Last week CMS and the IRS came out with proposed rules on exemptions to the health insurance mandate. As you know, PPACA requires individuals to purchase health insurance that meets certain minimum criteria. These regulations create hardship exemptions which exempt individuals from paying the fines.
There are three main exemptions: 1) if it is determined that the coverage available through the health insurance exchange in an individual’s state is unaffordable, the individual would not be subject to a fine 2) individuals which would be eligible for Medicaid, but for their state’s refusal to accept Federal funding to expand Medicaid, are not subject to a fine and 3) individuals who are not required to a file a Federal return are also exempt.
Therefore, the Congressional Budget office estimates that only 2% of the population will actually pay the penalty. This means there will still be a lot of individuals without insurance who are not subject to the fines. At the same time, it is predicted that we will begin to see employers dropping group health insurance coverage because it will be cheaper for them to pay their mandated fines than to provide coverage. This will in effect create a larger uninsured population, who apparently may not have an incentive to purchase insurance on the exchange markets.
It seems to me that the population of privately insured Americans seeking treatment from Hospitals is going to remain relatively the same, if not decrease. Unless coverage on the Health Exchanges is more affordable, than the coverage currently offered, it is likely that many Americans will not be able to afford it. The idea behind the Health Insurance Exchanges was to create a more affordable option by increasing the size of the risk pool. The way you increase the risk pool is by mandating coverage. However, with such broad exceptions it appears we may be right back where we started with a small pool and unaffordable coverage.