Distressed by Baby Controversy, AOL’s Armstrong Reverses 401(K) Policy

He's not proven particularly popular. On the other hand, AOL is alive and profitable, which wasn't a sure thing five years ago.

This is exactly what you should expect when you mandate employers provide a benefit to employees - they will cut something else to make up the difference. Employees who liked the other thing more are screwed.

A single good quarter is NOT a reason to increase employee comp. Maybe a bonus (note: AOL has bonuses which are based mainly on profit sharing, not individual performance), but not a permanent comp increase.

I don't know of a good way to solve it. I would like to prioritize solid evidence-based decisions as much as possible, but those have a tendency to come across as unfeeling, or worse (one might even gloss such decisions as amounting to "death panels"). I think part of it is that intellectually all of us agree that we cannot spend infinite resources on every possible health problem, but it's difficult to decide that this specific person should not be treated because it's "hopeless" (a gloss for "poor likelihood of success relative to costs"). That would mostly not be babies, but mostly would be a mixture of elderly people (prognosis for nearly anything declines with age) and people with terminal illnesses that are statistically very unlikely to be cured. But even still, difficult to stomach. In part, because it goes against the psychological messages we're sending at the same time, which is that people should never give up hope, etc.

I don't actually know what I personally think about it, given some recent personal experience. One of my friends died a few weeks ago (in his early 30s) of melanoma, which was discovered in Stage 4, and treated unsuccessfully for about 9 months. The prognosis wasn't very good to begin with, given the advanced stage at discovery. Probably, this treatment had little statistical likelihood of success, though redeeming factors included: 1) at a young age, it was at least distinguishable from zero likelihood, and 2) it was part of a clinical trial, so may give some scientific information even if unsuccessful. However in a psychological sense both he and his friends/family seemed to benefit from the treatment, and would have been much less happy with a "not treatable" decision. Enough to be worth the cost, given the low odds of success? Difficult to say, and anyone who tried to say "no" would end up with a tough sell. And yet intellectually I obviously realize that if I were to advocate that we must "pull out the stops" to the maximum extent possible for every sick person, this isn't going to work under any economic system, whether it has a more right- or left-wing flavor.

In all seriousness, it is a challenging question though. The issue of how to spend healthcare dollars wisely is one that as a country we are currently unwilling to address honestly.

The answer to your question is simple. We pay $1,000,000 not to keep one person alive, but because that person is part of a risk pool which only works if it pays out when something catastrophic happens. The pool would quickly fall apart if it could say, "your parents paid in, but we don't think you're worth that much money."

I'm not an expert, but I believe that Obamacare removed lifetime maximums and the ability to deny coverage based on preexisting conditions. Anderson is probably angry that his costs per individual aren't capped anymore. He happened to pick the least sympathetic way to get that message across.

Yap, it does

> why, in a world with billions of people, we would spend a million dollars to keep just one human alive?

Because part of what makes us, "us" is keeping one human alive. That one human, one baby is someone's baby. If it was your baby, wife, sister, friend, how quickly you'd tell the insurance company and hospital, nah, don't pay for it, let them die. You wouldn't have to pay. That is why you joined AOL maybe and have "great" insurance. For not having to go bankrupt or make such decisions in cases like this.

I can see how someone in a poor country might be offended, but I am offended when a CEO who makes millions of dollars per year says that. Saving those 2 babies was just 15% of his annual salary. You can turn that question around and then ask: "I know it will sound unfeeling but I have to wonder why, in a world with billions of people, many making under $100/month, many sick and starving, we would, as a society even let one single CEO of some washed up Internet company that used to mail stupid cup coasters in CD form, make tens of millions of dollars / year?".

Q2: Would you consider working your rear end off for years on end to pay medical expenses necessary to save the life of your own daughter?

The reason AOL pays these expenses is the same reason it pays its own employees and the same reason those employees spend money on things like "television" and "dining out" and "silicon valley rent" instead of spending it on improving the fate of third world nations. People spend money on themselves and on people they care about!! There is more to life than the welfare state!! And it's a good thing, too, because taxation of an individual's economic output in favor of redistribution damages his incentives to work, and eventually you see the Laffer curve in action and the welfare state isn't doing as good a job of providing for peoples' welfare. (See also: abject failure of Communism, and associated famines).