Tuesday, July 25, 2017

When PolitiFacts contradict

In PolitiFact's zeal to defend the Affordable Care Act from criticism, it contradicts itself.

In declaring it "False" that the ACA has entered a death spiral, PolitiFact Wisconsin affirms three aspects of a death spiral, one being rising premiums. PolitiFact affirms that premiums are rising. Then, PolitiFact states that none of the three conditions that make up a death spiral have occurred. We must conclude, via PolitiFact, that premiums are increasing and that premiums are not increasing.

In PolitiFact Wisconsin's own words (bold emphasis added):
Our rating

A death spiral is a health industry term for a cycle with three components — shrinking enrollment, healthy people leaving the system and rising premiums.

The latest data shows enrollment is increasing slightly and younger (typically healthier) people are signing up at the same rate as last year. And while premiums are increasing, that isn’t affecting the cost to most consumers due to built-in subsidies.

So none of the three criteria are met, much less all three.
It's not hard to fix. PolitiFact Wisconsin could alter its fact check to note that only one of the conditions of a death spiral is occurring across the board, but that subsidies insulate many customers from the effects of rising premiums.

Subsidizing the cost of buying insurance does not make the cost of the premiums shrink, exactly. Instead, it places part of the responsibility for paying on somebody else. When somebody else foots the bill, higher prices do not drive off consumers nearly as effectively.

We're still waiting for PolitiFact to recognize that the insurance market is not monolithic. When the rules of the ACA leave individual markets without any insurers because adverse selection has driven them out, the conditions of a death spiral have obtained in that market.

We also note, in the context of the ACA, that when the only people who elect to pay for insurance are those who are receiving subsidies, it is fair to say the share of the market that pays full price encountered a death spiral.

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