Sarah Kliff summarizes a new report from Kaiser:
If young adults (those under 35) were 25 percent less likely than the rest of the population to sign up for Obamacare, they would represent 33 percent of exchange enrollees — rather than 40 percent. This means there would be fewer young people to subsidize older insurance subscribers. To make up that difference, the experts estimated, insurers would need to increase premiums by a terrifying … 1 percent. Yes, exactly 1 percent.
Levitt, Claxton and Damico also tested a scenario where young adults are half as likely as older shoppers to enroll. In that case, the younger enrollees would make up only a quarter of the exchange market. Premiums would fall 2.5 percent short of covering subscribers.
And that kinda makes the whole death-spiral argument a bit of a red herring, no? Kilgore comments:
If these numbers are accurate, the widespread assumption (particularly among happy Republicans) that there’s nothing ahead for exchange enrollees beyond “sticker shock” forever could give way to the expectation that Obamacare will eventually be self-stabilizing, at least for most enrollees.
Not everything in the ACA was as incompetent as the website. Adrianna McIntyre identifies more reasons to stay calm:
For the market to unravel, you need fundamentally broken risk pools, not a bad year chalked up to a bad website. Considerable time and resources have been invested in the ACA (see also: the industry bending over backward to accommodate the administration’s mercurial deadlines).
And market power is at play here, too. The new exchanges represent a pretty substantial slice of the potential individual market consumer base; the more enrollees an insurer has, the more power it wields for negotiating prices with providers. Exiting the exchange is likely to be accompanied by a pretty substantial blow to that market power.
There’s one last crucial variable: we don’t actually know what level of risk the insurers baked into their premiums. Obviously they couldn’t anticipate website woes on the scale that we’ve observed in the last three months, but I find it hard to believe that they’d draw up projections that assume a perfectly balanced risk pool from the start. Call me crazy, but something makes me think that actuaries are better at hedging than the blogosphere.
The Dish 