The Obamacare 'Death Spiral' Reinterpreted

Philip Klein parses the “death spiral” scenario, where the individual market tanks “if insurers are stuck with a disproportionate number of older and sicker enrollees with high medical claims without a sufficient number of younger and healthier participants to offset the costs.”

“What’s been largely lost in the ongoing discussion … is that there isn’t one Obamacare ‘risk pool’ and thus, there isn’t one potential ‘death spiral.’ In reality, there are 51 different risk pools (for each state plus the District of Columbia), which means 51 chances to get things right, as well as 51 possible death spirals.”

“Under such a scenario, in which there are a certain number of state-based death spirals, insurers may simply choose to exit the individual market in under-performing states.”

“Such a set of circumstances could scramble the current health care policy debate.”

With Republicans unable to repeal Obamacare and Democrats struggling to “dig in” amidst the collapse of individual markets, “this could produce a result under which Obamacare remains the law of the land, but states are given more flexibility, even the ability to opt out of the program.”


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