Saturday, November 16, 2013

Nonconforming ≠ Substandard

President Obama may have secured a measure of political relief for himself by allowing substandard insurance policies to be renewed for another year.

… 
 
“The president told me that if I like my health insurance, I could keep it. And that shouldn’t have an expiration date,” said Crusco, who has been covered under a nonconforming plan that did not cover maternity care. That fit her needs because, she says, she doesn’t plan to have more children.”

One of the things that irritates me about news coverage of the Obamacare mess is the willingness of many in the media to describe plans that do not fit the requirements of the ACA as "substandard."

The two quotes above, both from the same news story, nicely illustrate the rhetorical trick. A plan that does not cover maternity care is nonconforming, since it does not conform to the ACA requirement that all insurance plans provide maternity benefits.  It is substandard for someone who does not plan to have children, possibly a man or an elderly woman who is unable to have children, only if one assumes that the standard of what all plans ought to cover for everyone is determined by what Congress wrote into the act, which, as the example shows, is crazy. It should not take more than about thirty seconds of thought for a fair minded journalist to realize that at least some plans that do not fit the ACA's requirements are what their purchasers do and should want. 

Which suggests that quite a lot of journalists are either incapable of thought or engaged in deliberately biased reporting.



18 Comments:

At 1:53 AM, November 16, 2013, Anonymous Brandon Berg said...

There's something about this that's never really made sense to me. Obviously a young woman who doesn't want children should be able to save money by purchasing insurance that doesn't cover childbirth-related expenses. But why would it matter for a man? A man is making a credible commitment not to have children just by being a man, so shouldn't insurance cost the same with or without childbirth coverage?

 
At 2:59 AM, November 16, 2013, Anonymous Anonymous said...

conconforming?

 
At 8:16 AM, November 16, 2013, Blogger David Friedman said...

Brandon: It should if insurance companies were allowed to price according to risk, but that's what the ACA forbids them to do.

I agree that in an ordinary insurance market, insurance against things that cannot happen ought not to cost anything. Hence you are correct that, in terms of the pre-ACA market, a policy with maternity coverage was neither better nor worse than without it for a man, although worse for a woman who isn't going to have children but cannot easily demonstrate that to the insurance company.

 
At 8:16 AM, November 16, 2013, Blogger David Friedman said...

Anonymous:

Fixed.

 
At 8:47 AM, November 16, 2013, Blogger jimbino said...

Wrong. The purpose of health insurance is not to enhance health. That would be called health care.

The purpose of insurance is to take a dollar, return less than 80 cents average in health care and to move income and wealth from young, healthy males to hypochondriac old females.

Any insurance policy that doesn't do that well is properly called
"substandard."

Severely substandard is self-pay, where the return on the healthcare dollar is a dollar's worth of health care.

 
At 9:14 AM, November 16, 2013, Blogger Patrick Sullivan said...

Most journalists have degrees in English or 'Communications', meaning they really don't know anything about the areas they cover. They only know how to string plausible phrases together.

In economics it's particularly problematic, given the seeming paradoxes that abound. My estimate is that at least 98% of reporters (and their editors) who report economic news are totally unqualified to do so.

 
At 9:50 AM, November 16, 2013, Anonymous Anonymous said...

this is called media bias

 
At 10:12 AM, November 16, 2013, Anonymous Dick White said...

I recognize at the outset that supporters of ACA speak of its features as standard, i.e., good, optimal and so forth and the pre-ACA plans as substandard, i.e., poor. The posts on this blog fairly criticize the ACA standard features. However, the essence of the ACA plans, as I understand them, is not only unnecessary coverage in many cases but also the premium that such coverage elicits. While some of this premium is cushioned by the subsidies and some of it is skewed downward for older folks, much is not and thus provides sufficient revenue, actuarially speaking, to self-fund the ACA and perhaps even optimistically, contribute to budgetary surplus. Of course, supporters don't wish to lead with such assertions so we see the pejorative "substandard" language. For my part, I would like to see more constructive criticism that articulates this incremental premium feature of the ACA together with that of the one-size fits all criticism since it is the former that is the salient feature of ACA---the wealth transfer.

