“At the same time, ObamaCare also forbids insurance companies from turning anyone down — a reform called "guaranteed issue" — which also will provide an incentive for some to drop coverage, knowing they can get it back any time.
"Even with the tax penalty ... some healthy people would avoid purchasing coverage until they are sick," Howard Shapiro, director of public policy at the Alliance of Community Health Plans, told regulators .
The problem is that if the young and healthy drop coverage, the result would be what the industry calls a "death spiral." Premiums will climb as the pool of insured gets sicker, causing still more to cancel their policies.
This is just what happened in states that imposed strict community rating and guaranteed issue reforms in the past. In fact, of the eight states that did so, most ended up either dropping the reforms or loosening the rules after they saw enrollment decline and premiums climb.”
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