I hate to say this. It pains me, but......Obama isn't going to stop this train. Both parties in Congress can howl till the red states turn blue, and he wont stop it. He has already shown total disregard for any law he does not like. The employer mandate delay was illegal. Even Reid admits that. Still...nothing changes. Everyone strap in for the ride, because the fix is in and there is money to be made. I caught this story and learned something new about Obamacare. Note what happens if not enough young people enroll. Death spiral? Nope ...higher premiums....payed for by the government. Seems that when you read the fine print, the insurance companies are guaranteed not to lose money on this gig. The tax payers will be on the hook.
"The talk of a death spiral in recent days has often overlooked a crucial feature of the exchange system that provides a major cushion against the effects of cascading adverse selection, though not against a whole host of other related problems.
This protection is not a function of the law’s explicit risk-sharing and anti-selection provisions — which are designed to protect against insurers’ cherry-picking healthy customers, rather than an exodus of the healthy from the risk pool altogether. Rather, the protection is a function of the design of the law’s exchange subsidies.
An insurance death spiral is a feedback phenomenon — a bad risk pool in Year One causes drastically higher premiums in Year Two which causes an even worse pool that year and on and on. The key to it is that it causes consumer premiums to go up so that only people with high expected health costs (for whom the high premium is still less expensive than staying uninsured) stay in and drive the cycle on. But in the Obamacare exchanges, the subsidy system is intended to prevent people from feeling the effect of annual premium increases after the first year. The subsidies are designed to make sure that each recipient pays only a certain percentage of his income in premium costs. That percentage stays essentially the same year after year, so if premiums get more expensive the government covers the difference.
In other words,
if premiums for coverage purchased in the exchanges were to double or triple in 2015 because of severe adverse selection, people eligible for subsides would still pay the same amount they did in 2014 (assuming their incomes didn’t change) and the federal government would pay for the entirety of the increase. Subsidized beneficiaries would therefore not feel the effect and the healthy among them would not necessarily have much reason to flee the exchanges. "
An Insurance Death Spiral? | National Review Online
and there is this;
"Potentially more important for insurance companies is that they will have to submit their 2015 rates in the spring of 2014. The more claims data they have from 2014, the better they can estimate their 2015 costs. Actuaries are notoriously conservative and could raise rates in 2015 if there are too many unknowns.
The Obama administration has said it’s far too early to consider delaying the mandate or the open enrollment period."
Read more:
Delay Obamacare? Not as easy as you think - Jennifer Haberkorn - POLITICO.com
The fat is in the fire. Guaranteed profits for insurance companies on the taxpayers dime. Public subsidizing private risk...no different than Fannie Mae and Goldman Sachs.
Mussolini would be proud.
