep fraud and expenses down or go out of business.

3. "Government or universities develop most new medications and then just hand them over to pharmaceutical companies to manufacture and make all the profits."

When you hear this, mention that the National Institutes of Health (a government agency) reports that the pharmaceutical companies—who spend about $60 billion each year on research—develop more than 90 percent of new drugs.

4. "Advertising of drugs is bad because it increases the price of medications."

When you hear this, ask, "Why does any business advertise any product? Because they just want to add to their costs and increase the price?" Manufacturers of computers and other technological products who spend a lot on research need to find their market. A pharmaceutical company, spending an average of $800 million to develop a major new drug, has a few years of patent protection to bring the drug to the attention of physicians and patients who need it. This allows them to spread research costs over a much larger customer base and reduce unit cost—which lowers the price.

5. "Private corporations are wasteful and bloated bureaucracies. Government-provided health care is lean and efficient."

When you hear this, you might want to laugh. Then ask, "So you think that the 20th Century proved that communism and fascism work?" Is the Department of Motor Vehicles or the purchasing practices of the Defense Department our best models of administrative efficiency?

6. "People live longer in some countries because of their socialist health care systems."

When you hear this, ask if the people in those countries didn't live longer before they nationalized their health care systems. Ask how many people in those countries died on their highways, were killed in combat, shot by criminals, addicted to drugs, were severely overweight or in poor health when they arrived as illegal immigrants.

7. "The free market is callous and greedy, while government health care is compassionate and pays close and solicitous attention to the needs of every individual."

When you hear this, recite the following litany: Katrina, King-Harbor Hospital in Los Angeles, the annex at Walter Reed Army Hospital, the Veterans Administration, the government of New York State, members of Congress, every political spoils system since the Roman Republic.

8. "We can lower health care spending by eliminating all profits."

When you hear this, ask why we pay FedEx, UPS and DHL to deliver packages at a profit instead of using the U.S. Postal Service. Ask why we pay Microsoft and Apple for computer products at a profit instead of having all computers and software produced by the government. Ask why we don't have the government produce all of our food and build all of our housing if it can do it so much better without needing a profit. Ask where the money would come from, without profits, for drug research and development. Ask how expensive government drug research would be if it never had to get results. Ask what the cost of assuaging public employee unions and the politicians they fund will be when profits are eliminated.

9. "Government controls will lower the cost of insurance premiums to what we can afford."

When you hear this, ask why the government requires those who struggle to afford insurance to pay taxes on the money they use to pay for it. Ask why the government mandates that insurance cover treatments advocated by special-interest lobbies even when people do not want the coverage. Ask why state governments refuse to allow competition—and lower premiums—from insurers in other states. Government controls are now making insurance more expensive. Affordable insurance is hard to find because it is forbidden by law.

10. "Americans spend a higher percentage of their GDP on health care than any other country."

There are both good and bad reasons for the present level of spending on health care. Bad reasons include the waste and fraud in government-financed health care, regulations that drive up the cost of insurance, and what following the lead of complex Medicare reimbursement procedures and regulations has done to private insurance. Good reasons include the fact that one reason Americans spend more on health care is because they can. America is a rich country, and what is more important than health care? How much is too much? Americans not only have the most advanced drugs, diagnostic and other medical equipment but also make them more available than any other country. If we had a free-market medical system, those who could afford to try and live forever in perfect health would spend money that would stimulate medical research that would benefit all of us.

11. "Public opinion polls show that most Americans want more government health care."

A lot of people may respond favorably when asked if they think someone else—anyone else—should pay for their health insurance. Government, their employer, anyone else will do. They might not reply in the same way if asked if they should be responsible for providing everyone else with health care. They might not reply in the same way if they understood the consequences of government health care, such as rationing and long waits for surgery, treatments, or referral to specialists—or the government causes of problems with the status quo. They might not reply in the same way if asked if they really trust politicians and the loving arms of the federal bureaucracy for all of their health care. They might not respond in the same way if asked if they want government control of all aspects of health with nowhere else left to go.

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