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ACA Fail Fractal
Obamacare: Sicker, More Expensive Than Ever

The more they learn about Obamacare, the more nervous insurers get. New data is out on the 2.2 million people who signed up for insurance by the first signup deadline (December 24), and the pool is much older than the general uninsured population. Avik Roy breaks down the numbers:

Here are the key figures. 59 percent of non-elderly adults who selected an exchange plan were older than 45, compared to just 32 percent of the uninsured population: a skew of 27 percent. On the other hand, 25 percent of non-elderly adults who selected an exchange plan were younger than 35, compared to 47 percent of the uninsured: a skew of 22 percent, for a total skew of 49 percent (27 plus 22).

As the WSJ reports, insurers hoped that the percentage of non-elderly adults under 35 would be closer to 40 percent, rather than the 25 percent we actually see. With the current rate, they are worried that they won’t have enough young people in the new pool to balance older, sicker patients, that and they will have to raise premiums as a result. Before this data came out, the Kaiser Family Foundation said that it would be a “worst-case scenario” if only 25 percent of non-elderly enrollees were in the 18-34 age group by the end of open enrollment on March 31st of this year.

That’s still more than two months away, so the administration certainly has time to pull the numbers up. Other considerations also suggest this isn’t as bad as it might seem: Massachusetts’s Romneycare also saw more young people enroll as time went on, and age is not always the best way to measure demand. But if rates continue to hover near that 25 percent, the Kaiser Foundation paper says, costs would exceed premium revenues by about 2.4 percent. So to get to profitability, premiums would certainly have to go up. Kaiser thinks that the necessary increases probably wouldn’t trigger a death spiral, but it would certainly make the law more expensive than ever.

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  • qet

    I would like to think that the results of the ACA will put to rest the epistemological fallacy of modern US politics, which is that the right way to know what “the people” want in the nature of policy is to be found in last week’s polls and surveys. I expect that well over 50% of all the young adults who have thus far not signed up voted for Obama, twice if they were eligible. I also expect that a not-insignificant fraction of them have responded to polls or surveys, or signed petitions or what have you, indicating that they strongly favor the federal government providing health insurance to everyone. And there is not one policy wonk or babbler, on either side of the aisle, who does not preface or punctuate his or her wonkery or babbling with the phrase “studies show,” or “the data show,” or “according to a recent poll” or some such. Yet here we are, seeing that actual behavior in the target demo is very wide of the mark set by polls and studies and data. Many people predicted this would be the outcome, reasoning from their knowledge and understanding of human nature and history, only to be met with scorn, if not outrage, and cries of “the plural of anecdote is not data!” or “you are not doing evidence-based analysis!” Not only are modern wonks and babblers unable to reason correctly from premises, they are unable to understand what correct premises are in the first place.

    • mc

      Exactly right. I’d go further: the New Deal/ New Frontier/ Great Society governance model presupposed a well educated caste of leaders and officials. To our discredit, our major universities got out of the serious education game a generation ago. Their recent products are much more adept at detecting thoughtcrimes than at serious analysis. They are good at demonizing and spinning, and thus at debased forms of politics, but not at all good at balancing conflicting imperatives.

      • qet

        Yes, I’d agree with that. It seems that today, and for some years now, higher education (and lower education, for that matter) is designed and intended to produce in the student a fundamental and unremitting hostility to US history and institutions, and to the European, and more specifically Anglo, basis of our culture. So that our political class–elected officials and career bureaucrats alike–enter their careers having been taught to hate all American traditions and seeing as their calling the tearing down of people and things seen to bear or embody those traditions.

  • Boritz

    The administration’s position is that 25 percent will work. Good enough. Green light. The insurance companies are going along with the narrative because the bailout provisions in the law have them covered. How’s that cost curve looking now?

    • bigfire

      Cost curve? If Republican retake Senate in 2015, they aimed to repeal it. Of course, we’ll need a Republican president to sign it, so it’ll likely to be in it until 2017.

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