From Devon Herrick at healthblog.ncpa.org:
With great fanfare, the U.S. Department of Health and Human Services issued a press release in mid-October estimating enrollment in the Obamacare Marketplace (i.e. the exchange) at 10 million by the end of 2016. HHS Secretary Burwell said, “We believe 10 million is a strong and realistic goal.”
Before you burst out with excitement, keep in mind enrollment for 2015 is estimated at 9.1 million. As recently as March 2015, estimates by the Congressional Budget Office (CBO) projected 21 million would sign up in 2016. Enrollment is only about half what the CBO originally estimated and is likely to gradually decline into what actuaries sometimes refer to as an adverse selection death spiral.
In a nutshell, Obamacare exchange plans are premised on the idea that young healthy people would be overcharged to help pay for older, less healthy enrollees – who would otherwise find their coverage unaffordable if charged premiums based on their health risk. In theory, sliding-scale subsidies would make premiums affordable for moderate-income families, while the law would force healthy, wealthier families to subsidize the poor and those in poor health. The only problem: people know when they are getting a bad deal and resist in any way they can!
This was tried once before in the 1990s. At the time, states passed perverse regulations to force insurers to accept all applicants — including people in poor health — at rates reflecting average health in a community rather than individual health status. What happened was young people (who already had lower demand for health insurance because they were healthy) were charged too much and abandoned the market. As healthy people dropped out, sicker people remained in the insurance market. As this progressed, the risk pool of enrollees that remained became increasingly costly to ensure. Premiums increased in response to higher costs of the remaining enrollees, prompting an new round of healthier enrollees to drop out.
To continue reading: Research Explains Why Obamacare is Failing
