Why Johnny Can’t Reason
ByA recent dip into conservative drive-time talk radio raised Michael Shermer’s question: Why do smart people believe weird things?
It’s not as if the conservative talk audience is all Mensa members. (Sean Hannity, at least, need not apply.) And it’s not as if the left doesn’t believe its share of nonsense. It’s that conservative “experts†with educational pedigrees and elite-sounding, non-elitist titles spout ideas they expect listeners to accept without question.
Like how replacing employer-based health insurance with health savings accounts means a $10,000 raise for the average family.
The day of the president’s health care summit, the Cato Institute’s Director of Health Policy Studies, Michael Cannon, spoke with WBT Charlotte’s Tara Servatius. No surprise, neither had anything good to say about the Democrats’ health care reform proposals. Neither showered praise on health insurers, of course. They know which way the wind blows. Instead, Cato’s Cannon recommended more and bigger health savings accounts. [timestamp 34:22]
Cannon: That $10,000 that employers use to buy coverage for average, for the worker with average family coverage. That $10,000 doesn’t come out of the employers’ profits. That comes from workers’ wages. His salary would be $10,000 higher if he weren’t getting health benefits at work, and he’d be able to use that money to pick, to purchase coverage that meets his needs – and it stays with him from job to job – that’s more secure and provides higher-quality coverage …â€
Plus freedom and all that. The employer-based system takes financial decisions out of people’s hands, Cannon said. He recommended that “we give that money back to the American people†and allow market forces to control costs.
Read: Relieve companies of paying employees’ health care costs and the average American family gets a $10,000 raise – a libertarian “peace dividend.†Johnnys all around Charlotte nodded at their radios. So did their local radio host.
Servatius: You know what’s fascinating about that, Michael Cannon, if I had been allowed to do that for my, at the last two employers I had … Let’s just say, had it been a real option where say I could write that $10,000 off and lower my tax, you know, my total taxable income… If I had done that going back, you know, seven years when I wasn’t having children and I was single and, you know, maybe went to see a doctor once a year, maybe. I could have paid for the births of both my children in cash. Chosen my doctor. Been able to shop by prices. Would have had it in the savings account and really would have been able to do it competitively. And would have still had a ton of money left over, in cash, to pay for my health care.
And if pigs could fly, we could train them to bomb the Taliban.
Cato isn’t quite that naive. Still, it is on A.M. talk peddling the idea that eliminating employer health plans would mean a boon for employees, not windfall profits for employers. Freedom-loving employees who wish to manage their own health care could drop out of their employers’ group health plans. Employers would simply roll over $10,000 into employees’ health savings accounts. Next up, Cato will sell you some swampland in Florida.
Maybe these smart people – experts – don’t really believe their own nonsense. They just expect us to. They expect working families getting by on $40,000 a year to save $10,000 a year. They expect sleep-deprived workers stretched thin from juggling jobs, kids, shopping, church, home and car repairs, bills, etc., to take a graduate course in America’s labyrinthine health care system and to comparison shop for medical procedures when little Johnny gets sick. Or else endeavor to persevere.
Experts like these spend their time fretting about economic efficiency and market “distortions.†They would hand business another windfall and expect workers to pay for it with an unfunded mandate – of time. Workers who can’t handle it? Well, that’s what natural selection – like applesauce – is for.
Current health savings accounts are okay, Cannon believes, except they’re too small. They leave employers still controlling too much of workers’ health care dollars.
Cannon: So what we need to do is wrest from the employers the money that they use to purchase our health insurance so that workers control that money. Workers can save it in a large health savings account, and then use that money to purchase insurance that meets their needs.
Wresting money from employers to benefit workers? If a liberal said anything remotely like that, the torches and pitchforks brigade would be in the streets calling for his Marxist head on a platter. Thank goodness it was said in that happy place called conservative talk radio where the credulous come for their daily dose of alternate reality.
No wonder Johnny can’t reason.
(Cross-posted from Campaign for America’s Future.)
14 Comments
March 1st, 2010 at 11:58 am
Republicans: A stupid person’s idea of what a thoughtful person sounds like.
March 1st, 2010 at 1:01 pm
Tom, you forgot to mention the boon for the financial services industry if everyone was suddenly handing the banks a $10,000 stake to invest with. Whatever the interest on those accounts is for the consumer, you’ve got to imagine the vig for the banks will amount to a decent sum.
