Skin in the game – ctd.

I have to admit, I’ve having difficulty understanding how so many of you think we’re not spending enough of our own money on health care. While I disagree, I’m trying to keep an open mind.

I was reading Ross Douthat’s column this morning, and was struck by this line:

Today, for instance, a family of four making the median income — $94,900 — pays 15 percent in federal taxes.

That seemed insane to me – way too high. Looking at the comments, I found I wasn’t alone. And, to his credit, Ross posted a correction in his blog (emphasis mine):

My column today includes an estimate, taken from this Congressional Budget Office report, of what a median-income family would pay in taxes over the next few decades under the “current law baseline” — a scenario in which tax rates rise fast enough to cover the budget deficit without any kind of entitlement reform. The median income figure the C.B.O. used (see Table 4-4 on p. 65 of the report) is $94,900 for a family of four, which (as a number of readers have noted) seems much higher than the usual estimates for median income in a four-person household. It turns out that I didn’t catch a crucial footnote in the C.B.O. document: “All income is assumed to be from compensation, which includes employment-based health insurance and the employer’s share of payroll taxes.” That is to say, the $94,900 in income includes the estimated value of the median family’s health care plan as well as their salary, which is not what most people think of when they hear the term “median income.”

Health care is expensive! Amazingly so, as including the cost of  health care plans in estimates of compensation results in much higher numbers than salary alone.

I think saying this over and over might get people to see just how much we are spending on health care. I’m not sure that informing people about how much of their compensation goes to health care will make them better consumers, but I bet it would make them better citizens. It might mobilize them to demand better cost controls and a better fiscal outlook.

How about this: it’s not that we lack skin in the game; it’s that we don’t realize how much of it we have in there already.

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