Health reform and marriage penalties

By Lexington

BARACK OBAMA'S health reforms include a substantial marriage penalty, according to Diana Furchtgott-Roth. Couples who wed could suddenly find that they no longer qualify for assistance:

Two singles would each be able to earn $43,000 and still receive help to purchase health insurance, but if they got married and combined their earnings to $86,000, they would be far above the limit. As a married couple, the most they could earn and still get government help would be $58,000, a difference of almost $30,000, or 32%. This looks like a substantial disincentive to getting married, or to working while married.

The penalty extends also to single mothers. Say Sally is a single mother earning $43,710, putting her and her baby at 300% of the poverty line. They would be eligible for the health insurance premium assistance credit.

But what if Sally wants to marry Sam, the father of her child, who earns $43,320, and is at 400% of the federal poverty line? Their total earnings, at $87,030, would exceed the 400% poverty line for a family of three ($73,240). Married, they would no longer receive help with their health insurance premiums, despite both earning the credit when unmarried. In order to keep her government health insurance benefit, Sally could only marry someone earning less than $30,000.

One can never entirely rid the tax code of perverse incentives, but this sounds like quite a bad one. More thoughts on marriage and inequality here.