No, ‘ObamaCare’ is not in a death spiral

Posted by AzBlueMeanie:

The Tea-Publican political strategy for the 2014 midterm elections is a single issue campaign: repeal "ObamaCare" (second verse, same as the first). Tea-Publicans have convinced themselves from their own GOPropaganda in the bubble of their conservative media entertainment complex feedback loop that "ObamaCare" is a trainwreck and is in a "death spiral."

The Tea-Publican political strategy does not allow for entertaining any fixes to "ObamaCare" to make it work more efficienty. This is what happens when you have demonized something as satanic and evil. Repeal has become a religious crusade for the GOP. One doesn't compromise with evil.

A number of commentators are sounding a warning of an "ObamaCare trap" for the GOP based upon its repeal only stance. The GOP has long since abandoned its "repeal and replace" lie. There is no consensus on a GOP alternative ("ObamaCare" IS the the GOP health care plan; it was crafted by the Heritage Foundation and implemented as RomneyCare in Massachusetts), although Rep. Tom Price's really bad bill has emerged as the point of discussion among the GOP.

Repeal leaves the GOP advocating for a return to the old broken health care system that no one was happy with. Moreover, this would mean taking away health care benefits from millions of Americans who now have access to health care, many for the first time in their lives. "No health care for you!" is not a winning political strategy.

Greg Sargent reports in the Morning Plum: Despite O’care rollout, Americans want to expand safety net that a New York Times/CBS News poll which is being reported by the lazy media as "the uninsured disapprove and are skeptical of ObamaCare," also finds:

* A majority of Americans says “providing access to affordable health care coverage for all Americans is the responsibility of the federal government,” by 54-43.

* A majority says that “when individuals don’t have health insurance,” it “hurts the country,” by 70-22.

* A majority says “providing health care coverage for the poor is the responsibility of the federal government,” by 53-41.

So it appears majorities still believe government’s proper role is to expand coverage to as many people as possible, and that so doing will make the country a better place. Also:

* Only 37 percent support repealing Obamacare entirely, while 53 percent say there are good things in the law and that changes are needed to make it work better.

* Only 41 percent say the law goes too far in changing the health system, while a total of 50 percent say it doesn’t go far enough (28) or is about right (22). All this, at an absolute low point.

All these things may be related. This is admittedly speculative, but one reason majorities may be unwilling to give up on the law, even though they disapprove and are skeptical of it, may simply be that many Americans support government doing something about the problems Obamacare is designed to solve, and don’t believe there is any other set of viable solutions out there. (With single payer being a political impossibility, they’re probably right.) Indeed, an October Kaiser poll found that only 13 percent want to repeal Obamacare and replace it with a generic GOP alternative. In short: The Affordable Care Act is it.

The same poll finds that 73 percent of the general public and 70 percent of the uninsured disapproving of the GOP's handling of health care. In other words, Americans do not trust the GOP on health care.

The New York Times' Paul Krugman and the Washington Post's Sarah Kliff write that the GOPropaganda talking point that "ObamaCare" is in a "death spiral" is not supported by the evidence. Krugman: The Non-death Non-spiral:

The glums of October, when the launch of healthcare.gov turned into a debacle, convinced many — in fact, just about all — conservatives that Obamacare was doomed, doomed, doomed. But the IT side is working much better — not as well as it should, but it’s getting there, and enrollment is rising fast.

So what’s a doomsayer to say? You could reconsider in the light of the evidence, but it’s virtually a defining characteristic of modern conservatism that you don’t do that sort of thing. So now prophecies of doom rest on predictions of a “death spiral” in which young, healthy Americans don’t sign up, leading to high premiums, leading to further dropouts, etc..

It’s not going to happen, even though the people who have signed up so far do tilt older. This was expected, by the way — the same thing happened in Massachusetts.

The point is that while the death spiral story sounds good, especially if you’re rooting for failure, you have to do the numbers. And they don’t work, as Sarah Kliff reports. Even if the young sign up at only half the rate of the rest, rates will go only a few percent higher.

Why? As the study Kliff cites explains, the key point is that while Obamacare does impose community rating — no discrimination based on medical history — it doesn’t eliminate age-based rating; it just limits the range of age-based variation in premiums. So while young enrollees are, to some extent, subsidizing their elders, it’s not nearly as big a deal as people imagine.

