Buy health insurance or pay a penalty.
That’s the incentive — or what critics would call a threat — that Congress built into the Affordable Care Act in 2010 to encourage all Americans to buy coverage.
Attacked by opponents as an unwanted intrusion into free choice, the individual mandate issue went all the way to the U.S. Supreme Court, which decided in 2012 that the requirement was legal.
But for all of the fierce political and ideological battles over the requirement, experts working on the front lines to implement the law on Oct. 1 say the penalty lacks muscle. And they say consumers don’t seem to be concerned about being forced to purchase insurance.
“When we have a chance to explain it to people, it’s been very positive,” said Libby Cummings, an outreach specialist at Portland Community Health Center. “People are excited about it and want to have health insurance. People see it as an opportunity to get coverage that was never open to them before.”
Cummings’ job includes identifying people eligible to buy insurance and helping them choose a plan on Maine’s new health exchange, which begins accepting enrollments Oct. 1. The insurance options on the exchange are open to Mainers who don’t have insurance and are now self-insured.
Consumers must choose a plan by March 31. Cummings said the key issue people are concerned about is whether they can afford it, not whether they are forced to purchase insurance.
The penalty for failing to buy coverage — $95 in 2014 before scaling up in subsequent years — is modest compared to the cost of health insurance, and people can also take advantage of broad exceptions to avoid paying the penalty.
For instance, people can avoid buying insurance and sidestep the penalty by declaring that the insurance available — even on the exchange — is unaffordable. Insurance is deemed unaffordable if premiums exceed 8 percent of total income.
The federal government also does not currently have much power to enforce the penalty, experts say. The penalty, which the government calls a fee, will be assessed by the Internal Revenue Service on individuals’ income tax returns, beginning in 2015 for the 2014 tax year.
“We don’t believe a whole lot of people are going to be paying the penalty,” said Trish Riley, a senior fellow at the Muskie School of Public Service at the University of Southern Maine.
For customers looking to purchase insurance on the exchange, the penalty is not the primary issue, said Kevin Lewis, president of Maine Community Health Options, one of the two insurance providers on the exchange. The other provider is Anthem.
“I don’t think the penalty is going to be the driving force behind whether people purchase health insurance. Affordability is going to be the driving force,” Lewis said.
Part of the reason may be that “young invincibles” — the uninsured between 18 and 29 often predicted to resist purchasing health insurance — may instead be looking to buy it. According to a Robert Wood Johnson Foundation study, only 26 percent of uninsured young adults believe they don’t need health insurance.
“Most of the young invincibles apparently do not believe they are so invincible that they do not need health insurance, suggesting that well targeted outreach and enrollment efforts may succeed,” said the report, published this month by the New Jersey think tank.
Wendy Wolf, president and CEO of the Augusta-based Maine Health Access Foundation, whose mission includes improving access to quality health care, said she’s not surprised at the results of the survey of young adults.
“There’s this idea that young people don’t think they need insurance. That’s not true. Young people sense a vulnerability when they don’t have insurance,” Wolf said.
Even under the Affordable Care Act, the uninsured are not protected retroactively if they choose not to buy coverage. For example, an uninsured person hurt in a car accident could sign up for insurance afterwards and receive coverage for future care related to the crash injuries. But the person would still be billed the full amount for care received while uninsured, Wolf said.
BOTH SIDES TARGET STUDENTS
Survey findings aside, the young are still the focus of lobbying campaigns on both sides of the health care law. Colleges will host events by groups such as Enroll America, an organization that supports the Affordable Care Act and will seek to sign up students for the health exchanges.
Critics trying to steer students clear of the exchanges include Generation Opportunity, a Virginia group with financial ties to David and Charles Koch, wealthy businessmen who fund a variety of conservative political efforts.
Generation Opportunity is airing a video, widely criticized by supporters of the law, that depicts a young woman with her feet in stirrups awaiting a gynecological exam. After a nurse leaves the room, an Uncle Sam figure in a garish mask pops up between her legs.
The battle over college students underlines the importance of enrolling young, healthy people in the exchanges. Their premium payments will help support the higher demand and costs of older consumers in the exchanges.
About half of consumers who now lack insurance will likely qualify for subsidies that will reduce their premiums to $100 or less a month, according to a report released this past week by the U.S. Department of Health and Human Services. Subsidies are available on a sliding scale to those who earn between 100 percent and 400 percent of the federal poverty level.
That means a family of four earning as much as $90,000 would still qualify for a modest subsidy.
Cummings, at the Portland clinic, said the subsidies, still just an estimate until the system goes live on Oct. 1, are a major selling point. She runs potential clients’ incomes through a subsidy estimator developed by the Kaiser Family Foundation. It’s often a good moment in the conversation.
“Seeing these subsidies is really powerful for a lot of people,” Cummings said.
STILL TOO COSTLY FOR SOME
Still, how many people will sign up for Maine’s exchange remains something of a mystery.
“What is abundantly clear is that there’s nothing that’s abundantly clear,” said Caroline Teschke, clinical programs director at the Portland Community Free Clinic, which treats many low-income residents who don’t have health insurance. “We don’t really know what people are going to do.”
Teschke said for some families, even subsidized insurance is out of reach.
“For some families, $200 a month might as well be $20,000 a month, when the kids need shoes and the car needs tires,” she said.
The penalty for those who don’t buy in does ramp up over time, from $95 in 2014 to as much as $695 in 2016. So it may become more persuasive in the future.
“The penalty is a backstop. There are so many carrots and only one stick in the ACA,” Riley said. “Step 1 are the carrots, and Step 2 is the stick.”
Joe Lawlor can be reached at 791-6376 or at: