A (2:38)

I sense an epic Jew joke, I.

B (2:39)

Have, I have this. I have this theory that you wrote this index card. When did you write about?

C (2:44)

Two years ago.

B (2:45)

You you literally came down with these kind of. It really was kind of Ten Commandments. You're like, that you could put thou shalt in front of all of them.

C (2:54)

Yes.

B (2:55)

And you're like, do this, do this, diversify that, save the other. And everyone was like, awesome. Now I know what to do. And then you go and ruin it all because you. You've now written. If that's the Torah, as it were, you've gone and written, like, the Talmud to go with it. You've got an entire book's worth of.

C (3:11)

Like, footnotes amid rush, please.

B (3:15)

But so I have to say, I mean, I. I love your index card. It really does make finance easy. And now I feel like you've got this book and it makes finance difficult again. Or am I missing something here?

C (3:26)

Well, I don't think it makes it too difficult. I think that, you know, there's no question that, you know, the Ten Commandments requires a little bit of commentary. I guess it's not too hard to know, like, this is how you don't commit adultery. It's a little easier to understand than this is how you commit your advisor to a fiduciary standard. You know, there's issues of execution. We did. It was a challenge to write this in a way that. That distilled. Some things are complicated, but they have a simple answer, like, just don't buy any individual stock. I think that actually the index card thing, it really is all you have to know to know. I just don't buy any stocks.

B (4:01)

You basically don't need to read that chapter. Just read the title of the chapter and move on to the next one, because that's it. Don't buy any individual stocks. Okay, done.

C (4:09)

But I think some of the other ones are, how do I think about my 401? How do I think about some of the college issues? Or, you know, what is the fiduciary standard? We got a lot of pushback for, you know, the last item on the card about social insurance. We didn't say too much about that, but I think it's important to mention it. And also the idea of this is how you get started. One of the things that really struck me in my own life, you know, I basically didn't do any of these things well until I was about age 40. And then I had a financial crisis, which you talk about in the book. For me, the biggest thing was just getting up a basic emergency reserve and making sure that I had no credit card debt. Like, now I'm ready to go.

B (4:49)

This is. This is One of the things I really love about this book is that neither, like financial gurus normally come in a familiar guise, which is like some wildly successful multimillionaire telling you how to be like them. And here you have Harold and Helene, who are two sort of like middle class authors with genuine money problems, saying like, it's, you know, I'm not going to solve all of your problems. This isn't easy. We all make mistakes. And it's refreshing to read that.

A (5:20)

Just for people who aren't familiar with the story of the index card, it's sort of an Internet Y thing. It began. You were in an interview with Helene. Right. And it's a great story. I'd love, if you'd like, tell us how actually the index card came out. How did you create this viral phenomenon?

C (5:36)

So Helene Olin, who, you know, wrote this wonderful book called Pound Foolish, and I was interviewing her about it on the samefacts.com and during our conversation I said, you know, isn't the financial advice industry, Isn't there fundamental dilemma that the correct advice is available for free in the library and you could write it down on an index card? And then the conversation sort of continued, but I started getting all these emails that were sort of, well, where's the index card? And since I was speaking metaphorically, you know, I was sort of stuck. But, you know, I had, I had made this claim, so I sort of felt I had to honor it. And I grabbed one of my daughter's 4x6 cards out of, out of our drawer in our kitchen. I sort of scribbled it. Probably took me two minutes to write the thing down. And I might have taken two and a half minutes if I knew that it was going to be widely circulated. And I took a picture with my iPhone and I just put it on the, on the web and it got something like 400,000 hits. It was one of Money magazine's best new ideas of the year.

A (6:35)

Should we actually just read the index card? Should we actually deliver the Ten Commandments?

B (6:38)

Okay, so I think we'll have Harold deliver the ten Commandments, although it is slightly different from the original.

A (6:45)

You've updated the commandments. It's a very unbiblical thing to do.

B (6:48)

Most egregiously at least in my view. You withdrew the recommendation to put your money into target date funds, which I feel like was not a well advised edit. But come tell us what your ten Commandments are. And you should put thou shalt in front of all of them if you want.

C (7:03)

Yeah, please thou by the way I'm reformed. So what we do is we just mess with the translation, but we don't tell you that we've done that in order to make it more palatable. So if you've ever seen any. If you read Hebrew and you also read Reform, it's sort of an interesting translation.

A (7:18)

Yeah. This is my entire Hebrew school disillusionment you've just described to me.

C (7:23)

So thou shalt. Shall I start reading?

B (7:26)

Yeah, go for it.

C (7:26)

Rule number one. Thou shalt strive to save 10 to 20% of your income.

B (7:31)

So this is where you start. And this is the, like, the bit where I became quite demoralized about 10 pages into the book was I start with this nice, simple, you know, commandment. I'm like, awesome. I know what I'm meant to do. Moses has come down, you know, with this written on a tablet. And then next thing I know, I'm being told that I should itemize every single thing that I spend for three months, even down to a, you know, $50 packet of chips. And I'm like, okay, wait. No. Okay. This is way harder than I thought that it would be.

A (8:04)

You know, it's actually not that terrible if you use a debit card for all your purchases. I thought that was a very good advice. I've been trying to do that, or I guess the advice resonated with me because I've been personally trying to get some hold of my finances. There are some awesome services that even, like, bank of America will offer you that will analyze all your purchases for three months and kind of average them out and tell you where all your money's going. So I think it's more doable than you might be worrying about.

C (8:28)

Yeah, I think that you have to sort of know what you're spending your money on in order to really get a handle on it. And by the way, we don't think you should go on a financial starvation diet. You know, if every day you really get your mojo by having a mocha whatever from Starbucks, and that's really your thing, great. You should do that. You should just make sure you're spending your money on the things that actually are important to you and give you pleasure and looking at your credit card to see, like, that old subscription service that you even forgot that you had, There's a lot of stuff that you sort of see in the underbrush there when you keep track of your spending, and. And we think that's valuable now. I must say, I'm more of a puritan than Helene was. We had this Sort of interesting tension because I drive this old dented professor car and I'm sort of, you know, much more puritanical. But when I wrote down on the original index card, you should save 20% of your income, I got a bunch of letters from people that were basically of the form, dear professor pollock, I'm a 28 year old single mom. You just told me to save 20% of my income f you. And I get that that is really hard. And so we tried to strike a balance. I did find, when I started writing down my expenses, and I actually find paying cash for me is good because there's something about the poker chip of pulling out a credit card that is a problem for me, that I just. I'm just less diligent when I'm spending the Tomorrow Guys money than when I'm actually pulling out these green pieces of paper.

