Two full years into Affordable Care Act enrollment, a surprising number of Americans remain uninformed about the law and the specific requirements it makes of them—an ignorance that could end up hurting insurance companies.
A Harris survey conducted in late 2014 found that nearly half of Americans did not know they had to report their health insurance status on their tax returns. Laura Adams, senior analyst with insuranceQuotes.com, believes this level of unawareness so late into the game is the result of a complicated law coupled with the existing confusion surrounding tax season.
“Talking about health insurance is complex and you layer taxes on top of it, and it just makes for a very difficult subject for consumers to wrap their head around,” said Adams, who believes the White House “greatly overestimated” Americans’ ability to comply with ACA requirements.
The inherent confusion has been further compounded by issues with state exchanges, most notably Covered California. As many as 100,000 enrollees were sent the incorrect tax forms, and many more have not received forms at all.
Sylvia Oliverez, an agent with Santa Clara-based Be Well Insurance Solutions, described the situation as a “nightmare” both for her and her clients, who are looking to her for guidance in the current tax season.
“Everybody calls every day,” said Oliverez. “Covered California never got them into the system. Luckily, I made copies.”
Somewhat counterintuitively, it is young people who are most likely to be unaware of their requirements under the law. Despite being among the most educated generations and having access to sufficient information online, millennials are least likely to carry health insurance and therefore most likely to incur a tax penalty.
“It makes me wonder if it’s just a conscious decision on their part to say, ‘Oh, I know about Obamacare but I’m not going to do it,” said Adams.
Of course, the lack of public awareness—and mitigating government actions, such as the deadline extensions through tax season in several states—has a strong effect on insurers’ ability to accurately price risk.
With many 2016 rates due in May, it does not allow insurers the time to make forward-thinking assumptions on enrollee data, risk and pricing. What’s more, the government may be fostering a public attitude that expects deadline delays.
“Obamacare was founded on the idea that if we all have insurance, then we’re not subsidizing the sick,” said Adams. “The problem is without that sense of urgency, our human nature is to procrastinate and wait to sign up until we get sick, and that means the cost can go up for everybody,” said Adams.”
