Tag: Financial institutions

The Wrong Skew

Well, it seems like Obamacare is finally working. Two million people are signed up, so obviously this is … oh:

Now that more than 2 million people have signed up for private insurance plans created by President Barack Obama’s healthcare law, a crucial next check-up for the new marketplace will be to see how old customers are.

Early data from a handful of state exchanges shows the administration needs more young adults to sign up in the next three months to help offset costs from older enrollees and prevent insurers from raising their rates.

Critics of Obama’s Affordable Care Act say the market won’t attract enough young people to keep it financially viable, putting more pressure on government funds to compensate for any insurer losses.

Data from seven states and the District of Columbia, which are running their own marketplaces, show that of more than 200,000 enrollees, nearly 22 percent are 18 to 34 years old, according to a Reuters analysis.

The administration had hoped that over 38 percent, or 2.7 million, of all enrollees in 2014 would be 18 to 35 years old, based on a Congressional Budget Office estimate that 7 million people would sign up by the end of March.

Now, to be fair, these are early numbers and there is some data showing that the most recent signups skew as young and healthy as Obama wants them to. However, we are once again seeing how this Obamacare thing is like a house of cards. The insurers offered rates based on a projection of seven million signups with 2.7 million of those from young healthy people. That lower number is a critical card in the house. Without young people paying identical rates to older ones but using less care, the system becomes a massive money pit. Suddenly, you’ve got a way more expensive group of patients than you anticipated.

That leads to another card: an insurer bailout. To keep the insurance market from completely imploding, the government is poised to bail out their losses if this happens (these bailouts are euphemistically called “risk corridors”). Republicans want to repeal this, which would bring the entire house crashing down. But really, it’s a matter of timing. You can’t go on forever with a zombie insurance industry.