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March 1st, 2010 at 2:44 pm
If you go with the example that someone has an extra $10,000 per year that it cost their employer for health insurance, then they could purchase a catastrophic health care policy to protect them for serious ailments (like your homeowners or auto insurance policy)and the remainder could be invested as the employee sees fit. Virtually ALL health policy experts agree that the way we pay for health care is a contributing factor to the rapid rise in health care costs. Perhaps some people would squander the money or go to Cherokee with it or maybe even by a lotto ticket at the Hess Station on Smoky Park Highway but they would be in control. Just like the dollars families spend on housing, transportation, etc.
Why should employers be responsible for paying an employee’s health care bills, if so then let them pay for their utility bills since most of us need electricity to make it? The only reason employers pay for healthcare differently than other expenses is because tax treatment allows the employer to deduct the expense but it is tax free income to the employee. Employers will provide whatever compensation package is necessary to attract the employees they need to do the job.
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March 1st, 2010 at 4:06 pm
Very true. This is why so many Americans don’t have health insurance under our employer-based, insurance-rationed, system.
In the absence of single-payer, access to healthcare is largely dependent on economic & social status. This will remain the case even with reforms working their way through congress.
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March 1st, 2010 at 7:13 pm
Huh? I thought “employer based” medical insurance had its origins several decades ago as a way to avoid national single-payer medical insurance, avoid raising wages, and had the added bonus of a tax advantage to the employer?? I could be wrong.
As far as I’ve been able to tell from pricing Blue Cross, etc., I could buy private health insurance at my advanced age of 61 for about $600.00 a month and that policy would have a $5,000.00 a year deductible. So much for investing the balance of the $10,000.00 a year that the employer will supposedly pony up.
I’m not sure where the money is supposed to come from if my employer goes out of business, moves the bulk of the operation overseas, or has a lay-off as a cost cutting measure.
I am sure that I’m offended at suggestions that people don’t have medical insurance because they lack personal responsibility. Actually, the people who do not work, pay rent from their own earnings or pay mortgages, buy cars, etc., can go to the E.R. for very expensive routine medical care with complete impunity – they have nothing to lose.
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March 1st, 2010 at 8:35 pm
Big Ivy – Just for discussion-the $10,000 would be an average so if your 31 the cost to your employer most likely would be much less and if your 61 like yourself the cost would be higher so you would have more than $10,000. For example, I am 41 and my BCBS premium is just over $300 per month or just over $4000 per year.
The discussion I thought was about employer based insurance but if they close shop then where does the money come from? Where it would under any circumstance out of someone’s pocket, if it were a single payer then you and I would have to pay taxes to support it because the government can’t continue to print money with impunity.
I didn’t say that people don’t have medical insurance because they lack personal responsibility. I said if they had the money in their pocket then could spend it in any way they feel benefits their families. In the case of the Hess station powerball ticket, that family now has $60M after taxes, awesome for them, couldn’t happen to better folks!
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March 1st, 2010 at 9:26 pm
Hey, I sure wouldn’t defend the employer-based system. The question over the last year has been what to replace it with. Cato’s write-up is much more sophisticated than what Cannon said on-air, but something about it reminds me of a push back in 2005 to privatize social security and put that money right where the banking sector could take good care of it for us.
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March 1st, 2010 at 9:47 pm
Mr. Ramsey, I can’t comment on lottery tickets other than to wish there were more winners.
However, when one’s medical insurance is tied to an employer and there is a loss (or lack) of employment then a genuine problem arises. That is the situation for far too many people.
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March 1st, 2010 at 10:28 pm
I would agree ER provided insurance is a problem and the greater issue around here is that most ERs are small businesses and the rates for these businesses to cover their EEs is sky high and likewise for the self employed it is out of reach. My employer doesn’t provide health insurance so I’ve got to pay the premium out of my pocket.
If health care costs can be contained and we have an economy sufficiently vibrant so virtually everyone willing to work can find a job and those willing to obtain additional training can find a better paying job, many (certainly not all) of these problems will be solved. No system will solve every problem.
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March 2nd, 2010 at 6:47 am
Simpler version for fence sitters:
Don’t call it health care. Think of it as a car.
Present system for many/most: employer helps pay for an old Yugo that runs half the time.
Cato plan: employee gets handed $10k and due to lack of regulation finds that all $10k will buy is a stripped hulk of a Yugo with no engine. But for $100k he could get a limo with champagne.
Socialized government evil health care: like having a subway that comes to every house. Not perfect, but sooo much better than the old Yugo.
You can still buy the limo with bubbly if you want it so much.
