How Obamacare Discourages Work and Marriage
by Chris Jacobs, Heritage Foundation, November 25, 2013
We were told that Obamacare was supposed to be compassionate toward the needy in America.
While President Obama and his fellow liberals may have held the best of intentions while ramming Obamacare through Congress, the law’s policies are far from compassionate toward the uninsured and Americans with low and modest incomes.
In fact, the law perpetuates some of the country’s worst trends that trap people in poverty. It includes disincentives for individuals to marry and for Americans of low and modest incomes to work. Discouraging work and marriage will only perpetuate poverty and income inequality, not alleviate them.
The way Obamacare calculates federal premium subsidies and cost-sharing subsidies includes several “cliffs.” A person might qualify for a hefty subsidy at his current income, but if he gets a raise and makes a little more, that Obamacare subsidy disappears.
At these cliffs, individuals and families will actually benefit more by working less because additional earnings could cause them to lose thousands of dollars in taxpayer-funded subsidies.
Families facing these kinds of poverty traps may ask the obvious question: If I will lose so much in government benefits by earning additional income, why work?
Rather than encouraging hard work, initiative, and entrepreneurship, Obamacare instead undermines these essential American values.
Obamacare contains not one, but two penalties on marriage—one for families with low and moderate incomes and another for families with higher incomes. By continuing failed policies that undermine the institution of marriage, Obamacare will accelerate a root cause of income inequality in the United States.
Here’s an example. A 50-year-old non-smoker making $35,000 per year would qualify for a sizable insurance subsidy, according to the Kaiser Family Foundation’s insurance subsidy calculator. The individual’s premium would be capped at 9.5 percent of income, resulting in an insurance subsidy of $2,065 paid by the federal government.
However, if this 50-year-old is married to another 50-year-old who also makes $35,000 per year, the couple would receive no insurance subsidy at all. This couple would incur a marriage penalty of $4,130 in one year—equal to the $2,065 that each individual could have received if they were not married.
As Urban Institute fellow Gene Steuerle has said: “Our tax and welfare system thus favors those who consider marriage an option—to be avoided when there are penalties and engaged when there are bonuses. The losers tend to be those who consider marriage to be sacred.”
Obamacare sends a clear message that reliance on government is preferable to these traditional American values—work and marriage.
Our health care policy should not be undermining these foundations of society. For a more commonsense approach to health care reform, check this out.
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