On Health Care, Figures Can Lie

Gamblers have a way of looking at a bet that has a good chance of winning. It’s called playing the percentages.

That means you are more likely to win by putting your money on red or black in a roulette game - eve though the payoff is small - than you are by betting on a single number, like 21 or 11. Bigger pay-off, true, but very little chance of winning. The gambling pros have a name for that too. It’s called a sucker bet.

Listen to ads for lotteries or casinos and you can hear a faint echo of sucker bets all the time. You have a lucky number. You have to be in it to win it. The odds of winning may be really high, but somebody is going to win. Sooner or later.

Sucker bets all.

Of course, there is entertainment to be had in making sucker bets. And there is a good chance you will have a few moments or a few hours - depending on whether you are betting on the roulette wheel or the state lottery - to imagine what you would do with all that new-found wealth.  I won’t argue that the dream isn’t worth the dollar or two you put down.

But what does this all have to do with politics? It’s all in the first sentence - the phrase “playing the percentages.”

This requires a bit of math to explain. But don’t roll your eyes, it’s important to know what is happening right now in Washington - and elsewhere - with people who are throwing out all kinds of facts and figures and percentages about health care.

Facts are being cherry-picked to make things look better or worse. Figures can lie (and a lot of liars figure). But the most dangerous of the three is percentages, which can easily be made to mislead people.

Huh? Well, if you look really carefully at the claims that the Affordable Care Act is about to self-destruct, and the proof is that premiums in some places have gone up 100 percent or more, you can see the misleading math huffing and puffing just under the surface.

Here’s why.

Let’s say you have a family health insurance policy that costs you $3,000 a year. (we’ll use round numbers to  make it easy to follow).  Now, say it goes up by $300 - you have seen a 10 per-cent increase in your premium. If it goes up to $6,000, that’s a hundred percent increase.

We’ll make it go up $300 again next year. Is that another ten percent increase? A hundred percent increase? No, because the base cost of the policy is now $3,300,  a 10 per-cent increase would have to be $330. A hundred percent increase would be $6,600.

Could that keep happening? Well, the annual premiums would go from $12,000 to $24,000 to $48,000 to $96,000. In just five years, they would hit $192,000, and no one would be around to buy it.

So. let’s look at what is real.

There are lots of arguments to be made about how much you have to make - and what kind of taxes you pay - to afford a $3,000 insurance premium. But, if you are bringing home $30,000 a year, you are just paying 10 percent of your income for insurance. Bring home $60,000 and it drops to 5 percent. Bring home $600,000 - you are the bank vice-president, not the teller - and you are spending one half of one percent of your take home pay on health insurance.

So when people tell you that premiums in some places have doubled or tripled under the Affordable Care Act, you shouldn’t just run around in a panic. Not until they tell you where those increases took place, and why those increases took place - in those few markets and nowhere else - and, most of all, just what those increases were. In real dollars. And who is paying them.

Say the premiums tripled from $900 a year to $2,700. That’s a lot, but its still only 10 percent of the take-home income of someone who brings in $27,000 a year. And 5 percent of someone making $54,000.

Now, I agree that the Affordable Care Act is still being phased in. It has problems, sure. And it needs some work by Congress to fix it. But most people who buy a new car and find the engine sputtering a year later will bring it in to a mechanic and have it fixed, rather than going out and buying a new car.

That’s called playing the percentages.