But the individual mandate is likely to prove a paper tiger in 2014 for two other reasons: the availability of hardship exemptions and lax enforcement.
The application for a hardship exemption lists 14 different qualifying categories. They include people who would have qualified for Medicaid under the law, but their states have opted not to expand Medicaid. Exemptions are also available to individuals who have been homeless, victims of domestic violence, filed for bankruptcy or had their existing plan canceled.
And the final category listed on the application is the broadest: “You experienced another hardship in obtaining health insurance.” The evidentiary standard for proving that hardship? “Please submit documentation if possible.”
“Basically anyone who wants to be able to claim a hardship exemption will probably be able to,” said David Howard, a professor at Emory University's Rollins School of Public Health. That's a view held widely among both the law's supporters and detractors.
In order to seek an exemption, though, one would have to know that such a possibility exists. Given that polls have repeatedly shown that Americans remain largely ignorant of the specific provisions of Obamacare, that seems unlikely to happen. There doesn't appear to be any coordinated effort by opponents of the law to alert individuals about the possibility of hardship exemptions.
But lack of rigorous enforcement is still likely to result in few financial penalties in the first year of the individual mandate. That's in part a political calculation by the Obama administration, Howard said.
“I think they feel it's important legally and symbolically to have a mandate in place,” Howard said. “On the other hand they recognize that enforcing it to the T would cause a lot of angst, a lot of political problems for Democrats in tight Senate and House races.”
That raises the specter that the mandate will be ignored and won't attract the volume of customers—particularly young, healthy ones—necessary to create a balanced risk pool. But Karen Davis, a health policy expert at Johns Hopkins University and former president of the Commonwealth Fund, argues that generous subsidies will still provide a strong inducement to acquire coverage for those who could seek out a hardship exemption.
“Nearly all of those are going to be very low income individuals who are going to qualify for substantial subsidies,” Davis said of the people who might qualify. “I just don't see these examples undermining the stability of the risk pool.”