Potential Death Spiral for Obamacare

January 14, 2014

The latest numbers for enrollees in the Obamacare health insurance exchanges were recently released. We are now over half way through the enrollment period, but only 2.2 million of the 7 million people the federal government predicted have signed up.

To make Obamacare work financially, at least 40% or enrollees must be young, healthy adults ages 18 to 34 to offset older, sicker individuals. Unfortunately, but predictably, less than 25% of those who have signed up are in this younger age bracket and 55% are between the ages of 45 to 64. Because of confidentiality laws, there is no data on health status of the enrollees, but it can be assumed that older people have more health problems than younger people. This creates a potential financial death spiral for Obamacare.

To date, Washington state has had a total of 248,000 individuals enroll in our exchange. Of this number, over 70% have signed up for Medicaid insurance which is an entitlement with no out-of-pocket cost to the recipient.

 Combining the lack of young healthy enrollees with the high percent of Medicaid enrollees almost guarantees financial trouble for Obamacare.