 
At 10:17 AM, November 16, 2013, Blogger Tibor Mach said...

I just wrote an article along similar lines 3 or so days ago on my blog...but the case example was not Obamacare but bitcoin.

So many journalists write about it in either a very biased or absolutely ignorant way, saying things that are simply not true...and some of which do not even make any sense.

One particular article I took as an example was by a journalist from the Czech (state) radio broadcast. He said that "bitcoin is not connected to the real economy" which would only make any sense if it worked somehow like WoW gold (and even that is, albeit not legitimately connected as it is sold for dollars sometimes). He said that you cant buy anything for it except for a few web services...which is also not true and especially funny since there was a link to another article right next to this one which was titled "in the USA you can buy t-shirts, electronics or food with bitcoin". It also said tha no countries regulate or recognize it in any way...while neighbourging Germany has passed a law that makes it an officialy recognized currency and accountancy unit (and so did Texas).

Also the article said mainly that the czech bitcoin exchange bitcash.cz was hacked and all BTCs stolen from there which is true, but the title said "Bitcoin had it close" suggesting that this has an important global effect and possiby endaners bitcoin as a whole...the price was not influenced by this at all though, as bitcash.cz is very small.

It makes me think - if journalists can write such nonsense about stuff I know something about, how much can I trust them when they write about things I know nothing or very little about? Of course, not all journalists are like this, but it seems to me a lot of them are people who simply have no particular understandng of any subject other than writing.

It is also an example of how important it is for children to learn to think critically and to be able to distinguish things that are likely to be true and those that are not. Internet is filled with both (and probably more of the latter). Instead, children learn mostly by memorizing facts that are presented by teachers. That maybe made sence when information was scarce and expensive but today it is abundant...you juts need to be able to eliminate the garbage that surrounds it.

 
At 11:24 AM, November 16, 2013, Blogger Patrick Sullivan said...

Here's a good example;

http://www.bbc.co.uk/news/magazine-24903034

The great helium shortage!

 
At 3:52 PM, November 16, 2013, Anonymous Gary said...

My guess is that it begins as deliberate misrepresentation by White House people, and then just gets parroted by journalists who are chosen for being not the trouble-making types. That is, not being too interested in critical thinking, or being scared of swimming against the current.

 
At 6:55 PM, November 16, 2013, Blogger Roger said...

The insurance policies are quite literally "substandard" because they offer less than what the ACA requires.

 
At 6:57 PM, November 16, 2013, Blogger Roger said...

The insurance policies are quite literally "substandard" because they offer less than what the ACA requires.

 
At 8:52 PM, November 16, 2013, Anonymous Anonymous said...

Did she make herself physically incapable of child-bearing? If not, how is it different from any other insurable event?

 
At 10:33 PM, November 16, 2013, Blogger David Friedman said...

Roger: The policies are non-standard. Describing them as "substandard" implies that anything not offering what the ACA requires is worse than a policy that offers what the ACA requires.

 
At 11:24 PM, November 16, 2013, Anonymous William Friedman said...

Roger: An (entirely theoretical) example. If government policies require that shower curtains be painted light blue and white, and a company makes shower curtains painted light green and white, they are non-standard, and they do not fit the policies, but that does not make them sub-standard, because there may be people who don't mind, or even prefer, green.

 
At 11:03 AM, November 18, 2013, Anonymous Laird said...

"Which suggests that quite a lot of journalists are either incapable of thought or engaged in deliberately biased reporting."

Does either of these really surprise anyone?

 
At 2:00 PM, November 19, 2013, Anonymous Ted Levy said...

"Which suggests that quite a lot of journalists are either incapable of thought or engaged in deliberately biased reporting."

Fortunately, we need not choose. It could easily be both...

 

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