Econoclasm Chapter Two, continued: The Death Spiral

It ' s been a few days since the last post in this series, so I ' ll remind you that last time, we posed the question, " What would happen if insurers were simply required to cover people for pre-existing conditions? " Problem solved, right? No. Problem made worse. Imagine what would happen. All of a sudden a whole lot of people with serious chronic diseases, who couldn ’t get health insurance before, will buy it now. They’re expensive to cover, so the premiums will go up for everybody. At that point some number of people who don’t need it quite as badly will drop their coverage, leaving only sicker people in the “pool,” and the price will go up more, whe reupon even more not-so-sick people will drop their coverage and eventually the premium would have to cover the full cost of treating people with expensive chronic conditions, which means the insurance would be worthless, and nobody could afford it. This is called the Death Spiral. Since the ACA requires insurers to offer coverage for pre-existing conditions, it was because of this concern that it originally included an individual mandate – people who didn’t have insurance through their employers, Medicare, Medicaid or some other source were required to purchase insurance or pay a penalty. So why wasn’t there a death spiral when congress eliminated the individual mandate effective in 2019? It turns out that the subsidies for lo w and moderate income people in the ACA are sufficiently generous that r...
Source: Stayin' Alive - Category: American Health Source Type: blogs