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Scary Stuff

Richard Quinn

WOULD YOU BASE important financial or life choices on false or misleading information? Of course not. Yet, when deciding on key economic and social issues, that’s exactly what people often do.

I’m addicted to social media. I follow advocacy groups focused on Social Security, health care and taxes, as well as the politicians who are especially engaged in these issues.

Some tweets and memes reinforce what people want to believe or provide the easy answers they seek. Usually, no thought is given to investigating the facts. That may be comforting to some, but it’s a heck of a way to set economic and social policy.

The misinformation—and the related comments—are scary. One recent tweet read, “Americans pay all the taxes and get NOTHING in return while the rich get richer.” Get nothing mind you. Do Americans realize they live in one of the world’s lowest-taxed countries?

Another said Americans could have health care for free, just like other countries do. I’ll take anything that’s free, but health care is never that.

Are you among those who are convinced Congress stole the Social Security trust funds?  Do you believe the $2.9 trillion in the trust isn’t reserved for incurred liabilities, but rather represents surplus funds that should be used to increase benefits? I hope not.

A favorite myth is that, to fix Social Security, all we need do is stop paying members of Congress. The fact is, their salaries would pay Social Security benefits for less than an hour.

My frustration is increased when it’s so easy to get the facts on most subjects. For example, check out the latest Social Security Trustees Report. You only need to read the first few pages to get the message.

Politicians tweet that 70% of seniors don’t have dental insurance and therefore can’t afford dental care. Ah, the fallacy of generalization. A more recent report says a little over half of seniors have dental coverage. A whopping 93% of seniors favor adding dental coverage to Medicare, but that drops to 59% if additional premiums are required. And it appears only 20% say they delayed or avoided dental care because of cost.

I recently saw a bumper sticker reading “Medicare for All.” Most people will agree our health care system needs some major changes. But do they think beyond the “Medicare for All” phrase and consider its consequences?

Medicare pays significantly less for care than the private sector. What are the implications of paying all health care providers 20% to 30% less than they currently receive from their patients under age 65? There must be some. And what about managing costs? Do people realize that all health care systems use some strategy to manage costs—strategies that limit choice and access in some manner?

Do most Americans understand the cost of Medicare to beneficiaries? It’s not free. Start with the basic Part B premium of $170.10 per month. Add the average Part D premium of $31.47. Then there’s Medigap coverage for another $200 per month, although prices range from about $100 to nearly $1,000, depending on your age, where you live and the way the carrier sets premiums.

In total, we’re at about $400 per month per retiree, not considering income-based extra Medicare premiums, otherwise known as IRMAA, or the deductible and copays applicable to Part D coverage. Oh yeah, there’s also funding for Medicare that comes from those payroll taxes on all wages.

It’s possible today to get family Affordable Care Act (ACA) coverage for far less than what Medicare costs, once ACA subsidies are factored in. Don’t get me wrong, I’m not against health care reform. I am for people understanding all the moving parts and then deciding what they want to change—and pay for.

The general lack of understanding of economics is also frightening. Many believe corporate profits are bad—greedy even—and of little benefit to the average American. Yet these same people are banking on stock market growth in their 401(k) plan and IRA.

Corporate greed and CEO pay are blamed for inflation. Doesn’t that ignore global factors, notably ramped-up consumer spending and supply chain issues?

The link between spending, taxes and prices is often ignored. A good example is the tendency for the public to get behind workers in a labor dispute, while knowing little of the issues and being oblivious to the impact on consumer prices.

Are teachers underpaid? I’ve found most people believe they are. Do those folks make the link between teacher costs, the household incomes of local citizens and their property taxes? In my town, 59% of property taxes go to schools and, of that sum, 60% is for teacher compensation.

Everything we want has a price. Sometimes, it’s cash. Other times, it’s tradeoffs. Nearly everything is linked to something else. There are—many times unintended—consequences to how we act as individuals and as a country.

Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.

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