Friday, November 8, 2013

The Affordable Care Act and Marriage

Turns out the Affordable Care Act has a fairly substantial incentive to avoid marriage. From The Atlantic

Any married couple that earns more than 400 percent of the federal poverty level—that is $62,040—for a family of two earns too much for subsidies under Obamacare. "If you're over 400 percent of poverty, you're never eligible for premium" support, explains Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation.

But if that same couple lived together unmarried, they could earn up to $45,960 each—$91,920 total—and still be eligible for subsidies through the exchanges in New York state, where insurance is comparatively expensive and the state exchange was set up in such a way as to not provide lower rates for younger people.
Personally, I don't care if people marry, who they marry, how many they marry, how often they marry, what species they marry. Personally, I don't think the government should care either.

I'm guessing this marriage penalty was not contemplated by the authors of the ACA. Designing "a system" sounds so alluring to those in power, and pretty much impossible to do in practice. We are seeing that proven (again) with the ACA.

Let's add this incentive to the long list of perverse incentives (employer incentive to reduce work hours, employer incentive to keep business from hiring, employee incentive to not work, consumer incentive to cost shift to Medicaid, insurance incentive to drop plans and of course insurance incentive to undo the risk pools so painstakingly created by the ACA). It is an edifice doomed to collapse. We've known this from the beginning.


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