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A million Americans dropped health coverage. Now everyone else is paying for it

Health insurance costs keep rising as healthier customers exit the marketplace. A decades-old collapse pattern is repeating in real time

Andrew Harnik / Getty Images

More than a million Americans have dropped health insurance since Congress let enhanced premium subsidies expire at the end of last year. Most were young and healthy.

Coverage costs more now that the healthiest customers have left. Insurers raised premiums to keep up, and those higher premiums pushed out the next healthiest slice of enrollees, worsening the pool again. The process, as economists David M. Cutler and Richard J. Zeckhauser documented in a 1998 research paper for Harvard University, continues until a generous plan "empties completely" and no amount of premium increase can sustain it.

This "adverse selection death spiral" drove insurers out of state markets across Washington, Kentucky, and several other states in the 1990s. The Affordable Care Act added subsidies and a mandate to prevent it from happening nationally, but with those protections now weakened, marketplace insurers have proposed double-digit premium increases for 2027.

The same cycle is repeating itself again.

The collapse of state insurance markets in the 1990s

In the 1990s, several U.S. states enacted insurance reforms that triggered death spirals in their individual markets. Washington state passed sweeping health care legislation in 1993 requiring insurers........

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