Slow Train Coming

Well, it’s finally over.

As a nation, we were obsessed by a single news story for the past two years. The election of a new U.S. president has led nearly every newscast, topped the front page of nearly every newspaper, and dominated the Twitterverse. Had there been an asteroid headed toward Earth, I’m not sure we would have noticed.

There is no question that it was an important story. Although presidents don’t control America, nor even the American government, they have a profound effect on nearly every aspect of our society, and those effects are felt around the world. I don’t doubt that the future of the toy business will be influenced by the new president in ways large and small.

Having said that, I nonetheless believe that the press coverage was way over the top. A month before the election, for example, we spent an entire week talking about a Venezuelan woman who won the Miss Universe beauty pageant 20 years ago, and the remarks one of our presidential candidates had made about her weight.

I realize that the incident raised some serious issues about gender bias, fat-shaming, eating disorders, and standards of acceptable behavior by people who aspire to public office, but here’s the thing. It’s not news.

Hurricane Matthew did manage to break through the election chatter for a few days, natural disasters being kind of hard to ignore. Everybody understands the basic dynamics of a storm story, and they fit our video-driven media perfectly, with all those news reporters out on the beach like damsels tied to the railroad tracks. (It also didn’t hurt that the storm was threatening the largest swing state in the country.)

The hurricane was itself knocked off the front page by a mud storm, made up of videotapes, emails, tax returns, dusty allegations and brawling debates. I don’t know how much of that would qualify as news, but it certainly was a spectacle.

All the while the spectacle was unfolding, there was one story in particular that was continuously overshadowed or ignored, even though its effects will be profound. Newspapers did run some articles, and it even came up in the debates, but under normal circumstances it would have dominated the news.

I’m talking about the slow-motion collapse of the Affordable Care Act. In mid-August, Aetna became the third major insurance company to announce that it was pulling out of the “Obamacare” exchanges in the past four months. Over just six months, Aetna had lost $430 million on the 900,000 people it was covering through the ACA exchanges.

UnitedHealth Group said it would withdraw from most regions in April, followed by Humana in July. Both companies are also currently insuring hundreds of thousands of individuals and losing hundreds of millions of dollars. The response from the U.S. Department of Health and Human Services to the departure of these companies was that they had caused their own losses by setting their premiums too low.

The basic idea of Obamacare was that uninsured Americans would be required to buy health insurance. To make it affordable, exchanges would be set up in each state, and participating insurance companies would compete to offer plans that met the federal requirements. Lower income people would receive subsidies to help them pay the premiums, to be phased out as income went up. Those who refused to buy a plan would face a tax penalty, also based on income.

For people who earn less than $29,700 (two-and-a-half times the poverty level), tax credits cover most of the cost of premiums, and more than 80 percent of those people have signed up. Among people who earn between three to four times the poverty level ($35,640 to $47,520) however, there are no subsidies and the enrollment rate is 17 percent.

That’s the problem in a nutshell. The vast majority of enrollees are relatively poor, which costs the government a lot in subsidies and also costs the insurance companies a lot because poorer people are less healthy, on average, than wealthier people. That part was expected, but the low participation of middle-income people was not.

It’s not simply that the plan depended upon those people to buy insurance, but also the make-up of the 17 percent who do buy it. As you might have guessed, they tend to be the older and sicker individuals who have more need of doctors, hospitals, tests, drugs, therapy and so forth.

I am by no means an authority on health insurance. Like most of you, I run a small business that provides some measure of insurance coverage, plus I have to navigate the healthcare system myself.

When the Affordable Care Act was moving through Congress in 2009, I wrote a column on it in which I speculated about what the long-term effects were likely to be. After it was published I got a letter from one of our readers saying that health insurance had nothing to do with the toy industry and suggesting that I should steer clear of politics.

Perhaps you agree, but I believed at the time, and continue to believe, that health insurance has a lot to do with this industry. What my company spends on health benefits amounts to 10 percent of our profits, and that number is almost certain to go up. That seems like a fairly important issue to me.

As far as the politics of it go, my concerns are a lot more practical than ideological. If everyone could get quality healthcare without bankrupting either themselves or the taxpayers, I’d be thrilled, but the Affordable Care Act did not get us there. Even President Obama acknowledges that it needs to be fixed, and former President Bill Clinton called the current system “crazy.”

Ideas for fixing the system seem to fall into three groups. The first, and most straightforward fix, is simply to raise the premiums and the penalties for not buying insurance. The obvious drawback is that the burden falls on the people who are already having the hardest time with the cost of healthcare.

Second is the so-called “public option,” by which is meant the establishment of a federal government-backed insurance plan that would compete on the state exchanges with the private insurance companies. This proposed solution was included in Mrs. Clinton’s platform, but is opposed by insurance companies and much of Congress.

Third is the “single payer” system, which is sometimes referred to as Medicare for all. Under this plan, the federal government would pay the healthcare costs of all Americans, funded by new taxes on both businesses and individuals. What could possibly go wrong?

Senator Bernie Sanders, one of the major proponents of the single-payer idea, argues that it would represent a huge benefit to business owners. “Employers could be free to focus on running their business rather than spending countless hours figuring out how to provide health insurance to their employees.” Well, there is that.

I’ll take whatever works. I just hope the new administration in Washington can figure out what that is and how to get there, and the sooner the better.

In the meantime, stay well.

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