While the passage of Obamacare has increased overall insurance coverage dramatically, the exchanges have still struggled to attract younger and higher-income enrollees at the rates that designers had hoped.
One problem, according to a new analysis from Avalare Health, may be that the penalties for failing to enroll are not high enough. The reports finds that a 27-year-old earning $24,000 a year would pay $1,523 in premiums for a silver plan, but just $695 in penalties for not signing up.
Source: Avalere Health
Some potential enrollees are able to avoid paying the penalty altogether by claiming exemption. Last year, 12.5 million taxpayers were able to get exemptions from the mandate, more than signed up for coverage through the exchange. Exemptions are granted for a variety of reasons, including low income and experiencing various hardships such as bankruptcy.
Meanwhile, those age 55 and older -- those consumers who typically have the highest healthcare costs -- comprised more than a quarter of all enrollees, even though they make up just 16 percent of the eligible population.
Lower enrollment, especially among young, healthy consumers, is one of the factors driving the increase in exchange premiums, which are going up more than 20 percent this year. Higher premiums will make it even more likely that healthy consumers will make the economic decision to choose the penalty over the insurance. “If 2017 enrollment growth is small, as expected, it will perpetuate market instability,” Caroline Pearson, senior vice president at Avalere health said in a company blog post.
About 10.4 million Americans were enrolled in exchanges in the first half of this year, less than half the number projected by the Congressional Budget Office after the Affordable Care Act was passed.