By Steven Brill
Oct 8 (Reuters) - (This is the latest installment of StevenBrill's weekly column "Stories I'd Like to See.")
1. How Obamacare burns smokers:
Amid all the publicity around the glitch-filled launch ofthe Obamacare health insurance exchanges and the accompanyingdebate over whether the premiums being offered will be lowenough to attract enough buyers, one aspect of the story hasn'tgotten nearly the attention it deserves.
Almost anyone who has followed the story knows thatObamacare doesn't allow people with pre-existing conditions tobe denied coverage or to be charged extra; that it limits theprice differentials that can be charged to older people versusyounger customers; and that it provides government subsidies tothose living below 400 percent of the poverty level to help thempay their premiums. But what's not well-known is how Obamacarelowers the boom on the 19 percent of American adults who smoke,substantially negating all three of those consumer-friendlyfeatures.
Being a smoker is the one pre-existing condition thatinsurance companies can discriminate against under theAffordable Care Act. In fact, insurers participating in theexchanges can charge a premium of up to 50 percent for smokers.
But the penalty doesn't stop there: The premium subsidiesthat Obamacare makes available for the poor and lower-middleclass are based on a formula that subsidizes an individual orfamily so that they do not have to pay more than a certainpercentage of their income - out of their pockets - for theirinsurance. However, under the law, those subsidies cannot beapplied at all to pay the 50 percent smokers' premium. The lossof that subsidy can be a big deal.
Suppose, for example, someone earning $20,000 a year wouldqualify for a $3,000 subsidy on an insurance plan costing $4,000a year. This would make his annual cost $1,000. But if he's asmoker, the same plan might cost $6,000 a year (factoring in the50 percent surcharge on the $4,000 sticker price). He wouldstill only get a $3,000 subsidy, because the subsidy can't beapplied to the smokers' penalty. That means he would pay $3,000out of pocket instead of $1,000.
As a September 11 article in USA Today pointed out, smokerstend to be overrepresented in the lower income demographicgroups and also among the currently uninsured. Both groups arethe people most likely to want to buy insurance on theexchanges. So the penalty is likely to affect a significantlyhigher percentage of exchange customers than the overall 19percent of American adults who smoke.
In one regard, the policy makes sense. Why shouldn't thosewho choose to smoke - and, therefore, are far more likely toneed the healthcare the insurers are promising to provide - paymore? If not, the rest of us would be subsidizing them.
On the other hand, if one views smoking as an addiction, nota choice, then isn't it just another pre-existing condition?
On the third hand, if the goal of the Affordable Care Act isto protect the most vulnerable by offering them affordableprotection, why would we want to discourage smokers - a fifth ormore of the population and a group who are exceptionallyvulnerable to health issues - from signing up?
Now that the exchanges are open for business it's time for afull exploration not only of those policy issues, but alsoreporting from the field on how the penalty is affecting smokersign-ups. We should also want to know how the penalty isaffecting overall premiums and how much of a dent it puts in theObama administration's boasts, the week before the exchangesopened, that average premiums are significantly lower than hadbeen predicted. (The administration's press release andaccompanying white paper about all that didn't include thesmokers' penalties in touting the various state-by-state averagepremiums.)
Finally, how is the smoking surcharge enforced? What if I'vepolluted my lungs and bloodstream with Marlboros for 30 yearsbut quit smoking the day before I sign up for a plan? Am I anon-smoker? What if I say I quit but didn't? Or what if I goback to the habit a month after signing up?2. Understanding anonymity at the Economist:
I used to think that people subscribed to the Economist sothat they could have it on their coffee tables to impressfriends. My assumption was that because I didn't read my copiestoo avidly, they never really read them either.
But several months ago, I was on an airport runway and hadto turn off my electronics, leaving me with only the magazine toread. As the takeoff got delayed I found myself diving intoarticle after article, and I was stunned by how intelligent andoriginal the Economist is on subjects I've already read about(e-cigarettes or Germany's election, in the last issue) orsubjects I didn't think I cared about ("Water and Agriculture inKansas").
With my new loyalty to the Economist in mind, here's whatinterests me most about the publication that I would like to seea story about: the Economist has no bylines. In fact, there'snot even a masthead to tell me who the editor or editors are whodeserve the credit for all this smart stuff. (Such anonymity wasmore common when the Economist was founded in 1843.)
A Google search will quickly tell you that the editor isJohn Micklethwait, and the Economist's website does list itseditorial staff, with mini-bios. But for most journalists, letalone journalists who produce such world-class stuff, thatusually isn't enough. They - well, we - like our bylines. Wedon't like to labor anonymously. Some even enjoy going ontelevision to talk about what they've written.
So how does the Economist attract such extraordinary butapparently ego-less talent? What does that talent say about thesacrifices, or rewards, of hitting home runs every week with noone in the ballpark cheering them on? And has the Economist doneany research on what readers think of reading stories with nonames attached?3. Behind the big-city bike-sharing business:
New York City's bike-sharing program, Citi Bike, which waslaunched last spring, seems like it's already a big success. Italso seems to be a logistical tour de force, enabled by amazingsoftware that predicts and tracks usage in order to get thethousands of bikes positioned at the right docking stationsaround town so that they can be shared efficiently andconveniently.
NetJets, the fractional private aircraft ownership company,was considered a logistics and software marvel soon after itbegan operations about 27 years ago. But it has 650 jets, whileCiti Bike already has 6,000 bicycles in its fleet, with more onthe way.
Similar systems are operating in cities around the world,from Paris, to London, to Denver to Washington, D.C., toMinneapolis.
So how does it all work? What's the financial model in NewYork and elsewhere? Is this a for-profit service? If so, who arethe investors that stand to win or lose? Is Citibank just payingto have its name emblazoned on the fleet, or is it a financialparticipant?
I've seen trucks in New York hauling bikes from overstockeddocking areas on city streets to those that need bikes(presumably the equivalent of a NetJet flying to an airportwithout passengers). How is all of that monitored and minimized?How is the program adjusted based on tracking data related towhere and when the bikes are being used?
What have been the biggest surprises and challenges so farin New York? Have taxi or subway revenues been affected?
And what are the differences between New York's program andsome of the others?
All grist for a bunch of good stories.
- Consumer Discretionary