The recent kerfuffle over the middle-class family of Graeme Frost who can’t “afford” medical insurance got me to thinking: Why do we think it unfair that some people must pay rather a lot for medical insurance?
Bonnie Frost works for a medical publishing firm; her husband, Halsey, is a woodworker. They are raising their four children on combined income of about $45,000 a year. Neither gets health insurance through work. Having priced private insurance that would cost more than their mortgage – about $1,200 a month – they continue to rely on the government program
Why do we as society seem to feel that a family who makes $45,000 should not have to accept the loss of lifestyle that paying $14,400 a year for medical insurance would entail?
In a manner similar to the class structure of the medieval world, we expect people with certain incomes to be able to afford certain levels of consumption. We think a certain lifestyle correct and “fair” for each level of income. We feel unnerved when we see someone living below their economic “station.” We feel so strongly about this that we will consider transferring income from one person to another if the receiver cannot maintain the expected level of consumption on the same income.
Most of us don’t write our own checks for medical care or insurance. A private or public institution does it for us. Most people don’t understand that if they make $50,000 a year plus benefits, that they are receiving anywhere from $12,500 to $16,500 worth of benefits, including medical insurance. That means that if they wanted to head out on their own, they would have to make between $62,500 and $66,500 to maintain their current lifestyle and still have enough left over to buy the same level of benefits themselves.
Most of us have no feeling for how much compensation we actually earn. Anywhere from 25% to 33% of our total compensation gets diverted and spent by others. We never see it, never feel and never budget it, so we don’t include it in our intuitive model of the proper, responsible budget for a “fair” level of consumption.
This lack of proper intuitive accounting leads us to feel that a self-employed person who makes $50,000 a year earns the right to the same level of consumption as a corporate employee whose earns $50,000 plus benefits. We feel it’s wrong that the self-employed person must consume at the level of a corporate employee who earns “only” $35,000-$40,000 a year plus benefits.
In the specific case of the Frosts, we all intuitively empathize with them that if they earn $45,000 a year that they should be able to consume at the level of someone with benefits that earns $45,000 a year. We don’t want them, or ourselves, to have to live down in the gutter with those that make a mere $30,600 plus benefits.
In the end, we respond to the threat of a loss of consumption on the part of the Frosts in the same way as medieval peasants responded to the sight of impoverished nobility. We feel in our bones the wrongness of it and wish to fix it even if we ourselves possess much less.
We need to feel less and think more.