CP Politics

Monday, Sep 22, 2014

'Obamacare' Failures Make Health Industry Bailout More Likely

  • (Photo: Reuters/Jonathan Alcorn)
    A man fills out an information card during an Affordable Care Act outreach event hosted by Planned Parenthood for the Latino community in Los Angeles, Calif., Sept. 28, 2013.
January 14, 2014|10:44 am

A government bailout of the health insurance industry looks increasingly likely as too few young, healthy people have signed up for insurance on the Affordable Care Act's, or "Obamacare's," new health insurance exchanges.

For the health insurance exchanges to be financially viable, a sizable portion of its enrollees (the Obama administration estimates 38 percent), need to be in the 18 to 35 age range. Without a sufficient number of enrollees from that low-health-costs age group, industry payments to health providers will be higher than expected.

Those higher costs could lead to higher premiums, which could lead to fewer enrollments, which could lead to even higher premiums, and so on. This is known as the "death spiral."

To prevent this "death spiral," a provision was added to the ACA that would bail out the insurance companies who participate in the exchanges if they do not get enough young enrollees.

The Department of Health and Human Services announced Monday that 2,153,421 people had picked out a plan on the ACA exchanges through Dec. 28. About one in four, 24 percent, were in the 18 to 34 range. HHS did not announce, though, how many of those had actually completed the transaction by purchasing the plan.

According to a Reuters analysis of the seven states and the District of Columbia which have data available, only about 22 percent of enrollees are 18 to 34, 13 percentage points less than what the administration says is needed. And that number could be higher than the national average because of the young congressional staffers who are required to enroll in the D.C. exchange.

Uninsured Americans have until March 31 to buy health insurance or they will have to pay a fine – $95 or one percent of income, whichever is greater. It could be, then, that there will be a greater number of young enrollees by the end of March that will make the plan viable.

A December Gallup poll found, though, that about one in four, 26 percent, of those aged 18 to 30 said they would rather pay the fine than get insurance. About one in four, 24 percent, of all age groups also said they were unaware that they were required to purchase insurance under the new law.

In a Monday editorial for Fox News, Sen. Marco Rubio (R-Fla.) wrote that he had introduced a bill that would remove the automatic bailout of the health insurance industry from the ACA. If the ACA is not viable, it should be replaced, rather than bailed out by taxpayers, he argued.

"This is government favoritism and corporate cronyism at its worst, and it's taxpayers that will pay the price unless we stop it," Rubio wrote.

Contact: napp.nazworth@christianpost.com, @NappNazworth (Twitter)
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