B (9:53)

Are you hyperbolic discounting?

C (9:55)

I'm totally a hyperbolic discounter. But I found that it was really useful to get a handle. And I did find things that I was spending money on that I just didn't want to.

B (10:05)

So the first chapter is budgeting. Keep on going. Read on a bit.

C (10:09)

Thou shalt pay your credit card balance in full every month.

B (10:14)

Okay, that one's pretty.

A (10:16)

Don't let those interest payments pile up.

C (10:18)

I would say for most people, that is the single most important thing. It is unbelievable. Credit card interest rates are unbelievably high, I would say, by the way. Also, you should not borrow money in high interest rates in other ways that are often disguised. So like if you go to the gym and they say you can pay, you can pay 500 bucks up front for the year or 550 bucks up front, let's say. Or you can pay $50 a month for the year in easy payments. And we're going to help you manage your cash flow. And you sort of think, this is great. I don't have to put it on my credit card. It makes it easier for me if you actually work out the interest rate for all these payment plans, they're like worse than your credit card. And if you need to borrow money, you should borrow it from a bank at a reasonable interest rate and you shouldn't be doing things.

B (11:04)

And now this is something that you admit that you kind of fail to do, that you ran up a bunch of credit card debt and rather than borrowing money from the bank, you went and borrowed money from your 401k to pay down the interest. Now, was that just because you were a fool? Was that because banks didn't like you.

A (11:21)

Back then, or you're a sinner who's reformed.

C (11:27)

This is a little goyish, but this is The Confessions of St. Augustine, part of the podcast. You know, it was easy to do to borrow from my 401. The interest rate wasn't all that high. It was tempting to do. And you know, one of the things that we found when we didn't have an emergency reserve and we were sort of really trying to make it to the end of every month was we did whatever we had to do that solved our immediate problem. And the fact that in the long run it was not that smart was something that I kind of knew, but that was not something that was, that I was acting on on a day to day basis. And I think that a lot of people are in that situation.

B (12:03)

It's an easy. I think the key word there is easy. That banks in general make it unbelievably difficult to borrow money from them. Weirdly, given that people think of banks as lenders because they make so much more money by lending you money on credit cards that they make it unbelievably easy to borrow money on a credit card and so hard to borrow money in a simple sort of unsecured personal loan that people wind up borrowing from their 401ks just because that's easier than the unsecured personal loan, even though the unsecured personal loan is clearly the better option.

C (12:36)

It's also, there's, there's so many psychological things going on. It's somehow it's my money in the 401k and I don't have to go and talk to anybody. I can just kind of go do it, or my credit card for that matter. And it's embarrassing to go and borrow money. And it's, you know, I think those kinds of things make a big difference too.

B (12:56)

So let's run down a few more commandments here.

C (12:59)

Thou shalt max out your 401k and other tax advantaged savings accounts.

B (13:04)

Okay.

C (13:05)

So I mean, there's so many things that are good about this for the average person that this is just important, first of all.

B (13:11)

But you're basically, it's a corollary to number one, you're saving up money and you're saving it up for when you need it most.

C (13:17)

You're saving it. That's true. You're making it automatic. It comes out of your monthly paycheck. You get a big tax advantage. And often your employer is kicking in something to help you with that. So maxing out your 401k for a lot of people, that is really great. Now I should say that as public policy, there's a lot that's really stupid about the 401k because it's great for people like us who are more affluent than many other people and also are kind of sophisticated in the ways of this thing. The amount of money that's given out to advantage people in tax breaks for this is. It's kind of hard to get.

B (13:50)

We're going to come to public policy of the welfare state in a minute, but let's move on to the next commandment.

C (13:56)

Rule number four, Thou shalt never buy or sell individual stocks.

B (14:00)

Just. We'll leave that one there. We don't need to do any kind of Talmudic anything on that one.

A (14:04)

I do feel like it's almost like.

C (14:05)

The next commandment buy inexpensive, well diversified indexed mutual funds and exchange traded funds.

B (14:12)

So this is something we had a whole episode about just a week or two ago for Thanksgiving. We all had to come up with the financial innovation we were thankful for when I came up with index funds. They're wonderful things. We all love them here on Slate Money. What's up next?

C (14:27)

Make your financial advisor commit to the fiduciary standard.

A (14:31)

Oh yeah, I feel like this one takes a little bit of explaining. Well, I've actually struggled with this a little bit with my family's financial advisors. It's not a fun conversation to have with someone.

C (14:43)

No, you need to have a cordial but direct conversation. By the way, I actually think that financial advisors have a lot to offer. It's just that they make their money out of selling you investment products that are not valuable. And the things that they offer you that are valuable are the actual advice about how do I manage these life problems that I'm having. If they try to charge you straight up for the advice, we get a sense of sticker shock because we're used to the indirect ways that they are.

B (15:07)

Paid, which, yeah, it's really a question of what you're being paid for. And there's this, there's this disconnect basically that financial advisors do, as you say, perform a valuable job and they are paid for that job. And the valuable job that they do is a job of hand holding and basically just reassurance and telling you that they understand what you're doing. And also frankly, being someone to blame if something goes horribly wrong, it's nice to be able to blame someone else and just blame yourself. All of that is valuable. But they never say that they're charging for that. They always say that they're charging for picking investments and outperforming the market and making you money, which is really not what they're doing.

C (15:55)

In fact, they're doing the opposite in many cases. And everyone that I talk to really loves their financial advisor. But if you actually look at the investments that their advisors have promoted to them, they're often very poor or they're often, they're not terrible, they're not Bernie Madoff poor, but they're often just overpriced for what they're offering. Right?

