Liberal Forum

Obamacare Is Not in a Death Spiral

"Death spiral” is an actual technical term in the insurance industry, used by actuaries to describe a rare sequence of events that leave a once profitable insurance product a heap of smoldering metal.

Whenever I heard it brought up, it was done so in a hushed voice, because once a product went into a real death spiral, all that was left was to lead it out into the woods, tie it to a tree, and shoot it in the head.

Paul Ryan likes to talk about death spirals when he talks about Obamacare, not because he is actually describing one but because “death spiral” sounds real scary, maybe even to him.

Death spirals are very rare insurance events that require something to happen that causes relatively well people to withdraw from an insurance plan, leaving most of the truly sick behind.

The spiral comes when the insurance company raises prices in order to pay for this greater proportion of sick people, and this price pressure causes even more of the healthier people to leave the plan, which then causes another sharp price increase, followed by more attrition, and on and on until it’s time to lead old Rover out into the woods for that last walk.

This is simply not happening with Obamacare.

There is no attrition of healthier people going someplace else.

There is no increase in the proportion of the sick in the covered population as a whole.

Obamacare has been expensive, but then what would one expect if one starts to suddenly insure millions of people who had not had insurance (and treatment) for years or decades?

And while the price of Obamacare policies did increase, a lot, over the course of several years for a number of reasons, the main one was that the original policies were not priced high enough to begin with, because no one had any way of knowing how sick these people would prove to be.

That anyone would still be breathless in astonishment about any of this, that sick people used doctors and hospitals and this turned out not to be free, is rather astonishing behavior for adults.

So the technical requirements of a death spiral are not there for the ACA.

But the current Republican plan to defund Obamacare will definitely lead to one.

And when it does, we can then blame Ryan and his pals for making it happen.

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Death Spiral, Debunked: Facts Undercut Major Argument for GOP Healthcare Plan

Republicans have spun a lot of stories in their desperate attempt to sell the repeal of the Affordable Care Act (ACA), or Obamacare—and among their favorites is the narrative that the law is "imploding," in a "death spiral," or otherwise doomed to fail.

There are two problems with that argument.

First of all, Obamacare is not, in fact, "collapsing."

And secondly, to the extent the ACA is experiencing problems, much of the blame can be placed directly at the feet of Republicans and the insurance companies to whom they are beholden.