Health-law fine on the uninsured will more than double

WASHINGTON -- The math is harsh: The federal penalty for having no health insurance is set to jump to $695, and the Obama administration is being urged to highlight that fact in its new pitch for health-law sign-ups.

That means the 2016 sign-up season starting Nov. 1 could see penalties become a bigger focus for millions of people who have remained eligible for coverage but uninsured. They're said to be squeezed for money and skeptical about spending what they have on health insurance.

Until now, health-overhaul supporters have stressed the benefits: taxpayer subsidies that pay about 70 percent of the monthly premium, financial protection against sudden illness or an accident and access to regular preventive and follow-up medical care.

But in 2016, the penalty for being uninsured will rise to the greater of $695 or 2.5 percent of taxable income. That's for someone without coverage for a full 12 months. This year, the comparable numbers are $325 or 2 percent of income.

Marketing usually involves stressing the positive. Rising penalties meet no one's definition of good news. Still, that may create a new pitch: The math is clear. A consumer would be able to get six months or more of coverage for $695, instead of owing that to the IRS as a tax penalty. (That example is based on subsidized customers putting in an average of about $100 a month of their own money.)

Backers of the law urge the administration to drive the math lesson home.

"Given that the penalty is larger, it does make sense to bring it up more frequently," said Ron Pollack, executive director of Families USA, a liberal advocacy group. "It's an increasing factor in people's decisions about whether or not to get enrolled."

"More and more, people are mentioning the sticks as well as the carrots," said Katherine Hempstead, director of health insurance coverage for the Robert Wood Johnson Foundation, a nonpartisan organization that helped facilitate the insurance expansion under Obama's law.

Administration officials are looking for a balance.

"We need to make sure that we are very clear and explicit about that $695 penalty so people understand the choice they are making," spokeswoman Lori Lodes said.

But she said the main emphasis will stay on the benefits of having health insurance and how the law's subsidies can dramatically lower the cost of monthly premiums.

The requirement that individuals get health insurance or face fines remains the most unpopular part of President Barack Obama's health care law, a prime target of Republican repeal efforts. It started at $95 or 1 percent of income in 2014. The fact that it's gone up so much may take consumers by surprise.

But many experts consider the mandate essential to Obama's overall approach, as does the insurance industry. The law forbids insurers from turning away people with health problems, and the coverage requirement forces healthy people into the insurance pool, helping to keep premiums in check. After 2016, the fines will rise with inflation.

This year was the first time the IRS collected the penalties, deducting them from taxpayers' refunds for the 2014 tax year in most cases. Some 7.5 million households paid penalties totaling $1.5 billion, an average of $200 apiece, according to preliminary IRS data. Separately, another 12 million households claimed exemptions from the mandate because of financial hardships or other reasons.

Although Obama's law is five years old and has survived two Supreme Court challenges, administration officials say the upcoming open enrollment season won't be easy. It may be a struggle to just keep about the same number of people covered.

The administration has set a goal of 10 million customers enrolled and paying their premiums by the end of 2016 on HealthCare.gov and state insurance markets. That's roughly the number covered now, well below what congressional budget analysts had estimated for 2016. The administration expects most will be returning customers, but 3 million to 4 million will be people who are currently uninsured.

Among the difficulties for next year: Premiums are expected to go up more than they did this year, even if subsidies cushion the cost. The most eager customers have already signed up. And many of those remaining may have other financial priorities for their tight budgets, like car repairs or putting money in savings accounts.

Sign-up season starts Nov. 1 and runs through Jan. 31. As a result of the law, the share of people in the United States lacking health insurance is at a historic low of about 9 percent, and the White House wants to keep that trend going during Obama's last full year in office.