A (16:14)

Yeah. And I guess we should just quickly explain. Fiduciary standard just means that that person has a legal obligation to act in your best interests, that your financial advisor is not getting paid by someone else to shovel your investments into a underperforming mutual fund somewhere. And like you say in the book, and this is like I said, the awkward part of it is you really just have to ask them outright, do you work on a fiduciary standard? You have to be very clear about it. And you said there's a New York Times writer who even suggests actually getting them to sign a little oath for.

B (16:42)

You or just, I mean, you could just get them to send you an email. It's almost easier to just send them, you know, to get it in writing. Yeah. Because they can always like wriggle out of it in conversation.

C (16:51)

And I should say, by the way, it's really important in all their dealings with you that they commit to a fiduciary standard because they may be committed in some but not all of their transactions with you. What they're often committed to is something called a suitability standard, which is they have to offer you a suitable investment. And if I have an index fund that has a 0.5% fee and I have an index fund that has a 0.1% fee, the 0.5% one is still suitable. So you're not really. What you're getting from the suitability standard is much weaker.

B (17:20)

And then we end with insurance.

C (17:23)

Well, we also have thou shalt buy a home when you are financially ready.

B (17:27)

The whole rent versus buy thing, which of course we've covered in many times on Slate Money insurance, then I will.

C (17:34)

Say I have a relatively inexpensive home. And when we did have a financial crisis, I should say that about 12 years ago, my mother in law died tragically and her son, who's mentally disabled, had to move into our home and my wife had to withdraw from the workforce to take care of him. And we just had this Major financial hit. And what saved us was that we live in an inexpensive house because you can actually stop going to Starbucks and you can do all sorts of things to change your spend. You can't change your mortgage payments. And the fact that we were not leveraged up in our house, I think was just sort of saved us financially. So I think that it is. I think that's actually really important.

B (18:16)

Do you think it was helpful that you owned it or was it not helpful that you owned it?

C (18:23)

I think it's a mixed bag because I think it limited our flexibility. The fact that we owned it and of course, the fact that the financial crisis hit not long after that also was a challenge. I think you should. There are reasons to own a home. If you're raising a family and there's a particular school district you really like and you want to make sure that you're not priced out, if you're a renter, that's a good reason to buy. If you like to put a purple stripe on the wall and you have a pet iguana that chews on the electric cords, if you own a house, you're not accountable to somebody. It's such a leveraged investment.

B (18:59)

I just feel like this. I've just made the single stupidest thing according. According to this logic, I've got the worst of both worlds. And I just bought a New York City co op.

A (19:08)

Yeah, I'm doing the same thing. I'm in the process of buying a new.

B (19:11)

So, like, I have.

C (19:11)

I have all of.

B (19:12)

All of the downside and none of the control.

A (19:14)

And yet somehow we're all still. There's just this thing about living in New York where it's like, if you have the opportunity, it's. It's a disease. It really is.

C (19:21)

I'm. Well, New York, of course, is. Is its own world. And the great failure of blue state America is, you know, we just haven't built enough housing. As Matt Iglesias has written about quite eloquently. I think that your house should be the thing that you live in. And you should not think of your house as your major financial investment.

B (19:43)

A house is just as likely to be a liability as to be an asset.

C (19:47)

By the way, when I talk to my African American friends, one of the more poignant things is for all sorts of interesting reasons, that is where culturally many, many African Americans put their wealth is I move out to a nice suburb where I can buy a home if I can. And that's a huge thing. And it's a huge. And we all we all understand it's a big right of adulthood to own your own home and so on. That is specifically the venue where they're the most discriminated against and where they put themselves most at risk. And one of the great things if they put that money into an index fund is they would at least get to pay the same price that everybody else pays. Right.

B (20:21)

And then we end with insurance, which I think is the bit which, like, really confuses most people the most. And the short version is insure things which you couldn't afford to lose. And there's something called term life.

C (20:36)

Yeah, that is. So don't try to use your life insurance as a sort of complicated investment vehicle for you. I'll sort of leave it. I'll sort of leave it there. That you want to make sure that if you suddenly drop dead that your family is protected. And not to be a downer in this conversation, and that's the purpose of life insurance. But I think with your, I should mention with your auto and your home insurance, one of the most obvious things that everybody should do is just get the highest deductible that you can afford to pay for because it's so much cheaper. First of all, it's cheaper for the insurance company because you're not filing piddling claims. Secondly, you're putting yourself in a risk pool with people who don't think they're going to file a lot of insurance claims. And therefore the monthly premiums for a high deductible, homeowners or auto insurance, is just a lot cheaper.

B (21:21)

Okay, so now, now we've reached this whole question of risk pools and insurance and this lovely subject. We are going to move on to your ninth commandment. But before we move on to the ninth commandment, I need to. Because this comes after Hanukkah and after Christmas and after the gift giving season. I'm gonna say that you should give the gift of Slate plus to all the people who you forgot to give gifts to this year. But just buy it for yourself because you're sad that no one gave it to you. So give Slate plus today. You can give it@slate.com giveplus or just go along to Slate and sign up for Slate plus. You get to listen to this entire podcast without this little ad in the middle, which it's probably worth it just there. So wait, Harold, this amazing gift or thing that one can get at Slate, which is Slate plus, you are a member?

C (22:21)

I am a member and I've given people memberships. I actually think, first of all, I like it. And I subscribe to all the Slate plus podcasts and I like the little sophomore things at the end of a lot of the podcasts, which are often good. But also I just think I like supporting the work that you guys do in a straight up way. And so I hope that people subscribe to Slate plus because I actually think it's a good thing.

B (22:41)

And so I love the idea that when you're doing your budget and you're going through your credit card statements and you see that line item for Slate plus and you think to yourself, I'm happy I spent that money rather than that's something I can cut.

C (22:53)

Absolutely. And it's not very expensive. So, you know, go for it.

B (22:58)

So, yeah. So, Harold, what is your ninth and kind of most sort of public spirited.

C (23:06)

Commandment rule number nine? Thou shalt do what you can to support the social safety net.

