The Washington Post reported Thursday that the Healthcare.gov website isn’t likely to be fully functional by the White House’s self-imposed November 30th deadline. After the site’s disastrous launch on October 1st, the Obama Administration announced a “tech surge” and promised that the site would be fixed at the end of November. The White House will obviously be embarrassed if the new deadline is missed. The bigger consequence, though, is that health insurers will starting panicking.
The core of ObamaCare is built on a pretty simple concept. Insurers could be compelled to cover new benefits and insure sick people, if young and healthy Americans could be compelled to purchase insurance. The premium payments from people who rarely consume health care would cover the costs of those who need a lot of health care services. It’s basically a transfer payment from the young and relatively healthy to the old and relatively unhealthy.
The utter failure of Healthcare.gov has made it harder to attract the young and healthy that are required to make the system work. These individuals are already being asked to make a purchase that is, for many, against their economic interest. Making it difficult to do so makes it less likely they will enroll.
Of the 50,000 individuals who have weathered the federal website and managed to enroll, it is likely that a sizable number of them need health insurance, i.e. they are either old or sick. They had the incentive to wait through hours of crashes and busy signals to see the process through. Nobody who doesn’t really need health insurance, i.e. the young and healthy, is going to do that.
If Healthcare.gov isn’t working on December 1st, it will be almost impossible for millions of Americans to have coverage in place by the January 1st deadline. Insurers will enter the new year with a dramatic increase in the number of sick people they are covering and a host of new benefits and services they have to provide, without the additional premiums they expected.
To make up the shortfall, health insurers would have to again spike premiums for those with existing coverage. This risks creating a death spiral, pushing more people out of the market. The ObamaCare website will eventually be fixed. Missing the November 30th deadline, however, could trigger a collapse of the health insurance industry.