Death Spirals in RepubliCare. Taking away large parts of the Medicaid…

Taking away large parts of the Medicaid program and Obamacare subsidies has a very simple effect on the overall population: it makes the entry cost to access basic health insurance much higher. So making the baseline cost of health insurance higher means more people on the margins are going to go uninsured. Taking away the individual mandate also means more people will go uninsured. Adding the 30% surcharge if you lack “continuous coverage” for 60 days or more (extra 30% premium you have to pay to the insurance co. for 12 months) also means more people will go uninsured until they are so sick that they feel they MUST buy insurance.
Insurance is based on risk pools. The individual mandate was designed to expand risk pools, getting more young and healthy people into the health insurance system. The more you can get these people into the risk pools, the lower everyone’s premiums can be. By creating many incentives for people to go uninsured (as in RepubliCare), your risk pools are going to be drastically altered and premiums will go up way more quickly than the cost of living. This in turn causes even more people to go uninsured, causing the risk pools to be altered again, making premiums go up again, and the cycle continues to repeat. This is what’s known as the insurance “death spiral” and RepubliCare almost guarantees that the death spiral event will happen.

RepubliCare will NOT reduce costs. In fact, it will do quite the opposite. Fewer people will be covered and costs will rise significantly.

Death Spirals in Insurance Risk Pools

Source: http://www.vox.com/2017/3/6/14829526/american-health-care-act-gop-replacement

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