A (23:13)

Okay, so Jordan, so this is a good time. I think this is actually a perfect week to talk about this commandment because. Well, one, there was some, I think, pretty good news about Obamacare if you support the law. Basically, the Department of Health and Human Services came out and said that 8.2 million people have signed up at this point in open enrollment, which is more than this point last year. There are more new enrollees as well. The pool of people who are enrolling is slightly younger, which is important because you need more young and healthy people in these insurance plans so that they can basically pay premiums that will then support the older and sicker people in these insurance plans, and that makes these markets function. So there was some good news on the Obamacare front. But Harold, you recently did a report for the Century foundation that was really interesting. And it was basically talking about what needs to be done to improve the health care law, what we need to do to fix Obamacare, sort of from a left perspective.

B (24:13)

You're not one of these people saying Obamacare is broken, it needs to be abolished on day one of the Trump presidency. I'm going to assume that is correct.

A (24:21)

And this is interesting because I think that there is, there has been for the last few years a lot of hesitancy among liberals to talk about the warts on Obamacare at all, because it is felt constantly the law has been under kind of this existential threat from challenges in the Supreme Court. And, you know, the House of Representatives has voted to get rid of it entirely, you know, some 5 million and a half times. But you're saying we really do need to think about reforming it over time and making it Better. And so, you know, what are the high level issues at the law as you see it? What do we need to make this a better piece of the safety net?

C (24:55)

I think you gave a nice introduction to it. For a long time we've had this repeal and replace sort of debate and it's increasingly beside the point. This thing is embedded in American life.

B (25:06)

Is this as embedded as Social Security and Medicare? Like, is this unrepealable for all? The Republicans are unanimous that they want to.

C (25:15)

I don't know that I would go that far, but I think that there is sufficient momentum behind it and so many different constituencies that have a stake in it and just so many identified human beings that we're just not going to, we're not going to take away the insurance from this guy with cancer at this point who got it because of aca. So I think in a lot of ways it's embedded. And so that means that we can think about, okay, how do we actually repair and improve this thing? Because it does have some significant issues. I should say that that before I say what its issues are. I do think there's a lot that's going well with Obamacare. In fact, the past five years by some standards might be the five most successful years in the recent history of American health care. First of all, we've expanded health insurance to many, many uninsured people. And it's sort of amusing to see this debate, did Obamacare actually reduce the number of uninsured? Because if you just look at a graph since 1965, it's basically, you know, once Medicare and Medicaid come in, it's basically flat. And you know, it's bumping up and down with recessions and so on, but. And then all of a sudden you see Obamacare comes in and you see this abrupt decline and to sort of watch the hermeneutic discourse trying to say that it didn't accomplish anything, you know, so who are you going to believe, you know, my elaborate argument or your lying eyes looking at this graph? There's a humorous aspect of that. So it's reduced the uninsured, but it's also done other things too. Patient safety has really improved and we see the cost growth not entirely due to ACA by any means, but ACA has come in in a time when we've progress on controlling health care costs. We also see the burden of uncompensated care on the safety net has really been alleviated, except in the Southern states that have rejected the Medicaid expansion aspect of aca. So we have, there's a lot of good that is coming out of this thing that we want to build on.

A (27:02)

And yet you still managed to find 19 different places where you feel like the law could be improved. And you know, I found myself reading over this list and you know, one thing that struck me about it and I kind of want to, I would love to get into some of the details of them but one thing that struck me about it was it was in places that people who make public policy for a living, who typically have some sort of insurance through their employer and don't have to go through the bureaucratic rigmarole of actually going to these markets and getting insurance, them wouldn't necessarily think about. It's these aspects of the bureaucracy and details that might not be at the front of mind for people who are in Washington making laws. But please, what are the big things right now that you think need to be addressed with it?

C (27:49)

So there's a couple of things. One is the human experience on the exchanges needs to be a lot better. It is very complicated and difficult, particularly for people who have a real issue. If you're a 25 year old guy and you want to buy insurance to make sure if you get hit by a car on your bicycle you're taken care of, you know, it's pretty straightforward for that. But if you're someone who has diabetes or depression, it's complicated. And the idea that it's going to ever be sort of like buying a book on Amazon, that's just naive. And I think one of the things that those of us who are proud of the law have to appreciate is it is difficult for a lot of people and it's getting better. The decision supports on healthcare.gov and the state exchanges are better. But people need human help and they need, it's sort of like the financial advisor. They need someone who can, who can really guide them through the process and deal with the complexities of it. Also, there's all of the aspects of insurance that a lot of people haven't had to deal with before. It's funny, within the political debate people really like to rag on Medicaid. But the fact is when people get on Medicaid through Obamacare, they don't have to worry about deductibles and co payments and the network issues are much more straightforward. It's actually much simpler for people on Medicaid when they get into some silver plan, all of a sudden they have to deal with all that complexity. And particularly for people whose incomes are high Enough so they're not really getting as rich a set of subsidies. It's expensive for people, too.

A (29:11)

This is something I've been thinking about a lot recently because there's been coverage about this deductible issue and all these people who have buying health plans on the exchanges and then realizing their deductibles are so high they're not very useful. And I found myself looking at the New York Times articles and looking at these families who are appearing in them and actually then going on to healthcare.gov and seeing what was available, what should have been available to this person. Like what? Was there anything cheaper, A better plan? And often it seems like, yes, for someone who fit the description, there should have been something else that would have been financially smarter for them to purchase. And it just drives home this point that shopping for health care is really hard. It's this pressure point in the system that we have not figured out how to fix.

B (29:51)

No one does, basically anywhere in the world. Shopping for health care is a weird thing which people, normal people don't do. This is why we have HR departments or whatever to do it for us, because it's incredibly complicated and we shouldn't need to do that.

A (30:09)

Yeah, kind of a buyer beware approach, which it seems like at this point the marketplaces sort of still are. Is troubling.

B (30:17)

And this is actually going back to the index card. One of the reasons why the index card is complicated and one of the messages of the book is it's on you and no one is going to look after you. You have to do this yourself is a little bit depressing. It used to be the case that there were these wonderful things called defined benefit pension plans which make incredible amounts of sense for everybody. And they got abolished basically and replaced with these horrible new things called defined contribution pension flat plans, which are incredibly difficult to navigate, which people always get wrong and which is, you know, it's all based on the it's on you idea. And if you make people make these decisions themselves, whether it's retirement planning or health care, they are, statistically speaking, many of them, going to get it wrong. It's just inevitable.

