Beware surveys

Years ago I was involved in a acquisition and part of my job was to explain the new benefits program to workers of the acquired company. When I reviewed the payroll deduction for health benefits there was a near riot from the audience. They were incensed at the amount of the deduction … until the previous owner stood up and said, ” hey guys, don’t you realize you now pay 100% of our premium and this is a lot less?”

Fact is, they had no clue what was currently being deducted from their pay. That’s the way it is with survey responses too; no clue, misunderstanding the question or simply saying what one thinks should be the answer. And yet, many of those survey results become the driver of political rhetoric and even public policy. Further, we tend to accept the results and never question why an answer may be as it is or even the probable logic behind a response.

For example:

🤑 As the annual IRS filing deadline of April 15 approaches, just 17% believe their own taxes will go down, the NBC News/Wall Street Journal Poll found. By contrast, 28% believe they’ll pay more, 27% expect to pay about the same and 28% don’t know enough to say. Fact is, about 80% of taxpayers paid less in taxes albeit some saved little.

🤑 As Social Security Administration research shows, many workers who are actually participating in a plan tell surveys that they’re not. This isn’t unexpected: “behavioral economics” research finds that employees don’t pay much attention to their employer’s retirement plan offerings, so it shouldn’t be surprising that many employees answer even simple questions incorrectly.

Want proof? According Bureau of Labor Statistics’ Current Population Survey (CPS) data, 30% of New Jersey state government employees aren’t offered a retirement plan. In fact, the state offers a pension to all its employees. CPS figures also claim that only 69% of federal employees are offered a retirement plan, when 100% actually are. These CPS retirement coverage figures for public sector employees are obviously wrong, and there is no reason to assume that CPS data for private sector workers are any more accurate.

Source: The “Retirement Coverage Gap” is Vastly Exaggerated

🤑 A CareerBuilder survey found that 78% of U.S. workers are living paycheck to paycheck. Nobody even knows what that means, nor does it make any sense unless we know exactly how money is spent. You can live that way on $30,000 or $300,000 income.

🤑 40% of Americans say they can’t come up with $400 according to a Federal Reserve Board survey (Economic Well-Being of U.S. Households) of 12,000 people. At the same time 74% in the survey say they are okay financially, a number higher than four years ago. Let’s summarize; 74% are doing okay, but don’t have $400 while at the same time 78% are living paycheck to paycheck.😱

🤑 And the there are surveys about healthcare. “One quarter of Americans say either they or someone in their family has skipped necessary medical care because of the cost, a Bankrate Money Pulse survey finds. And more than half worry about not being able to afford health insurance.”. The real question is what people don’t skip spending money on that causes them to skip medical care. Would a reasonable person really skip necessary medical care when many of these people rack up credit card debt on non-necessities?

🤑 In a Consumer Reports survey, the vast majority (74%) of regular users of prescription meds who pay more now say they did not receive any notification in advance that their costs might go up. That’s nonsense. The more likely truth is they never paid attention to the communication they received.

No survey about health care costs is accurate because (1) for most people no amount of spending their own money on health care is “affordable” and (2) many people don’t differentiate between premiums and actual costs for care they receive.

The recent publicity surrounding insulin provides a good example.

🤑 Researchers of a new study published this month in JAMA Internal Medicine surveyed patients with type 1 and type 2 diabetes who had insulin prescribed to them within a 6-month window. Out of 191 patients who completed the survey, 51 reported cost-related insulin underuse, resulting in 1 in 4 patients experiencing cost-related insulin underuse that is associated with poor glycemic control. 

Asking 191 patients is a study worthy of headlines?

If you are low income and do not have have health insurance, any spending on health care will be a burden, but that is the exception and even then many alternatives to obtaining care and prescriptions are available.

🤑 Among covered workers in plans with three or more tiers of cost sharing for prescription drugs, the average copayments are $11 for first-tier drugs, $33 second-tier drugs, $59 for third-tier drugs, and $110 for fourth-tier drugs. https://www.kff.org/report-section/ehbs-2017-section-9-prescription-drug-benefits/

Yes, the cost of insulin has in increased significantly, perhaps unjustly, but not equally among all brands and those increases have been borne more by the health plans than by patients who are protected by discounted pricing and Co-payments and co-insurance. The full story never makes the press.

