No, it's true. The possible geometry of visible GPS satellites at any given moment (namely that they're all above you and none are below) means that the vertical error is pretty bad in comparison to the horizontal error.
I don't understand the math but essentially you are trying to solve four unknowns. Latitude, longitude, elevation, and the time offset between the satellite and device clocks. If only three satellites are in view the only way to solve latitude and longitude is to assume a value for elevation based on previous results. Without a forth satellite the GPS simply doesn't know what the altitude is. But that estimated value is sufficient to give a good estimate of horizontal position.
Link for bystanders: http://en.wikipedia.org/wiki/Waas
WAAS uses a network of ground-based reference stations, in North America and Hawaii, to measure small variations in the GPS satellites' signals in the western hemisphere. Measurements from the reference stations are routed to master stations, which queue the received Deviation Correction (DC) and send the correction messages to geostationary WAAS satellites in a timely manner (every 5 seconds or better). Those satellites broadcast the correction messages back to Earth, where WAAS-enabled GPS receivers use the corrections while computing their positions to improve [3D] accuracy.