The Health Care Blog at the Health and Human Services website routinely recounts the experiences of people signing up for health insurance on the ObamaCare exchanges. But what HHS often considers a “success story” is in fact an example of why the exchanges are likely to fail. For example:
One of the most important benefits of the Affordable Care Act is that insurance companies will no longer be able to turn you down or charge you more because you have a pre-existing condition.
This is good news for Americans like Diane, an attorney from Michigan. Recently, Diane enrolled for coverage using HealthCare.gov after going without insurance for over six years. Her pre-existing condition made finding a quality, affordable health insurance plan nearly impossible
As many critics have warned, the rules governing the ObamaCare exchanges like community rating and guaranteed issue would make the exchanges more attractive to folks who were older and sicker and less attractive to the young and healthy. The leads to a “death spiral” or, as the case may be with ObamaCare exchanges, a bailout for the insurance companies and then a death spiral. The story of Diane suggests that this process is in the beginning stages.
The HHS blog has quite a few similar examples. There’s Jacob:
Before the passage of the Affordable Care Act Jacob, a father of three from Arkansas, was forced to shop around for a high-risk insurance plan.
Jacob’s pre-existing condition also forced his three children and wife to be on a separate health insurance. When the family included Jacob in his plan, they were denied coverage. That’s not all, says Jacob:
“Even with my wife and kids on a separate plan, one of my sons is charged extra because he had trouble gaining weight after he was born.”
When soccer is your passion, not being able to hold down food because of an esophagus condition called Esophagitis is a roadblock.
“I struggled a lot with the condition these last 5 years, living without health insurance. Solids and liquids don’t go down easily, and throwing up a lot makes it very hard to get the nutrition I need as an athlete.
My employer doesn’t offer health insurance, and I’ve tried to get coverage through the individual market and couldn’t because I was either denied coverage or would have to pay 4 or $500 a month, way out of my price range.”
For James, a 29 year old in Pensacola, FL, a normal week involves hunting, welding, fishing, and before January 1st, worrying about his lack of health insurance.
“I’ve always been able to afford health insurance—they just wouldn’t cover me, because I’m a diagnosed diabetic. Being without health insurance was terrifying because you could be bankrupted by someone else not paying attention on the road. Or what if something bad happened in the shop?”
Thanks to the Affordable Care Act, James was able to enroll in coverage without worrying about his pre-existing condition.
People who are costly to insure and some getting premiums well below what they’d get on a less regulated market—in the long run, there is only one way this ends.
Of course, that depends on whether these examples are representative of many of the people signing up on the exchanges. Surely, a few anecdotes do not add up to data.
For that, let’s turn to the most recent enrollment report. Or, rather, let’s turn to Spencer Cowan’s recent analysis of the enrollment report. At the Weekly Standard, Cowan explains why the choice of plans that exchange enrollees are making is indicative of trouble to come. He notes that the silver-level plans
which represent 60 percent of all plans sold to date through the Obamacare exchanges. In fact, the silver-level plans are three times more popular than the cheaper bronze-level plans and sixty times more popular than the cheapest catastrophic-level plans, which are available only to enrollees under 30 years old.
Why would someone opt for a silver-level plan over a cheaper bronze or catastrophic-level plan? The most plausible explanation is that the enrollee anticipates incurring significant medical expenses over the coming year, which is to say that he’s not healthy.
Cowan goes on to explain why they would choose silver over the even more generous gold- and platinum-level plans. In short, though, the evidence suggests the exchanges are creating exactly the type of insurance pool that is headed for a death spiral.