Tuesday, October 22, 2013

The Death Spiral

I flipped over to MSNBC after the Presidents Rose Garden infomercial for the Affordable Care Act yesterday to see how those on the left would A) Blame the Republicans for the problems associated with the rollout of ObamaCare and B) Carry on the President's sales pitch that the ACA has been a "great success so far".  (The answer to "A" was to blame the government shutdown for creating all kinds of "confusion and worry" for health insurance consumers.  The answer to "B" was "look at all the unemployed 25 year olds getting insurance through their parents!")

But one topic that the talking heads kept expressing the greatest concern about (despite the show host--Alex Wagner's--best efforts to steer them toward less gloomy subject matter) was the potential Death Spiral that swirls just below the surface of ObamaCare.  In a nutshell, the only way the health care exchanges are going to work as the designers of the ACA hope it will is if large numbers of young, healthy people buy policies with inflated premiums in order to allow older, sicker people to purchase policies at artificially low rates.

And that is where the greatest concern lies with the failure of the HealthCare.gov website.  Young, tech savvy people--already leery of being "legally required" to buy health insurance that they may not see financial value in having--aren't going to try 25-times to log in and register.  The handful of people who actually were desperate to buy health insurance--and who will ultimately cost the providers in the exchanges the most money--will try and try and try (or wait until a taxpayer-funded "helper" comes to their door with the forms and pens) until they get their tax credit and their subsidized health care.

If those "Young Invincibles", as one of the pundits called them yesterday, stay away from the exchanges in droves--the death spiral is set in motion, as the insurance companies (who cannot operate at a continuous loss like a government entitlement program) have no choice but to jack up rates on all premiums--making the policies even less appealing to those least likely to file claims and the whole system collapses.

Ms Wagner tried to argue that the "Young Invincibles" will buy into the system for no other reason than "it makes financial sense" and to not do so would be "breaking the law".  Apparently she has forgotten that she is talking about the "financially smart" generations that took out huge student loans so they could live off-campus at a private school for six years while getting a degree in a field that nobody is hiring in--and who bought everything they wanted when they wanted on credit cards.  And as far as being afraid of "breaking the law", she might want to check out the rates for underage drinking, recreational drug use and texting while driving.

My advice would be to remain seated and keep your hands and arms inside the car at all times until the Death Spiral comes to a complete stop.

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