From: Stern, Steven (Sns5r) []

Sent: Friday, January 22, 2010 10:12 AM

To: [deleted]

Cc: Stern, Steven (Sns5r)

Subject: RE: NPR Planet Money piece


they would do it if the union wanted to do it.  the union may be controlled by older workers with more health problems.  the bottom line is the negotiators for at&t and the union agreed to their plan.  if the cadillac tax passes and the plan becomes more expensive, it may be in the interest of both sides to have a less expensive plan.  part of making it attractive for the union will involve sharing the cost reduction benefits with the union; both sides will have a strong incentive to do so.

steven stern


-----Original Message-----

From: [deleted]

Sent: Friday, January 22, 2010 9:57 AM

To: Stern, Steven (Sns5r)

Subject: Re: NPR Planet Money piece


Thanks for the quick reply. That point wasn't clearly made in the piece that aired.

The problem is, who really controls the cost and benefit of a group health plan? If AT&T could do what you say and get better coverage at lower cost for them and their employees, why haven't they? That would be an economic choice on their part. Do they really have the power to determine the plan though, or is it a back and forth between them and the insurance company?








Stern, Steven (Sns5r) wrote:

> you are missing the point.  at&t can structure a health insurance plan with excellent coverage for emergencies and catastrophic events with larger deductables and copays for small claims.  you would get the same coverage for the type of events you discuss, but the plan would be much cheaper. 

> steven stern

> -----Original Message-----

> From: [deleted]

> Sent: Friday, January 22, 2010 9:33 AM

> To:

> Subject: NPR Planet Money piece

> Dear Professor Stern,

> I'm sure your mailbox is overflowing today with feedback from your interview with the NPR Planet Money team on the 'Cadillac Tax' on health insurance premiums, but I felt I had to write.

> Never mind the motives and psychology of wage negotiation and whether employers really will pass on healthcare savings in the form of more wages. My problem is your incredibly naive view on the purpose of insurance. Just because the woman you met hasn't needed to go to the ER in the last 7 years, doesn't mean it's a good idea to have a health plan that doesn't include emergency care. By it's definition, the need to go to the ER is not predicable. Two years ago I had sudden internal bleeding. I needed to spend 6 days in the ICU and had 7 units of blood during that time. Taking your approach, I wouldn't have even bothered with health insurance because I was a healthy 30-something year old with no medical issues. That one event would have had an enormous impact on my financial stability and would probably have bankrupted me.

> The whole point of insurance is that you pay into it when you don't need it so that if you do need it, it will cover more than you could afford to pay on the spot. Yes, in pure economic terms every year that you don't make a claim is a year you've lost money, but there is no way to know in advance when you will need it. Now, I'm not saying the current system works well. Obviously consumers are paying too much because insurance companies make big profits, but telling consumers to stop buying coverage is not going to change that.

> Do you have health insurance? When did you last go to the ER?

> Is your house insured? When was the last time you house was broken into, or burned to the ground?

> What about your car? Do you have insurance on that? When was the last time you had a major accident?

> Unless a person has massive amounts of easily available assets, they mitigate their risks with insurance.

> And telling someone that they "should change [their] mind" when they don't see the merit in your argument, is a very condescending way of trying to get your point across. She should just change her mind because you say so, it's up to you to present a compelling argument and you failed to do that.

> I have to think that maybe Planet Money edited this piece in such a way that it does not portray your true viewpoint because I can't believe a professor of economics can have such a blinkered view about the value and role of insurance.

> Sincerely,

> [deleted]

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