“The design of Obamacare rests on the very assumption that windfall profits from selling younger and healthier Americans more insurance than they need will be enough to subsidize older and sicker Americans,” observed Klein. The law “sells” this insurance to young invincibles in two ways. First, it requires that they — and everyone else — carry health insurance or pay a penalty: the greater of $95 or one percent of income in 2014, rising to the greater of $695 or 2.5 percent of income in 2016 and succeeding years. Second, it subsidizes the purchase of government-approved insurance, which often includes benefits that healthy people — who frequently purchase catastrophic coverage when they buy any at all — do not need and would rather not pay for. The subsidies are based on income, with those with the lowest incomes getting the largest subsidies and those making over 400 percent of the Federal Poverty Level (FPL) getting none. The question is whether the combination of penalty and subsidy will be potent enough to convince young invincibles to flood the insurance market next year. Hogberg’s study, based on Census Bureau data and premium calculations by the Kaiser Family Foundation, concluded that it probably will not. The study found that among 18- to 34-year-olds with no children, millions will benefit financially from choosing not to buy insurance next year and instead paying the penalty, even when the available subsidies are taken into account. Specifically, over 3.7 million individuals — 61 percent of the young invincibles — will save at least $500 if they opt out of health coverage next year, and over three million — 49 percent — will save at least $1,000. “In both cases,” Hogberg noted, “the uninsured comprise the bulk of these individuals. These people have already decided, for whatever reason, that purchasing insurance is not worth the cost. Getting these people to shell out $500 or $1,000 of their own after-tax income is going to be a difficult task, to say the least.” "All of this suggests that ObamaCare’s insurance exchanges may be in some serious trouble very soon. The Obama administration estimated that about 2.7 million 18- to 30-year-olds would have to buy coverage on an exchange next year in order for the system to work. According to Hogberg’s calculations, however, of the 4.3 million 18- to 30-year-old single people who will be eligible for exchange coverage, “about 2.9 million have a $500 incentive to avoid the exchange and about 2.38 million have a $1,000 incentive.” Subtracting either of these figures from 4.3 million comes up well short of the administration’s goal. Should young invincibles succumb to the powerful incentives ObamaCare offers them to remain (or even become) uninsured, the exchanges will enter a “death spiral” of increasing claims costs for those buying coverage, followed by higher insurance rates to pay for those claims, which in turn will drive more healthy people out of the market, and so on, until only the sickest individuals maintain coverage and only a few insurers remain in business, driving premiums even higher." From: thenewamerican/usnews/health-care/item/16389-obamacare-will-lead-to-insurance-death-spiral-study-says
Posted on: Fri, 30 Aug 2013 10:32:11 +0000
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