Millions of Americans may be wrestling with computer glitches to try to sign up for Obamacare — but many people eligible just won’t bother and will pay a price for it. Some will flout the mandate to buy coverage on ideological grounds, a health insurance version of civil disobedience.
- Some will opt for the penalty because it’s cheaper than paying for insurance, even with subsidies — as long as they don’t get sick and have to pay their own medical bills. And some are so confused about the president’s health care law that they may not even realize they have to pay a penalty — or a tax, as the Supreme Court called it — until they get slapped with the fine when they file their 2014 tax returns. And sign-up rates may be affected, too, if the technical problems on the exchange websites persist.
The new health exchanges need younger and healthier people to balance out the risk and prevent spiraling insurance costs. The mandate is one way of nudging them in. Here’s a look at who may opt out — and why they’ll do it.
- In reality, there are no “Obamacare cards,” but some conservative groups, notably FreedomWorks, are using the imagery to promote resistance to the law, especially among younger and healthier people. “My guess is they need about 40 percent of the people in the exchanges to be young, healthy adults under 35,” Dean Clancy, vice president of public policy for FreedomWorks, said in an interview. “If they don’t get that, the premiums will go up in the second year. Insurance companies may back out because they can’t get enough people to sign up, … and the whole thing will collapse.”
- Most people who sit out Obamacare will be motivated by math, not politics. These people — mostly the so-called young invincibles — would rather take their chances that they won’t need costly health care, pay the 95 bucks and not spend money on insurance. “The main reason the people will skip the exchange is not ideological but financial,” he said. “This sticker shock will be our best friend in the fight,” he said, referring to the cost of insurance in the exchanges.
- Pro- and anti-Obamacare forces agree that much of people’s decisions on whether to sign up will boil down to dollars and cents. Individuals won’t know until they check out the exchanges — and access the troubled websites — exactly what their particular coverage options are and what those would cost.
- Many experts, including people interviewed at Intuit and H&R Block, expect that a large chunk of the people who pay the tax just won’t know the rules. “I would say a huge portion of the population is confused or ignorant of what will happen,” Clancy said. “I think a lot of people will drift along passively, unaware that the mandate applies to them.”
- The $95 penalty number is well-known — but it’s only part of the story. It’s actually $95 or 1 percent of taxable income, whichever is more. (The income penalty would be based on earnings over the so-called filing threshold — the amount earned before someone owes taxes.) For someone making $40,000 with standard deductions, it would mean about $300 more in taxes (or $300 less of a refund).
- “I think that the $95 has been really well communicated, … but what has not been communicated as well is the 1 percent, and that is what we heard from clients this year and was really eye-opening,” said Meg Sutton, senior adviser on tax and health care services at H&R Block. By 2016, the tax will be higher — $695 or 2.5 percent of income, whichever is more.
- The CBO broke down its projection of 6 million penalty payers by income. About 30 percent will have incomes too high for federal subsidies. Forty percent will have incomes between 200 percent and 400 percent of the federal poverty line, which makes them eligible for the middle range of subsidies. The remaining 30 percent will make less than 200 percent of poverty and would qualify for the highest subsidies — but low-income groups can be hard to reach and skeptical of government assistance.
- “I think a lot of people will factor in things like, ‘Well, I ought to have health insurance,’ or, ‘I have kids and want to make sure they’re covered.’ … Or, ‘Oh I haven’t had health insurance for years, but I’m getting older and having health problems,’” Intuit’s Williams said. “So you can envision all sorts of rationales that economists may or may not get to that are personal. … All of that is an art, not a science.
*Modified from a Politico.com article