The first real test of Obamacare comes today as online insurance marketplaces, or exchanges, open to the public.
While the Affordable Care Act continues to be a source of debate, two questions loom over the whole enterprise: Who is actually going to sign up? And will enough young, healthy people buy in?
“Nobody knows who is going to sign up,” said Ceci Connolly, managing director for PwC’s Health Research Institute. Tuesday “is going to be exciting because it’s opening day. But there is a long season ahead of us. … The overarching theme as we go through the next few months is, ‘Who is going to sign up via exchanges?’”
Getting the right mix of people, especially young, healthy individuals, is critical to the success of the program, experts and proponents say.
Young, healthy people who do not receive insurance through their jobs typically went uninsured in the past. The ACA hopes to create incentives for that pool of people to join, but also promises a punishment if they don’t — a fine this year of $95.
Young, healthy people are critical to making the system work. By putting money into the pool, but taking little out for medical expenses they “contribute to the system by spreading around risk,” said Connolly. “By not needing as much care, they help subsidize potentially sicker participants,” she said.
The fear is that not enough healthy people will chose to enroll, setting off what experts call a “death spiral,” paying out more expenditures than the program takes in from enrollees. The administration was aware of the potential death spiral and created incentives and penalties to encourage people to sign up.
Obamacare is available to anyone under 65 years old who does not receive insurance through work. Anyone who remains uninsured at the end of the enrollment period must pay a $95 penalty this year. But that penalty increases every following year. Next year, those who don’t have insurance will have to pay out $325 for refusing to sign up, and by 2016 the penalty will exceed $750.
Families this year will be charged no more than $285 or 1 percent of their income in penalties, whichever is higher.
The administration hopes people would prefer to pay between $1,200 and $1,500 a year for insurance, rather than $750 to get nothing, experts said.
Enrollment begins today, but remains open until March 31, 2014.