January 18, 2014

The report of the death of the death spiral...

 ... was an exaggeration.

23 comments:

PB Reader said...

when all else fails, in addition to mandating all goal posts have wheels so they are easier to move. the democrats will even redefine the definition of the word death and/or spiral so that, by definition, a death spiral cannot possibly occur.

Continuing this strategy, democrats will continue to redefine all words so conversation is impossible and Bill Clinton will have proven prescient, "It depends on what the meaning of the word 'is' is."

Bob Ellison said...

What is the death spiral? Pundits keep talking/writing about it as though it's part of the law, as though the ACA says "if the following things do not happen, the law shall be defunct".

The law does not say that. There is no death spiral. The law goes on until we kill it with fire.

Hagar said...

A wooden stake?

Michael K said...

I posted a link to a longer post of mine on the latest in the cluster**k in the previous post.

tim maguire said...

Exaggeration? Or made up out of whole cloth to feed to hopes of the suckers?

Yeah, it's that second one.

Grundoon said...

Is the definition of "death spiral" that the insurance companies will be faced with paying out more than they take in? This is not causing the death of the general federal budget or the social security program. It won't cause the death of federally-managed insurance, either. Insurance has been a regulated industry for years. The conservatives think one answer is to sell insurance across state lines, or federally-managed insurance. I see no hope that either liberals or conservatives will create a free market in health care. I assume I will need to fly an hour south to Mexico a couple of times a year to buy the health services I want. Canadians used to come to the US for the same reason. I think I may make some investment where I find my new doctors so my trips can be charged off as a business expense.

tim maguire said...

Bob, the "death spiral" is a term used to describe a self-accelerating circumstance leading to the collapse of the program.

There are several "death spirals" lurking in Obamacare, but the one most fretted about is that not enough healthy people sign up relative to the sick ones. The system as designed requires lots of healthy people willing to get cheated.

If not enough healthy people are willing to over-pay for their insurance, premiums will have to increase, leading more healthy people to drop out, leading to more premium increases, forcing more healthy people to drop out...

Bob R said...

Death spiral refers to the death of the insurance companies, not Obamacare. If the ratio of sick to healthy people is bad, the price of insurance goes up. That makes more healthy people drop out. That makes the price go up again. So on until the insurer quits.

Prices for 2015 insurance are due out in October. What do you want to bet that Obama has that deadline moved to the second week in November.

rhhardin said...

Death spiral is strictly a catastrophe brought on by attempts to prevent it.

Obama's view of economics puts these instabilities all over.

Originally, it's from a pilot's inability to tell if he's turning without referende to a visual horizon.

Supposing he's turning but doesn't know it, he notices that the altitude is dropping and the speed is increasing.

He fixes it by raising the nose a little.

Unfortunately, in a turn, that tightens the turn.

The nose drops further and the speed increases more.

The pilot raises the nose more.

And so forth, always making things worse, until he hits the ground or tears the wings off with g-forces.

Since it's a spiral flight path, it's called a death spiral.

JFK Jr is a famous instance.

The turn and bank indicator was invented to tell you if you're turning, and you learned to believe the indicator and not what it felt like.

Recovery is simple with this information:

1. Stop the turn with the rudder.

2. Center the ball witht he ailerons.

3. Control the speed with the elevators.

You may feel like you're still turning, but you're straight and level.

SteveR said...

Death Spiral: when one or more of several structural failures occur in the ACA and that will be blamed on Republicans and used by President Hillary Clinton to initiate Universal Health Care in the United States. Hilarity ensues

damikesc said...

I love when wonkiness becomes nothing more than false hope.

Prices for 2015 insurance are due out in October. What do you want to bet that Obama has that deadline moved to the second week in November.

If I'm not mistaken, he's already requested that insurance companies hold off release of info involving cancellations until after the elections.

AJ Lynch said...

Ezra has always been, at heart, a cheerleader for the big govt librul policies. I bet he even has a cheerleader costume in his closet.

EMD said...

I'm more interested in the voters' upcoming rage spiral.

jimbino said...

Never underestimate the propensity and ability of a socialist gummint to bail out lost causes.

