When D.C. does math, be very skeptical(Read article summary)
Be wary of claims about the oodles of money that will be saved or lost by this or that initiative.
Pay attention, class. Today we are going to discuss Decoderâ€™s First Law of Inverse Numerical Rationality.
This holds that any prediction of national budget savings or change in economic growth rate made by anyone at a well-attended Washington press conference is useful only in inverse proportion to its specificity.
In other words, if Lobbyist X stands at a podium and says, â€śIf the White House will do this thing we want, American families will save $2,500 each, and the republic will be saved,â€ť you can be certain that the actual outcome of the change will be nowhere near $2,500 per nuclear unit of four.
Why? Because Hogwarts doesnâ€™t exist, thatâ€™s why. The effect of changes to government programs usually canâ€™t be predicted with magical pinpoint accuracy, owing to the size and complexity of the endeavors in question.
That goes double for the effect of changes made to an entire sector of the national economy, such as healthcare. (Yes, thatâ€™s what this is about â€“ weâ€™ll get there in a second.)
On the other hand, if a deputy undersecretary of Overeducation stands at another podium and says, â€śThis change will save American families $2,500, or possibly nothing, or possibly $25,000,â€ť at least youâ€™ve got a range to plan against.
Decoder was reminded of this iron law of Washington numeracy when reading the fine print of the voluntary cost reductions offered by leaders of the healthcare industry on May 11.
The changes that doctors, hospitals, drug firms, and insurance companies are offering to make might well be good things. One, for instance, is a reduction in hospital readmission rates. If they can really do that, thatâ€™s sure to save money. So would reducing Medicare overpayments â€“ another item on the list.
But how do we know they will â€śsave the country $2 trillion over the next 10 yearsâ€ť? The industry is very confident in its predictions â€“ adding that they will â€średuce the annual healthcare spending growth rate by 1.5 percentage pointsâ€ť for the next decade, resulting in â€śsavings of roughly $2,500 for American families.â€ť
The healthcare debate is just getting started. Lots of far-reaching and important changes to a system that touches almost every American will be discussed.
But when they talk numbers? Take those with a grain of salt. Or maybe 2,500 grains of salt. Per family.