Comments on: Question from a Reader (Health Care Costs and Wages)

By: Andrew'

Andrew' — Fri, 13 Mar 2015 09:37:40 +0000

Thank you Lord! You just helped me articulate the solution. The wasteful spending is piggybacking on the positive value insurance proposition and the solution is to move in a direction of separating the two. It is a work in progress.

By: Andrew'

Andrew' — Fri, 13 Mar 2015 09:33:23 +0000

Ah. This is both a reassuring and troubling explanation. It explains the insanity of such arguments (e.g. the notion that a handful of tiny gun manufacturers who can’t even keep up with demand are oppressing anyone), but it implies their beliefs may be inseparable from their insane marketing arguments. And that is giving them the charity of assuming they believe their framing of the arguments. They are intellectual slaves to their framing orientation. Every day it seems I learn I haven’t been cynical enough.

By: Andrew'

Andrew' — Thu, 12 Mar 2015 21:35:38 +0000

And don’t forget that you will be required to report to the gym for a physical fitness assessment to determine how much you will be required to use the gym. And you will receive *free* spinning and yoga classes and lots of other things you don’t want to use or don’t think actually work to reduce “fitness costs.”

If you don’t feel better off immediately, please report to human resources for an Oppositional Defiant Disorder assessment. Oh, and you might be a racist.

By: ColoComment

ColoComment — Thu, 12 Mar 2015 19:25:16 +0000

*JKB*

By: ColoComment

ColoComment — Thu, 12 Mar 2015 19:24:03 +0000

Much as journalists and others should be specific with respect to wages v total compensation, so too have I argued with friends that any article or essay that uses any of the terms “rich” “high income” “wealthy” “poor”* etc., should have to define the term. That is, is “rich” defined by wealth or income? What’s the threshold for “high income,” and is that gross or net, earned or unearned? Does “wealthy” include tax-deferred retirement funds, which are, after all, merely deferred income. Does “poor” or “poverty” include or exclude transfer payments or other, non-cash, government-provided benefits?
Those are the most basic financial & tax concepts, but unfortunately, I don’t think most non-financial journalists know what all that means. Or perhaps it suits their goals better to leave them undefined?
PS: FWIW, the financial institution I used to work for would give its employees a report that totaled their annual compensation, including allocations for the employer-provided benefits that DKB describes. ‘Twas most informative.

By: Arnold Kling

Arnold Kling — Thu, 12 Mar 2015 18:11:03 +0000

I do not use the three-axis model to explain any belief. What I say is that people frame their arguments in those terms. And on guns, the left frames it as the gun industry exploiting everyone else.

By: Arnold Kling

Arnold Kling — Thu, 12 Mar 2015 18:07:11 +0000

Think of it in these terms: suppose that instead of giving you a raise next year, your employer said that the cost of gym membership had gone up by $2400 a year, and you would still get your gym membership for free. Are you better off?

By: JKB

JKB — Thu, 12 Mar 2015 16:38:01 +0000

It seems to me that to compare wages over time, you would need to look at the full employee labor cost to the employer. This would include the wages (employee discretionary), benefits (employer paid product/services for employee benefit) and the payroll taxes/mandated payments for employee benefit (employer contribution to SS/Medicare, pro-rated workers’ comp and unemployment insurance premiums, etc.).

Then you could see if compensation has stagnated or if increases have been consumed by employee non-discretionary compensation leaving wages to appear stagnant. Many don’t like this view as an increase in required workers’ comp or unemployment insurance coverage shows the government taking or directing a larger portion of the employee’s compensation leaving the employee with less discretionary in the form of wages. Same with government mandated health insurance, vacation, leave, etc.

By: Matt

Matt — Thu, 12 Mar 2015 16:37:47 +0000

“If workers care about health care expenses, then you should look at their total compensation. If they do not care about health care expenses, then you should use a price index that just includes those goods and services that they do care about.”

I’m not sure I understand this. If you are receiving $15,000/year in health care cost reduction from your employer, you’re getting that benefit whether you value it or not. And it really no longer matters if you value the benefit, because you must carry health insurance, thanks to the ACA. And also thanks to the ACA, someone else will be bearing a large part of that cost, giving you a monetary benefit.

To use a different example, my employer provides a $30.00/month gym membership. I don’t value this, since I have a home gym that I’m perfectly capable of not getting around to using. But that doesn’t remove the fact that I’m receiving the benefit.

By: Andrew'

Andrew' — Thu, 12 Mar 2015 14:40:04 +0000

This is my explanation for the whole mess that dovetails with Arnold’s explanation. Back when healthcare was more amenable to insurance the value was higher than the price. You were insuring against a low probability of a large cost. Now that insurance (among other related things) has screwed it up, you are paying for a near 100% probability that your input will be squandered by other people. Thus the value has dropped well below price.