20 Jun 2013 Oregon Health Exchange Will Meet Same Fate As California’s: A Death Spiral
Washington, D.C. – “Cover Oregon,” the ObamaCare exchange in the Beaver State, is headed for the same problems as the California exchange, says a just-released paper, “Oregon’s Coming Health Insurance Death Spiral” by David Hogberg, Ph.D., senior fellow for health care policy at the National Center for Public Policy Research.
“Oregon’s exchange didn’t receive near the scrutiny that California’s did, and that’s unfortunate,” says Hogberg. “Many Oregonians are going to be in for a shock.”
Hogberg explains that many will experience rate shock. The average premium in Cover Oregon is 66% higher than the average premium in the current individual market. Even the cheaper Bronze plans are 42% higher.
Don’t expect premium subsidies to erase that increase for many of the “young invincibles.”
“In Oregon, many of those age 20-39 are concentrated in Portland,” says Hogberg. “For these people, the incomes for qualifying for subsidies top out pretty quickly.”
For example, a 25-year-old Portlander earning $27,533 or more annually will not qualify for a subsidy. Neither will any 30-year-old earning $29,271 or more.
These people will be paying the full cost of their insurance, which will almost always be higher than the $695 fine under ObamaCare for not purchasing coverage. When the young and healthy in Oregon realize this and that guaranteed issue rules force insurers to sell them a policies even when they get sick they’ll have substantial incentives to forgo insurance until they actually need it. That generally means that those who remain in the insurance pools are older and sicker, which means insurance prices will rise.
“More young and healthy will drop out, price will rise, the death spiral repeats,” says Hogberg. “In the end Cover Oregon will be left with two or three insurers, as most other will drop out because they can’t make a profit.”
David Hogberg, Ph.D., is a health care policy analyst for the National Center for Public Policy Research. Previously, Dr. Hogberg was a Washington Correspondent for Investor’s Business Daily, specializing in health care and Medicare. Prior to his employment at IBD, he worked as a policy analyst studying health care and other issues for various think-tanks, including the National Center for Public Policy Research, and for the office of Representative Jeff Fortenberry. Dr. Hogberg holds a Ph.D. in political science from the University of Iowa. He is currently working on a book entitled “Medicare’s Victims: How The U.S. Government’s Largest Health Care System Harms Patients And Impairs Physicians.”
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