Time Expiring for Obamacare to Avoid Death Spiral

The dreaded “death spiral” for Obamacare is looking more like a reality. With 2.2 million Americans having signed up for Obamacare from October 1 to December 28, older, sicker pools of enrollees (ages 45-64) are outnumbering the younger, healthy enrollees (ages 18-34) by a margin of 55% to 24%.

According to a new Kaiser Family Foundation report, Obamacare will need about 40% of enrollees to be young, healthy adults to “cross-subsidize” the older and sicker participants. “If enrollment among young adults falls short, then the total amount of premiums collected by insurers will be less than the total health care expenses of enrollees plus administrative overhead and profit,” the report states. “And, if insurers believe that those enrollment patterns will continue into 2015, then they may raise premiums higher to compensate for the loss.”

What’s more, for the Affordable Care Act to be “affordable,” the Obama administration needs over seven million total enrollees by March 31. Yet, being more than halfway past the sign-up period, they’re at less than one-third (31%) of their goal. HHS Secretary Kathleen Sebelius and others in the administration have tried to mask the insufficient turnout so far by adding Medicaid enrollees to bolster the numbers. 

However, that doesn’t help the insurance companies increase revenues since Medicaid recipients don’t pay for their care, other than some minimal co-pays. Enrollment “has been a bust so far,” said Brendan Buck, spokesman for House Speaker John Boehner (R-OH). “It’s no surprise that young people aren’t rushing to sign up.” 

Now, in an attempt to enroll more young adults, both the federal and the state exchanges are engaged in a vigorous advertising campaign. On Thursday, California will commence a “YouTube campaign” deploying comedians, celebrities, and athletes to “speak to young people about why health reform is so relevant to them.” Though it’s led by California, the “Tell A Friend, Get Covered” campaign is nationwide.