How Obamacare’s “Death Spiral” becomes Reality

A Picture of the Self-Fulfilling Prophecy

How did Johnny become such a ne’er-do-well? Did it have anything to do with every role model telling him he was lazy, stupid or a failure from an early age? This is a typical understanding of a self-fulfilling prophecy.

Here’s another — a few years back, while Democrats still held the White House and Washington, DC Republicans could do nothing about killing then President Obama’s signature legislation, some of these same Congressional leaders and some paid third parties started telling Americans that Obamacare was in a Death Spiral. A narative made easier by rising premiums, insurers leaving some markets and state run exchanges falling apart.

BUT

It’s not dying fast enough! It needs to be nudged if the prophecy is to occur to coincide with political calendars. There needs to be more uncertainty in these marketplaces — How? What can be done to raise more questions and concern among providers?

Aha! We can accomplish everything we need by simply not saying that we will commit to paying these CSR’s (Cost Sharing Reductions). That should create enough uncertainty. That should kill this, once and for all!

So, this brings us to today. The GOP currently controls the House, Senate and White House and they are walking the US healthcare marketplace right off a cliff.

Let’s start by reminding everyone what the cost-sharing reductions are. CSR’s are subsidies designed to reduce out-of-pocket costs for low-income patients who purchase silver-level plans through Obamacare’s exchanges. The subsidies are only available to marketplace customers with an income between 100 percent and 250 percent of the federal poverty line ($12,000 to $30,000 for an individual).

In 2017, 7 million people — 58 percent of marketplace enrollees — qualified for cost-sharing reductions, according to the Department of Health and Human Services.

According to the Daily Signal:

At this stage, no one is entirely sure what Trump and his officials plan to do about the cost-sharing reductions.
Both the White House and the Department of Health and Human Services, now led by Secretary Tom Price, have sent mixed signals on whether they intend to continue funding the subsidies.
In a statement to The New York Times, the Department of Health and Human Services said the agency would continue to make payments to insurance companies.
But Trump floated the idea of using the cost-sharing reductions as leverage to bring Democrats to the negotiating table over a bill replacing Obamacare.

That’s exactly what is causing all the uncertainty in the marketplace and uncertainty is the death nail to almost any marketplace.

Uncertainty Poised to Destroy the Individual Marketplace

Due to the level of uncertainty created by a lack of commitment to funding CSR’s, Congress and the White House are sending insurers scrambling for the exits.

A recent story from Utah’s Deseret News reports on the concerns of the state’s insurance commissioners:

“They’re not willing to commit to it under the new presidential administration,” Tanji Northrup, assistant commissioner of the Utah Department of Insurance, explained to the Deseret News.
Northrup added that a lack of certainty over those funds “really puts the insurers at a risk.” Health insurance providers in Utah aren’t sure whether they will be required to increase monthly premiums in light of withdrawn subsidies, she said, and very likely won’t have any more clarity before they are required to submit their initial rate plans.
“We’re going to have insurers who may be financially unstable” if premium rates are not adjusted and the funds don’t come, Northrup said. Insurers fear they could also get it wrong by significantly increasing premiums before receiving word that they will, in fact, be reimbursed, and unnecessarily drive up prices for consumers, she explained.
A simple fix would be a strong commitment from the federal government to maintain the status quo, which would prevent insurers from getting cold feet, Northrup said.
“All of this confusion only happens if the feds fail to fund the (cost-sharing reductions), she said.

This scenario is playing out in almost every state in the nation and the numbers are disheartening. For instance, in Florida alone, more than 1.2 million people could lose coverage if Washington, DC doesn’t provide some indication that these water calming payments will remain while the GOP gets clear with the American people about how and what they intend to replace Obamacare with.

Members of Congress like Senator Rubio, Congressman Diaz-Balart, and Congressman Curbelo (who represent some of the most impacted districts in America) need to stand up and speak for their most vulnerable constituents — before it’s too late.