Colorado health benefits exchange

How government makes health coverage more costly

Linda Gorman April 13, 2015

Using taxes and fees on health coverage to generate revenue increases the cost of health coverage.

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It’s worrisome enough that we have to live with the ever-present threat of nuclear war hanging over our head, the fiery extermination of humanity from global warming, a worldwide depression triggered by the U.S. defaulting on its $39 trillion national debt on its way to $50 trillion, to say nothing of an uptick in falls from Denver rent-a-scooters. On top of all that, yet another crisis has descended upon the American public: Donald Trump has ended the minting of our one-cent coin, affectionately known as the penny. Good grief!

Don’t panic, 240 billion of them are still in circulation. Actually, this is long overdue. “Seigniorage” is the revenue a government derives from the difference between the face value of a coin and the cost of its mintage. (Ignore paper currency.) The U.S. Mint stopped making quarters, half dollars, and dollars out of silver when inflation made the metal content more valuable than the face value of the coins. Minting a penny now costs 3.7 cents each. The penny is the only current U.S coin with negative seigniorage.

When I was a kid, a penny had some intrinsic value. You could actually buy something with it. Place one in a bubble-gum machine, turn the crank and a candy-covered gum ball would drop out. You could even put a 1-cent stamp on a penny post card. In 1857, the U.S. stopped minting half-cent coins, and the nation survived even though a half penny actually had some purchasing power; you could buy a half-dozen cigars for that.

The cumulative inflation rate of 370% over the last 270 years since then has rendered the penny virtually worthless. Today, it isn’t worth the trouble of picking up off the sidewalk (especially if it’s face down; that’s bad luck). Dimes or quarters have replaced pennies in kids’ piggy banks. And credit cards, debit cards, PayPal, internet electronic transactions, crypto currency, automatic ACH billing, and mobile sports-betting, to name just a few alternatives, are increasingly displacing purchases with cash in general (with the exception of stacks of hundred-dollar bills in duffle bags for big illicit drug deals). Most people don’t even bother to carry coins in their pockets anymore. If you try to give the kid at the checkout counter a $5 dollar bill and three pennies for a $4.83 purchase, hoping for two dimes back, his eyes cross as he struggles to do the math in his head.

The sentimental case for keeping the penny is fading away as penny-laden references in our language such as “a penny for your thoughts,” “penny wise and pound foolish,” “penny-ante,” “penny pincher,” “pennies from heaven,” and “penny stocks,” are disappearing with generational change. Even penny loafers are out of style. Abraham Lincoln won’t be forgotten; his face will still grace the $5 bill. Canada has already eliminated its penny in 2012 (mostly to stop unruly hockey fans from throwing them onto the ice).

In your shopping cart at the supermarket, each individual item will still be priced in 1-cent increments. If you’re paying with plastic or a check you’ll pay the exact price, with no rounding necessary. Making a mountain out of a mole hill, some people are afraid retailers will cheat consumers by always rounding prices UP (which would be the to the nearest nickel, not the nearest dollar). This is ridiculous. Rounding will only apply if you’re paying with cash, and it will be on the total bill (not each item) rounded to that nearest nickel. So, a total purchase of, say, $89.01 or $89.02 could be rounded down to $89.00, saving you one or two cents. And a purchase of $89.03 or $89.04 could be rounded up to $89.05, costing you one or two cents more. This is small change and in the long run, it’ll all even out anyway.

Anti-business progressives are also stricken with UP-rounding paranoia that greedy capitalists will oppress consumers. Coming to the rescue, the (NCSLSLTTF) National Conference of State Legislatures’ State and Local Taxation Task Force (whew!) is proposing a government mandate requiring that purchases ending in 1, 2, 6 or 7 cents be rounded down to the nearest nickel, and purchases ending in 3, 4, 8 or 9 cents be rounded up. Please. This is a solution for a non-problem.

I doubt Safeway will make it corporate policy to always round up. That would be terrible public relations giving Wal-Mart the competitive opportunity to advertise they always round down (perhaps raising prices a few cents to make up for it).

Longtime KOA radio talk host and columnist for the Denver Post and Rocky Mountain News Mike Rosen now writes for Complete Colorado.