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Title: Obamacare flying machine begins a death spiral
Source:
Washington Times
URL Source: http://www.washingtontimes.com/news ... macare-death-spiral-may-have-/
Published: Mar 28, 2015
Author: Sean Parnell
Post Date: 2015-03-28 08:31:19 by cranky
Keywords: None
Views: 797
Comments: 10
Premiums are rising rapidly and the young and healthy are bailing out The Supreme Court decision in King v. Burwell, the case challenging the Obama administration’s decision to award tax credits for health insurance sold through federally established exchanges, could turn on the question of whether a ruling that ends the tax credits on federal exchanges might cause something known as a “death spiral” in health insurance markets. The good news is the answer is probably no, but the bad news is that’s only because the death spiral has probably already started. A death spiral generally occurs when insurers are forced to raise premiums sharply to pay promised benefits. Higher premiums cause many of the healthiest policyholders, who already pay far more in premiums than they receive in benefits, to drop coverage. When healthy policyholders drop coverage, it leaves the insurer with little choice but to raise premiums again because they now have a risk pool that is less healthy than before. But another premium increase means many of the healthy people who remained now drop their policies, too, and this continues until the only people willing to pay the now-very-high premiums are those with serious medical conditions. The death spiral isn’t just a theory. Eight states learned this the hard way in the 1990s when they enacted two policies known as “community rating” and “guaranteed issue,” requiring health insurers to sell coverage to anyone who wanted it at the same price. This quickly set off a death spiral because people knew they could wait until they were sick or injured to buy insurance, and premiums rose sky-high as healthy people exited the individual insurance market while the sick remained. New Jersey enacted both community rating and guaranteed issue in 1992. By 2003, the lowest monthly premium for a family policy in the state was $3,810 and nearly 40 percent of the people in the individual market had dropped their coverage. Obamacare includes both community rating and guaranteed issue. The hope of the politicians who passed Obamacare was the individual mandate would keep the relatively healthy from dropping insurance coverage, thereby avoiding a death spiral. During oral arguments in King, Justices Anthony Kennedy and Ruth Bader Ginsburg expressed concerns that not allowing subsidies in the 37 states using the federally established exchange would set off a death spiral in those states. Their fear was that while subsidies would no longer be available, and there would effectively be no individual mandate, community rating and guaranteed issue would remain. Many commentators saw Justice Kennedy’s comments as a signal he isn’t willing to stop subsidies on federal exchanges, either because of the serious consequences of doing so or because surely Congress could not have intended to put states in the position of choosing between creating an Obamacare exchange or seeing health insurance markets destroyed. What Justice Kennedy and many others may not understand, however, is the death spiral is probably already underway in all 50 states, regardless of how the Supreme Court rules in this case. According to the Manhattan Institute, premiums climbed by 41 percent on average from 2013 to 2014, and premiums are likely to rise sharply again after two insurance company bailout programs included in Obamacare expire in 2017. The other sign health insurance markets are in the early stages of a death spiral is the age mix of those buying policies through Obamacare. Originally it was estimated that around 40 percent of enrollees had to be in the relatively healthy 18 to 34-year-old age segment, so their premiums could be used to pay for the health expenses of older, less-healthy enrollees. So far it appears only some 28 percent of enrollees are in that coveted age group, which also comprises around half of the uninsured. All of this means insurers are getting a risk pool that is less healthy than expected, and more premium hikes are around the corner. While subsidies hide some from the full impact, others in the middle class will not be shielded. It will undoubtedly take a few years to know for sure, but for anybody concerned about setting off a death spiral or thinking Congress surely didn’t intend to do so, don’t worry. It looks like it’s already here, whether Congress intended it or not.
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#1. To: cranky (#0)
(Edited)
The Ruling Class has fought long and hard to impose Socialized Healthcare - preferably single-payer (i.e. thinning the herd) on the unwashed masses. It ain't goin' anywhere. So here's the deal: 1. Ruling Class Plan A is likely to have SCOTUS uphold the Law. Since we are no longer under a Constitution, that is very do-able. It probably depends whether or not one or more of the supposedly conservative justices is bribeable or subject to threat on life or limb. (as Roberts probably was last go-round) 2. If Plan A tanks, then there will be Plan B. What is Plan B? Here's a hint: Mitch McConnell, John Boehner, bipartisanship. See where I'm going?
Perhaps not but Øbamacare is unsustainable in its current incarnation. And it certainly will not survive in any form when America balkinizes.
There are three kinds of people in the world: those that can add and those that can't
‹/eyes closed tight› I'm afraid to look.
