Wonkbook: Seven reasons Obamacare isn’t facing a “death spiral”
Wonkbook: Seven reasons Obamacare isnt facing a death spiral
By Ezra Klein and Evan Soltas at the Washington Post
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/07/wonkbook-seven-reasons-obamacare-isnt-facing-a-death-spiral/
"SNIP.................................
1. Tax subsidies.
Obamacare pumps more than a trillion dollars to subsidize lower-income people in the insurance exchanges. That's a lot of money. And, crucially, the subsidies are tied to the cost of the insurance plans. As premiums rise, so too do the subsidies.
"The tax credits are a huge piece of death spiral prevention here," Levitt says. "At least half, probably 60 percent, of the people in the exchanges will get tax credits. The risk of higher premiums is more on the federal government than it is on people."
That's particularly true for the young people the law so desperately needs. Put simply, the younger you are, the more likely you are to be poor. "The tax credit premium subsidies are disproportionately going to be helpful for the young adult population," says Ron Pollack, head of Families USA. "Theyll get the largest tax credit subsidies of any age group."
The result is that a lot of the young people needed to keep premiums down will be paying a fraction of the premium's cost -- or none of it at all. That's one brake on the dreaded death spiral.
.................................SNIP"