Is an ObamaCare “Death Spiral” on the Horizon?

By:  Michael Tennant
Is an ObamaCare “Death Spiral” on the Horizon?

Low enrollment by young, healthy people, among other things, suggests that ObamaCare will precipitate a "death spiral" of skyrocketing insurance premiums.

Is health insurance under ObamaCare headed for a “death spiral” of increasing premiums as a result of an influx of older, less healthy individuals into the insurance market?

“According to figures released [January 13] by the U.S. Department of Health and Human Services, only 24 percent of the 2.2 million people who have already signed up for Obamacare are between the ages of 18 and 34, just a little more than half of the 40 percent the administration admitted it needed to keep premiums affordable,” reported

This makes sense considering that premiums for those individuals are rising to offset the cost of covering older and sicker individuals, whom insurers must now cover at rates comparable to those being charged to people expected to draw few benefits. If not enough young, healthy people buy coverage, insurers will be forced to raise premiums on existing policyholders, which will encourage even more young and healthy individuals to drop coverage, leading to another round of rate hikes, and so on, until the health-insurance industry goes under.

Despite the lackluster enrollment figures for young adults, the Washington Post’s Ezra Klein declared, “The risk of a ‘death spiral’ is over.” Klein based his opinion in large measure on a December Kaiser Family Foundation report arguing that even if young, healthy individuals do not buy health insurance in large numbers, insurance premiums will not rise significantly.

Not everyone shares Klein’s optimism.

“I think there is a significant problem here,” Dr. John Goodman of the National Center for Policy Analysis told “I think the insurers are worried. I think the administration is worried.”

“Remember, everybody is facing the wrong price,” Goodman explained. “And sick people are facing a price that’s well below the cost of their care. Young healthy people are being overcharged. And so they need lots of young healthy people to join so they can get the money to pay the bills for the sick people. And the younger people just aren’t buying it.”

Besides the high premiums, Goodman suggested that the numerous problems with and some state exchange websites have also contributed to the failure of young, healthy people to enroll. “The only ones who’ve persevered — sometimes trying a hundred times — are people who really have serious health problems,” he said. They, after all, have much to gain — namely guaranteed coverage at below-market rates — by enrolling, while the young and healthy have little to gain and much to lose by doing so.

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