C (31:12)

Yeah, no, there's no question about that. And of course, we try to educate people to do it better, which, you know, at one level makes a lot of sense, but at another level indicates there's this fundamental structural defect that we're requiring. We're putting it on people who are predictably not going to do it better. I think there are a couple issues in play, though. One is we are not ready for a single payer system in the United States. We had to do an incremental reform in ACA that was market based. And that leaves us with the good and the bad of competitive insurance markets. There are a number of ways that people are proposing that makes this less of a burden on people. Part of it is to go beyond just providing people information and to actually give people useful recommendations. So when there is an obvious choice for someone that's better when they go to sign up. We can actually find a lot of these obvious choices with computer algorithms and things like that to say, hey, this is the plan you actually should be in. So there's things that we can do that are useful to support.

B (32:05)

We're going to nudge them, Harold. We're going to nudge them in the direction of the optimal plan.

C (32:09)

Yeah. And it has the pluses and minuses of nudging that. Nudging. Nudging doesn't deal with the fundamental structural flaw which you'd like to deal with. But if you're having to live with the structural flaw, you just as soon have a useful nudge than not.

A (32:23)

Another point that you bring up, and I think might be the most important part of a reform agenda is that a lot of people just don't get enough support that the subsidies for purchasing health care just are not A, don't cover enough people, that some people fall through loopholes, and B, just do not support enough Americans, do not make coverage affordable. So I was hoping you could talk a little bit about that or affordable enough.

C (32:47)

Absolutely, that's true. And there's a couple different categories of people who just need more help. One is the group of people who actually are connected to an employer and their employer's offering a bad health insurance plan. And there's something called the family glitch in the Affordable Care act that prevents people basically, if your health care package is deemed affordable for you personally, but it's not affordable for your entire family, you can't go on the exchanges and get financial help to get insurance for your family. It's a little bit unclear whether this is a legislative glitch that needed to be fixed or it's interpretation by the IRS that just needs to be interpreted differently. But it's a real problem. And all of us know people in our lives who were hoping that they could get help from Obamacare, you know, who are basically at a low wage employer and they're shut out by this. And there's also just a group of people who just need richer subsidies and The Urban Institute actually has a very nice paper where they sort of work through all the numbers. When we were in this political knife fight to get ACA passed, a lot of conservative Democrats basically wanted to constrain how much money we were going to put into Obamacare and restricted the generosity of these subsidies. And there were sort of a couple ironies of that. One is it had zero impact on political attacks on the law. If we had spent more money, we'd have exactly the same attacks being made as were made, but it made the law less effective and less generous for people. And, you know, in many ways, this law would be easier to defend if it were doing more for ordinary people than we were able to get done.

A (34:18)

I mean, there's one group in particular that you bring up which is just people who make more than 400% of the poverty line, but still are on the exchanges. And you don't get subsidies if you make more than 400% of the poverty line. And the fact is that this insurance, if it is not subsidized, is kind of expensive for what the product is, I mean, because of all the requirements and such. So you talk about a few different ways to help this group, but it does seem like this is one demographic in particular that needs to get some kind of assistance.

C (34:45)

Well, one of the challenges, of course, is from a political perspective, it's also the group of people who actually matters the most in American politics.

A (34:51)

They're middle class.

C (34:52)

I mean, the people who are being tremendously benefited by Medicaid, by this, are just not the people that matter the most in American politics and in many cases are nonvoters. And one of the tragic aspects of this is there are a very large group of people who are actually helped, but who just don't matter politically as much as other people. Now, it is true that health insurance is expensive. This is a thing that' syou know, it's 1/6 of our economy. And especially when you require insurance to actually work when people get sick, it means that you actually have ayou have to have an essential health benefit package that works if you have cancer, and that also works by if you have a substance abuse issue or other issues that are more controversial. So in order to make that work financially, the insurers, you know, they have deductibles and co payments that are more transparent to people. And you know, I'm not going to get liver cancer, so I don't really know that if I got it, my old health insurance policy would have imploded and would have left Me losing my house, I don't see that. What I do see is I have, you know, whatever the deductible is on my silver plan or my bronze plan or whatever it is that I chose to buy. And I'm unhappy about it because I think I got a worse deal in many ways. I think if I actually went through it with them, I would argue with them anyway that it's actually not a worse deal or it's certainly not a worse deal than you would have right now if ACA didn't exist. But that's not the everyday reality that people necessarily are experiencing.

B (36:13)

Okay, so we're going to move on to a bigger issue about healthcare in a second.

A (36:20)

You think bigger?

B (36:21)

Even bigger. All right, I'm going global here. I'm going global. Okay, so, Harold, before we move on to global healthcare issues, what is your theory about gift giving?

C (36:32)

I think we should all give way more gifts that are cheap and we should not give $300 blenders. When somebody gets married. The only purpose of giving someone an expensive gift is it's a graceful way to give them money. Or if you and the other person are sufficiently affluent that it doesn't matter. But, like, if I see a book and I say, wow, this reminds me of my friend jord is a $10 book, I should do stuff like that more often to send it to you.

B (36:53)

Yeah, you don't need to wait until Christmas or Hanukkah or birthdays or something. Just give gifts all the time. No matter what the time of year is, it's always a good time of year to give a gift. And Jordan?

A (37:03)

Yeah?

B (37:03)

If I want to give a gift, where should I go to find out what gift to give?

A (37:08)

Funny you should ask. It turns out Slate has a gift guide right now on Slate.com pics.

B (37:13)

Slate.com is our sponsor, I guess, weirdly, this week. So that's the guide for everyone on your list or even yourself or just people you met and you want to be nice to. Pics.slate.com it's popular around Christmas, but it's actually a website which exists year round. Okay, I want to move on. I want to globalize this issue about healthcare a little bit.

A (37:39)

It's worldwide, Felix.

B (37:40)

Well, this is Worldwide Salmon.

A (37:41)

Worldwide salmon.

