More Economic Idiocy

Dean Baker illustrates today why economists should be put into a pickle barrel and stored in a deep basement. He has long argued against the adage that the problem with Obamacare is that, “Not enough young healthy people are signing up for health insurance,” by insisting that older people are healthy too, and that the real problem is that not enough older healthy people are signing up for health insurance.

In today’s piece he claims that, “the age distribution of enrollees has little impact on the cost of the program," notwithstanding his statement in the same piece that, “on average the older enrollees are a net drain on the system.” What?

Not satisfied with making such contradictory statements, he then disproves the first and and proves the second by saying that “people in the oldest age bracket pay premiums that are three times as large as people in the youngest age bracket,” and that, “older enrollees will cost the system about 3.5 times as much as young enrollees.”

Dean Baker does not seem to understand the meaning of the word “average.” Immediately after saying that, “On average, the older enrolllees will cost the system about 3.5 times as much as young enrollees,” he proceeds too insist that, “a large number of people in the older age band are every bit as healthy as people in the youngest age band.”

The latter statement is undoubtedly true, but working against his so-called “logic” is that on average they are not, and averages are what insurance is all about. If you continue to sign up large numbers of older people you will sign up far more unhealthy people than healthy ones.

If, on the other hand, you sign up large numbers of young people you will sign up far more healthy people than unhealthy ones, and that is the point that is being made when people say that, “Not enough young healthy people are signing up for health insurance.”

It would probably make the point more clearly to say that, “Not enough young people, who are predominantly healthy, are signing up for health insurance,” but only someone intent on proving the idiocy inherent in being an economist, like Dean Baker, would argue the point being made by the statement as issued.