The individual mandate penalties are among the least popular parts of PPACA.

(Bloomberg) — The health care system created by the Patient Protection and Affordable Care Act (PPACA) — Obamacare — is about to test how well people respond to economic incentives.

About 3.5 million Americans who are uninsured today could get health coverage in 2016 for less in out-of-pocket premium costs than what they’ll pay in individual mandate penalties under PPACA, according to a new analysis.

That’s because the fines for skipping health insurance will rise next year. On average, people currently uninsured could have to pay $969 in 2016, up from $661 this year, according to the report by the Kaiser Family Foundation. The penalties are rising to 2.5 percent of income or a flat dollar amount of $695 per adult, whichever is higher. For most people who owe penalties, 2.5 percent of income will be higher.

That’s compared with 2 percent of income, or $325 per adult, this year.

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About 11 million people are eligible for coverage but haven’t bought it. The big question is whether the steeper fines will prod more of them into the market. “That’s where the mandate matters the most, because it aims to bring healthy people into the risk pool, which will help keep premiums down,” says Larry Levitt, senior vice president at the Kaiser Family Foundation and one of the report’s authors.

The new insurance markets created by PPACA need healthy people to enroll in order to be sustainable. Last month the largest U.S. health insurer, UnitedHealth Group (NYSE:UNH), said it might withdraw from the exchange system entirely after next year because of mounting losses.

More than 2 million people in the 38 states that use the HealthCare.gov enrollment system selected PPACA exchange plans in the first month after open enrollment began on Nov. 1, according to federal statistics. That total includes about 700,000 people who are new to the system. It omits enrollments by residents of California, New York and other states with state-based, state-run exchange programs. Obama administration officials have said they expect about 10 million people to sign up for exchange coverage during the enrollment period that closes at the end of January, only a small increase over the current year.

PPACA relies on carrots and sticks to get people to enroll in health plans. Subsidies bring down the price typical consumers pay for insurance, while the penalties discourage people from forgoing coverage. For many people, paying the penalty might be a rational choice, because it’s often still less money than what those people would pay out of pocket for the cheapest health plan. Kaiser estimates that there are about 7 million uninsured people in this category.

But then there’s another group of about 3.5 million uninsured people who are eligible for coverage, and could enroll in the least expensive health plans for less in out-of-pocket premium spending than what they’ll pay in penalties, or for no out-of-pocket cost at all after subsidies. That’s roughly equivalent to the population of Connecticut. And they’d have to defy economic logic to remain uninsured next year.

There are several reasons that they might.

First, the penalties aren’t calculated until tax time: Fines people incur for not having health insurance in 2016 won’t be levied until they file their taxes in 2017. A lot of people who are eligible for subsidies to reduce the cost of coverage don’t realize it, Levitt says. And the administration has soft-pedaled the penalties, because they’re among the least popular parts of the law.

“The mandate could be a very effective tool to encourage people to sign up,” Levitt says, “but the politics of it aren’t great.”

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