The Big Story on Obamacare

Married People Can’t Afford Health Insurance
April 30, 2014

The news media is not reporting the big story on Obamacare. The big story is that married people have been priced out of health insurance. This reality will rapidly worsen as more businesses dump employees on the Exchange.

I broke this story on the marriage penalty back in 2009, before it was passed. I explained five years ago that Obamacare contained massive discrimination against married people which would largely price them out of the insurance market.  I demonstrated that married persons will be required to pay up to $10,000 more each year for their health insurance just because they are married as opposed to living together unmarried. The numbers are now in. They do, in fact, demonstrate that is exactly what has happened.

Here are the numbers:

  1. The 10/27/11 Report of the House Committee on Oversight and Government Reform reported that only 14% of Obamacare’s tax credits would go to married persons. (I had said 13%.) The Committee reported that single persons would receive 86% of the tax credits. This Report has not been disputed.
  2. Breitbart reported (1/14/14) that 79% of people enrolling in insurance through the Exchange will receive government subsidies. Breitbart also said that, according to the White House, most of these people who qualify for the subsidies could not afford insurance without the subsidies.
  3. Forbes reported (3/8/14) that by far the biggest reason for the uninsured to not enroll in the Exchange is they can’t afford the premiums.

Put all these facts together, and the conclusion is obvious: Those Americans obtaining health insurance under Obamacare are mostly single persons. Married persons, for the most part, are not enrolling because they cannot afford to do so.

The primary effect of Obamacare is not shrinking the number of persons who are uninsured. The primary effect of Obamacare is creating a new pool of persons who can’t afford health insurance because they are married.

It’s time for the Obamacare supporters to come forward and make the case that this discrimination and injustice against married people is good for our country and our future!

Huge Marriage Penalty in House & Senate Health Care Bills/2009

Huge Marriage Penalty in House and Senate Health Care Bills

By Allen Quist

November 2009

There is a huge middle class marriage penalty hidden in the House and Senate health care bills. The penalty becomes evident by evaluating questions like the following: How much would two single people, each making $30,000 per year, pay for private health insurance if the Pelosi bill was in effect now? The answer is $1,320 per year for both individuals combined (based on the premium limits and subsidies outlined on the charts on p. 3). But how much would they pay for the same level of insurance under the Pelosi bill if they were to marry? Their combined cost would then be about $12,000 a year (the estimated cost for private insurance).

Health insurance premium costs for two adults with equal incomes if the Pelosi bill was in effect now:

Combined yearly Income  Combined premium cost if single Combined premium cost if married. Change
$60,000 $1,320 $12,000 +$10,680
$70,000 $1960 $12,000 +$10,040
$80,000 $2,880 $12,000  +$9,120
$90,000 $12,000 $12,000 0

Sources:  The numbers on the chart are based on (a) a chart provided by The Committees on Ways & Means, Energy & Commerce, and Education & Labor, October 29, 2009, see chart on p. 3; (b) the current Federal Poverty Levels; see charts on p. 3; and (c) the estimate that two adults would pay $12,000 annually for individual health insurance with average benefits if their income exceeds 400% of the Federal Poverty Level.

Once the income of Americans exceeds 400% of the Federal Poverty Level, there are no limits on the premiums they can be charged, and their premiums are no longer subsidized. The poverty level is much higher for two people living unmarried as compared to the same two people being married. That is why citizens in many cases will pay far more for insurance if they are married. Why should married people be subjected to financial discrimination?

This extraordinary penalty people will pay, should they marry, extends all the way from a two-person combined income of $58,280 to $86,640, a spread of $28,360. A large number of people fall within this spread. As premiums for private insurance escalate, as expected, the marriage penalty will become substantially larger.

The Senate bill also creates a marriage penalty, in this case by imposing a new tax on individuals who make $200,000 annually but it also applies to married couples making $250,000 each year. This marriage tax on the affluent, however, is just the tip of the marriage penalty iceberg in the Senate bill.