Actually, due to internal provisions in the law, it will collapse and have to be rewritten in 2017 due to rising premium/subsidy costs and bailing out insurers. This was baked into the cake from day one. Central provisions of the ACA will be rewritten in 2017. No way to avoid it.
Perhaps not but Øbamacare is unsustainable in its current incarnation. I'm sure the Chinese will continue to underwrite it for us. The word "unsustainable" can never be applied to gov't programs. How so? It matters not to the Ruling Class whether there's one doctor per 1000 people or one doctor per 10,000 people. In fact - to the Ruling Class - the second option is preferable.
This was baked into the cake from day one. Central provisions of the ACA will be rewritten in 2017. No way to avoid it. And that's where the Turtle and the Weeper will ride in and save the day.
Even the Chinese will run out of money. The word "unsustainable" can never be applied to gov't programs. When a government ends, so do its programs. How so? I don't expect any governments formed when America devolves into its ethnic constituencies to foist it on their people.
There are three kinds of people in the world: those that can add and those that can't
Øbama has avoided it so far by the simple expedient of executive fiat. No reason our next sovereign can't do the same thing.
There are three kinds of people in the world: those that can add and those that can't
That appears to be an impossible statistic. $3,810 a month works to $45,720 a year. The author appears to have converted an annual premium to a monthly premium. Andrew Kitchenman | January 12, 2015 NJ one of 10 states to see price of premiums skyrocket since enactment of Affordable Care Act [...] While employers are paying more than they were a decade ago, the growth in employees’ contributions has outpaced those of their employers, increasing workers’ share of total health costs. “Workers are paying more but getting less protective benefits,” wrote authors Cathy Schoen, David Radley, and Sara R. Collins. New Jerseyans saw their average annual employee contribution for family coverage rise from $2,007 in 2003 to $4,486 in 2013, a 124 percent increase. The total average premium for family plans -- including the employer’s contribution -- rose from $10,168 in 2003 to $17,396 in 2013. This was the fourth-highest average in the country, behind Alaska, New York, and Massachusetts. But the burden on New Jersey residents was offset by their relatively high household incomes. The average total New Jersey employee healthcare spending -- including both premiums and deductibles -- as a share of household income was 7.9 percent in 2013, tied for the ninth lowest in the country. That percentage rose from 3.6 percent of income in 2003. The national average rose from 5.3 percent of income in 2003 to 9.6 percent in 2013. See also: In addition, the percentage of workers whose plan includes a deductible -- which is an amount that must be paid out-of-pocket before insurance kicks in -- increased in New Jersey and every other state. In New Jersey, it rose from 48 percent in 2003 to 69 percent in 2010, before leveling off at 68 percent in 2013. The average deductible for a single New Jerseyan rose from $538 in 2003 to $1,311 in 2013. Deductibles are higher for businesses with fewer than 50 workers. I have been pointing this one out since Obamacare started. It provides policies with large deductibles to poor people. Even with a subsidy to the insurance company to cover the policy cost, the poor person cannot afford the deductible. It provides insurance that covers minor or routine doctor visits, but the deductible puts them economically out of reach. It is useful for catastrophic care. A policy that covers catastrophic care would be comparatively very cheap. This whole mess will collapse economically under its own weight. The cure for that, and it will be a moral imperative, will be to expand the program.
There are three kinds of people in the world: those that can add and those that can't
#2. To: Rufus T Firefly (#1)
It ain't goin' anywhere.
#3. To: Rufus T Firefly (#1)
See where I'm going?
#4. To: cranky (#2)
Perhaps not but Øbamacare is unsustainable in its current incarnation.
#5. To: cranky (#2)
It ain't goin' anywhere.
And it certainly will not survive in any form when America balkinizes.
#6. To: TooConservative (#4)
Actually, due to internal provisions in the law, it will collapse and have to be rewritten in 2017 due to rising premium/subsidy costs and bailing out insurers.
#7. To: Rufus T Firefly (#5)
I'm sure the Chinese will continue to underwrite it for us.
#8. To: TooConservative (#4)
No way to avoid it.
#9. To: cranky (#0)
New Jersey enacted both community rating and guaranteed issue in 1992. By 2003, the lowest monthly premium for a family policy in the state was $3,810 and nearly 40 percent of the people in the individual market had dropped their coverage.
New Jerseyans Paying More For Less Health Coverage, Report Reveals
The growth rate in insurance premiums and deductibles outpaced income growth in all 50 states, according to the report.
#10. To: nolu chan (#9)
The author appears to have converted an annual premium to a monthly premium.
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