For many, the ACA may mean a more stressful tax season this year as the penalties for non-coverage finally kick in. Here’s Margot Sanger-Katz at The Upshot:
For people who didn’t sign up for coverage last year, and didn’t qualify for a special exemption, the consequences are starting to become clear. As people file their taxes, people who remained uninsured will be hit with penalties of either $95 or 1 percent of their income — whichever is higher. Those fines rise for people who don’t sign up this year, though they won’t feel the pain of that decision until next year.
The tax penalties are a key feature of the law, devised as an extra encouragement for reluctant people to enroll in health insurance before they become sick. But awareness remains low among the uninsured, about both signup deadlines and the penalties.
Even fewer people may wind up knowing what’s going on if the attempts to carve out more exemptions succeed. According to Sanger-Katz, some Democrats are asking the administration to “grant a special sign-up opportunity” for the uninsured so they don’t get penalized. Meanwhile, in states that did not expand Medicaid, lower-income Americans can receive an exemption from the mandate if they would have qualified for Medicaid had their states expanded it. Both of these are reasonable responses to the ACA rollout, but the second one especially contributes to the defanging of the individual mandate. The more exemptions and extensions and special considerations Americans are given, the less forceful the mandate becomes.
That may not seem like a problem if you think the mandate shouldn’t exist, but it does alter the coverage pools. Originally, one fear about the ACA was that a low penalty could keep healthy and/or well-off people out of the market, leaving only sick people to sign up. That would have raised premiums, perhaps significantly. But if these stories are to be believed, the opposite may be happening. The exemptions mean that lower-income Americans who would have qualified for Medicaid expansions stay out of the market entirely—perpetuating a problem the ACA was supposed to fix. Proponents of the law argued that uninsured, lower-income Americans are a financial drag on the system because they use health care anyway, and that drawing these people into the exchanges would save the system money. It doesn’t appear to be working out that way.