by architek, Wed May 20, 2009 at 06:42:00 AM EDT
"Death Spiral" - Its a terrifying name. Its also the de-facto description of what the public option will undergo if it is "optional" because optional will mean not enough money will be devoted to it to avoid the "Death Spiral"
It starts with a nice, but misleading idea: "All other things being equal, public, nonprofit insurance can be cheaper than for-profit insurance"
Right? No - wrong. Because PUBLIC insurance HAS to be fairer and serve the public good and not the god of money.
The private insurance we all are hoping to replace is very profitable and expensive, because they deny care, right?
The catch is in that "if all other things are equal". The problem that eventually kills public option is that they wont, they can't be equal in profitability..
They will be extremely unequal. Any public option has to be fair to the sick. The for profit insurers don't. Not even Obama can EVER force a COMPANY to lose money. They have to make money so they avoid insuring many. That willingness to insure the sick makes the public option the insurance of last resort for many, inherently a money loser. It will drive up its losses or it will have to raise its premiums
(This is one of several links documenting these so-called "Death Spirals")
If the risk pool gets sicker. And the higher the premiums go, the fewer people, healthy or sick can afford it.
Their only public option will become Medicaid loans for the indigent. (Which people are eligible for ONLY AFTER THEY OWN OR MAKE VIRTUALLY NOTHING.)