(Mis)understanding Insurance

As I was reading the transcript of Scott Pelley’s 60 Minutes interview with House Speaker Paul Ryan, I noticed that he seemed to be not interested in hard news or in-depth information so much as he was interested in tripping up the Speaker, trying to put him in a position of disagreeing with his new boss, making one or the other of them look bad, or uncovering something potentially embarrassing.

He asked how often they speak on the phone and who initiates the conversation.  The answers were almost daily and both.  No news there.  How does he answer the phone?  “He doesn’t say, ‘This is the president-elect?’”  No.  “Have you told him being president is not being CEO of the United States, that the Congress is going to have a say?”  Instead of asking how the two got together after a contentious election, he asked, “Who apologized to whom?”  It’s clear by now that Pelley has no liking or respect for Trump, thinks he is a bully and a racist, and is searching for evidence to back up his views.  Better yet, he would like to get Ryan to agree on any point that might make it seem he is of the same opinion.

The silliness and self-serving finally comes to a close, and Pelley asks a number of questions about policy issues.  Soon he gets to the details about possible changes to Obamacare and the sniping continues.  At one point Pelley says “And women will pay the same as men? That didn’t used to be the case.”  This is a question designed to bait an answer that will incite outrage.  He is trying to get some admission of bias against women, showing in the process that he does not understand how insurance works and counts on the fact that many Americans don’t either.

Insurance usually works by assessing the risk and charging premiums accordingly.  If you have homeowner’s insurance you expect a discount for having a working alarm system.  Teen drivers are generally less safe than more experienced drivers, but boys have more accidents than girls.  Auto insurance for a young man 16-25 is higher.  There is no outrage there.  It’s not unusual for companies to charge smokers more for their health insurance benefits.  Owners of cars with higher repair costs pay higher premiums.  Older cars are cheaper to insure due to the lower replacement cost.  Those who don’t drive as many miles sometimes pay lower premiums.  Costs of auto and homeowners insurance vary by what part of the country and by the size of the town or city you live in.  And since women outlive men and take fewer chances, they pay less for life insurance.  Older people pay more, as do those who participate in dangerous hobbies like skydiving or juggling chainsaws.

This all happens without a stir.  Everyone seems to understand that certain classes of people are at a higher risk for either the frequency or the size of insurance claims.  Hence they should pay more.  The ones in the classes with higher premiums don’t like it, but they pay.  So why would people be upset that some women, especially those of childbearing age, might have to pay more?  That “used to be the case” and it didn’t have anything to do with prejudice or victimization.

Apparently the government and some group of citizens have decided that now charging women more for health insurance can be justified only by prejudice.  Everyone must purchase the same insurance for the same cost or there will be an uproar.  And Scott Pelley and others in his profession are more than happy to incite and later fan the flames of that uproar, because it makes their job of reporting the news so much easier.  Their job is not to inform or to educate; their job is to attract views and clicks.  Nothing does that better than a good demonstration or protest, even those grounded in fundamental misunderstanding.

(I have often said that the problems with healthcare costs cannot be solved with insurance changes, but that’s for another discussion.)

Granola Bars as Health Food

Some people actually think granola bars are healthy.  In any case Americans spent around $1.4 billion on them last year and that is expected to increase according to the experts, due to the fact that “nutritional and cereal/granola bars present an efficient platform for packaged food engineers to respond to the very latest in food concerns of healthy-eating consumers [and] rapid growth in the number of Americans actively engaged in fitness and weight management programs.”

Another source states:  “Granola bars are becoming quite popular these days as a healthy, on-the-go snack.”

Well, we stopped at the grocery store a few days ago on the way home from yoga class and had a case of the munchies – a very poor time to go grocery shopping.  In an end display were boxes of granola bars with dark chocolate, a favorite at our house.  We yielded to temptation and bought a box.  When we got home to sample them, my wife commented that she liked it "better than other candy bars."  How could she say such a thing?  Wasn’t a granola bar much better for you than candy? 

It said on the package “Natural and Artificial Flavors” so it hit the natural requirement.  It said it contained whole grains, although I wasn’t sure what this really meant in terms of health.  They are often sold in the breakfast aisle, not the dessert or candy aisle.  How could it not be better for you?

This called for some investigation, which was made simple by government labeling requirements available to anyone.  With no candy in the house, I instead compared ingredients to Oreo Double Stuff cookies.

One serving of Oreos, 2 cookies (29g), contains 140 calories, with 60 calories from fat.  One of the bars we bought contains 140 calories with 45 from fat.  The Oreos have 7g of fat, 13g of sugar and 90mg of sodium.  The bar has 5g of fat, 13g of sugar and 70mg of sodium.  The bar seems slightly better, but vitamins, minerals and protein slightly favor the Oreos.

