Political  Calculations

The Affordable Care Act (aka "Obamacare") is unraveling on many levels, but perhaps most so on the personal finance level for the consumers of both health care and health insurance.

That's particularly true for healthy, young Americans, who the Obama administration and its health insurer crony capitalist partners were counting upon to enroll in much, much greater numbers than they are. Because these individuals represent up to 40% of all Americans who might buy health insurance through the Affordable Care Act's state and federal government-run health insurance "marketplaces", if significantly fewer than this percentage sign up for Obamacare, many health insurers will be forced to jack up the cost of health insurance within the next few years to cover their losses.

That will be true, even with Obamacare's built-in multi-billion dollar bailout for health insurers participating in the ACA exchanges. A bailout that at least one politically-connected health insurer has planned to exploit all along as part of its business strategy.

But if too few young, healthy Americans buying health insurance to cover the health insurers' costs of paying for the health care bills of older, sicker, insured Americans, they risk setting up the dynamic where each time they increase their premiums to compensate, they'll lose more of their healthier customers who will balk at paying higher bills, sending their business into a death spiral. That dynamic is the result of what insurers call "adverse selection", which is the situation where not enough healthy people sign up for health insurance to cover the cost of paying for the health care needs of the sick people who did.

That's why President Obama's political supporters are scrambling to put out a marketing campaign aimed at getting young Americans to enroll in ACA coverage on 15 February 2014, even though the Healthcare.gov web site will not be functioning on that day.

Political Calculations

Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.

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