<img src="http://b.scorecardresearch.com/p?c1=2&c2=18406752&c3=&c4=http://www.slate.com/blogs/moneybox/2017/01/16/paul_ryan_says_obamacare_is_in_a_death_spiral_it_s_not.html&c5=&c6=&c15=&cj=1" /> Paul Ryan says Obamacare is in a death spiral. It’s not.

Paul Ryan Says Obamacare Is in a Death Spiral. It’s Not.

Paul Ryan Says Obamacare Is in a Death Spiral. It’s Not.

Moneybox
A blog about business and economics.
Jan. 16 2017 3:16 PM

Paul Ryan’s Big Lie About Obamacare

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Walks like a wonk. Talks like a wonk. Is not a wonk.

Mark Wilson/Getty Images

Paul Ryan has always been good at peddling groundless conservative talking points by dressing them up in the wonky language of a D.C. think tank symposium. With a phrase or two, he whips up an air of unearned mastery and seriousness, and certain easily duped members of the press go weak in the knees. Now that Congress has begun the process of repealing Obamacare without a clear plan for replacing it, the House speaker is milking those talents for all they’re worth.

Jordan Weissmann Jordan Weissmann

Jordan Weissmann is Slate’s senior business and economics correspondent.

To hear Ryan tell it, Congress needs to abolish the Affordable Care Act immediately because the law is in the midst of a “death spiral.” If you’ve been following the health reform wars of the past few years, this is a term you have almost certainly heard bandied about. It describes a worst-case scenario in which high premiums discourage healthy Americans from buying insurance, leaving behind a market full of sick, unprofitable customers whom carriers are still required to cover under Obamacare’s regulations. That drives premiums even higher, pushing away more healthy shoppers. The process repeats until insurers flee and the market unravels. According to Ryan, we’re witnessing that spin cycle of doom right now.

 
 
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“Obamacare is failing and failing quickly,” he told reporters at a press conference last week. “Premiums are so high, more and more people aren’t even buying health insurance. And so only people who are desperate to get it are buying it and that is what we call a death spiral.”

Ryan repeated the refrain later when he was confronted at a CNN town hall by a Republican cancer survivor who credited the ACA with saving his life. “The problem with Obamacare—the actuaries call it a death spiral. It’s really kind of an ugly, gruesome term. But a death spiral is a mathematical term. They say when the insurance gets so expensive, healthy people won’t buy it. Because it’s just a trade-off. The penalty to not buy it is a lot cheaper than buying the insurance, so healthy people won’t buy it, therefore they won’t go participate in the insurance pool to cover the losses that sicker people who have to have insurance buy it.

"That’s what’s happening to Obamacare now,” Ryan concluded.

This was all completely baseless, at least if you judge by the latest enrollment data.

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During the summer and early fall, there was some speculation that Obamacare might have entered the early stages of a death spiral. A handful of major carriers announced they were pulling out of the law’s insurance exchanges after losing too much money on them. Many markets were left with just a single insurer. The government announced that average premiums were rising by more than a fifth nationwide, and as much as 116 percent in Arizona. While most of the pundits pronouncing Obamacare’s imminent collapse were conservatives, even moderate and liberal health care analysts agreed that the situation was tenuous, and the next open-enrollment period could determine whether the system survived.

But we are now most of the way through open enrollment, and Obamacare sign-ups are rising, albeit modestly. This is in fact the opposite of what’s supposed to occur in a death spiral. As of late December, a record 11.5 million Americans had enrolled in coverage on the marketplaces, up 286,000 from the same time a year before. Sign-ups even jumped in Arizona, the state where the insurance market seemed most imperiled thanks to its giant premium hikes. Open enrollment won’t be over until the end of this month, so it’s technically possible the expanding insurance rolls are just a temporary illusion created by people picking their plans earlier. But right now, the market appears to be growing, and if it’s growing, it’s probably not twirling toward ruin, since that would entail a scenario where new customers on the exchanges were even sicker than the very early participants.

There are still plenty of open questions about whether Obamacare is really stabilizing permanently. There’s just no evidence I’m aware of that it’s midcollapse, either. Perhaps Ryan has some secret info the rest of us aren’t privy to. But assuming the speaker hasn’t been performing esoteric readings of Centers for Medicare and Medicaid Services data using sheep entrails and a dream shrine, I doubt that’s the case.

Of course, Republicans have come up with all sorts of absurd explanations for why we need to repeal Obamacare (see: goats). The problem is that Ryan’s fluency in wonk speak tends to win him plaudits from centrist pundits, who are more impressed by his ability to translate budgeteese than they are interested in whether anything he says makes sense. If you’re trying to dupe a bunch of reporters, or a nervous town hall audience, claiming Obamacare is in an actuarial death spiral is a better lie than merely telling people the law is a failure, because it sounds specific and analytical. And most political reporters simply don’t have the policy background to call it out. “You should watch this Paul Ryan town hall on CNN,” the Washington Post's Chris Cillizza told his Twitter followers last week. “The guy is extremely impressive.”

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