North Carolina-based producer Teri Gutierrez’s biggest fear a couple of months ago was that not enough of the nation’s “young invincibles”—healthy Americans in their 20s and 30s—would choose to enroll in a healthcare plan under the federal and state exchanges. Without them, choosing Obamacare plans would create a high-risk pool that would drive up rates for all her clients, she said.
“It creates a death spiral for the pool that’s out there because the people who are going to continue to make an effort to get enrolled are the people who are going to use [their healthcare],” Gutierrez said. “They’re the people who have health concerns, or who have been part of the high-risk pools in the past. Consequently, that may cause the coverage to increase dramatically in price, which makes it less attractive.”
Gutierrez added, however, that it was a “wait-and-see” situation as the enrollment process continued.
Now, the Kaiser Family Foundation said the nation has waited long enough to make a verdict: the Affordable Care Act will not cause the so-called “death spiral.”
In a recent study, Kaiser estimates that while the enrollment of young people is currently sitting at 25%--far below the White House’s target of 40%--premiums will likely increase just slightly in 2015.
With this percentage of enrollees in the age 18 to 34 bracket, carriers will have to raise premiums by just 2.4% in 2015 to cover the shortfall and maintain the average 3% to 4% profit margin, the report concluded.
“It is nowhere near what is sometimes referred to as a death spiral,” Larry Levitt, a health economist with Kaiser, told journalists.
Levitt added that a future death spiral is also “highly unlikely” as insurers will want to keep rates low to attract young, health clients.
Producers say that while they’re signing up very few young people in Obamacare plans in general, they have had some traffic from those who would prevent a state- or nationwide death spiral.
“I just finished up a call with a couple of 20-somethings,” said San Diego-based producer Stephen Hurd. “That was out of the norm, but one of my buddies who has an agency similar to mine says a lot of his clients are younger.”
Overall, however, Hurd predicts most young people will wait to purchase health insurance in the new year, or accept the $95 fee which is “nothing” to many young invincibles.