March 2014

A survey conducted near the deadline for  the enrollment to the Affordable Care Act revealed that many consumers do not grasp health care concepts as well as they need to. 62% did not realize that an HMO restricts the choice of doctors more than a PPO (preferred provider organization). 42% could not describe what is a deductible and 39%  did not understand the relationship between premium and deductible. Given that car insurance has long been a requirement, one may be skeptical, and yet the fact remains that health care is far more complex. Besides if a survey were conducted about people’s familiarity with their car insurance, we may find a corresponding lack of understanding.

While the critics of Obamacare may point to the law’s many provisions as being responsible, we do live in a world that requires a certain sophistication and  level of knowledge about things such as computers, cars, cable subscription plans, smart phones and their providers, taxes, and of course now the health care law. The lack of understanding makes some consumers prey to scams and/or it  can lead to confusion or overwhelm. In turn these lead to errors and certainly people cannot protect themselves nor safeguard their interest if they cannot make informed choices.

Given that it’s doubtful the society will ease its level of complexity in the foreseeable future, it would seem some means to mediate how many handle that complexity does look necessary.

I became aware quite recently of “gapping”, the practice of U.S. universities to admit students without providing enough financial aid for them. The practice implies that financial aid people are aware that some of the students they admit will, down the road, end up burdened, some unduly. Private colleges are said to be 27% more likely to engage in gapping than public ones. A survey of Inside Higher ED and Gallup published recently found that 53% of public college directors and 74% of private ones said gapping was ethical. It seems that while there may be some in the higher education financial aid community who are conflicted about current practices, their concerns do not extend  to informing students of the issues they face and the consequences of their borrowing. As we’ve all heard, student debt is not a small problem for a large number of young people. And now new data reveals that people from higher income, not surprisingly, are not affected by any of this; those from lower income  have certain resources available, so the consequences of gapping end up particularly acute for middle income families and students.

It’s troubling that institutions which ought to know better, and who seem so eager to justify their higher and higher tuition, engage in practices at the expense of the future of their charges.