What prevents Insurance Companies from tripling premiums now?

[smoke]

@Fuzzy_Dunlop

If I don’t get it I have to pay $700 and get absolutely nothing, so I’m getting insurance for $1300 extra". Plenty of people will decide getting nothing for $700 is better than coughing up the full insurance premium, but nobody but the angriest tea-bagger is going to gleefully do it to spite the mandate.

This is the part of the bill I truly don’t understand. My employer-sponsored family plan comes out to roughly $12,000 per year. My contribution is around $300/month. If suddenly, I had to choose between buying my own healthcare and paying a $700 fine, and I decided I didn’t want to pay for healthcare, that $700 fine would be a tiny drop in the bucket, compared to even my monthly $300 payment. And that doesn’t take into account the portion I’d have to pay that my employer currently does.

I don’t see how this fine is any incentive whatsoever, but there has to be some calculation I’m missing. Anyone?

[Clu-Me-In]

@smoke

This is the part of the bill I truly don’t understand. My employer-sponsored family plan comes out to roughly $12,000 per year. My contribution is around $300/month. If suddenly, I had to choose between buying my own healthcare and paying a $700 fine, and I decided I didn’t want to pay for healthcare, that $700 fine would be a tiny drop in the bucket, compared to even my monthly $300 payment. And that doesn’t take into account the portion I’d have to pay that my employer currently does.

I don’t see how this fine is any incentive whatsoever, but there has to be some calculation I’m missing. Anyone?

I think that amount folks pay as a result of not buying health insurance goes towards what the rest of us pay for those folks who get injured/sick and are not covered by any health insurance policy.

In the past, they were never penalized. Now they will be, and it will get more expensive for them the more money they make.

[zwede]

@smoke

I don’t see how this fine is any incentive whatsoever, but there has to be some calculation I’m missing. Anyone?

My thought here is:

1. The fine is aimed at the working poor as it is expected that middle class all wants insurance anyway (which I believe is a false premise…). The working poor will have their premiums heavily subsidized to the point where the $700 fine is more than they would pay for the (subsidized) insurance.

And/or

2. For political reasons, the fine is originally $700 but will soon the increased to a much larger amount.

[Balthisar]

The fine is the greater of $700 or a percentage of your income. If my employer dropped my insurance, and I decided not to buy from the pool, my fine would be considerably higher than $700!

[smoke]

@Balthisar

The fine is the greater of $700 or a percentage of your income. If my employer dropped my insurance, and I decided not to buy from the pool, my fine would be considerably higher than $700!

I think this is the main piece I was missing. Still less than the full 12 grand, but much more painful.

[zwede]

@Balthisar

The fine is the greater of $700 or a percentage of your income. If my employer dropped my insurance, and I decided not to buy from the pool, my fine would be considerably higher than $700!

I’ve seen the number 2.5%, but it is unclear to me if that is gross or net income?

[The_Great_Philosopher]

@smoke

This is the part of the bill I truly don’t understand. My employer-sponsored family plan comes out to roughly $12,000 per year. My contribution is around $300/month. If suddenly, I had to choose between buying my own healthcare and paying a $700 fine, and I decided I didn’t want to pay for healthcare, that $700 fine would be a tiny drop in the bucket, compared to even my monthly $300 payment. And that doesn’t take into account the portion I’d have to pay that my employer currently does.

I don’t see how this fine is any incentive whatsoever, but there has to be some calculation I’m missing. Anyone?

The fine for not buying insurance is either $695 or 2.5%, whichever is higher, and if I understand it correctly, it applies per person. That would mean if you’re a family of 4 and your total income is $27,800 or less, your fine would be $2780, although at that level of income you’d be eligible for Medicaid anyway. If your family unit earns more than that, then the 2.5% rate would start to apply and the fine would be even higher, although I think there is an upper limit on how high the fine can be which I can’t seem to find right now. But yes, the fine would probably be lower than what you’re currently paying for insurance, and that is potentially a problem with the reform bill.

[DSeid]

It’s household income, not individual income, and a majority will qualify for some subsidy in its purchase. This NYT interactive helps me understand it. Median household income in the US is about $50K for context and

Starting in 2014, anyone with an income below 133 percent of the poverty level — or about $29,327 in 2009 for a family of four — will be eligible for a rejuvenated Medicaid program. Medicaid’s often anemic reimbursements will be increased to the same level as Medicare, making more doctors willing to accept it. …

… Coverage for those making up to four times the poverty threshold — $88,200 for a family of four in 2009 — will get subsidies on a sliding scale. That means you will pay somewhere between 3 percent and 9.5 percent of your income for insurance, and the government will cover the rest. …

Those are parts of the carrot. Along with a host of other measures. The stick is pretty mild -

The penalty will be phased in, starting at $95 or 1 percent of income in 2014, whichever is higher, and rising to $695 or 2.5 percent of income in 2016. But families would not pay more than $2,085.
American Indians don’t have to buy insurance. Those with religious objections or a financial hardship can also avoid the requirement. And if you would pay more than 8 percent of your income for the cheapest available plan, you will not be penalized for failing to buy coverage.
Those who are exempt, or under 30, can buy a policy that only pays for catastrophic medical costs. It must allow for three primary care visits a year as well.

Bottom line is the mandate is a soft one that more appeals to the idea that most people will have the good sense to get it if it is reasonably affordable once you’ve added up the penalty and the incentives.

Really a bit like what Obama advocated for back in the election season now that I put it like that …

How is it reported? My thought has always been that it would be something you would have to attest to on your tax forms - and either claim a credit, accept the fine, or be neutral on - and that most do tell the the truth on tax forms.

[jasg]

@RandomLetters

If they broke their leg, then they could just buy some insurance (or get a relative/friend to buy it for them) over the phone or the net while waiting for the ambulance/before calling it. Hell, someone could make a smartphone app that is set up with your information/type of plan you want, to apply for you, so it is push button receive insurance.

It appears to me (from reading the bill) that there will be open enrollment periods. Not surprising really, with Medicare you must sign up or change options during a limited period each year. Same for changes in employer provided plans.

I expect that when the insurance exchanges for individual plans go into effect just before 2014, you will have a limited amount of time to enroll. If you don’t do that, you wait for a year.

That should cut down on ‘adverse selection’ a fair amount.

[The_Great_Philosopher]

@DSeid

The penalty will be phased in, starting at $95 or 1 percent of income in 2014, whichever is higher, and rising to $695 or 2.5 percent of income in 2016. But families would not pay more than $2,085.

OK, I wasn’t sure what the upper limit was. That’s even lower than I thought.

Bottom line is the mandate is a soft one that more appeals to the idea that most people will have the good sense to get it if it is reasonably affordable once you’ve added up the penalty and the incentives. Really a bit like what Obama advocated for back in the election season now that I put it like that …

Obama and Clinton did have some heated arguments about the very concept of an individual mandate though. Obama was definitely against it - he talked about why he changed his mind on it at the health care summit.

How is it reported? My thought has always been that it would be something you would have to attest to on your tax forms - and either claim a credit, accept the fine, or be neutral on - and that most do tell the the truth on tax forms.

I thought that would make the most sense, but I’m not sure it’s the case. The Democrats have said that there will effectively be no enforcement of the fine: no criminal penalties for refusing to pay it and no liens. Surely if you need to claim a credit just to avoid paying the fine, there’d be no need for either of those things anyway. Anyone have a better idea of how the fine will be enforced?