The "death spiral" is the result of trying to insure everyone by raising the cost of insurance to those, like the young, who are healthy and don't use it. Obamacare requires everyone to buy insurance but despite the penalties for not having it, the young still calculate that it's cheaper for them to decline the purchase.
The failure to lure the healthy into the market means that those who are covered are sicker than the general population and thus the insurance companies have to pay more compensation out than what they're taking in. This forces insurance companies to raise the premiums on everyone else which causes even more people to decide that they can't afford it and drives them out of the market as well. As the price goes up fewer people are paying into the system, the government tries to compensate the insurers and subsidize those who can't afford the insurance, but this just makes the burden on taxpayers greater.
Eventually, the whole system collapses under its own weight, at least this is what critics have been predicting will happen in a year or two. McCaughey claims it's beginning to happen now:
The Obama administration is having trouble selling insurance plans to healthy people. That’s a big problem: When the young and healthy don’t enroll, premiums have to be hiked to cover the costs of older, sicker people, discouraging even more young people from signing up.McCaughey has more at the link. The republicans are reported to be coalescing around a plan to revamp the whole system while the Democrats (Clinton and Sanders) want to raise taxes to pay for the subsidies, raise the penalties, and compel people to buy health insurance.
Last Thursday, the administration predicted enrollment for 2016 will be less than half what the Congressional Budget Office predicted in March.
Despite subsidies to help with premiums and out-of-pocket costs, most of the uninsured who are eligible for ObamaCare are saying “no thanks.” Only one in seven is expected to sign up. That’s despite a hefty increase in the financial penalty next year for not having insurance.
Bad enough that healthy people aren’t buying. Worse is that the administration is spending billions of your tax dollars covering up the problem, paying insurers to keep offering the plans, even though they’re losing their shirts. But facts are facts — and there’s no hiding these.
Health and Human Services Secretary Sylvia Burwell predicts ObamaCare enrollment will inch up by 1 million or so, to 10 million people — half what the CBO forecasted. Open enrollment for the coming year, which begins Nov. 1, “is going to be a challenge,” she said.
David Wichmann, UnitedHealth Group’s president, announced higher premiums last week because enrollees will “require more medical services than original expectations.”
Many states (though not New York) are looking at premium hikes of 30 percent or more, according to a new Robert Wood Johnson/Urban Institute analysis. The Heritage Foundation estimates that insurers lost 12 percent selling ACA plans in 2014, with more losses this year.
And to think that Democrats once touted themselves as the party of individual freedom. Times have sure changed. The only individual freedom liberals endorse today is sexual freedom. Everything else they want to make subject to government regulation.