B (37:42)

Although I'm gonna. So. So this is fascinating. One of the things that happened this week to try and give a little bit of a news hook to this is that Hillary Clinton came out with a pledge that if she gets elected to be president, she's going to spend $2 billion a year for 10 years. That's $20 billion in an all out attempt to try and find a cure for Alzheimer's disease. And I've looked at where this number comes from and it's just huge, huge amounts of money. And obviously we don't know for sure that it will work. And when you're spending $20 billion on anything, and certainly when the government is spending $20 billion on anything, you know that a lot of that $20 billion is going to wind up getting wasted one way or another. There's like Department of Defense is involved in this. But the fact is that this is a good idea because even if you waste a lot of that $20 billion, the amount that you save, like let's say that it has a 50% chance of working.

A (38:40)

Yeah.

B (38:41)

But then it has a 50% chance of saving hundreds of billions of dollars in like the costs of looking after people with Alzheimer's and the family costs and the human toll and everything. Like the benefit is so great that $20 billion almost seems modest. Okay, so we in the United States are willing to spend absolutely enormous amounts of money to work on diseases which affect a lot of Americans, like Alzheimer's disease. But there are diseases like Chagas disease, which affects roughly 10 million people just in the Americas alone, which are almost completely neglected by researchers. And it's a huge problem in a lot of Central and South America.

C (39:32)

If I could just cut in on the US Policy first. Yes, but I'm very much in favor of spending more money on Alzheimer's disease. I do think that the way that we do this is so discouraging from the point of view of a researcher. So what we've seen, although neither party particularly wanted to do this, we have cut NIH's budget and the funding lines for my junior colleagues in particular, for what actually gets successfully funded when you submit a grand project, become much more stringent. And I write a lot of tenure letters for people at other universities. I'm getting more and more letters that say this person had a great project that five years ago would have been funded or 10 years ago would have been funded. And when you evaluate this person's tenure, you should think about that. What we really need to do is on an even keel, support both basic research and also health services research.

B (40:16)

So one of the things in the Alzheimer's budget is fascinating. They're like, we know this seems like a good, like a lot of money. Basically what it means is that Instead of accepting 10% of the grant proposals, we'll accept 30% of the grant proposals, we're still having a very high bar for like what gets funded.

A (40:34)

Yeah, I was going to say this is kind of. This is actually a recurring theme not just in medical research, but kind of American science. We decide we're going to go to the moon or wage war on some sort of disease and there's a burst of funding. The NIH situation is they decided during the 90s, I think they were just going to double the NIH budget, which is great, but it leads to all sorts of knock on effects where if you don't continue growth, growing the budget after that, you get all these problems in the research world and it starts to feel like you're essentially cutting the budget. Well, you are, you are, you're effectively cutting the budget. It's slightly more complicated than that, but that's really basically what's happening. And so the result is that you get these booms and bust cycles which aren't actually very good for research purposes.

C (41:17)

No, they're not. And they have strange consequences. Like suppose I got a lot of NIH funding during the boom and I was reasonably productive. Now I'm really competitive for the next NIH grant, even though maybe I'm actually not that great a researcher. I just happened to be the guy who was there when the money was available. Now you have this really smart younger person who doesn't have the same track record that I do because the money wasn't available when they started out. I'm going to outcompete them for grants because I just got funded during the boom cycle. And it's very hard to be methodical about that. And it's gotten worse over time because the politics have become more polarized somehow. Public health and health services research have kind of been identified with Obamacare in a weird way. And so when you want to research all sorts of issues about how to, you know, reduce hospital infections, somehow that's gotten caught up in the.

B (42:07)

So, Harold, what's your view on this Clinton proposal? Do you think that it's a good idea to have a big 10 year push to spend $20 billion on Alzheimer's or should we just broadly increase, you know, CDC and NIH funding rather than trying to be too specific about it?

C (42:25)

Well, I think that in order for it to be politically sustainable, it is important to have it anchored to things that people care about. And so I think that having a big and certainly Alzheimer's, both research and services, you know, certainly incredibly important, I think I would, in the details of it, make sure that it's done in a way that we really are pursuing the most important healthcare and scientific opportunities. It may be that the prospects for a cure, you know, may not be there as much as people are hoping, in which case there's still lots of worthwhile things we can do with the money. And I just think we have to make sure that in the blocking and tackling that we actually apply the best evidence that we have to make sure that's going to high value activities.

B (43:04)

Okay, so now this allows me to segue.

A (43:07)

Yeah, we've gotten off an awesome tangent. We want to get back.

B (43:10)

So this allows me my segue when we're talking about low hanging fruit and the most obvious opportunities. There are hundreds of thousands of Americans, or at least people in America with Chagas disease. Most of them are undiagnosed. And a lot of these people are going to die from congestive heart failure or from heart arrhythmia. And many of them will die without ever knowing that they had Chagas disease, let alone that it's an entirely curable disease. There's this drug called benznidazole which cures Chagas disease, and it's available for between $50 and $100 in most of Latin America, but it's not FDA approved in the United States. So if you have Chagas disease, if you're lucky enough in a weird way to be diagnosed, as opposed to not being diagnosed with Chagas disease, you still can't get it, basically unless you go to this one clinic in Southern California which specializes in navigating this horrible CDC protocol for getting the drug for free from the cdc. But it's, it's incredibly difficult to do that and no one really does it. So it's very important and we would save thousands and thousands of lives if we just got FDA approval for this drug. And this is where our good friend Martin Shkreli comes in.

A (44:26)

Yes. So this is where Martin Shkreli comes in. And Felix, you wrote a slightly slate pitchy article arguing that Martin Shkreli may have inadvertently done something or sort of done something good for the world on his way to getting arrested for securities fraud. I don't know if I 100% agree with you, but basically Shkreli, we all know, became famous when he basically hiked the price of a drug for treating a parasitic infection that AIDS and cancer patients get. And he hiked it by more than 5,000%. He had a similar seeming scheme going with another company that he had bought or that he had bought an interest in and become CEO of called Kalobios. Essentially, Kalobios was going to do is going to. Or what it had done was bought the global rights to this drug that treats Chagas. And then it was going to go to the FDA and try to go through this program meant to expedite the creation of drugs to treat rare diseases. And there's this interesting loophole. Basically what happens is if you go to the FDA and you say, hey, we're gonna try and treat this rare tropical disease like Chagas, they will in some cases give you a voucher saying that, okay, we will speed up your approval process by four months, which for a drug company can be very valuable. It's four more months on the. On the market. However, the interesting thing about this voucher is that you don't have to actually use it yourself. You can also just sell it to another company for lots and lots of money. And that's been happening.

