2013
From the New York Times, December 4, 2013
Because insurers on the exchanges cannot discriminate by pre-existing conditions, applications do not ask questions that would indicate the health of enrollees, said Cori Uccello, senior health fellow at the American Academy of Actuaries. So while insurers will know the ages of their new customers, they won’t know their health status until they start filing claims next year.
But the health law contains important provisions to prevent a “death spiral,” in which a population too heavily weighted to the old and sick drives up premiums, pushing healthier enrollees out, resulting in even higher premiums, said Stan Dorn, a senior fellow at the Urban Institute’s Health Policy Center.
Between 2014 and 2016, a temporary tax on health plans will pay for most of the claims of high-cost enrollees while lowering premium costs for everyone else. Over the same years, “risk corridors” ensure that health plans that collect far more in premiums than they pay out in benefits pay into a fund used to help plans that pay unexpectedly high benefit costs. A permanent feature mandates that health plans that enroll a disproportionate number of sick patients receive payments from plans that “cherry pick” a healthier population.
Most important, Mr. Dorn said, younger enrollees, who also tend to be less affluent, will receive tax subsidies. If premium prices spike, the government will absorb that cost, ensuring they do not flee the exchanges.
“Lower-than-expected enrollment probably will mean average risk levels will go up, but that’s not the end of the world,” he said.
What a way to run a business. Does this sound like a workable long-term strategy? Employer plans subsidize the marketplace risk, one insurance company subsidizes the risk of others and if that fails, the government just pays higher subsidies. Given the pressure on premiums and legal spending limits to begin with, what are the chances an insurer will collect far more in premiums than they pay out in benefits? And how can any exchange plan cherry pick the population considering nobody can be turned down, benefits are regulated and mandated and premiums are subject to state and federal review?
Regardless of how you feel about Obamacare, I hope you agree that to be successful it must stand on its own with premiums fully supporting costs.
But hey! If not, “The government will absorb that cost, it’s not the end of the world.” 😕
QUINNSCOMMENTARY 
“The government will absorb that cost, it’s not the end of the world.” That attitude is one that really irks me. I actually wrote the Wall Street Journal’s editorial page to point out that this is not the “government’s” own money, and they shouldn’t call it that. The govt. never had a paper route. If Obamacare needs to be bailed out, it is the _taxpayer_ not the govt. that will be tapped to do the bailing. I wish the newspapers would recognize the difference and phrase it correctly.
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You are right of course, but good luck with getting out the facts.
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Unfortunately, all i see in much of the discussion on premiums and tax credits /subsidies is a whole lot of wealth, money being transferred around from one entity to another. Primarily, i would say so- so that obama care survives despite its overwhelming lack of popularity.Its a rigged game. In the end its always the government(that means us tax payers) that does the bailing out.
SO tell me what is the difference between these money transfer schemes and bailing out say….General Motors?
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