In short, the age profile of enrollees is interesting, but not a reason for either glee or nail-biting anxiety.

Here is the Sarah Kliff post to which Krugman refers. Why Obamacare won’t spiral into fiery, actuarial doom:

The rumors of an Obamacare death spiral have been greatly exaggerated.

So say Larry Levitt, Gary Claxton and Anthony Damico, experts at the Kaiser Family Foundation who have put together a new brief analyzing what would happen if young adults snubbed the Affordable Care Act. Even if young people sign up at half the rate the administration hopes for, it would nudge premiums up only by a few percentage points, their report says.

"When you do the math, it matters, but not nearly as much as the conventional wisdom suggests," Levitt says

The worry tends to go something like this: If young adults don't sign up for insurance coverage through the exchange, then the market loses a wide swath of very healthy enrollees — and wouldn't have enough people to help pay the claims of the sicker, older subscribers. Without enough young people to subsidize the costs of older enrollees, insurers would instead raise premiums to cover the higher costs. And that would make coverage less desirable to young shoppers in 2015.

Or, if you prefer a bit more hand-wringing: If enough young people don't sign up for Obamacare, premiums spike, the market goes into a "death spiral" and the health law is doomed.

Levitt has already warned that fears of this alleged death spiral are likely overblown. Now, he, Claxton and Damico put a few numbers to the argument. First, they start with an analysis of who is actually in the market of people eligible to buy coverage on the exchange. These include those currently in the individual market and the uninsured who earn too much to qualify for the Medicaid program.

* * *

"Your ideal, as an insurer, is to get a proportional mix of enrollees," says Levitt.

That's what the White House has aimed for: Officials there have estimated that, if 7 million people enroll in 2014 (as the Congressional Budget Office has projected), 2.7 million of them, or 40 percent, need to be under age 35.

Levitt and his colleagues then modeled what would happen if these people didn't show up. There's already some evidence that insurance plans are getting enrollees that skew older; in California, for example, only about a quarter of their sign-ups are under 35. Most health policy experts expected the first wave of enrollees to skew older, with the younger population to follow.

But to see what would happen if this trend continued, the trio used data on typical health care costs for older and younger people to figure out how bad that would be for the exchange.

If young adults (those under 35) were 25 percent less likely than the rest of the population to sign up for Obamacare, they would represent 33 percent of exchange enrollees — rather than 40 percent. This means there would be fewer young people to subsidize older insurance subscribers. To make up that difference, the experts estimated, insurers would need to increase premiums by a terrifying … 1 percent. Yes, exactly 1 percent.

Levitt, Claxton and Damico also tested a scenario where young adults are half as likely as older shoppers to enroll. In that case, the younger enrollees would make up only a quarter of the exchange market. Premiums would fall 2.5 percent short of covering subscribers

"I had a general sense it wouldn't be giant, but this was even smaller than we expected," Levitt says. "It's not a terrifying number."

So, given that this review found such small effects, do young people really matter that much at all to Obamacare's survival?

"I think it shows age is important, but not super important," Levitt says. "And that also depends a lot on your perspective. An increase of 2.5 percent isn't going to precipitate a death spiral. When premiums are going up pretty slowly though, you ideally wouldn't want to add another 2.5 percent increase in 2015."

For insurers, Levitt argues, a situation where medical spending is 2.5 percent higher than premiums paid in could be noticeably detrimental, given that insurers typically run profit margins around 3 percent to 4 percent.

"When you're talking about profit margins around there, they might not lose money, but they might not make that much, either," Levitt says.

As for a death spiral, Levitt and his colleagues' research suggests that's a very unlikely outcome — no matter what the doomsayers might be predicting.

So that obnoxious "Kochtopus" Americans For Prosperity ad which keeps airing on television here in Southern Arizona with that innocuous blonde lying about "ObamaCare" is just more right-wing propaganda bullshit. Fact Check: AFP's 'Pants on Fire' ad about 'ObamaCare'.

UPDATE: The DCCC has launched the website Faces of Repeal: Real Stories About the Cost of Republicans' Health Care Agenda, which features people describing what returning to the old health care system would mean to them in concrete, real life terms.

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