B (45:56)

And the last time one of these vouchers was sold, it was sold for $350 million. It's a lot of money.

A (46:01)

And I can kind of see the logic of this. I think the idea is that maybe you don't need that four months extra on the market for your drug to treat Chagas, but the ability to sell this voucher will create some financial incentive to go and seek out a cure. However, all Shkreli was doing was basically buying the rights to an old drug overseas, and then he was gonna get it approved, and then said he was gonna raise the price of $60,000 for a course of treatment, because that's what Martin Shkreli does. So, Felix, I want you to explain for our listeners how you think this might have been a good thing for the world.

B (46:35)

So the very easy way of explaining why this might have been a good thing is to say that having this drug be FDA approved is always and everywhere a better state of the world than if it's not FDA approved. So, you know, if it's available with nothing but a prescription at any old pharmacy, that's amazing. And it's going to increase the number of people who get diagnosed with the drug. And if they have insurance, they can get the drug and they can get treated, and it's going to save lives. And so that's the simple thing. And then on top of that, Shkreli did say, and, you know, you can take this with as many grains of salt as anything that Shkreli says. But he did say that he would give the drug away for free to anyone who was not insured.

A (47:17)

Yeah, but you did make the point that it's also often very hard to access those programs to get.

B (47:22)

But it's still easier than trying to navigate the CDC thing that we have right now.

A (47:27)

So I guess the first thing. But the reason I'm not so sure Shkreli really did a great thing for the world here is that. And again, like you mentioned in your piece, is that there were other companies pursuing this treatment. He was not the only one out there trying to get appropriate.

B (47:42)

So in August, the FDA added Chagas to the list of neglected diseases, which makes it eligible for one of these vouchers. And at that point, the race is on, basically. But my general feeling is that the more people who are part of this race, the better and the more likely we're going to get FDA approval more quickly.

C (48:01)

If I could just cut in, there's a couple issues I think this brings out. It is sort of amusing. This guy's like the town harlot of pharmaceutical capitalism and sort of brings to the fore these fundamental issues that are so boring but important that it's hard to focus public attention on them until he has the bad fortune to take on some of the most powerful and concentrated constituencies in America in his profit maximization, which I appreciate. But I think that there's a couple issues that this Chagas drug brings out. One is we really struggle to find a way to give economic incentives to work on important problems, particularly that don't affect Americans primarily. And the use of the patent system to provide an economic incentive to develop new drugs, you know, is fundamentally problematic because then you have a monopoly over this life saving drug. And how do we deal with the ethical quandaries? And the Gates foundation has tried to come up with some alternatives to that. Michael Kramer, an economist at Harvard, has, you know, has done a lot of really good work on this where maybe one of the things you could do is say we'll have a prize instead of giving you a monopoly patent. If you come up with this drug, we promise we will buy, you know, 50 million doses at $20 a dose or whatever. There are alternatives that people have talked about.

A (49:15)

Well, the voucher is almost like a prize in a way, except you don't actually have to develop the drug. And that's kind of why people are worried about it, is that. But you're giving away the voucher like a prize and it attracts people who might be. Want to get do kind of a get rich quick.

B (49:28)

There is, I mean, this is absolutely a loophole. It turns out that you don't need to invent a new drug in order to qualify for the voucher. Although that's what its intent was. When they've created this law, all you need to do is get FDA approval for a drug which was invented in 1960. And that feels like a bit of a loophole. But it's a loophole which is good for anyone suffering from Chagas disease.

C (49:51)

It's a loophole because it gets us through the bureaucratic hurdles that you correctly identify. I think you make a good point. I think there's two other things about Chagas that are interesting. One is our neglect of basic prevention. So Chagas is a disease that is readily prevented by spraying people's houses. It's spread through a kissing bug. And we can kill these bugs and we can do a lot of things. It turns out that, that in one of the major studies of this, it cost $27 per house that was sprayed to stop this. So we actually don't need a really expensive drug to prevent a ton of these cases. We can do basic public health prevention.

B (50:29)

Although the fact is that a lot of that basic public health prevention needs to be done in places like Nicaragua and Bolivia, where, you know, it's very hard for the FDA to get involved.

C (50:40)

Well, that brings up the second point, which is I think that we have to recognize that Mexico and other parts of Central America are kind of within an integrated biosphere with the United States. And, you know, people move, goods move, agriculture moves. And I think a coordinated public health response that takes into account, hey, you know, there's 11 million people from Mexico in the United States. There's 150 million people who move across that border. Bugs move across that border. Lots of things move across that border.

B (51:06)

And it's no coincidence that the highest prevalence of Chagas is in Southern California, right next to the Mexican border.

C (51:13)

Yeah. And they have excellent public health agencies in Mexico that we could work with and provide resources to that would probably help more Americans than anything we're gonna do with this Chagas drug.

B (51:23)

This is an incredibly important insight, actually, that if you're going to be spending money on FDA approval for Chagas drugs, that's all well and good, but that money would probably be better spent and save more American lives, never mind Mexican lives. If you just spent it on Chagas. I guess prevention in Chiapas and places like that, where it's common.

A (51:45)

I guess another point that this all just brings home for me is the US's weird unwillingness to import drugs that are basically known to be safe all over the world.

B (51:57)

Well, these are highly toxic drugs. It has to be safe, okay?

A (52:00)

But, like, they're still there. They're the proven course of treatment. And instead we have this byzantine process of redoing FDA approval. It sets up these weird incentives. And I don't know. I mean, my impulse is that there's something wrong with that. But, Harold, I'm curious if you feel otherwise, if you think that that ban is really making us safer in any way.

C (52:19)

Well, I think there are historical antecedents to it. And certainly, like the thalidomide example is one that people often cite. I think the political economy of pharmaceutical regulation right now leads to overly costly drugs. And at some point, we are going to be much more willing to dictate prices to the pharmaceutical sector, which would include allowing more competition from imported drugs. Obviously, that's a heavy political lift, but it seems to me that at some point that will happen. And the arguments against it from a sort of health outcomes point of view are really pretty weak. So Germany, France, England, there's a lot of places that know how to regulate drugs pretty well that could send drugs to the United States. There's lots of ways we could determine product safety that would allow greater competition.

