WASHINGTON — Despite all the spin and punditry about the national health care law’s mandate that Americans buy health insurance or pay a penalty, the vast majority wouldn’t be forced to buy anything or pay any penalty.
A recent study by the Urban Institute, a nonpartisan research center that focuses on economic and social policy, found that if the law had been fully implemented last year, 93 percent of the population under age 65 wouldn’t have faced a penalty or had to buy insurance under the mandate.
In fact, only 6 percent of Americans, about 18 million people, would have to “newly purchase” insurance under the law, the study found. And of this group, roughly 11 million would be eligible for subsidies to help buy their coverage from new insurance marketplaces, or “exchanges,” created by the law.
The remaining 7 million, about 2 percent of the total population and 3 percent of all Americans under age 65, wouldn’t receive any financial help and could face penalties for lacking coverage, said Linda Blumberg, a health economist and senior fellow in the Urban Institute’s Health Policy Center.
This relatively thin sliver of Americans who’d be required to pay for full coverage belies the dominant public perception that the mandate would be a financial strain for wide swaths of the population.
“That was one of the reasons we wanted to do this study, because we felt like the real impact was being blow out of proportion,” said Blumberg, who was the lead researcher on the study.
A closer look at numbers shows that 87.4 million of the 268.8 million Americans under age 65 would be exempt from the mandate because they’re illegal immigrants, have incomes below the law’s tax-filing threshold or can’t get coverage because the premiums would eat up too much of their income.
Nearly 75 percent of this group – 63.4 million – already have coverage, while 24 million do not. Blumberg said these 24 million comprised 7.3 million illegal immigrants, 14.3 million people whose incomes are below the tax-filing threshold and 2.4 million people who can’t get affordable coverage.
That leaves 181 million Americans under age 65 who could be subject to the mandate, Blumberg said. But 86 percent of this group, 155 million people, already have coverage.
“So they’re not going to be subject to any penalty. They don’t have to change anything that they’re doing,” Blumberg said. “Some of them have public coverage already, some of them are buying coverage on their own, some of them are in employer-based insurance.”
That leaves 26 million non-elderly people who are uninsured and potentially subject to the penalty.
Of this group, 8 million are low-income people who’d be eligible for free coverage under Medicaid. Nearly 11 million others probably would get federal subsidies to buy coverage on the insurance exchanges, “so they wouldn’t have to pay the full freight, but they would have to pay something in order to avoid a penalty,” Blumberg said.
The remaining 7 million “would not be eligible for financial assistance and if they wanted to avoid the penalty, they would have to buy coverage with their own cash,” Blumberg said.
Blumberg’s estimates reflect the participation of all states in the expanded Medicaid coverage envisioned under the Patient Protection and Affordable Care Act. But the Supreme Court ruled Thursday that states don’t have to expand their Medicaid programs as the law originally required.
If, as expected, some states choose not to increase their Medicaid enrollment as result of the high court’s decision, Blumberg’s estimates could look dramatically different, with some of the 8 million people projected to get free Medicaid coverage moving instead into the group of nearly 11 million who are eligible for subsidized care.
In his majority decision, Chief Justice John Roberts Jr. suggested that the law’s penalties for not obtaining coverage may not be enough to compel the uninsured to purchase it.
“Some people will definitely pay the penalty instead,” Blumberg acknowledged. “But I think people would also like to spend their money and get something in return, rather than spending it and getting nothing in return, which is what the penalty is.”