What about those whole grains that are so proudly displayed on the front of the box.  Another Internet lookup told me:  “Fiber is one big reason to eat whole grains. Adults need about 25 to 35 grams of fiber daily, and whole grains contain two types – soluble and insoluble – which are both beneficial to your health.”  So comparing fiber, I found the same 1g for each.  (By the way, the store brand of a similar cookie is slightly less expensive and slightly healthier – if healthier is even a consideration when buying cookies.)

My research led me to the conclusion that, despite the prevailing health mythology, eating that particular granola bar was about the equivalent of eating a couple of Oreo cookies.  The only other difference is that the Oreos have approximately 15 servings per container and the granola bars have 5 or 6.  The price difference comes out to about 40 cents per serving.  That may not seem like much, but Americans overall could have saved $930 million last year by buying cookies instead of granola bars with little, if any, effect on their health.

Just to make sure this dark chocolate bar was not some kind of anomaly, I googled granola bar health and found another bit of research on the sugar content and other problems that are often overlooked.  One conclusion:  “The presence of these ingredients makes it less healthy than you might think it is. Eating a serving of Nature Valley Oats 'n Honey granola bar is the same as eating a bowl of Fruit Loops. Similarly, the Sweet and Salty Nut bars are rich in fructose corn syrup and contain plenty of maltose corn syrup as well.”

That’s why it makes sense to do a little questioning and a little research.  Using critical thinking instead of following the crowd or the common popular beliefs leads to some different, sometimes surprising, conclusions.  A granola bar is a good substitute for a couple of cookies, if cost is not a factor, but it’s as good a substitute for breakfast as a two Oreos.  And most of the information needed to find this out is written on the package.

Cat Yoga?

This should be a lesson to me:  Never ask what’s coming next?  

CNN featured this story on cat yoga, and they have the nerve to put it under the Health section of the website.  Now I have nothing against cats, and I certainly have nothing against yoga; but cat yoga is not about health, it’s just a gimmick.  But CNN hasn’t got a section called gimmicks on their website, although almost every news website these days probably ought to.  Such a section would give the so-called journalists more permission to bombard us, as they already do, with news from their professional investigation into what is trending on Facebook and other social sites.  They also get a chance to show how clever they can be with puns.  This is not news and cat yoga is not yoga.

The story tells that people receive on-line invitations to a cats-only animal shelter – this one in Marietta, GA – three times a month to do yoga as the shelter cats are allowed to wander around the floor.  They got the idea by watching cat videos on the Internet and thought it might be one more way to get people to visit the shelter and possibly adopt a cat.  (Can you say “Gimmick”?)

The excuse for having it on the health page comes later.  “Studies show that yoga can improve your balance, your breathing, your sense of self and your overall health. It can reduce anxiety and fight off depression. It strengthens your core and can help ease chronic pain.”  The endorsement for cat yoga comes from the teacher who says she sees a difference in her students and believes, "Cat yoga is good for your soul."  This is clearly where we move from scientific research into the land of the airy-fairies.  There is no research on cat yoga as such.

It is true that yoga is beneficial.  But that applies to yoga, not cat yoga or dog yoga or beer yoga or suspension yoga or rock & roll yoga or paddleboard yoga or naked yoga or yoga on horseback – Honest, I didn’t make any of these up!

The benefits from yoga come from the opportunity to focus inward, to stretch safely in an accepting environment, to sync the breath with movement and to practice a little guided meditation.  Do these quotes from the cat yoga story sound anything like that? 

“Cats love yoga mats and can't help but be the center of the action”

“If you've ever tried a hero's pose with your cat around, you know the challenge has nothing to do with your breathing or flexibility.”

“Cats may be distracting”

"There's not as much pressure to make my form perfect."

All these intentional distractions and need for reassurance from being judged by yourself or others sound nothing like traditional yoga, in fact, it’s quite the opposite.  So I’m not expecting studies of so-called cat yoga to show any benefits beyond what you might get just from hanging around with cats.  Of course if you are a cat person, cat yoga at the shelter is like being a grandparent: you can play with them, cuddle, and spoil them rotten, but you can also give them back when it’s time for the feeding, the litter box cleaning and the medicines.  Just stretching is optional – but it’s not yoga.

Just remind me from time to time not to ask, “What’s coming next?”

Where Do Those Numbers Come From?

You hear it all the time from politicians and news anchors:  97% of scientists agree on climate change; women are paid 79% of what a man is paid for the same job; and the rich are getting richer while the poor get poorer.  But where do these numbers come from?

I found more information about the first number in a Forbes article written by Alex Epstein.  Now Epstein is the author of A Moral Case for Fossil Fuels, so he definitely is not unbiased.  But he says that a 2013 paper by John Cook and others “found that over 97 percent [of papers he surveyed] endorsed the view that the Earth is warming up and human emissions of greenhouse gases are the main cause.”