The Senate bill stipulates that two unmarried people, 52 years of age, with private insurance and a combined income of $60,000, $30,000 each, will pay a combined cost of $2,483 for medical insurance. Should they marry, however, they will pay a combined cost of $11,666 for insurance—a penalty of $9,183 for getting married (based on tables at: http://healthreform.kff.org/SubsidyCalculator.aspx). (The Congressional Budget Office has recently said that the cost of private insurance under the Senate bill should be increased by 10 to 13 percent—that would put the penalty above $10,000.)

This substantial marriage penalty applies to persons on individual insurance, but, as the Heritage Foundation’s Bob Moffit said: “‘if an employer has a health care benefits package that is 12 to 13 percent of payroll, and they can solve their problem by paying an 8 percent payroll tax [into the Exchange], I think they’re going to do it,’” (New York Times, 9-30-09). And Howard Dean said that, “small business won’t need to buy health care for its employees any more” (Fox News Sunday with Chris Wallace, 11-29-09).

Businesses will shed their employees and health care dollars into the Exchange, but the dollars that are paid back out will be directed only to those who make less than 400% of the Federal Poverty Level. Those above the Poverty Level will receive none of their previous insurance benefits from businesses. For that reason the new system is income redistribution on steroids.

“‘Household” is defined in both bills as including those who can be claimed as dependents for federal income tax purposes thereby clarifying that adults can avoid the marriage penalty by living together unmarried. The new system provides a huge incentive for doing so.

The bills additionally contain De Facto salary caps called the “concrete ceiling.” How much would a married couple pay for private insurance under the House bill if their income was $58,000 per year?  The answer is $2,088. But what if their income increased by $1,000? Their annual premium would then be about $12,000. The economic penalty for going off the subsidized system is so severe that it will be difficult for people to increase their earnings beyond 400% of Poverty Level. In addition, only half of the $12,000 health insurance premium cost is tax deductable. The Senate bill works essentially the same way.

Senior citizens and small businesses have already been identified as big losers in the health care bills. Married citizens in the middle class need to be added to the list. 

Official summary of premium limits and subsidy levels in the House bill*

Income                         premium limit as         % paid by                      Caps on out of        

                                      % of income               individuals                     pocket costs

Under 133 – 150% FPL 1.5 – 3% 3% $500/$1000
150 – 200% FPL 3 – 5.5% 7% $1,000/$2,000
200 – 250% FPL 5.5 – 8% 15% $2,000/$4,000
250 – 300% FPL 8 – 10% 22% $4,000/$8,000
300 – 350% FPL 10 – 11% 28% $4,500/$9,000
350 – 400% FPL 11 – 12% 30% $5,000/$10,000

 Federal Poverty Levels now in use:

Single person = $10,830

Two person household = $14,570

Three person household = $18,310

Family of four = $22,050

400% of Federal Poverty Level:

Single person = $43,320

Two person household = $58,280

Three person household = $73,240

Family of four = $88,200 

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*  Chart provided by The House Committees on Ways & Means, Energy & Commerce, and Education & Labor, October 29, 2009.

NYT: Marriage Penalty in Obamacare

As stated by the New York Times:

Starting in January, the health care law will require workers to pay an additional tax equal to 0.9 percent of any wages over $200,000 for single taxpayers and $250,000 for married couples filing jointly.. the taxes came with “a shockingly inequitable marriage penalty.” Read the entire article here.

As “shocking” as the Medicare withholding tax Marriage Penalty is in Obamacare beginning January 1, 2013, it is just the tip of the iceberg. The really ugly Marriage Penalty will hit in the premiums middle class taxpayers must pay. See my article here.

Federal HHS probing Minn. Medicaid program

“Another federal agency is looking into whether the state of Minnesota improperly set rates for its Medicaid program. The Office of Inspector General for the Department of Health and Human Services has sent a letter to state officials Minnesota Human Services Commissioner Lucinda Jesson seeking information about the state’s Medicaid program. “

Read the full article from MPR here.

I and others called for a federal audit on this seven months ago: Medicaid Fraud in MN State Government.

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