What Everyone Is Missing About The Obamacare Deadline

Bill Scher

Enormous political weight is being put on what the final sign-up tally for Obamacare will be. Democrats want a strong number to show that Obamacare’s individual mandate for buying health insurance is working as intended. Republicans want a weak number to show that the entire program is a boondoggle that nobody wants.

And so, when the Obama administration makes a minor tweak, allowing an extension for people who began the sign-up process but didn’t finish before the March 31 deadline, it becomes a political football. In any other context, a deadline extension would be simply be seen as run-of-the-mill friendly customer-service.

But treating the sign-up tally after this year’s deadline as the final proof of whether the individual mandate concept is ridiculous for one indisputable reason.

Under the law, for 2014, we don’t have a complete individual mandate.

The individual mandate is phased in over three years. This year the penalty is very light, 1% of your income or $95, whichever is higher. Some folks may conclude paying that penalty is no big deal. (In fact, the Koch brothers-funded Generation Opportunity has a whole “Opt Out” campaign premised on that argument.)

But in 2015, the penalty doubles and then some: 2% of income or $325. In 2016, it explodes to 2.5% of income or $695. And the flat dollar amount will be pegged to inflation after that. (Good luck with the Opt Out campaign in 2016.)

So even if sign-ups this year are relatively weak, it would say nothing about what will happen once the penalty is fully phased in, the urgency to avoid the penalty sparks more word-of-mouth, and overall awareness is widespread.

Right now it’s possible awareness is not widespread. A poll taken two weeks ago finds 61% of the uninsured are not aware of the deadline.

Maybe the final PR push will change that, but all the outreach so far isn’t scolding you to get insurance or else pay the piper. It’s encouraging you to buy health insurance for your own good.

Appealing to better angels makes some political sense, as it doesn’t have a Big Government, Nanny State flavor to it. But the folks that end up paying the penalty this year will be a lot more motivated to buy health insurance next year, even if it makes them grumble.

And you can bet in 2016 there will be a lot more communication reminding you that you’ll be socked with a $695 penalty if you don’t sign up.

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