Monday, April 18, 2016

ObamaCare Death Spiral
Death spiral is a condition of the insurance market in which costs rapidly increase as a result of changes in the covered population. It is the result of adverse selection in insurance policies in which lower risk policy holders choose to change policies or be uninsured.
Definition , Death Spiral
Ah, yes, the death spiral.   In the words of Mark Twain of Richard Wagner's music, "It's not as bad as it sounds," or that news of his death had been greatly exaggerated. 

Besides,  government programs rarely fail.  The government seldom abandons a program because it is not gambling with its own money;  its success is measured in good intentions, not results;   it succeeds by growing too big to fail, and too influential to stop, and it can't go out of business , can print money to keep on going, and is propped up by taxpayer money.
I read about it everywhere among ObamaCare critics, the latest in The Hill,  a website devoted to the goings-on in Congress,   In an April 17 piece “Insurers Warn That Losses from ObamaCare Are Unsustainable.”
The  death spiral message is that ObamaCare  is on death row because healthy young people, who regard themselves as invincible,  are not signing up for health exchanges, while older sicker people (aged 35 to 65) are enrolling in droves. 
Consequently,    insurers are either driving up premiums and deductibles or withdrawing from markets to save their skins, and most government non-profit co-ops are failing, 11 of 23 so far and the rest to follow in short order.  UnitedHealth has dropped out of Georgia and Arkansas health exchange markets, and Blue Cross Blue Shield, in response to ObamaCare, is raising rates an average of 19%, and is jacking up premiums as much as 50% in some states.
Personally I do not attribute this death spiral to greedy insurers. Insurance companies have to make a profit to stay in business and to satisfy stakeholders.   When ObamaCare ruled that patients with pre-existing conditions could not be asked about their conditions and could not be removed from coverage,  it removed the risk of health insurance.   This may have been the death knell for the insurance industry,  for insurance is a risk-based business.
 I place the blame for the death spiral on  a hastily drawn up and carelessly planned health plan which passed without a single GOP vote,  indeed without even consulting Republican leaders.  Another factor, of course, are  duplicitous Obama promises that people could keep their doctors and health plans and that family premiums would drop by $2500 for a family of 4 by 2016.    Millions have been forced to shift doctors and plans and now must pick doctors from narrow networks of providers and must pay $5000 or more in premiums along with exorbitant deductibles.  
Jonathan Gruber has rubbed salt in the ObamaCare wound.  Gruber, an MIT economist,   declared  by many Democrats  to be the architect of ObamaCare ,  has revealed that  Obama  knew early no these promises could not be fulfilled.  Instead we have premium increases of 10% to 50% and deductible of $1000 or more.  To many people paying these deductibles is akin to having no insurance at all. Add to this the fact that ObamaCare policies have triggered waves of consolidation among health plan, hospitals, and physicians to protect themselves against low Medicare and Medicaid payments.   Consolidation often leads to monopolies and hikes prices for consumers
And there you have it – all the ingredients of an insurance death spiral, causing  the young and healthy  choosing not to become insured ( It’s cheaper to pay the annual individual mandate penalty); the older not to sign on,  and sicker to join the exchanges.   The middle class pays the Piper in the form of heftier premiums, deductibles, and co-payment  and higher tax bills so government can bail out insurers to keep them in the game.

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