A new HealthPocket consumer survey revealed that a penalty for remaining uninsured will not motivate most people to buy insurance.
Survey respondents were asked, “Will the $95 IRS penalty motivate you to shop this October for an Obamacare health plan?” and nearly two-thirds of consumers surveyed answered “No.” Only 8 percent of respondents answered “Yes,” while nearly 30 percent were unsure.
“From this we know that the penalty alone will not drive a large number of consumers to purchase a new health plan starting this October,” said Bruce Telkamp, CEO of HealthPocket. “Therefore, the law will be most effective if consumers see real value in obtaining the insurance coverage. Only insurers that offer high quality and affordable health plans should expect to see significant new enrollments this fall.”
Beginning in 2014, consumers will be required to buy health insurance under the Affordable Care Act. An IRS tax penalty will be levied on consumers who fail to purchase health insurance, with some exceptions for people with financial hardships or religious beliefs that preclude them from purchasing health insurance, among others.
The tax penalty for not purchasing health insurance will start at either $95 per individual or 1 percent of household income, whichever is greater. By 2016, the penalty will rise to 2.5 percent of annual household income or a minimum of $695 per person, again, whichever is greater.
The poll also found that the $95 tax penalty is likely to be as ineffective at compelling younger respondents to buy health insurance as it was for survey respondents as a whole—61 percent for 18 to 24-year-olds and 55 percent for 25 to 34-year-olds. The report points out that if younger, healthier populations choose to face the penalty and don’t enter the insurance pool, insurance premiums for the entire market could rise due to the higher costs of coverage for the older and less healthy enrollees who remain in the pool.
However, the tax penalty is not the only strategy that Obamacare will use to promote enrollment. Some premium and out-of-pocket assistance is available for individuals making less than 400 percent of the federal poverty level or $45,960 in 2013 for individuals. When examining responses from consumers who fall in this income range, HealthPocket found that 63 percent still responded “no,” indicating that an outreach program has to occur that speaks to this population.
The InfoPoll survey of 1,003 people was conducted between April 12 and April 16, 2013.
