ObamaCare Architect: ‘I Wish the Mandate Penalty Was Stronger’

A key adviser who helped design President Obama’s signature healthcare law is calling for stricter penalties for people who choose not to pay for health insurance.

“I think probably the most important thing experts would agree is we need a larger mandate penalty,” Jonathan Gruber said in an interview with CNN on Wednesday.

“That’s something I think, ideally, we would fix,” he added.
When asked later about the one adjustment he would have made to the law before it was passed, he said, “I wish the mandate penalty was stronger.”

For 2016, the penalty for being uninsured is 2.5 percent of taxable income or $695, whichever is greater.
The MIT economist is giving voice to a growing number of ObamaCare observers who say a more onerous penalty would help alleviate some of the law’s struggles with attracting enough enrollees.

About 1 million fewer people than expected have signed up for the insurance marketplaces nationwide, resulting in higher costs for some insurers as they face a pool of customers who are sicker overall.

ObamaCare created both a “carrot and stick” approach to sign-ups: People receive subsidies to sign up, and if they don’t, they have to pay more in taxes.

On the campaign trail, Democratic presidential nominee Hillary Clinton has talked only about a bigger carrot. She has called for larger tax credits to help people pay their premiums as well as a new program to cover more out-of-pocket costs.

But Gruber, as well as other Democratic health policy experts, say the penalty would also need to rise. The amount is now capped at the yearly cost that someone would pay for ObamaCare’s bronze plan, the minimum coverage under the law.

About 25 percent of uninsured people are exempt from the penalty, for reasons such as financial hardship or significant life changes, according to data from the Kaiser Family Foundation.

Gruber said stricter penalties would prevent what he described as “individuals who are essentially free-riding on the system” – echoing concerns that are frequently raised by insurance companies.

Still, Gruber voiced doubt that lawmakers in Congress would agree to change the penalties or any other parts of the law, even if the next president wanted to.
“It’s hard to know what dramatic fix we could do without Congress participating in the process,” Gruber said. “I think nothing much is going to happen, to be honest.”

The ObamaCare architect also delivered a robust defense of ObamaCare marketplaces in general following the negative headlines this week after the White House announced that premiums would rise on average 25 percent next year.

Gruber stressed that the increase applied only to the “very small fraction of people” who buy coverage through ObamaCare. He said 85 percent of those people are getting help from the federal government to cover their costs.

“Now, for those remaining people, that is a problem, and that’s something that we need to address, but it’s not a crisis. It doesn’t mean the system’s collapsing,” he said.

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