Consumers say mandate penalty won’t work News added by Benefits Pro on April 19, 2013

Benefits Pro

Joined: September 07, 2011

My Company

By Kathryn Mayer

Just how effective will the insurance penalty under health reform be in getting consumers to buy insurance?

Not very, according to a new survey.

Nearly two-thirds of consumers (63 percent) surveyed by HealthPocket, a website that compares and ranks health plans, said the IRS health penalty won’t motivate them to buy insurance.

Only 8 percent of respondents said the penalty would motivate them, and nearly 30 percent were unsure.

Beginning in 2014, consumers will be required to buy health insurance under the Patient Protection and Affordable Care Act. An IRS tax penalty will be levied on consumers who fail to purchase health insurance, with few exceptions.

The tax penalty for not buying health insurance will start at $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, whichever is greater.

“From this new poll we now 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.”

The poll confirms what some industry insiders have been arguing all along: that the 2014 penalty won’t be sufficient enough to motivate the uninsured to buy health insurance.

The poll of roughly 1,000 consumers found that the $95 tax penalty is as ineffective to compel 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.

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, HealthPocket researchers said.

The number of people who are uncertain about whether the penalty will motivate them to buy a health plan might stem from a lack of awareness that a tax penalty under the law exists, or a lack of understanding of how that penalty amount will compare to the cost of a new Obamacare health plan, said Kev Coleman, head of research & data at HealthPocket and researcher of the poll.

Poll after poll confirm that consumers aren’t aware of many aspects of reform.

Results are based on responses to an online survey conducted from April 12 to April 16. Margin of error across the responses is estimated at +3.2 percent to -3.3 percent.

Originally published on
The views expressed here are those of the author and not necessarily those of ProducersWEB.
Reprinting or reposting this article without prior consent of is strictly prohibited.
If you have questions, please visit our terms and conditions
Post Press Release