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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.

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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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John Elway
John Elway
9 months ago

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”

That ignores that profits are taking a bigger % of what companies make and
worker pay is a lesser %.

Higher worker pay is probably a lot better for the average American than higher stock prices.

R Quinn
R Quinn
9 months ago
Reply to  John Elway

Not necessarily. Pay is rising because market forces are at work, profits don’t have to change as a result- inflation and price increases. Perhaps in the short term workers would like the (taxable) cash, but not in the long run.

macropundit
macropundit
9 months ago

true dat

Randy Starks
Randy Starks
9 months ago

Thanks Richard, one of your best articles, and appreciate your perspective. The healthcare Industry is a mess, no doubt, and there is no easy way out. The lobbyists in Washington and the healthcare Industry control the narrative and any movement towards healthcare reform. So, try to stay healthy, eat well, do not drink excessively and take vitamins and herbs. Otherwise, prepare to pay and don’t believe the BS about Medicare Advantage Plans. If you are healthy, they are probably just OK. If you have any major health issues, good luck with an Advantage Plan, JMO.

Chazooo
Chazooo
9 months ago

Can anyone explain the medical billing system where Medicare is involved? Provider bills $1850; Medicare pays $262; Patient pays $35 co-pay. Why do providers bill such high charges for which they know they will not be compensated?? Is that for tax purposes? “Well, we lost $1500 on that one…

parkslope
parkslope
9 months ago

You use the obvious fact that many people make decisions based on misleading information to imply that your opinions are settled facts about which reasonable people can’t disagree.

Why assume that a Medicare for All bumper sticker reflects ignorance about the true costs of Medicare? Could it be to imply that there would be little if any, support for universal Medicare if Americans understood the costs? If so, then you are making an assumption that is clearly subject to debate.

Those who blame CEOs for the recent rise in inflation are clearly in the minority because CEO pay didn’t suddenly go off the charts in the past couple of years. I think almost everyone would agree that arguments about the cause of inflation have centered around pandemic-related issues–most notably stimulus payments and supply chain problems.

Your argument about teacher pay is also one that reasonable people can disagree about even though you include it in your article about false and misleading information. Your statistics also do not provide conclusive support for your argument. For example, noting that 35% (59% * 50%) of property taxes goes to teacher compensation ignores the issue of whether property taxes are sufficient to adequately compensate teachers. If property taxes were suddenly cut in half and teachers still received 35% property taxes would you still argue that they are fairly compensated?

Last edited 9 months ago by parkslope
Mark Royer
Mark Royer
9 months ago
Reply to  parkslope

Another option is to eliminate most of the bureaucrats in our education system and raise pay for effective teachers with the money freed up. We have too many “educrats” that have little contact with children and instead add work to the teachers’ already heavy workload. In all areas we need a lean, efficient and honest government.

R Quinn
R Quinn
9 months ago
Reply to  parkslope

It’s a bit more than opinion. My questions and conclusions are based on review of many studies, surveys, feedback from many sources and believe it or not experience. I do indeed believe support for Medicare for All would change if the direct cost to Americans were presented. I support Medicare for All in some form though.

This was the case back in 1988 when Medicare expansion was repealed and more recently the proposal to add dental where support dropped significantly when told there would be new premiums.

If we were willing face the costs and pay for them we could solve the health care problem. Just double the payroll tax and you have it.

I’ve been doing some informal and unscientific polling on several Facebook groups and Twitter asking if they would support M for A if there was a significant increase in taxes. Almost two to one the answers are no.

You are right about CEOs. However, those who make that case have the Bully Pulpit and easily influence those who feel the need to find scapegoats for all their ills. The fact is just using CEO is misleading because what they really mean is a few CEOs among the S&P 500.https://quinnscommentary.net/?s=Ceo

As far as teachers go, I served on three governors task forces evaluating public employee benefits and pay. I know the packages. But you raise a good point, for those who feel teachers are underpaid, how much in additional property taxes are they willing to pay? Teacher pay has to reflect the incomes of the citizens in their community and their ability to be taxed more.

David Lamb
David Lamb
9 months ago
Reply to  R Quinn

I think this is the challenge: “I do indeed believe support for Medicare for All would change if the direct cost to Americans were presented. I support Medicare for All in some form though.”

In other words, your M for A is probably not mine or his or hers. It’s a sound bite, and means different things to essentially all of us.

Jim Burrows
Jim Burrows
9 months ago

America has a science problem. We don’t understand the basic concepts of scientific methodology or how to interpret results. These shortcomings are combined with our predisposed natural tendencies to seek patterns and simple narratives that provide answers that conform to our predisposed desires. Add on that we love certainty. Uncertainty causes anxiety. We don’t want to be told the truth that the future is unknown. Better to believe a lie told with certainty.  Enter the charlatan.

dl777
dl777
9 months ago

Thanks for all your writings Richard. One of our big issues is government worker salaries and their associated pensions. It is totally out of control. Government wages used to he half of industry because it was public service but now they are equal or even higher. And they receive a very generous pension (sometimes over 100% of final pay) where nearly all future private sector workers get none (at most a 3-4% match of their 401K).

Public sector employment has become an elitist club and they can write themselves raises/increase benefits without having to go through the legislative process. I see it in the paper every week about government workers giving themselves raises because they have to compete with the private sector. It seems there is no longer any public service sentiment in our country. It seems everyone is about getting more than their fair share.

In retirement, future private-sector workers will be the ones living on a severely diminished income and government workers will be on the beach in their tax-payer funded vacation homes.

Sorry for the pessimism but I don’t see a way out of our terrible overspending by our elected officials and the terrible agencies they instituted which have no checks and balances.

Kevin Madden
Kevin Madden
9 months ago
Reply to  dl777

There should be a constitutional amendment banning all public employee pensions. Governments should be required to pay NOW for work performed NOW. No promises of future compensation in any way. Pay for public employees would likely rise to some degree and only then would taxpayers know what it costs the government to deliver the services they demand or desire.

R Quinn
R Quinn
9 months ago
Reply to  dl777

People forget that public sector total compensation is funded by taxpayers most of whom enjoy few if any of the benefits of those workers. To make matters worse many of states have failed to adequately fund the promises made.

dl777
dl777
9 months ago
Reply to  R Quinn

I also get the sense that public workers go out of their way to sign people up (who don’t pay into the system) to receive free benefits so that the government workers can keep their jobs/pensions.

Last edited 9 months ago by dl777
Mik Cajon
Mik Cajon
9 months ago

Nailed it…facts don’t have feelings.

parkslope
parkslope
9 months ago
Reply to  Mik Cajon

True. However, facts can be selectively manipulated to support one’s feelings.
https://en.wikipedia.org/wiki/How_to_Lie_with_Statistics

An
An
9 months ago
Reply to  parkslope

Yep! “Figures don’t lie, but liars figure.”

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