Death Spiral? Inconceivable!

Sarah Kliff explains:

The rumors of an Obamacare death spiral have been greatly exaggerated.

So say Larry Levitt, Gary Claxton and Anthony Damico, experts at the Kaiser Family Foundation who have put together a new brief analyzing what would happen if young adults snubbed the Affordable Care Act. Even if young people sign up at half the rate the administration hopes for, it would nudge premiums up only by a few percentage points, their report says.

“When you do the math, it matters, but not nearly as much as the conventional wisdom suggests,” Levitt says.

Advertisement

I don’t have the numbers or the actuarial tables or the math to do the math, but as I understand the death spiral — it’s a spiral, not a straight line.

That is, rates go up a few percentage points, which doesn’t sound like much if you’re a highly-paid Kaiser Family Foundation expert. If you’re a healthy young person barely making it, those few percentage points mean a lot. So next year they drop their coverage and pay the fine — assuming they overpaid their income taxes and the IRS can actually collect the fine.

Now rates go up a few percentage points more, on top of the typical annual increase. At this new and even higher rate, it makes sense for even more people to think about dropping their coverage in the next year.

And so on.

It’s still too early to tell, but a few percentage points today can quickly add up to whole bunches of percentage points tomorrow.

Recommended

Trending on PJ Media Videos

Join the conversation as a VIP Member

Advertisement
Advertisement