Looking at the same official enrollment numbers that Jonathan Cohn used earlier today to discuss the broad range of issues about Obamacare implementation, Ezra Klein is willing to make a flat, important statement:
The risk of a “death spiral” is over. The Kaiser Family Foundation estimates that if the market’s age distribution freezes at its current level — an extremely unlikely scenario — “overall costs in individual market plans would be about 2.4% higher than premium revenues.” So, in theory, premiums costs might rise by a few percentage points. That’s a problem, but it’s nothing even in the neighborhood of a death spiral….
That calculation, however, omits the transitional policies in Obamacare that help insurers keep premiums low as the risk pool sorts itself out over the first three years. Add those in, and it’s unlikely that 2015 will see any premium increase at all. Robert Laszewski, a consultant for the insurance industry, agrees. “I think the 2015 rates will be the rates you’re looking at today, more or less,” he says.
Ezra goes on to note it’s important to keep in mind there’s no national “risk pool,” and enrollment-driven premiums will vary from jurisdiction to jurisdiction. But the health status of enrollees is at least as important as their age, and again, so far there’s no clear evidence of a crisis.
So next time you hear gabbers confidently talking about the “death spiral,” feel free to ignore them or ping them to update their talking points.
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