Embargoed Until:
October 21, 2008
10:00 a.m. Eastern Time



Christopher Fleming

Harvard Analysts Dissect Five Myths About The American Health Insurance System

Second Article Analyzes The Politics Of Paying For Health Care Reform

Bethesda, MD -- The problem with the private health insurance system in the United States is that sick people without insurance can't find affordable policies. Covering the uninsured pays for itself by providing preventive care and reducing expensive emergency room care. Lack of insurance is the principal barrier to getting high-quality care.

All of these statements represent "facts" that many people "know" about the American health insurance system, but all of them are also myths, Katherine Baicker and Amitabh Chandra of Harvard write in one of two articles published today on the Health Affairs Web site. http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.6.w533 In the second article, Jonathan Oberlander of the University of North Carolina analyzes the politics of paying for health care reform. http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.6.w544

According to Baicker and Chandra, other health insurance myths include the ideas that employers can shoulder more of the burden of paying for insurance and that high-deductible health plans and competition -- not government action -- are the keys to lower costs. "These myths are each built on a kernel of truth, but the oversimplified form in which they are often presented by advocates can be quite misleading. We hope that stripping these myths away will help reveal the real problems of our insurance system and prepare the public for the hard trade-offs that meaningful health care reform will require," said Baicker, a professor of health economics at the Harvard School of Public Health.

Several of the myths Baicker and Chandra cite stem from confusion about the differences between health, health care, and health insurance, the Harvard authors say. For example, since private health insurance is about purchasing protection against the uncertain possibility of falling ill, those without coverage who are already ill "do not need health insurance -- they need health care." Society may want to redistribute resources to sick people with low incomes so that they have access to care, but this occurs through social insurance, which is fundamentally different from private insurance, Baicker and Chandra say.

The two researchers conclude that "the fundamental problems facing our health insurance system are unlikely to be cured by the extremes of either a single-payer system or an unfettered marketplace." They argue that health reform should focus not only on expanding coverage, but also on improving the quality and value of the care given to those who have coverage.

Oberlander: There Are No Easy Paths To Financing Universal Coverage

Oberlander considers the political pros and cons of four main strategies for financing health care reform. First, he discusses the "holy grail" of financing possibilities: ending the tax exclusion for employer-sponsored health benefits, which could produce $3.6 trillion over the next decade. Next, he examines the "zombie" of mandating that employers provide coverage to their workers, which has been a feature of many unsuccessful reform attempts, only to reemerge repeatedly in new proposals.

Third, Oberlander looks at financing health reform through a value-added tax, a broad-based consumption tax that is common in other industrialized countries but has not been used in the United States. And finally, in contrast to the VAT, an approach that he dubs "the foreigner," Oberlander discusses the "all-American" approach of financing health reform through general revenue.

"There are no easy paths to financing universal coverage," Oberlander warns. "All of the major financing options have serious political liabilities; they risk arousing either public opposition and antitax sentiment or stakeholder opposition, or both." Substituting true cost controls for increased revenue will not solve the political problem, "because more cost control means less income for the providers and other stakeholders who will resist proposals to reduce the rate of medical inflation."

Given this, "it is no surprise that American politicians put their faith in savings from promoting prevention, improving quality, moving to electronic medical records, reducing waste, and other reforms whose fiscal impact is at a minimum uncertain and, in reality, is probably overstated. These faith-based cost-control strategies might work on the campaign trail," Oberlander says. However, he warns that the Congressional Budget Office is unlikely to "score" them as achieving the savings needed to pay for significant expansions of coverage under congressional rules requiring that new expenditures be balanced by other spending cuts or increased revenues.

After the embargo lifts, the article by Baicker and Chandra will be available at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.6.w533. The article by Oberlander will be available at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.6.w544.


Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of each Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it will switch to pay-per-view for nonsubscribers. Web Exclusives are supported in part by a grant from the Commonwealth Fund.


©2008 Project HOPE–The People-to-People Health Foundation, Inc.