When D.C. does math, be very skeptical
Be wary of claims about the oodles of money that will be saved or lost by this or that initiative.
NEWSCOM
Pay attention, class. Today we are going to discuss Decoder鈥檚 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.
Got that?
In other words, if Lobbyist X stands at a podium and says, 鈥淚f the White House will do this thing we want, American families will save $2,500 each, and the republic will be saved,鈥� 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 doesn鈥檛 exist, that鈥檚 why. The effect of changes to government programs usually can鈥檛 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, that鈥檚 what this is about 鈥� we鈥檒l get there in a second.)
Remember the immortal words of David Stockman, budget director for President Ronald Reagan: 鈥淣one of us really understands what鈥檚 going on with all these numbers.鈥�
On the other hand, if a deputy undersecretary of Overeducation stands at another podium and says, 鈥淭his change will save American families $2,500, or possibly nothing, or possibly $25,000,鈥� at least you鈥檝e 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, that鈥檚 sure to save money. So would reducing Medicare overpayments 鈥� another item on the list.
But how do we know they will 鈥渟ave the country $2 trillion over the next 10 years鈥�? The industry is very confident in its predictions 鈥� adding that they will 鈥渞educe the annual healthcare spending growth rate by 1.5 percentage points鈥� for the next decade, resulting in 鈥渟avings of roughly $2,500 for American families.鈥�
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.