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March 2nd, 2010 at 1:04 pm
From my understanding, group health insurance is rated as a group so the employers are paying the same premium for every employee who has the coverage; the rates are determined by averaging the health and age of the group, not the individual employees. So if Big Ivy works in a small company with an older or less healthy employee pool then maybe the increased pay would even out to pay the premiums for a private plan, but if Big Ivy works in a large company with a healthier work force, it is highly unlikely the increased pay (assuming the employer shared all of the savings) would be able to pay for an individual plan. Last year my husband’s employer decided to stop contributing anything to his group health insurance so we reviewed getting him an HSA because he’s young and relatively healthy; the HSA would have had a yearly $5k deductible/out of pocket maximum with an 80/20 coinsurance clause (i.e. we have to pay 20% until we meet the deductible except for preventative treatment which is 100% covered), and the monthly cost savings was about $15. His group plan has a $1k deductible.
Mr Ramsey, I understood that elected officials in Buncombe County received healthcare for life or at least the option to receive healthcare.
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March 2nd, 2010 at 1:22 pm
working families getting by on $40,000 a year
Why does that employer pay that worker 40k? Why not 35k? It’s because the market has set the rate for the specific experience and demand of that job at 40k. If the employer was only willing to pay 35k she would not be able to fill the position.
Further, that worker is not simply making 40k; he is making 40k PLUS health insurance. A family of 4 in Wake county can get a policy with $1500 deductible for about $690 a month. By being in the 25% tax bracket,, our family would have to earn $906 a month to cover that cost. That comes to $10,880 a year. Where Cato fails to mention is that the raise would only be $8160, the cost of the policy to the employer. We would have to extend the same tax situation to the worker for it to come to 10k.
Again, why does that employer pay 40k + insurance [that costs her only $8160]? Because the market demands it. Now, I am not so naive to think that if we took away the employers tax advantage resulting in next to no employer base coverage, that the employer would immediately dump an extra 8k into wages, but in time, the market would re-level and workers WOULD receive a raise if you will.
They expect sleep-deprived workers stretched thin from juggling jobs, kids, shopping, church, home and car repairs, bills, etc., to take a graduate course in America’s labyrinthine health care system and to comparison shop for medical procedures when little Johnny gets sick.
Who doesn’t do this today? I shop for doctors, medicine and procedures. Do you ever look around and see how much office visits cost? Or nurse questions? Do you ever go to the mini-clinic in the drug store instead of the doctor? Shopping will reduce price and increase quality and choice.
Freedom-loving employees who wish to manage their own health care could drop out of their employers’ group health plans. Employers would simply roll over $10,000 into employees’ health savings accounts.
Imagine if the State gave employers a tax advantage to pay us with food plans. That is, if Acme Corp could buy us a food plan tax free. We would see the same thing as health insurance. Employers would compensate us with a food policy. We would sign up and have food delivered to us as prescribed by the plan. Do you think that’s a good idea?
Me neither. So why do you think it’s a good idea for health insurance?
If a liberal said anything remotely like that, the torches and pitchforks brigade would be in the streets calling for his Marxist head on a platter.
But you don’t. Whether it be health insurance or social security, you want the state controlling the money. Very weird.
Huh? I thought “employer based†medical insurance had its origins several decades ago as a way to avoid national single-payer medical insurance, avoid raising wages, and had the added bonus of a tax advantage to the employer?? I could be wrong.
Hi Big Ivy, I think you are. During his administration, FDR imposed wage controls. Businesses were no longer able to pay more, government limited the amount of money Acme Corp could compensate their employees. In order to get around that crazy law, they began to offer health insurance as a means to compensate their workers. In 1943, the IRS gave them the tax free status and from there on it just became a no brainer.
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March 2nd, 2010 at 3:02 pm
eemilla – Under longstanding policy for many years, Buncombe County Commissioners who serve at least three terms (12 years) receive health care just like a county retiree who aren’t eligible for Medicare. I served two terms (8 years) so I lost my county health coverage when I was not re-elected. I don’t know what the policy is now.
While I was a commissioner I continued to pay for my BCBS policy because I would loose my county health care coverage unless I served for 12 years. I joked to many people that I didn’t cry any tears when I lost the election but I would really miss meeting so many different and interestiing people in the course of the job and I would definitely miss my county health insurance!
It was an awesome benefit and county employees always mentioned to me how grateful they were for their health insurance even if they could have found another job which paid a higher salary it was a reason to stay with the county. The county has worked really hard to minimize the cost increases of the health plan to taxpayers without dramatically increasing the cost to employees.
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March 2nd, 2010 at 4:51 pm
“His salary would be $10,000 higher if he weren’t getting health benefits at work”
Or, more likely, he would make the same $$ and not have health insurance.
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