The state and federal health insurance exchanges are using all manner of humor and happy talk to sell the Affordable Care Act’s products. But the one part of the new system that they are not quick to trumpet is the financial penalty that Americans will face if they fail to buy insurance.
On state exchange websites, mention of the penalty is typically tucked away under “frequently asked questions,” if it appears at all. Television and print ads usually skip the issue, and operators of exchange telephone banks are instructed to discuss it only if asked. The federal website, now infamous for its glitches, mentions the penalty but also calls it a fee, or an Individual Shared Responsibility Payment.
The euphemisms and avoidance of any discussion of the penalty are no accident, both supporters and critics of the law say. While the mandate for all Americans to buy health insurance — with a penalty if they do not — was the linchpin of the Supreme Court decision upholding the law, and is considered the key to its success, poll after poll has found that it is also the least popular part of the program.
State exchange operators say that they are not trying to hide the penalty, but that their market research has taught them that, at least in the initial phase, consumers will be more receptive to soothing messages and appeals to their sense of collective responsibility than to threats of punishment.
“We feel that the carrot is better than the stick,” said Larry Hicks, a spokesman for Covered California. “This is a new endeavor. We want people to come in and test our wares.”
But there is also the dirty little secret of the penalty: It is a bit of a chimera, because the federal government cannot use its usual tools like fines, liens or criminal prosecutions to punish people who do not pay it. The penalty is supposed to be reported and paid with the income tax returns of those who do not buy insurance, but the government has not said how it will collect from those who owe it but do not pay it, though the law allows it to deduct from any income tax refunds.
“It might be that they want to be positive,” said Michael Cannon, director of health policy studies at the conservative Cato Institute. “But it’s also the case that an informed customer is not their best customer.”
And for many healthy middle-class people, a side-by-side comparison might suggest that it would be more cost-effective to pay the penalty than to buy insurance.
In 2014, a family with two adults and two or more children, for example, would pay $285 or 1 percent of the family’s income over the $20,300 filing threshold, whichever is greater; those jump to $2,085 or 2.5 percent by 2016 and rise with inflation after that.
For instance, a family of four making $59,000 a year could face a choice between a $387 penalty the first year or, in a typical “silver” or midpriced policy offered on the California exchange, a premium of nearly $4,800 after the federal subsidy, with a $4,000 deductible, according to the Kaiser Family Foundation subsidy calculator. There is variation from plan to plan, but the deductible typically would not apply to doctor visits, preventive care, lab tests or generic drugs, although some regular co-payments would apply.
“Are they going to buy it?” said Robert Laszewski, president of Health Policy and Strategy Associates, a health care industry consultant in Alexandria, Va. “I don’t mean this as an attack on Obamacare. I think it’s a difficult political problem.”
The federal website, which serves residents of 36 states, appears to acknowledge this problem in a not-quite-threatening way: “If someone who can afford health insurance doesn’t have coverage in 2014, they may have to pay a fee. They also have to pay for all of their health care.”
The penalty, despite its unpopularity, is the glue that holds the Affordable Care Act together. Unless people are forced to buy insurance, health policy experts say, young and healthy people may stay away, leaving only the more expensive patients in the plans, which will quickly drive up premiums. And it was the penalty that the United States Supreme Court relied on to uphold the individual mandate, reasoning that it was a legal use of Congress’s taxing authority.
The sotto-voce treatment of the penalty resembles the strategy Massachusetts used when it set up its universal health insurance program several years ago. It took a sales approach at first, using the Red Sox in its campaign to appeal to men, who tend to be a little more resentful of being pushed into something, said Jon Kingsdale, the executive director for the first four years.
In November 2007, with barely two months left to sign up, his state began emphasizing the penalty, and volume soared, he said. “That was very effective as a call to action,” Mr. Kingsdale said.
Directors of state exchanges said that as happened in Massachusetts, a new phase of advertising that incorporates the penalty may kick in as the sign-up deadline approaches. Last month, the Obama administration said people who signed up for coverage by March 31 would avoid the penalty; previously the date was Feb. 15.
Some people are exempt from the penalty, including those with religious objections to insurance or with incomes too low to require a tax return, and those who cannot find a plan costing less than 8 percent of their income.Officials at the Health and Human Services Department, which runs the federal exchange, would not answer questions about the marketing of the penalty.
But officials at Enroll America, a nonprofit agency that is promoting the new marketplace, said they were deliberately playing down the penalty in favor of themes that tested well with focus groups: financial assistance, core benefits, no one being turned away for pre-existing conditions, and easy comparison shopping. “That doesn’t mean that the penalty or the mandate isn’t an important piece of the law from a policy perspective,” said Sophie Stern, a senior policy analyst for the agency. “But from a messaging perspective, this is what we find resonates best.”
The approach is evident in a vast expanse of cubicles in an office park outside Albany, with panoramic views of low-lying mountains, where dozens of newly hired customer service representatives answer the calls of New Yorkers with questions about the state’s exchange.
They rattle off information about the “metal levels” — bronze, silver, gold and platinum plans — and deductibles and copays. But they are not supposed to volunteer that by law, having health insurance is now mandatory for most people. If someone asks — and occasionally people do, the customer service agents say — they pull up a script that says, “The Affordable Care Act requires that if you can afford health coverage, you must get coverage or pay a penalty.”
Donna Frescatore, executive director of New York’s exchange, said focus groups preferred positive messaging, hence the state’s message, “Today’s the day that you can have information.” The campaign, she said, “is about health as opposed to the burden of illness.”
Likewise, Minnesota has gone upbeat with its humorous ads, which feature a replica of a roadside Paul Bunyan statue suffering various injuries. Oregon has a YouTube video in which Laura Gibson, a folk singer, wearing a red dress and strumming a guitar, stands in a green field as she sings about living in a place “where I’m free to be healthy and happy and strong.”
“We don’t have any messaging related to the penalty or the mandate, and that’s intentional,” said Amy Fauver, a spokeswoman for Cover Oregon, the state exchange. “Because first of all, we don’t enforce it, it’s really not ours to enforce, and we really feel like there is so much to celebrate in terms of benefits.”
