The Journal's Fuzzy Math

by TNR Staff | February 9, 2007

Pointing out intellectual dishonesty on The Wall Street Journal editorial page has a certain tiresome dog-bites-man quality to it. I generally restrain myself to only the most hilarious and/or flagrant examples. Today's editorial on health care, alas, fits the bill. The editorial is the Journal's panicky attempt to persuade American businesses that they should oppose any form of national health insurance. "More than a few American businesses are tempted to go the government route because it would allow them to toss their liabilities on the taxpayer," concede the Journal's editors. But they should resist the temptation. Why? Because it would lead to higher taxes. The following paragraph is the Journal's attempt to make this seem like a terrifying proposition:

Health care is a big reason that the overall tax burden is as high as it is in most of Europe. According to the OECD, the "tax wedge" as a share of all labor costs was only 29.11% in the U.S. in 2005. It was above 40% in most of Europe, and above 50% in France and Germany. These countries spend little on defense, so "national health care" and other social services explain the high tax burden.
Do you notice anything odd about that paragraph? If not, let me point it out. The editorial is saying that public health care is the reason Europe has higher tax rates than the United States, but it does not say how much Europe spends on health care vis-à-vis the U.S. Why do they avoid pointing it out? I'll give you one guess. Okay, here's the answer: The United States spends far more on health care than any other country, including France or Germany. In fact, our system is so inefficient that the American government spends more money on health care per capita ($2,727) than either the French government ($2,476) or the German government ($2,350.) (Figures culled from OECD statistic available here.) Back to the scurrilous Journal editorial. Why did they write something so weaselly? Here's my guess. The writer was determined to show how horribly expensive nationalized health care would be. He set out to find the most expensive health care systems in the world to compare to the United States. He found that those systems are actually cheaper than ours (despite the fact that they produce better outcomes, offer more doctors, et cetera.) In other words, he found that health care is not "a big reason that the overall tax burden is as high as it is in most of Europe." He found the opposite. So he stuck in a little clause: "'national health care' and other social services explain the high tax burden." In fact, other social services and not health care spending account for the difference, but the editorial writer and his editors obviously hoped the reader would not notice that utterly crucial point. The funny thing is that even if the Journal's implication were correct--that higher health spending is the cause of higher taxes in Europe--why would that matter? U.S. companies are already paying exorbitant prices to insure their workers. If they stopped paying for that, and the government started paying instead, yes, they would have higher taxes. But why is that bad for companies? The Journal doesn't attempt to explain. --Jonathan Chait

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