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Health insurance exchange signups surging

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Enrollment is surging in the federal health insurance exchange that offers coverage to eligible individuals in the 38 states that have declined to offer their own exchanges.

As of Dec. 26, more than 8.5 million individuals signed up for health insurance plans through the federal exchange during the first eight weeks of open enrollment for 2016 coverage, the U.S. Centers for Medicare and Medicaid Services reported last week.

Enrollment in the federal exchange is sharply higher compared to about the same period a year ago. From Nov. 15 through Dec. 26, 2014, nearly 6.5 million individuals — about 2 million less compared to the 2016 open enrollment season — opted for coverage in the federal exchange.

Benefit experts say the surge in exchange enrollment is being driven, at least in part, by sharply rising penalties — set under the Patient Protection and Affordable Care Act — imposed on individuals who do not enroll in a health care plan, as well as greater public awareness of those penalties.

“The penalty has increased significantly, which has gotten lots of attention in the media. That, in turn, has led more people to enroll and thus avoid the penalty,” said Cynthia Cox, associate director of health reform and private insurance at the Kaiser Family Foundation in Washington.

“If you are a younger person and because of your age and because you can get a federal premium subsidy, it may be less expensive to get coverage in the exchange than pay the penalty for not obtaining coverage,” said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington.

This year, the penalty imposed on an individual who does not enroll in a health care plan is $695, or 2.5% of household income, whichever is higher. That compares to the 2015 penalty of $325, or 2% of household income.

Enrollment in states that offer health insurance exchanges also is surging. For example, in Minnesota's health insurance exchange, known as MNsure, nearly 68,000 individuals signed up for coverage as of Dec. 28. That is more than double compared to the roughly 28,000 who had opted for coverage at about the same time during the 2015 open enrollment season.

“These preliminary enrollment numbers are very encouraging,” MNsure CEO Allison O'Toole in St. Paul said in a statement Monday.

The surge in exchange enrollment also could lead to another sharp decline in the nation's uninsured rate, which already has fallen sharply.

In 2014, 33 million people lacked coverage, down 8.8 million compared with the 41.8 million without coverage in 2013. Correspondingly, the uninsured rate in 2014 fell to 10.4%, down from 13.3% in 2013, according to a Census Bureau report released in September.

That falling uninsured rate could have a positive impact on health care costs if it leads to a reduction in uncompensated care, a cost which providers, when possible, have shifted to those with employment-based coverage.

“It is definitely good for providers and employer-sponsored plans if we get the uninsured rate down,” said Katherine Hempstead, director of the coverage team at the Robert Wood Johnson Foundation in Princeton, New Jersey.