How the Shell Game Con Works

Here’s how the shell game con (also known as “Three Card Monte”) works. The con artist puts up a table. On the table are three shells and a dried pea. A mark will bet that he can find the pea. Confederates of the con artist, shills, may pretend to play to convince prospective marks to lose their money. It appears to be a game of skill.

It’s not a game of skill. For the con to work the pea must be removed from the table. It’s a con, not a game of skill.

Here are the critical components of the con:

  1. The con artist
  2. The pea
  3. The mark
  4. The “bet”
  5. Removing the pea from the table by palming it or some other misdirection

The editorial writers at the New York Times identify a legitimate problem, rising healthcare premiums and healthcare costs (the pea):

Too many people are being hit with relentlessly rising premiums or are at serious risk of losing their coverage to allow the status quo to continue.

A survey by the Kaiser Family Foundation found that, once again, health insurance premiums rose faster last year than either wages or general inflation.

which they (the shills) use to argue for reform in the abstract. I’m in favor of reform, too. However, the reforms proposed by Congress (the cons) have nothing in them to reduce healthcare costs or healthcare premium costs. They will be paid for using some combination of means including fees, excise taxes, and, have no doubt, the general fund (the “bet”). Indeed, every plan on the table actually increases total costs and per capita costs. In theory they could reduce the costs per insured but, since the plans do nothing to increase the supply of healthcare, the costs per insured may rise, too.

They’ve taken the pea, rising healthcare costs and rising premium costs, off the table. It’s a con.

There’s only one way for taxpayers (the marks) to avoid being cheated: put our money in our pockets and walk away. I’m all in favor of extending coverage to more people but the healthcare reform we need must reduce costs. Unless you leave the pea on the table it’s just a con.

16 comments… add one
  • Andy
  • Short, simple, sweet, and undoubtedly correct.

  • PD Shaw

    Excellent.

  • I’ve been making the supply-side point for years now, but so few listen. Somehow we’re supposed to throw money at the problem (boosting demand!) when supply is limited and inelastic, and thus magically lower overall costs AND lower excess cost growth. Impossible.

    We have excess cost growth in health care because demand for health care is highly price- inelastic and effectively unlimited, supply is limited and growth in supply tightly bounded by both available resources and government regulation, and individual wealth has been growing. In such conditions and for such a high-demand good, the annual price increase will ALWAYS be greater than individual income growth, right up to the point where short-term individual resources are exhausted. Health care is a secondary survival good, after basics such as food and shelter, which are near-fixed costs. Thus each extra dollar of individual income above those needed to provide primary survival goods will go increasingly to the highest-demand secondary non-fixed-price survival good…health care.

    Econ 101: Boost income demand on secondary survival goods with fixed supply by growing income, and PRICES GO UP. And they go up at rates faster than income growth. Period. This excess cost growth is seen in ALL developed nations, and the only way to stop it (short of lowering incomes, i.e., destroying the economy or taxing the consumer into submission) is through overt and heavy-handed rationing.

  • Jimbino

    I do three-card monte and will say it requires quite a bit of skill. The solution to our healthcare woes is to:

    1. Kill all medical licensing, as Milton Friedman long ago proposed.
    2. Require all prices of all procedures to be published by CPT code used by Medicare and all insurers but hidden from the public.
    3. Prohibit price discrimination. Same price for all, per CPT code, just as Walmart does.
    4. Tax all employer-provided medical benefits as income.
    5. Encourage healthcare dollars (especially Medicare) to be spent on procedures and drugs overseas.

    Anything else is just an attempt to extend gummint control over our lives so as not to “waste a crisis.”

  • Drew

    Thats a clever, and hyperbolic analogy. I love it.

  • There’s only one way for taxpayers (the marks) to avoid being cheated: put our money in our pockets and walk away.

    Translation (at least my translation):

    In other words, the Republicans are doing a good thing (kind of) by slowing down if not stopping the Health Care Reform Short Bus. As much as the Republicans can be annoying boobs, on this one they are on the right side. The current bills suck. And being the party they can’t realy put forward much in the way of an alternative.

    Tully,

    One option is to get the government out of regulating the supply side of the health care issue. If they are restricting supply (and they are) then removing that restriction would help as well. Of course, technocrats and progressives find that kind of thinking unbearable.

  • Steve, I think that Republicans are doing almost the right thing. They’re opposing the current bills. However, my interpretation of their behavior is that they’re defending the status quo too energetically. The status quo is unsustainable and, consequently, is of rapidly diminishing relevance.

    But, more importantly, how can Democrats make it an honest game? One way, the way I prefer, is keep the pea on the table. Make real cost control part of the bill.

    I understand why they aren’t. It will make powerful people unhappy. But IMO that’s what they were elected to do.

  • PD Shaw

    The debate on mandates seems to be an opportunity to turn this boat around. I had forgotten about this dispute within the Democratic Party and how Obama had emphasized costs firsts. The mandates will be where the pain of unchecked healthcare increases will be the harshest.

  • I agree Dave. I hear it on the talk shows when I go to lunch. That the U.S. has the best care in the world, we shouldn’t change a thing, yada yada yada. Problem is I know that view is Bravo Sierra too. I can understand that line though, its simple and plays into the American Exceptionalism that many people like. In short, it sells.

    Trying to say, “Okay, yeah our health care system is in real trouble, but these bills they stink. They stink because, well you see, this part here it will ead to cost increases becuase of this perverse incentive that….”

    Most people will MEGO pretty damned fast. But yes, the Republicans tactic could come back and bite us on the posterior if they do find themselves in charge of one or both houses of Congress (yes, damned unlikely). They’ll have to about face and with many people it will leave them wonder “Wut?!?” Or it could be another couple of years before another attempt at health care reform is attempted and that would be bad too.

    I think you’re right about the honesty part as well. The Democrats are playing a con-game. And for good reason. They see playing an honest game as a loser. We’ll have to do things that people wont like. We’ll have to raise taxes (taxing employer provided benefits), reduce benefits for programs like Medicare, or means test which is pretty much another increase in taxes, but now one of the wealthiest demographics that also votes the most…the elderly. So they play the dishonest game.

  • steve

    Uhh, what happened when cutting Medicare costs was mentioned? It is talked about quite a bit in the Baucus bill BTW.

    Steve

  • To the best of my knowledge there is no reduction in net costs involved. Additionally, you’ve got to believe that they’ll actually cut Medicare costs rather than just add them back in later.

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