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Study: Relatively Few Would Have to Buy Coverage Under Mandate

By John Reichard, CQ HealthBeat Editor

March 27, 2012 -- Relatively few Americans would be affected by what polls show is the most controversial part of the health law—the requirement that individuals pay a penalty if they do not have health coverage.

That's the finding of a new study by the Urban Institute, which estimates that just six percent of the U.S. population, 18 million people, would have to "newly purchase" coverage under the individual mandate provision of the health overhaul law (PL 111-148, PL 111-152).

The term as used in the study refers to people who are uninsured now who would have to buy coverage. In most cases the government would provide some help for those needing insurance.

Linda J. Blumberg, one of the three authors of the study, says there is a misperception on the part of many that "everybody in the country is going to be directly affected" by the individual mandate and its penalty provision.

Blumberg said that misperception exists even though most Americans have coverage and wouldn't have to pay the penalty. She said many people fear they will lose that coverage and then be in a situation where they would have to pay. What people in many instances don't know, she said, is that the law would make subsidies available in most cases for them to buy coverage. Or, it would make them eligible for the Medicaid program, so they wouldn't have to pay the penalty.

The requirement is scheduled to take effect in 2014. However, it may not pass muster with the U.S. Supreme Court.

The study says 18.2 million Americans would have to newly purchase insurance in order to comply with the requirement. The researchers say that although 26.3 million Americans who are currently uninsured will be required to newly obtain coverage or pay a fine, 8.1 million people in this group qualify for "free or close to free" coverage through Medicaid or the Children's Health Insurance Program.

Of the 18.2 million who would have to buy coverage, 10.9 million would be eligible to receive subsidies to buy private coverage in new health insurance exchanges but would still have to pay some of the pay the costs out of their own pockets. About 7.3 million people "are not offered any financial assistance under the [health law] and will be subject to penalties if they do not obtain coverage," the study said.

Although relatively few Americans are affected, the requirement "will still make an important difference in the premium levels and long-term stability of the nongroup and small group insurance markets" under the health law, the study says.

"We find that premiums in the nongroup market would be 10 to 20 percent higher on average without the individual coverage requirement," it notes.

Blumberg said there has been a "communications failure" in explaining why the mandate is needed,which is to bring good risks into the insurance pool to make coverage more affordable.

"I think it's a broad failure," she said. "The administration could have done a better job, but I also think it's been very difficult to overcome misinformation that's been spread from many quarters about the law."

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