Question: I'm worried that the penalties for ignoring the health insurance mandate are too low - something like $100 for the first year - meaning many people will not buy until they need it. This situation is almost as bad as having no mandate at all, leading to costs and premium prices going through the roof.
Answer: I agree. Penalties are too low. But there are federal provisions protecting against big premium price hikes in the first few years of health reform. There will be reinsurance operated by the state that is externally funded by assessments on a broad group of health plans including large employer self-funded plans. Also, there are arrangements that will compensate health plans who loose substantially because they priced their plans too low to cover costs. These safeguards should control prices initially and encourage health plans to participate in the exchange.