A King v. Burwell ruling for the plaintiffs may not equal death spirals – AEI

Prior to the ACA most states had little or no restrictions on insurance rates taking account of enrollees’ health risks. In the 1990s a small number of states imposed community rating and guaranteed issue in their health insurance markets, as the ACA has done, but without any subsidies, exactly the same situation that will result on the federal exchanges from a plaintiffs’ victory in King v. Burwell. It was widely predicted these states would experience an adverse selection death spiral. A 1999 National Bureau of Economic Research (NBER) paper by Thomas Buchmueller and John Dinardo compared New York, which had imposed community rating and guaranteed issue, with neighboring states. They “found no evidence for the conventional wisdom that the imposition of pure community rating tends to an adverse selection death spiral.” Similarly, another 2006 NBER paper by Bradley Herring and Mark V. Pauly compared states with community rating and guaranteed issue to states with no such regulations. They found a small increase in the number of uninsured, but did “not observe a strong positive relationship between risk status and the likelihood of being covered, that would be consistent with so-called death spirals.”

via A King v. Burwell ruling for the plaintiffs may not equal death spirals – AEI.

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