ObamaCare Death Spiral Approaching


Aetna is just the latest healthcare insurer to report huge losses on the ObamaCare exchanges. (Aetna Bailing From ObamaCare Exchanges) With their recent announcement of projected losses over $300 million this year, they joined UnitedHealth Group, Blue Cross Blue Shield, Anthem, and Humana who have reported such losses before.

When the initial rollout of the Affordable Care Act was such a disaster in October, 2013, many analysts warned of a pending “death spiral” if not enough young and healthy people enrolled to compensate for the many old and sick Americans who grabbed the chance to get subsidized health insurance. The “death spiral” occurs when the cost of providing insurance is higher than the premiums paid, which forces insurers to raise prices in a market already lacking sufficient enrollees.

Rising premium prices discourages people from enrolling at a time when more enrollees are needed, especially the young and healthy, to offset the high costs of providing healthcare for the sick. When it reaches a point where it is impossible to attract more enrollees because the prices are already too high, the end is nigh.

Death Spiral Near

Homan W. Jenkins, Jr. , writing in The Wall Street Journal, believes we are very nearly there already. The evidence of that is that premiums are rising, but deductibles and copays are rising even faster. For a family of four on a bronze plan (the cheapest available), the deductible is now above $11,000. As he says, this is the equivalent, in the case of routine illness or injury, of not being insured at all.

Combine that with the above-mentioned plight of insurers who are already losing millions, and must raise premiums, deductibles, and copays even higher, and you have the makings of the “death spiral.”

Robert Laszewski, insurance industry analyst, says there are only two kinds of insurers in the marketplace today; the “less worse off” and the “worse worse off.”

It’s no surprise that insurers like Aetna are looking to the government to bail them out. After all, they only agreed to this Faustian pact with the Obama administration because they were promised bailouts in the first three years. Unfortunately for them, the bailouts expire this year and they’re already losing more money than the government can subsidize.

Aetna CEO Mark Bertolini said, “big changes are needed to make the exchanges viable. Risk adjustment, a mechanism that transfers funds from insurers with healthier clients to those with sick ones, ‘doesn’t work.’ Rather than transferring money among insurers, the law should be changed to subsidize insurers with government funds.”

Government Takeover

Progressives like President Obama are secretly delighted to watch this “death spiral” unfold because it will enable them to justify passage of a “public option” that heretofore was politically impossible. Such an option will eventually put the private insurers out of business as the public plans get taxpayer subsidies while the private plans don’t.

This will lead to the inevitable complete takeover of healthcare by the federal government that progressives have wanted for the last hundred years. At that point the main concern will be government control of spending which will be controlled by limiting access to healthcare – just like every other socialized medicine system in the world.

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