Rule of thumb: Wherever there is major legislation, trillions of dollars, and your well-being at stake, there will be claims driven by emotion instead of fact. Case in point: Health care.

Here are three widespread health-care misconceptions I personally used to hold before digging into the facts.

Myth: Europe has socialized medicine compared with a free-market system in America.

Fact: By nearly any measure, the U.S. government spends more on health care than most European governments.

Yes, most European governments offer universal health coverage, and the main health insurance system in America is private insurance. But the U.S. government spends a lot on health insurance for its elderly (Medicare) and poor (Medicaid), plus layers of other subsidies. It's actually bigger than the private sector. State, local, and federal governments spend about $1.3 trillion annually on health care, compared with less than $1 trillion from the private sector, according to David Leonhardt of The New York Times.

Here's the real mindblower: The U.S. government spends more money per citizen covering a minority of its population than most European governments spend covering their entire populations:

Source: OECD.

These figures are adjusted for differences in the cost of living between countries, so it's truly an apples-to-apples comparison.

There are other ways to view this. As a share of government spending, the U.S. spends more on health care than all European governments except Switzerland, according to the OECD. This chart is probably the most complete measure, showing government health spending as a percentage of GDP. It still puts the U.S. at above average compared with major nations that offer universal coverage:

Source: OECD, Kaiser Family Foundation.

It's pretty clear. Government health care in America is larger and takes up a bigger share of the economy than several countries we often tag with a "socialized" label. And it bears repeating: Government health care in America only covers a minority of the population, while other nations cover everyone. As Ezra Klein once said of these numbers: "This is serious pitchforks-and-torches stuff, if only people really understood it."

And what about private coverage? According to the Centers for Disease Control and Prevention, 65% of nonelderly Americans have private health insurance. By contrast, about 90% of French citizens carry private supplemental health insurance that covers payments not provided under the country's universal system.

Myth: The U.S. health-care system is more efficient than other bureaucratic behemoths around the world.

Reality: By most measures, America has one of the least efficient health-care systems in the world.

Health economist Henry Aaron once remarked:

Like many other observers, I look at the U.S. health care system and see an administrative monstrosity, a truly bizarre melange of thousands of payers with payment systems that differ for no socially beneficial reason, as well as staggeringly complex public systems with mindboggling administered prices and other rules expressing distinctions that can only be regarded as weird.

Measuring the administrative costs for health-care systems is difficult and prone to undercounting. A good example: Some tout a slim 2% administrative cost for Medicare, but that doesn't include the cost of collecting premiums (done by the IRS) and a raft of billing work done by private contractors.

A more complete measure of public health administrative costs in America is 6%, compared with a 4% average among OECD nations, according to McKinsey & Co.

Include the private market and it's worse. The measure for administrative costs used by the OECD -- the difference between insurance premiums and medical costs -- was $465 per recipient per year in 2004, compared with an average among OECD nations of $104, and as low as $15 a year in Sweden. The only country with higher administrative costs is Luxembourg.

Focus on private insurers alone and it's pitiful. As Washington Post reporter T.R. Reid writes:

U.S. health insurance companies have the highest administrative costs in the world; they spend roughly 20 cents of every dollar for nonmedical costs, such as paperwork, reviewing claims and marketing. France's health insurance industry, in contrast, covers everybody and spends about 4 percent on administration. Canada's universal insurance system, run by government bureaucrats, spends 6 percent on administration. In Taiwan, a leaner version of the Canadian model has administrative costs of 1.5 percent; one year, this figure ballooned to 2 percent, and the opposition parties savaged the government for wasting money.

One Motley Fool commenter recently explained the reasoning for forgoing health insurance by noting the appeal of "not contributing a dime to the $950,000 salary of an insurance or billing company vice president." It's a reasonable gripe. WellPoint's (NYSE: WLP) CEO has been paid $63.5 million since 2007. Remember that next time your premiums go up.

Myth: America's uninsured are cared for by churches, charities, and at last resort, emergency rooms.

Fact: Put starkly, the uninsured face a 40% higher mortality rate than those with health insurance, even after adjusting for income, health status, body mass index, smoking, and alcohol use.

In 2007, President George W. Bush said, "People have access to health care in America. After all, you just go to an emergency room."

That's true for the most part. As part of law signed by President Ronald Reagan in 1986, hospitals with emergency departments that receive government funds, including Medicare (all hospitals, basically), are obligated to evaluate all patients and provide treatment until they're in stable condition regardless of ability to pay. This has become the de facto health-care system for millions of Americans.

But it's hardly adequate. ERs must treat those who aren't in stable condition. Anything less -- say, preventive care -- can be off the table, and is often too expensive for the uninsured. Surgeon Atul Gawande recently wrote in the New Yorker:

A vascular surgeon in Indianapolis told me about a man in his fifties who'd had a large abdominal aortic aneurysm. Doctors knew for months that it was in danger of rupturing, but since he wasn't insured, his local private hospital wouldn't fix it. Finally, it indeed began to rupture. Rupture is an often fatal development, but the man -- in pain, with the blood flow to his legs gone -- made it to an emergency room. Then the hospital put him in an ambulance to Indiana University, arguing that the patient's condition was "too complex." My friend got him through, but he's very lucky to be alive. Another friend, an oncologist in Marietta, Ohio, told me about three women in their forties and fifties whom he was treating for advanced cervical cancer. A Pap smear would have caught their cancers far sooner. But since they didn't have insurance, their cancers were recognized only when they caused profuse bleeding.

Yes, the ER will see you if you're in dire need. But by then illness can have developed into a more complicated -- and expensive -- ordeal. Or to the point where it's too late.

A 2009 study by a group of Harvard researchers published in the American Journal of Public Health reviewed a public health survey of 9,000 people in the 1980s. Following up in 2000 showed about 3% of the survey group had died. Even after controlling for age, income, weight, education, employment, tobacco and alcohol use, and physician-rated overall health, the researchers found those without insurance had a mortality rate 40% higher than those who did.

Why is complex. There isn't one single reason. But a report by the Kaiser Family Foundation provides key insight: The uninsured are three times more likely to claim problems getting needed care than those who have insurance. "Over 40% [of uninsured] do not have a regular place to go when they are sick or need medical advice, compared to just 9% of those with coverage," the report wrote. And that was in 2006, before the financial crisis. It's almost certainly higher today.



All of these issues are complicated and can't be given enough attention in one article. But we know the system is broken. We also know, for the most part, what works and what doesn't. Many aren't in favor of current reforms, but no one should be in favor of the status quo.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.