B (53:10)

On which note, we are going to wrap up this discussion and move on to the numbers round, which I'm gonna assume that it's not all gonna be based around, like, heavy issues of health care.

A (53:22)

And mine's like, the least heavy thing.

B (53:23)

What's your number?

A (53:24)

My number's four. For the Fab four.

B (53:27)

Oh, the Beatles.

A (53:27)

For the Beatles.

B (53:28)

I'm out on Spotify.

A (53:30)

Beatles are finally on Spotify and Apple Music and any streaming platform that you happen to have as of today, this is basically a sign that if you weren't already pretty certain of it, streaming really is just. It's here to stay. It's really the platform of today and tomorrow for music. The Beatles are always the last, basically group to put their music on any new medium. They were the last on itunes. They didn't remaster their music for years.

B (53:57)

They were pretty much the last on cd, if I recall.

A (53:59)

Yeah. Yeah. And they didn't actually put their stuff in stereo until years after everyone else did. I mean, like. Like, they are. They are always sort of. I feel like these guys are the nail in individual song sales. Like an actual album sales. Like, they're only going to decline from here on out. We're only going to see streaming grow.

B (54:17)

So. So my number is. Is also related to individual song sales. It's 1818. One of being English, I'M highly attuned to this very English phenomenon known as the Christmas number one, which is much less of a cultural.

A (54:34)

Well, we all know every American now knows it because love actually is now, you know, a standard Christmas movie.

B (54:40)

But the Christmas number one in America this year. Hi, Kathy, wherever you are. Is hello by Adele. And to no one's surprise, The Billboard Top 100 is full of lots and lots of Justin Bieber and the Weeknd. But the number which interests me is the song at number 18, which is the highest this song has ever got to in history. And. But it was released in 1994.

A (55:10)

What song?

B (55:11)

And the song is one of my favorite songs in the world is All I Want for Christmas is yous by Mariah Carey is currently at number 18 in the Billboard top 100.

A (55:22)

I didn't realize that. Speaking of love, actually I didn't realize that that song was from 94. For some reason, I thought it was more recent. That's a. That's. Wow.

B (55:30)

That song is over 20 years old and has never been so high ever. In its entire 20 year history, it has never reached number 18 or higher on the Billboard charts.

C (55:41)

There's a reason for that, Felix.

B (55:42)

What's the reason? Harold?

C (55:43)

It's not a very good song.

A (55:45)

It's a wonderful song.

B (55:46)

It's an amazing.

A (55:46)

Shut your mouth.

C (55:51)

Explain to me why it's a lousy song. I just want to make that point. Okay.

B (55:57)

Okay, Harold, what's your number?

C (55:59)

My number is 999,700.

A (56:03)

Okay.

C (56:03)

What that is, is it's the difference in value between the biggest and the second biggest checks that Dante Stallworth had received in his Life by age 21. Dante is a retired football player who I recently spoke with and who's a brilliant guy. He's now a journalist. He played wide receiver for about 10 years in the NFL. And when he was in college, he occasionally did, you know, summer jobs or whatever. And he got a check for $300 at some point as part of a job. And then he gets drafted and he gets a check for $1 million. He's now a publicly famous 21 year old who now has the burden of this huge check. And I'm thinking, this is so insane that we burden these young athletes. I mean, obviously he's blessed to get a check for a million dollars, but that we pay them in a way that is completely out of their comprehension. And of course, a lot of these players, you know, don't manage the money successfully. And a depressing percentage of former NFL players go bankrupt and have serious, well.

B (57:06)

That'S also related to brain injuries and stuff like that from all of the concussions. I don't know if that's your, what's your proposed solution to this problem? Should he not get a million dollar check?

C (57:16)

I think he should get a half a million dollar check and he should get a half million doll so that he can get used to living on a realistic lifetime income, given that that million dollars is actually a huge chunk of his entire lifetime income. If he's like most football players and that we should pay these guys out over a long period of time.

B (57:34)

Yeah, the 50% of your income should just automatically go to buy annuities, which kick in at age 35 or whenever football players generally retire.

C (57:44)

By the way, these guys are really smart. I mean, he's, if you actually follow this guy's Twitter feed. But you know, he really, he has all these tweets. I don't understand about how, you know, you know there's going to be an interception because the quarterback threw the ball in this spot where the, you know, there's a huge amount of reflective intelligence that he had at age 21 and it was all directed towards football and he didn't know anything about finance. And that's. And because his job was to be drafted as a.

B (58:08)

This is not going to be a problem anymore because Dante Stallworth, age 21, if he was 21 today, would be given a copy of the Index card and would and would henceforth manage his money in an absolutely perfect and optimal manner. Howell Pollock, thank you. Thank you very much for coming on the show. It's been amazing to have you on. And one, one more plug for your book, what's it called?

C (58:34)

The Index Card.

B (58:35)

The Index Card. It's easy. It's available everywhere that books are sold. Thanks to Zach Dynastein, who produced this week in a curiously empty Christmas Slate office, to Andy Bowers, the executive producer to the entire Panoply network, which you can find@itunes.com Panoply write to us@slatemoneylate.com subscribe to us. You can search for us in this iTunes store. Leave a review. Happy holidays and we'll talk to you next week on Slate Money.

D (59:24)

I'm Gretchen Rubin.

C (59:25)

And I'm Elizabeth Craft, her sister and happiness guinea pig.

D (59:28)

Every week on our podcast we talk about a try this at home tip for making your life happier, which Try this at home tip do you think listeners have most responded to, without question.

B (59:38)

The one minute rule.

D (59:39)

Oh, the rule that anything that you can do in less than a minute. You do without delay.

C (59:43)

Yes. Put a dish in a dishwasher, hang up a coat, whatever.

D (59:47)

I have to say, this has improved my marriage because my husband is neat and I'm not. And this is a good example that happiness can feel very transcendent and abstract. But sometimes, sometimes it's the little practical things that give us the biggest happiness boost. Search for Happier Wherever you find your podcast.