When smart people go stupid

Another post at Bookworm Room, this time an example of a neighbor who refuses to think beyond stage one.

I had an illuminating conversation with a neighbor this morning. She’s very pleased that health care reform passed, because “we’ll all have insurance coverage now.” This is an Ivy League educated woman, and that was her sole understanding of the monstrosity that just cleared Congress: “We’ll all have insurance coverage now.” The conversation got really strange after that.

I said, “Well, it’s not really insurance anymore, you know.” A politely phrased “Huh?” was her response. I explained: “The new plan forces people to buy insurance or pay a penalty. However, the penalty is significantly less than the cost of insurance, especially because it’s been predicted that the health care plan will cause an immediate 13%-15% increase in insurance rates. Further, insurance companies are now required by law to provide insurance to anyone who asks, no matter how sick they are. This means that people will choose to pay the fine, rather than to buy insurance while they’re healthy. They will only buy insurance once their sick — and that’s not insurance any more. That’s just passing the cost to an entity that no longer has a necessary income stream from healthy people. In 5-10 years, therefore (maybe less), all insurance companies will be bankrupt.”

Her response? “You’re just too sophisticated. I think most people will want to have insurance. They’ve always wanted insurance and now they can buy it. And anyway, most of the uninsured are healthy.” (Oy, vey. My brain is actually melting at this point.)

“Dear neighbor, People who wanted insurance could always buy insurance — and they did. Eighty-five percent of Americans are insured. The ‘uninsured’ are composed of about a third illegal immigrants, a third people who don’t want insurance and never did, and a third people who genuinely can’t afford insurance. Now they’re all being forced to buy insurance, except that the insurance is going to be even more expensive than before. Or all these people can pay a cheaper fine on an ongoing basis and just buy ‘insurance’ when they need it. I think even unsophisticated people are going to figure out that it’s not in their interest to buy insurance unless they’re sick — and in that case, it’s not insurance.”

“Yeah, but this will stop costs from going up,” she said. (At this point I think I can actually feel my melted brains oozing out my ears.)

“Dear neighbor, we already know costs are going to go up. Now taxes will too. The best way to keep costs down would have been to increase competition. Right now, your 70 year old husband, if he wants to buy insurance, is paying for a policy that provides him with fertility treatments. Opening the market would drive down costs, because people could buy only what they need, and not what the government mandates.”

“Well,” she said. “I think it’s going to be a good thing.”

I said a polite good-bye, and hauled myself uphill, leave a snail-like trail of melted brain matter behind me. If she’s an example of the best of brightest, we truly have gotten the government we deserve.

I'm sure this neighbor is a very nice person, and seriously convinced that she, herself, would never ever game the system the way Bookworm describes. And I'm sure she won't – until she absolutely needs to. Like when she or her child is sick.

One comment I constantly encounter in discussions of health care is captured in the phrase above: "but this will stop costs from going up"

No, dear neighbor, it won't.

It may stop prices from going up, but costs are not the same as prices. Costs will go up, and probably faster than they would absent the new regulations. If the price is kept low for you, it means someone else is paying for your care. In stage one thinking, you see the low price you pay for your care. You don't see what's beyond stage one – all the benefits you and other people won't reap because those dollars aren't being used where they're more productive.

Including research into cures that don't exist yet.

---

There's a follow-up, in which that neighbor has finally been hit over the head by what comes after stage one that she can no longer ignore it.

Last night, I was speaking with a liberal friend who actually works in the insurance business. During the run up to the health care vote, she and I had politely vigorous conversations in which I explained, over and over again, that, if penalties are lower than the cost of insurance, and if insurers must provide insurance to sick people, insurance no longer exists. Instead, one just has cost shifting that will destroy the insurance industry. She of all people, after all, should realize that the industry only makes money on healthy people who are planning ahead in case they get sick. (Here’s an example of the type of conversation I had with her.)

In last night’s conversation, my friend seemed a bit disturbed by things, and asked me how I thought health care was going now that the bill was passed. Since I understand how liberals think, I didn’t answer her question directly. Instead, I mentioned the recent Boston Globe article that suddenly informed us that citizens in Massachusetts are doing precisely what I predicted would happen under the Obama Care bill:

Thousands of consumers are gaming Massachusetts’ 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses.

I also threw in the fact that the New York Times is suddenly writing a series of articles about the unsustainable costs of medical care. In other words, I went to sources my friend trusts, since they have good liberal bona fides.

My friend was shocked: “Why didn’t anyone tell us about this before?” I replied, quite mildly, “I did.” She had the grace to fall silent.

As one of my adopted nephews says, "pwned!"

It turns out that my friend didn’t raise the issue randomly. The people in her insurance office are getting panicky because they’ve suddenly realized that they’ve entered the insurance Twilight Zone, where all the rules are upside down.

Double "pwned"!