Economist: Individual mandate's penalty is high enough

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The mandate requires most people to either buy insurance or pay a penalty. It's designed to bring into the system young, healthy people who are inexpensive to insure, who would offset the high cost of guaranteeing coverage to people with pre-existing conditions.

But some insurers and healthcare analysts fear the federal law's penalty is too low — that it won't be enough of an incentive to buy insurance, which will be much more expensive than simply paying the fine.

That might be true at first, Frakt wrote, but as the mandate phases in, the penalties will probably be enough to serve their purpose.

"Insurers may be correct that the penalties in the first 2 years will be too low, but it is harder to make the case that the fully phased-in penalties will be too low," Frakt wrote on the Journal of the American Medical Association's website.

Once Massachusetts' mandate was fully implemented, every sick person who gained access to coverage was offset by three healthy people, Frakt wrote. And he said the federal penalty will eventually be more aggressive than Massachusetts's.

Although it starts off low, the federal penalty will eventually rise to an average of $674 — compared with an average of $537 under Massachusetts's structure.

"Ultimately, the size of the penalty for noncompliance is a political calculation, not just an actuarial one," Frakt wrote.