The coming ACA death spiral.

You might have heard that even if only 25% of the enrollees are young adults that the overall costs of Obamacare will increase only 2.4% and a death spiral will certainly not ensue. Assuming that the enrollees don’t skew sicker than expected (we’ll come back to that) there is still a problem – the gender makeup. It is well known that men use fewer health services than women of the same age (until sometime in the late 60’s – after Medicare kicks in anyway). It is also well known that the ACA will not penalize people for being born with two X chromosomes by making them pay more for medical insurance (although car insurance companies are allowed to penalize people for being born with one X chromosome for a simple reason – they cost more as a group).  An interesting article points out that men have a negative subsidy rate up until age 60 while women have a positive subsidy rate at all ages (except age 58).  A new article from Realclearpolitics lets us know that 55% of the enrollees in the exchanges are women.

The exchanges have four basic categories that decide whether it will go all death spirally on us:

  • Age Makeup
  • Gender Makeup
  • Income makeup (wealthy enough to qualify for subsidies)
  • General health of enrollees

So far 82% of enrollees qualify for subsidies.  The age makeup is worse than expected, the gender makeup is worse than expected, and the income makeup is probably worse than expected (I can’t remember, but I think that the general ballpark used by the administration was that 50% of enrollees were expected to qualify for subsidies, not 82%.  Does anyone have a link?).  The only demographic that we don’t have information on is the general health of the pool.  I am going to go out on a limb here and make a prediction – I think in the next year we will find out that the men who actually enroll are turn out to be much more expensive to insure than projected.  That is, the group that Obama expected to pay the tab (young healthy males) just won’t show up.  That will leave a system where everybody is basically guaranteed to get more in services than they pay in insurance.  Since someone will have to pay, and those in the exchanges won’t we can expect back door payments to health insurance companies.  Expect Democrats to talk about how evil insurance companies are for pursuing profit and Republicans to talk about how the service is an “essential part of the American dream” and more than half of both houses to vote for bailouts of the insurance companies – as long as new regulations are passed and a few parks and roads funded at the same time.  If we have a squish in office even expect to hear how he will have to “abandon the free market in order to save it” or some such nonsense.  What we should not expect is for Mitch or Boehner to say:

“Obamacare has failed.  There will be no more funding for this failed model.  The exchanges have caused unprecedented harm to the only way to actually provide health coverage – employment.  As such we are pursuing a path that will improve the business climate in this country and will have as a direct result better health coverage for all working adults.  We will continue to work to improve options for those who cannot work, such as those on SSI, SSD, and Medicare.  To the rest of the American people I say this – get a job.”

Links aren’t working correctly for me today, so I am pasting them below


Gender equity and the Affordable Care Act