Bad Math at the Comcast Center

If you were at the Comcast Center today to see president Obama's speech, you may have caught Secretary of the Interior Gary Locke's opening act introduction.

In it he said that last year, health insurance premiums went up 15%, then asked "How many families' income went up 15% as well to make up for that?"

It's a fine rhetorical question, but the math is wrong: only part of a family's income goes toward paying health insurance premiums, so the total income needs to go up by a smaller percentage to keep everything else equal.

To illustrate with some completely made-up numbers: let's say a family makes $50,000 and spent $10000 of that on health insurance in 2007, leaving $40,000 for everything else. Premiums went up by 15%, or $1500, which means that in 2008, they had to pay $11500.

So in order to have the same $40,000 to spend on everything else, their total income would have to go from $50,000 to $51,500. That's an increase of 3%, not 15%.