🤑 64% of high-deductible plans used the preventive drug list recommended by Express Scripts which includes first-dollar coverage of insulin

16.9% of total insulin costs were paid by patients in 2018, with an average price of $43.19 per adjusted Rx. Source: https://my.express-scripts.com/rs/809-VGG-836/images/Express%20Scripts%202018%20Drug%20Trend%20Report.pdf

5 comments

  1. Polls never show or ask the follow up questions. Do you want free healthcare? YES I do. Do you want free college? YES I do. How much are you willing to pay in your taxes to fund “free” healthcare and “free” college? Not a penny. Why is it that people so greedy that they never realize that they are the ones who are paying for the free things that politicians promise.

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      1. They don’t ask that question precisely because they know part of the promise is that those in favor with the current Congress are to shoulder the cost. We have decades of this experience to unlearn, stretching back to FDR.

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  2. Here’s one more for your list. The Democrats in Congress, through the Patient Protection and Affordable Care Act of 2010 claim that a worker’s contribution towards the health insurance premium that exceeds ~10% of income is “unaffordable”. Now, that’s really interesting when you consider the economics of it all.

    Last I heard, health care costs were 18+% of GDP. GDP far exceeds personal income. So, 18+% of GDP is likely 25+% of the sum of each and every person’s gross Personal Income. So, the 10% expectation is confusing. Regardless, most workers with health care coverage through their employer pay a contribution that is much closer to 1% – 5% of their gross income, almost always on a pre-tax basis). And, did you know that, for many workers (a majority at the last firm where I led the corporate benefits function), the Medicare “contribution” (FICA-Med, 1.45% of pay on an after tax basis) had a larger impact on take home pay compared to the contribution workers made for their own coverage!

    So, given the calls for M4A, many people probably expect that their FICA-Med contribution will be the only cost they pay to get coverage. It is no wonder that folks feel entitled to more, and that someone else should pay.
    And, as I have frequently said, who should pay more? If we are to have M4A, we can’t rely on shifting the cost to other Americans (don’t tax you, don’t tax me, tax the guy behind the tree!). If not us, who, the French? Perhaps they will once Trump gets the Mexicans to pay for building a wall. That’s a promise not kept.

    Just reconfirms, once more, that Congress uses health care mandates to buy votes. And, Presidents are not above that activity either – consider the $10+ Trillion of unfunded liability President George W. Bush handed taxpayers when Congress approved Medicare Part D Rx without any new funding source.

    Compare that to President Reagan who signed into law the Medicare Catastrophic Coverage Act of 1988, where, once retirees found out that their premiums would go up to cover the cost of the improved benefits, they raised such a stink that Congress repealed most of that law. But Congress learned. Now they readily buy votes among old folks by promising stuff, and getting someone else to pay for it. For example, the seniors in 1988 wanted lower out of pocket costs, they just didn’t want to pay for it. So, Congress implemented price caps on services. Did you know:
    – Private insurers paid nearly double Medicare rates for all hospital services (199% of Medicare rates, on average), a range of 141% to 259% depending on the study.
    – The difference between private and Medicare rates was EVEN GREATER for outpatient than inpatient hospital services, which averaged 264% of medicare rates, and
    – For physician services, private insurance paid 143% of Medicare rates, on average, ranging from 118% to 179% of Medicare rates.

    Congress knows seniors vote. That is why you see political ads depicting Republicans shoving granny in a wheelchair over a cliff. It is why the Democrats don’t want to solve the funding challenges (medicare trust fund for hospital insurance is expected to run out of funds before 2026, social security trust fund to run out of money before 2034). That’s less than 15 years from now. They want to use it as a wedge issue to buy votes. And, remember, Biden/Bernie proposals would actually increase the benefits paid to seniors in those programs.

    Keep in mind that I too am one of those seniors. However, there’s no denying the truth. Used to be that over 30% of seniors lived in poverty (official statistics). Today, it is possible that the percentage is < 5% (adjusting for accumulated wealth). For comparison, years ago 30+% of children under age 18 lived in poverty, today, that is between 15% – 20%. Don't be surprised to see Congress find a way to further increase Medicare benefits and send the bill to those working today, children under age 18, and generations yet unborn.

    All in all, it reconfirms that people want the best health care YOUR money will buy.

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