To begin with the 97% refers to papers reviewed, not to scientists or even to all papers on the subject.  To get to 97% Cook developed three categories.  The first, “explicit endorsement with quantification,” refers to papers stating that at least half the problem is attributed to human activity.  This appears to be a small number of the papers.  The second category, “explicit endorsement without quantification,” includes papers that did not specify how much of the problem was due to human activity.  In the final category, “implicit endorsement,” are papers that only imply but do not state outright that some of the global warning is man-made.  Add all these categories up to get 97% of papers reviewed.  The only papers excluded were those that explicitly denied any man-made factor.

Epstein goes on to quote some of the authors of the reviewed papers who say Cook’s interpretation is not representative of their views.  So the source of this number gives no evidence that 97% of scientists agree and makes no mention that warming will be catastrophic, a thought the politicians and media automatically assume.  Finally, a reading of the paper itself shows that its stated purpose was to influence public opinion.

The pay issue is an easy one if you think it through.  The 79% number is probably accurate, but unfortunately meaningless.  It compares the pay of all women working full time to that of all men working full time.  It does not compare women in the same job to men in the same job.  In comparing the whole population, it doesn’t distinguish between the type of job, time on the job, or other factors (other than discrimination) that may affect pay level.  A more statistically accurate number is around 95.5%, which is still not acceptable but much closer to the truth.  And in some careers women earn more than men.  But even the department of labor publishes this bogus percentage as an argument for equal pay.

This Time article, written by a woman, gives good reasons for calling the 79% statistic a myth, but does not offer a more correct figure.

Finally we get to the earnings and wealth of the Top 1%, the rich who keep getting richer.  Well it’s true, the rich do continue to get richer, but the actual people in that category tends to change over time.  But I did wondered exactly how rich are they.  Do they have enough money to support all the programs that everyone wants to bill them for through higher taxes?

This should be an easy calculation – find out what percent of wealth they have and multiply by the total wealth in the US, a number probably available from census figures.  As it turns out, it is not so easy.  I looked up the percent of wealth held by the 1% in several different sources and found that it was almost 40% in April 2000, 35.4% as of 2010, 35% in 2007, but also 42% in 2007 (from another source), 40% in October 2011, and also 40% in 1995.  Where do these numbers come from?  They can't all be right.  Who do you trust?

It is also interesting that to be in the top 1% by income, you must earn more than about $470,000 per year.  So that evil top 1% by income, who are not paying their fair share, includes everyone playing in the NBA and all but the minimum salaried rookies in the NFL and top golfers and your favorite movie and TV stars, not just hedge fund managers and bankers on Wall Street.

With a little critical thinking, it turns out that numbers everyone throws around so confidently have problems.  And, by the way, the poor are not getting poorer.  According to a Congressional Budget Office report, the growth in average real after-tax household income for the bottom quintile of wage earners from 1979 to 2007 was about 18 percent, not a lot, but not poorer either.  ("Real" means inflation-adjusted.)

Predictable But Still Unexpected

In February 2013 when I wrote, “Will airlines charge based on the total weight of the luggage and the passenger?” some people thought I must have been joking.  Here is a reliable news source reporting another step in that direction.  “Two American Samoan businessmen have filed complaints with the U.S. Department of Transportation alledging [sic] they may have been the target of discrimination after being weighed while boarding a recent flight from Honolulu.

“In the complaints, the men also say they were assigned new seats on the aircraft that they did not originally select, to ensure that the weight on the flight was evenly distributed.”

I don’t claim any supernatural powers.  In most cases, any semblance of clairvoyance is merely a matter of looking at behavior and predicting the logical consequences.  Airlines already weigh baggage.  They also must estimate the weight of passengers to calculate the amount of fuel needed to safely make the flight.  In this case, after finding that the fuel burn on certain flights was consistently higher than expected, they ran a survey to find how far off their estimates had been and to make the appropriate adjustments.

The businessmen were not barred from the flight or apparently inconvenienced in any way except to be assigned new seats to better balance the plane.  It seems reasonable that passengers, even though they were customers of the airline, would be interested in cooperating to make sure the airplane they were riding in for many hours over open water was properly balanced and had enough fuel.  But as I noted last week, some people are so spoiled that they look for ways to be offended.

This was just a weight distribution issue, but the trend continues.  “In 2013, Samoa Air became the world's first airline to charge passengers according to size.”  Ticket prices are based on combined weight of passenger and baggage.  With an adult obesity rate estimated around 95 percent, it’s not surprising that American Samoans became the first to face this new fare scheme.  But as the issues of fuel and balance are real for every airline, will they be the last?   In what other unexpected areas will the consequences of our problems with discipline affect our lives and wallets?