For a while last fall, it looked like the Obamacare health insurance exchanges were spinning towards a death spiral. Enrollment in the health insurance exchanges was not growing as rapidly as many people had hoped. United Healthcare, one of the nation’s largest insurers, announced that it intended to pull out of the exchanges soon, convinced that there are not good profits to be made in that marketplace. The company even decided to cut commissions for insurance agents who direct consumers to the exchange. Some experts warned that the exchanges are entering what policy wonks call a “death spiral,” whereby insurance premiums would rise each year, forcing relatively healthy people out of the market, causing premiums to rise again the next year, and so on.
With a few months of enrollment figures now behind us, it is safe to say that rumors of an Obamacare Death Spiral have been greatly exaggerated. While the health insurance exchanges still face many challenges, they appear to be holding steady, and with a few modest policy changes could transform into a robust marketplace.
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