National Center for Public Policy Research press release


For Release: June 20, 2013
Contact:
Judy Kent at (703) 759-7476 or [email protected]

 

Oregon Health Exchange Will Meet Same Fate As California's: A Death Spiral

Young and Healthy Will Experience Rate Shock With Plans On "Cover Oregon"

In Key City of Portland, Many Young and Healthy Will Not Receive Subsidies to Reduce the Cost of Insurance

 

Washington, D.C. - "Cover Oregon," the ObamaCare exchange in the Beaver State, is headed for the same problems as the California exchange, says a just-released paper, "Oregon's Coming Health Insurance Death Spiral" by David Hogberg, Ph.D., senior fellow for health care policy at the National Center for Public Policy Research.

"Oregon's exchange didn't receive near the scrutiny that California's did, and that's unfortunate," says Hogberg. "Many Oregonians are going to be in for a shock."

Hogberg explains that many will experience rate shock. The average premium in Cover Oregon is 66% higher than the average premium in the current individual market. Even the cheaper Bronze plans are 42% higher.

Don't expect premium subsidies to erase that increase for many of the "young invincibles."

"In Oregon, many of those age 20-39 are concentrated in Portland," says Hogberg. "For these people, the incomes for qualifying for subsidies top out pretty quickly."

For example, a 25-year-old Portlander earning $27,533 or more annually will not qualify for a subsidy. Neither will any 30-year-old earning $29,271 or more.

These people will be paying the full cost of their insurance, which will almost always be higher than the $695 fine under ObamaCare for not purchasing coverage. When the young and healthy in Oregon realize this and that guaranteed issue rules force insurers to sell them a policies even when they get sick they'll have substantial incentives to forgo insurance until they actually need it. That generally means that those who remain in the insurance pools are older and sicker, which means insurance prices will rise.

"More young and healthy will drop out, price will rise, the death spiral repeats," says Hogberg. "In the end Cover Oregon will be left with two or three insurers, as most other will drop out because they can't make a profit."

Previously this month, Dr. Hogberg wrote a similar paper on the likely fate of California's health insurance exchange, "California's Coming Health Insurance Death Spiral." More information here.

David Hogberg, Ph.D., is a health care policy analyst for the National Center for Public Policy Research. Previously, Dr. Hogberg was a Washington Correspondent for Investor's Business Daily, specializing in health care and Medicare. Prior to his employment at IBD, he worked as a policy analyst studying health care and other issues for various think-tanks, including the National Center for Public Policy Research, and for the office of Representative Jeff Fortenberry. Dr. Hogberg holds a Ph.D. in political science from the University of Iowa. He is currently working on a book entitled "Medicare's Victims: How The U.S. Government's Largest Health Care System Harms Patients And Impairs Physicians."

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than 4 percent from foundations, and less than 2 percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.

Contributions to The National Center are tax-deductible and greatly appreciated.

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