Kliff: Why There’ll Be No Death Spiral For Obamacare

Sarah Kliff at the Washington Post explains that even if young people don’t sign up in the hoped-for numbers, the Affordable Care Act will work just fine.

So say Larry Levitt, Gary Claxton and Anthony Damico, experts at the Kaiser Family Foundation who have put together a new brief analyzing what would happen if young adults snubbed the Affordable Care Act. Even if young people sign up at half the rate the administration hopes for, it would nudge premiums up only by a few percentage points, their report says.

“When you do the math, it matters, but not nearly as much as the conventional wisdom suggests,” Levitt says.

…what the White House has aimed for: Officials there have estimated that, if 7 million people enroll in 2014 (as the Congressional Budget Office has projected), 2.7 million of them, or 40 percent, need to be under age 35…

Levitt and his colleagues then modeled what would happen if these people didn’t show up…

If young adults (those under 35) were 25 percent less likely than the rest of the population to sign up for Obamacare, they would represent 33 percent of exchange enrollees — rather than 40 percent. This means there would be fewer young people to subsidize older insurance subscribers. To make up that difference, the experts estimated, insurers would need to increase premiums by a terrifying … 1 percent. Yes, exactly 1 percent.

Levitt, Claxton and Damico also tested a scenario where young adults are half as likely as older shoppers to enroll. In that case, the younger enrollees would make up only a quarter of the exchange market. Premiums would fall 2.5 percent short of covering subscribers

“I had a general sense it wouldn’t be giant, but this was even smaller than we expected,” Levitt says. “It’s not a terrifying number.”

By: Alan

Alan Colmes is the publisher of Liberaland.