ObamaCare enrollment spikes ahead of increase in penalty

People who don’t buy health insurance next year will face a penalty of at least $695, a price that is being linked to a jump in ObamaCare sign-ups, particularly among people under 35 years old.

The administration said Tuesday that 8.2 million people have signed up so far, compared to 6.4 million at this point last year.

{mosads}That includes 2.1 million people under age 35 — nearly double the number of young people enrolled during the same period last year.   

Administration officials touting the numbers have pounded home the message that ObamaCare coverage is affordable in explaining the rush of people joining the exchanges.

Over and over, officials tout that more than 7 in 10 people can find a plan for $75 a month or less, with a government subsidy. 

But some say the real reason for the jump may be the threat of a big penalty.

Those who didn’t buy health insurance last year faced just a $325 fine or 2 percent of their income, which ever was greater.

This year the fine is $695 or 2.5 percent of their income. (There are some exemptions for people who cannot afford coverage). 

“Year 1 and 2 we got a lot of ‘I’m just going to pay the penalty,’ ” said Daniel Bouton, a “navigator” with the Community Council of Greater Dallas who helps people sign up. “Now they are saying that it is $695.”

According to the IRS, 7.5 million people chose to pay the penalty last year, higher than the administration’s projections. That number could now fall.

“There is an effect, absolutely,” Bouton added. “It is different than past years.”

How much of an effect the penalty is having is still unclear. 

“I’ll be frank with you, we don’t have data on this, but I can just tell you based on being in many states so far, I think it is playing a role, it comes up,” Kevin Counihan, the administration’s CEO in charge of the ObamaCare marketplaces, said on a call with reporters last week. 

Obama administration officials don’t put the penalty at the center of their messaging.

Officials such as Health and Human Services Secretary Sylvia Burwell often don’t mention it while doing local TV interviews urging sign-ups, instead touting information about financial assistance that officials say is needed to counter the impression that insurance is unaffordable. 

“I don’t think we hit it hard,” Counihan said of the penalty. “But we clearly do want to communicate that the penalty has gone up and I think that’s part of the role we have to do.”

Shelli Quenga, director of programs at the Palmetto Project, a non-profit that helps people sign-up in South Carolina, said that a combination of messages can lead people to sign up.

She said people come in the door having heard about the penalty, but they still need to be convinced that coverage is affordable. “There’s definitely more talk of the penalty this year than there has been in prior years,” she said. “It lets us begin the conversation.”

Jenny Sullivan, director of the Best Practices Institute at Enroll America, the leading outside group driving sign-up efforts, says that the primary message is getting out the basic fact that financial assistance is available, but the penalty “certainly is something we’re making sure we’re sharing with customers.”

Enroll America is testing its messages about the penalty to see if it is most effective to simply say there is a fine, to say it is at least $695, or to personalize the information to calculate the exact amount someone has to pay. 

One web ad for healthcare.gov reads: “Avoid the tax penalty of $695 or more. Enroll now.”

Sullivan also said there is some worry that people might not know enough about the fine.

The group’s polling shows that most people are generally aware that there is a penalty, but they don’t necessarily know how big it is.

Eighty-five percent underestimated the fine they would have to pay, Sullivan said. 

The fine remains one of the least popular parts of ObamaCare. A December 2014 Kaiser Family Foundation poll found that 64 percent view it unfavorably. 

Counihan, the Marketplace CEO, says the administration emphasizes that it would much rather sign people up than fine them. 

“We always make it clear that our business is not to penalize people,” Counihan said. “Our business is to get people insured.”