Death Spiral

The following is a quote from a New York Times op ed piece by Economist Nobel Prize winner Paul Krugman, where he demonstrates, using the current California insurance crisis, the reasons we are headed to hell if we don't pursue insurance reform.  Folks, I know I'm pretty much preaching to the choir here.  But find this article and email it to your Congressmen and Senators.  Maybe they won't listen to you or me, but perhaps they'll be afraid not to listen to a Nobel Prize winning economist.

"Here’s the story: About 800,000 people in California who buy insurance on the individual market — as opposed to getting it through their employers — are covered by Anthem Blue Cross, a WellPoint subsidiary. These are the people who were recently told to expect dramatic rate increases, in some cases as high as 39 percent.

Why the huge increase? It’s not profiteering, says WellPoint, which claims instead (without using the term) that it’s facing a classic insurance death spiral....

Now, what WellPoint claims is that it has been forced to raise premiums because of “challenging economic times”: cash-strapped Californians have been dropping their policies or shifting into less-comprehensive plans. Those retaining coverage tend to be people with high current medical expenses. And the result, says the company, is a drastically worsening risk pool: in effect, a death spiral....

But here’s the thing: suppose that we posit, provisionally, that the insurers aren’t the main villains in this story. Even so, California’s death spiral makes nonsense of all the main arguments against comprehensive health reform."

Read the rest here:  http://www.nytimes.com/2010/02/19/opinion/19krugman.html