Obamacare Architect: President's Administrative Fix Could Be 'Death Spiral' for Law

Harvard economist warns administrative delay could permanently unbalance the exchanges

November 14, 2013

A key architect of the Affordable Care Act Harvard economist David Cutler warned President Obama's administrative extension of individual health insurance policies could be the beginning of a "death spiral" for Obamacare Thursday on The Kelly File.

Last week, appearing on the same program, Cutler said if there is a dearth of enrollees in the new healthcare exchanges consumers shopping for individual policies could see premiums spike significantly:

Tonight, given President Obama's announced administrative extension of cancelled individual policies, Cutler cautioned the exchanges could become unbalanced in the next year.

If this is a temporary condition, Cutler said, it is not problematic in the long term. However, according to the Harvard economist, if healthier people ultimately stay away from the exchanges completely today's presidential waiver could precipitate a "death spiral" for Obamacare:

MEGYN KELLY: When you were on last week I asked if they don't get enough people in the exchanges, then what happens? You said then the premiums go up very, very high. Now was that ball put in motion today?

DAVID CUTLER: We don't know yet. What the president is trying to do is to say the website isn't working. The exchanges are not working. Let's slow down the process and delay it by a year. If it turns out to be a delay of a year then we can work through that. It will be uncomfortable as it has been for the last month, but it will turn out okay. If it becomes a permanent situation that people who are healthier stay away and people who are sicker go into the exchanges that becomes a very big problem.

KELLY: Is that the beginning of the so-called death spiral?

CUTLER: That could be the beginning of a death spiral. That is, you could have a situation where people in the exchanges are very unhealthy people with high premiums. There are a number of provisions in the law to reduce the probability of that, but that's the scare scenario that people really want to avoid.

Full interview:

Published under: Obamacare