Here is an abbreviated version of the full text of Mr Herrick's thoughts on just how the Affordable Care Act(ACA) or better known as ObjmaCare, will slowly but surly implode. As resent news from insurer United Heath on their intended pull-out of from the ACA as they are losing $100's of millions of dollars from this association, and as they are one of the largest insurers in the country, and as Mr Objma's Pastor from Chicago has rallied on many occasions, the ACA's 'chicken are coming home to roust'.
(Read the entire article here ; http://healthblog.ncpa.org/research-explains-why-the-obamacare-marketplace-is-slowly-failing/ )
Research Explains Why the Obamacare Marketplace is Slowly Failing
By Devon Herrick
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!
Writing in Forbes, Conover cautions this bad deal is expected to get worse as premiums rise (due to excessive regulations and probably a dollop of adverse selection). Conover points to research by Stephen Parente that estimates the premiums for bronze plans could double over the next year or so.
How will this play out? Here is what I predict: initially, moderate-income families are excited about getting coverage for a reduced rate.
As time goes by, bills pile up, the car breaks down, the truck needs new tires, etc. Maybe an addition to the family is born, but daycare is now a burden. The couple calculates what their coverage is costing, say, $100, maybe $200 a month after subsidies. But their coverage has deductibles so high most doctor visits are paid out of pocket. They reason dropping their coverage will allow them to get caught up on some bills and they can enroll again at the next open enrollment. But at the next open enrollment, premiums are much higher than they anticipated. As this goes on, more and more people will decide the penalty is better than the cure.