Using Deceptive Numbers on Health Care in the NYT

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Monday, 18 February 2013 18:02

It is really easy and apparently fun for some people to use scary numbers about health care costs. The trick is to take numbers over a long period of time that are not adjusted for inflation or income growth. Of course no normal person has any idea what their income will look like in nominal dollars 50-60 years out, so you can scare people to death with this sort of stupid trick.

That is what David Goldhill, the chief executive of GSN, did in an op-ed in the NYT. He told readers about a newly hired 23 year-old at his company who is earning $35,000 a year:

"I have estimated that our 23-year-old employee will bear at least $1.8 million in health care costs over her lifetime."

Do any NYT readers have any idea what this $1.8 million figure means either in today's dollars or as a share of this worker's lifetime income? The answer is almost certainly no. It is unlikely that even 1 percent of NYT readers (I know they are highly educated) has any clue what $1.8 million means over this worker's lifetime.

The question then is why did the NYT let Goldhill use the number? He surely could have used a standard discount rate and converted it into 2013 dollars. Alternatively he could have expressed the number as a share of the worker's lifetime income. The NYT was incredibly irresponsible to let Goldhill just include this $1.8 million number with no context.

It is probably also worth noting that this recipe for curing health care costs would be quickly dismissed by anyone familiar with current expenses. He wants to restrict insurance to catastrophic care (will he arrest people for providing normal insurance?), but he seems to have missed the fact that the overwhelming majority of health care costs fall into this category. His plan may deter people from getting necessary check-ups and preventive care, but would have little impact on the costs that are driving up the country's health care bill.

He apparently is also unfamiliar with the experience with health care costs in other countries, which pay an average of less than half as much per person as the United States, while getting comparable health outcomes. The U.S. would be looking at large budget surpluses rather than deficits if per person health care costs were comparable to those in other countries.