Reflecting on the new Obamacare numbers, Ezra claims that the “risk of a ‘death spiral’ is over”:
The The Kaiser Family Foundation estimates that if the market’s age distribution freezes at its current level — an extremely unlikely scenario — “overall costs in individual market plans would be about 2.4% higher than premium revenues.” So, in theory, premiums costs might rise by a few percentage points. That’s a problem, but it’s nothing even in the neighborhood of a death spiral.
Bernstein, however, wants us to stop “thinking about whether the ACA will ‘succeed’ or ‘fail.'”:
Yes, as Ezra Klein says today, a premium death spiral isn’t going to happen next year (although that doesn’t mean it won’t happen down the road — after all, spirals start slowly!). But that doesn’t mean that health care will indeed be affordable down the road. Or, more precisely, it doesn’t tell us how affordable it will be, and how that will vary for different populations.
Yglesias joins the conversation:
[H]ere’s the problem. The federal Health Insurance Marketplace isn’t a single insurance risk pool.
Because insurance is regulated at the state level, even the “federal” exchange is essentially an administrative mechanism for a couple of dozen separate risk pools. Each state needs a demographically balanced set of clients, it’s not good enough to just be balanced on average. And even though the variance between the different states isn’t huge, it’s not nothing either. The odds that at least one or two states will fall short are much higher than the odds that the federal exchange on the whole will fall short. Now in a sense, a program that works in 48 states is doing a lot of good even if for some reason it doesn’t come together right in North Dakota and Maine (or wherever). But it would be a huge embarrassment for a program that’s already witnessed a lot of embarrassing failures.
Reihan considers other threats to the ACA:
I would emphasize the fact that if the threat of the individual mandate penalty helps keep the risk pool fairly balanced, it will be because there will have been a widespread public information campaign informing people that they are subject to a nontrivial penalty for failing to purchase insurance that at least some people will consider quite expensive (provided that they aren’t among those who’ve had their insurance policies canceled). And if insurers experience significant losses, as seems well within the realm of possibility, taxpayers will be obligated to make up much of the difference. This might be the right policy. It’s not at all obvious, however, that it will be popular. Rigorous enforcement of the mandate and the transitional mechanisms for protecting insurers might both be necessary to get the ACA exchanges up and running and they might endanger the ACA’s political health.
The Dish 