Washington Examiner: Higher Premiums Could Lead to “Death Spiral”

A recent blog post in the Washington Examiner examines the impact of the health care reform law on health insurance premiums.  The article points out, “Should premiums continue to rise, more and more uninsured Americans are going to choose to pay the penalty rather than purchase expensive insurance. And those who go without insurance are more likely to be the ones who can afford to do so — young and healthy Americans with limited medical expenses. Should this occur, insurers would have to raise premiums even more to subsidize the expenses of the sicker beneficiaries they must cover under the law. This, in turn, would cause additional people to forgo insurance and pay the fine. And so on. This is known in the health care policy community as the ‘death spiral’ and it’s one of the biggest threats to the structure of Obamacare.”

AHIP has raised concerns about the impact that major provisions of the law will have on premiums, particularly the new $100 billion health insurance tax, new age rating restrictions, and minimum essential health benefits requirements that are much broader than what many people purchase today. As AHIP said in recent comments submitted to regulators, “Higher rates for the younger population combined with low mandate penalties during the first years of the ACA implementation will result in adverse selection because younger individuals are likely to choose not to purchase coverage. When these younger individuals do not enroll, destabilization of the individual market will occur, premiums will increase in the individual market for enrollees of all ages, and enrollment will decline.”

For more information, check out “Time for Affordability” on AHIP’s website, www.AHIP.org/Affordability.

This entry was posted in ACA, Health Care Costs and tagged . Bookmark the permalink.

Comments are closed.