ObamaCare's worst-case scenarios

As that quote suggests, some insurers might still lose money from low enrollment, because they had set prices for this year assuming a mix that included more healthy people. They could respond by increasing rates for 2015, in order to make up for the losses they saw in 2014. Insurers that took bigger losses, or feared bigger losses in the future, might drop out of the market altogether.

But as long insurers were confident that enrollment would run more smoothly in 2015—in other words, as long as they believed fixing the website were a matter of “when” rather than “if”—they’d also have strong incentive to restrain rate increases and give the system an extra year to stabilize. Why? For the very same reason insurers kept prices relatively low this year: They want to grab customers coming into the marketplace for the first time. “I wouldn’t assume they’ll try to recoup so many losses in 2015,” says John Holahan of the Urban Institute. “There will still be pressure to compete and [insurers] may not be as badly off as you think, at least if the risk corridors work.”

The other factor that will likely prevent a death spiral, at least of the traditional sort, is the law’s subsidies. You’ve heard all about these tax credits: They are worth hundreds of dollars a year to some people, and thousands of dollars a year to others. They are available to people with incomes below 400 percent of the poverty line, which works out to about $94,000 for a family of four and $46,000 for an individual.

What you may not realize (because few people do) is that the subsidies, by design, protect people from rising premiums. The law basically dictates what these folks pay for the typical, “silver-level” Obamacare plan, no matter what the insurer charges. This is critical. It means that rising premiums won’t affect the willingness of those people to enroll—which means, in turn, they’d still have incentive to sign up next year, as long as the technological bugs were gone and Obamacare online was working. (Subsides were a missing element of those ill-fated reform experiments in New Jersey and elsewhere.)

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