NCPA - National Center for Policy Analysis

NEW FEDERAL SUBSIDIES MARRED BY MARRIAGE PENALTY

July 6, 2010

Analysis of President Obama's health care overhaul reveals its system of federal subsidies is structured in ways that reward cohabitation and discourage people from getting married.  The effect will be felt most acutely by the poorest Americans, says Diana Furchtgott-Roth, a senior fellow at the Hudson Institute. 

"What's problematic is the interaction of the health affordability credits with the poverty line," says Furchtgott-Roth:  

  • If you have one person in the family, the poverty line right now is $10,830.
  • With two people in the family, the poverty line is $14,570.
  • According to the Department of Health and Human Services' 2009 guidelines, the poverty line for a family increases at a rate of $3,740 with each additional member of a household. 

Furchtgott-Roth uses an example of two people living together, each with income at the poverty line of $10,850, to illustrate the problem: 

  • If they decide to get married, their income would be around $22,000.
  • They would be counted as being in a two-person household and would be considered well above the poverty line, despite not having any more income.
  • They would immediately lose the affordability credits if they got married.
  • And given that the tax credits under this legislation are computed by where you stand on the poverty line, and that these tax credits are going to get more valuable as health insurance becomes more expensive, the costs of getting married will only increase. 

John Goodman, President, CEO and the Kellye Wright Fellow of the National Center for Policy Analysis, helped write legislation offered as an alternative to Obama's plan.  He says health subsidies inevitably discriminate, particularly against married couples. 

"This almost always happens when you have subsidies like this.  They never treat two single adults the same as a married couple," says Goodman.  "I don't think it's that they intentionally wanted to penalize marriage.  It just sort of falls out of their plans because they don't focus on marriage at all." 

What makes things worse, says Goodman, is that marriage is a key element in avoiding poverty. 

Source: Loren Heal, "New Federal Subsidies Marred by Marriage Penalty Health Care," Heartland Institute, July 6, 2010.

 

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