Obamacare at Risk of “Death Spiral

Economist John Goodman, who warned last October that Obamacare could plunge into a “death spiral” if not enough young, healthy people signed up for coverage, says that danger is now “significant” following news that the Obama administration failed to hit its young adult enrollment target.“I think there is a significant problem here,” Goodman, president and CEO of the National Center for Policy Analysis (NCPA), told CNSNews.com. “I think the insurers are worried. I think the administration is worried.“Remember, everybody is facing the wrong price. And sick people are facing a price that’s well below the cost of their care. Young healthy people are being overcharged. And so they need lots of young healthy people to join so they can get the money to pay the bills for the sick people. And the younger people just aren’t buying it.

“Part of the problem, I think, is that it’s been so difficult for people to sign up, and so the only ones who’ve persevered – sometimes trying a hundred times – are people who really have serious health problems.”

A death spiral – the insurance pool equivalent of bankruptcy – occurs when too many older and sicker people sign up for insurance relative to the number of younger, healthier people, Goodman explained, forcing everybody’s premiums up. But as premiums rise, even less young people sign up for coverage.

“That’s what we’re seeing so far,” Goodman told CNSNews.com. “Over half of all the people who enrolled are above the age of 45, and older people are more expensive [to insure]. We’re also seeing 20 percent of the people who are enrolling are going for the gold or platinum plans. Those people tend to be sick. They’re buying the more comprehensive plans because they plan to use a lot of health care.”

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