Sharyl Attkisson: Insurance 'Death Spiral' Could Cause ObamaCare's 'Collapse'

Besides facing a "credibility death spiral" on the issue of ObamaCare, as political director John Dickerson recently put it [1], Sharyl Attkisson pointed out on Tuesday's CBS Evening News that the very structure of the so-called reform could encounter a separate "death spiral" due to the "enrollment fiasco" surrounding HealthCare.gov.

Attkisson cited unnamed health care analysts, who predicted a doomsday scenario for President's Obama's supposed signature achievement: [MP3 audio available here [2]; video below]

SHARYL ATTKISSON: The 23 small co-ops across the country that are part of Affordable Care are intended to provide competition. As they adjust to stay afloat, some analysts worry that ObamaCare, as designed, might not. Their biggest fear is that with the website problems, more of the enrollees will be the sickest and most motivated. If that happens, insurers would have no choice but to raise premiums, and that could cause more healthy customers to flee. In the insurance industry, it's known as the 'death spiral', and experts say if that were to come to pass, the ObamaCare business model would collapse.

The CBS correspondent spotlighted one of these health insurance co-ops – Evergreen Health of Maryland – and noted how the CEO had to "blow up his business plan" because of HealthCare.gov's numerous failures. Evergreen Health had originally focused on signing up individuals, but is now pursuing small businesses "the old-fashioned way, with phone calls and TV ads."

Later in the segment, Attkisson revealed a sobering piece of information: the co-op's CEO stated that "he only knows for sure of a dozen people signing up for Evergreen so far". The journalist then added, "for context...the Affordable Care law is counting on signing up seven million people over the next six months. That averages to about 39,000 people a day."

Earlier, anchor Scott Pelley introduced Attkisson's report by recapping correspondent Jan Crawford's reporting [3] from Tuesday's CBS This Morning – that "more than two million Americans are getting notices that they can no longer keep their [health insurance] policies – including 279,000 in California; Michigan, 140,000; Florida, 300,000; and in New Jersey, 800,000".

The full transcript of Sharyl Attkisson's report from Tuesday's CBS Evening News:

SCOTT PELLEY: Those policies Major [Garrett] mentioned are being canceled because they don't meet the minimum standards set by the new health care law. Correspondent Jan Crawford confirmed with insurance companies that more than two million Americans are getting notices that they can no longer keep their policies – including 279,000 in California; Michigan, 140,000; Florida, 300,000; and in New Jersey, 800,000.

If the purchases on the ObamaCare website are small, as that agency official predicted today, what does that mean to insurance companies that need large groups of policy holders for their plans to work?

Sharyl Attkisson is looking into that.

SHARYL ATTKISSON (voice-over): Evergreen Health of Maryland is a non-profit insurer that got started with a $65 million loan from the federal government. Just days into the enrollment fiasco, CEO Doctor Peter Beilenson had to blow up his business plan.

DOCTOR PETER BEILENSON, CEO, EVERGREEN HEALTH OF MARYLAND: We actually called a meeting – immediately upon learning of these difficulties with the exchange – of our entire 35-person staff and said – listen, guys, we're going to have to switch our marketing strategy – our strategy of how we're going after folks.

UNIDENTIFIED MAN 1: I'm just reaching out to you to discuss your health care.

ATTKISSON: That means forgetting about individuals for now, and instead, targeting small businesses – the old-fashioned way – with phone calls and TV ads.

UNIDENTIFIED MALE ANNOUNCER 1 (from Evergreen Health TV ad): Neighborhood care, same-day appointments-

ATTKISSON: The 23 small co-ops across the country that are part of Affordable Care are intended to provide competition. As they adjust to stay afloat, some analysts worry that ObamaCare, as designed, might not. Their biggest fear is that with the website problems, more of the enrollees will be the sickest and most motivated. If that happens, insurers would have no choice but to raise premiums, and that could cause more healthy customers to flee. In the insurance industry, it's known as the 'death spiral', and experts say if that were to come to pass, the ObamaCare business model would collapse.

Beilenson says he only knows for sure of a dozen people signing up for Evergreen so far.

BEILENSON: If we have 1,000 members at the end of the year, that will be a problem. But we think we're – we're far along in our business planning, and we expect to have about 15,000 or so, which would be our break-even.

ATTKISSON (on-camera): For context, Scott, the Affordable Care law is counting on signing up seven million people over the next six months. That averages to about 39,000 people a day.

PELLEY: Sharyl, thanks very much.