Sunday, March 30, 2014

And Who Shall Pay for the Sick?

The sick are the greatest danger for the healthy.

Friedrich Wilhelm Nietzsche (1844-1900), Genealogy of Morals (1887)

How sick they are will factor into next year’s prices.

Shad Terhune,  “Insurers Already Calculating 2015 Premiums as ObamaCare Kicks In”, Los Angeles Times, March 30, 2014

“As California goes, so goes the nation.”   Like most clich├ęs, this one  contains a grain of truth.   More than 1 of 9 Americans live there.   As John Naisbitt observed in Megatrends (1982),  many national trends start there. With 1.1 million enrollees there,  California  leads the nation, with more 1 of 6 of those nationwide signing on the health plan bottom-line.   More Hispanics, the nation’s leading source of the uninsured,  reside there than any other state.   California bears health reform watching.

Already actuaries in California are hard at work.  They are figuring out next year’s rates. They are analyzing claims to see how many enrollees are sick,  for the sick will determine premiums for the healthy.   The sick will determine the level of “sticker shock” for the rest of us.   The sick will determine the degree of “adverse selection.”  The sick may determine the results of the 2014 November election, for premiums for 2015 must be announced in May, three months  before those elections.

If the premiums are low or minimal (less than 10%, preferably 5%), it will bode well for ObamaCare.   If premiums are in the double digits (20% or more),  as Wellpoint, Inc., predicts,  ObamaCare and the health exchanges are in trouble. A “death spiral” of ObamaCare with unaffordable premiums and deductibles may ensue. 
Robert Laszewski, a nationally recognized health care consultant, says , “If rates in California increase by 20%," enrollment will go down and any healthy people will bail." Excessive bailing, accompanied by penalties for not enrolling, will not be received well with voters.

Those concerns are one reason the Covered California exchange, insurers and health-law supporters are struggling  to persuade young and healthy people to enroll before Monday's deadline. The goal is to get  a balanced mix of policyholders and keep monthly premiums down.   

As matters now stand, about 30% of the young (18-34), have signed on.  The goal is 40%.  But the young are said to be inveterate procrastinators. They never do today what they could have done yesterday.    On Monday, March 31,  for the young, today arrives.  The  young will have their last opportunity to enroll.  Perhaps then they will recognize that federal subsidies make a bad deal a good deal.

And who shall pay for the sick?  The rest of us, that's who.  That's the way  it has always been and always will be. 

The only questions: How much?  How high the premiums for the healthy? How high the hidden costs to taxpayers?

Tweet: With 2 days to go before open enrollment deadline, all eyes are on California, to see how high premiums might go and how many of enrollees are the sick or the healthy young

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