Skip to main content

The most popular story on the Forbes.com website at this moment (Monday afternoon) is headlined “Obamacare Will Increase Health Spending By $7,450 For A Typical Family of Four”. Wow! That sounds bad! Until we see how this nonsense-number got calculated (under the fold)!

So I have taken the latest year-by-year projections, divided by the projected U.S. population to determine the added amount per person and multiplied the result by 4.

This is sheer deception. Its intent is to make the casual reader think that a “typical” family will spend over $7000 it can ill afford on health care because of Obama. For at least three reasons, this is absurd.

First, it turns out that the $7450, which we will see does not mean what the headline implies, represents not an annual cost as you would naïvely think, but is spread out over ten years. You have to read the article to discover that. If the government actuaries had done 100 years of forecasting, instead of just 10, Forbes would have given us the even scarier headline that it would cost $74,500.

Next, the article conflates what will be spent per capita with what each person will have to pay for health care. The impression is either that the family will have to spend $7450 itself, or that the government will add $7450 to each person’s share of the hated National Debt. The article links only to the government actuaries’ reports on expenditures. They forgot (cough!) to mention the increased revenues from Obamacare, which exceed the increased expenditures. Yes, in toto, the provisions of Obamacare, by official estimate, bring in more than they spend out, saving money, reducing the deficit. Unfortunately for the conservative argument, overall health costs have been increasing more slowly than expected.

The  most sophisticated error is conflating two types of “average”—a regular component of statistical sleight-of-hand. Forbes’ chart  [click for chart: not included for possible copyright reasons] contrasts the average spending of over $700 per year with Obama’s claim that a “typical” family would save $2250 per year. We have already noted that it makes no sense to compare gross spending with net savings, ignoring revenue. However, this claim also suffers from ambiguity about the precise meaning of “average” and “typical”

The $7450 figure is calculated as a mean, what we colloquially call an average. By “typical”, Obama is evoking the median family. Remember, the median means half of American families have higher income, and half less. In theory—not that this would happen under our political system—the entire additional cost of Obamacare could be borne by the wealthiest 1%, leaving everybody else (including, by any reasonable definition, all the “typical” families) unaffected. In fact, the 1% are contributing a big share of the revenues, with surtaxes for persons who earn over $200,000 per year ($250,000 for joint filers). Yes, the 99% are contributing too, especially those who prefer to pay a penalty (and gamble with their health) than get insurance. But the effect on the median family simply can not be determined from the information given.  More honest sources than Forbes have cast doubt on the magnitude of the savings for the median family, so I won’t defend the $2250 estimate. The difference is probably positive but not by that much; we can't tell from the information given. Even if the savings are so skewed that the Obamacare is a bad deal for typical families, you still can’t show this by comparing a mean of one thing to a median of another in Forbes' way; it’s not apples and oranges, more apples and carburetors.

Most dispiriting, this statistical travesty is not the product of an innumerate radio blowhard. It comes from a Ph.D. scholar with the Center for Health Policy & Inequalities Research at Duke University, who is also (no surprise) affiliated with the American Enterprise Institute and George Mason’s Mercatus Center. Once upon a time, the conservative movement was willing to make a serious contribution to the health care debate, viz., the structure of Obama/Romneycare. Now their loathing of the Democratic Party and nihilistic wrecking impulse leads them to say anything, even when they surely know better.

UPDATE: (Tuesday a.m.) I believe my first time on the Rec List. Thank you, and thanks to the editor who put me in the Spotlight.

Wed Sep 25, 2013 at 1:47 PM PT: The blunders in this article, including some I didn't catch (the author gets the effect of inflation on costs backwards!) are also reviewed here, here, here, and in its own comments section. Unfortunately, this piece of pretentious nonsense is bouncing around the right-wing echo chamber. Duke should be ashamed.

Originally posted to Andrew Lazarus on Mon Sep 23, 2013 at 06:22 PM PDT.

Also republished by Math and Statistics Geeks and Community Spotlight.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site