Wednesday, April 20, 2016

Death Spiral or No Death Spiral - A Summary from One of My Favorite Econ Bloggers

From Mish
... Obamacare Death Spiral Debate 
No Death Spiral: Dr. Mandy Cohen, the chief operating officer of the Centers for Medicare and Medicaid Services (CMS), said in an interview that there is “absolutely not” a risk of a death spiral or collapse in the ObamaCare marketplaces. 
Death Spiral or Premium Hikes: Michael Adelberg, a former CMS official under President Obama and now a consultant at FaegreBD had this to say: “Given that most carriers have experienced losses in the exchanges, often large losses, it only makes sense that most exchange insurers will request significant rate increases for 2017.” 
Adelberg added “Market exits are not out of the question if an insurer is looking at consecutive years of losses and regulators are unable to approve rates that get the insurer to break-even.”
Death Spiral, Not Tomorrow, Possibly Later: Blue Cross of North Carolina CEO Brad Wilson said in an interview that the company had lost $400 million due to its ObamaCare business. Wilson said he is not worried about a death spiral happening “tomorrow,” but has concerns if the situation does not change over time. 
Death Spiral: The most prominent insurer eyeing the exits is UnitedHealth, which made waves in November by saying it was considering whether to leave ObamaCare in 2017 because of financial losses. The company last week announced that it is dropping its ObamaCare plans in Arkansas and Georgia, and more states could follow. 
No Death Spiral: The Department of Health and Human Services argues that the attention on UnitedHealth is overblown, given that the insurer is actually a fairly small player in the marketplaces. 
Debate Winners and Losers 
  1. The winner in this debate is “death spiral or premium hikes” 
  2. The loser in this debate is the public. ...