I'd love to see a Death Spira kill Obamacare, but:

1. The Insurance-Medical-Drug Complex is Too Big to Fail.

2. A gummint that can carry on lost wars for over a decade can damn well bail out the lost cause of Obamacare.

3. A gummint that virtually forces the public into public education has the means to keep tnem dumb enough to vote for more socialist abuse.

pm317 said...

Although Wonkblog didn't respond to Kaus's argument, Levitt did, tweeting "that the 'shock absorbers' built into Obamacare--'risk corridors,' etc.--mean that the 'risk of a death spiral is overstated.' " Kaus conceded the point but noted that "those shock absorbers expire in three years,"

Who is paying for this 'risk corridor' and 'shock absorbers' -- it is a bonanza for the insurance industry.. if Obama minions break the industry who will prop it up? guess..

Michael K said...

"Who is paying for this 'risk corridor' and 'shock absorbers' -- it is a bonanza for the insurance industry.. if Obama minions break the industry who will prop it up? guess.."

Why do you think they signed on ? Obama and Reid knew that Hillary's failure to get them inside the tent in 1993-4 brought disaster.

tim in vermont said...

Bob, the deadline for price notification has already been moved passed the November election.

It happened right after the elections this past November when the risks became obvious to the more clear thinking of the politicos.

mccullough said...

The soft bigotry of low expectations

Bob Ellison said...

I understand the term "death spiral". It does not apply here. There is no ground for the spinning plane to hit; there's no concern for insurance companies. The government will fund it forever.

Obamacare is forever until we kill it with fire.

Chuck said...

Dear Professor Althouse,

YOU HAVE STUMBLED ONTO SOMETHING THAT IS VERY IMPORTANT. Like you, I read that "Best of the Web" column by James Taranto. It was fine, but it stopped short of a much bigger and more discrete issue concerning an ObamaCare "death spiral."

Earlier this month, the respected healthcare blogger Bob Laszewski put up a post that was soon thereafter linked throughout the conservative blogosphere. Of course Ezra Klein also has gone to Bob Laszewski as a credible source and Klein even linked his recent column to an older interview with Laszewski. Here is Laszewski's marvelous post:

http://healthpolicyandmarket.blogspot.com/2014/01/will-there-be-obamacare-death-spiral-in.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+HealthCarePolicyAndMarketplaceBlog+%28Health+Care+Policy+and+Marketplace+Blog%29&m=1

I URGE YOU TO READ IT, AND POST A LINK ON YOUR BLOG AS A FRONT-PAGE STORY.

That Laszewski blog post was then the jumping-off point for this current column by James Capretta and Yuval Levin in the Weekly Standard.

http://www.weeklystandard.com/articles/unwinding-obamacare_774775.html

The executive summary; that under current numbers and reasonable projections, healthcare insurers in 2015-18 will be looking at significant losses, of more than 102% of premiums. And that under normal circumstances, it would initiate a "death spiral" of rising premiums and declining participation. But that insurers may be protected by billions in reinsurance reserves channeled to the insurers by federal taxpayers.

And that the notion of a multi-billion dollar taxpayer-funded bailout of insurers to prolong a failing ObamaCare system will outrage the public.

gregq said...

Prices for 2015 insurance are due out in October. What do you want to bet that Obama has that deadline moved to the second week in November.

If I'm not mistaken, he's already requested that insurance companies hold off release of info involving cancellations until after the elections.


Individual notices are now "supposed" to go out after the election, per decree of the Obama. however, the companies have to file their rate plans before the end of summer. So the numbers will still be out there.

rhhardin said...

There is no ground for the spinning plane to hit;

Spiraling, not spinning.

A spin is another thing entirely.

Modern planes have to be held in a spin deliberately, but the danger of one is insufficient altitude to recover if it starts low.

tim maguire said...

Bob, the death spiral is not for the insurance companies, it is for the exchanges. The insurance companies will not go bankrupt, they will simply drop out of the exchanges and it will crash into the ground that is no insurer participation.

You can, obviously, argue that that is a feature and not a bug because it will allow the government to put the public option back into play, but there is nothing like a guarantee that the Democrats will be able to pul it off when it happens.