Married Couples Pay More Than Unmarried Under Health Bill

[willriker]

<<http://finance.yahoo.com/insurance/article/108540/married-couples-pay-more-than-unmarried-under-health-bill>>

Married Couples Pay More Than Unmarried Under Health Bill
by Martin Vaughan
Monday, January 11, 2010
provided by


Some married couples would pay thousands of dollars more for the same health insurance coverage as unmarried people living together, under the health insurance overhaul plan pending in Congress.

The built-in "marriage penalty" in both House and Senate healthcare bills has received scant attention. But for scores of low-income and middle-income couples, it could mean a hike of $2,000 or more in annual insurance premiums the moment they say "I do."

The disparity comes about in part because subsidies for purchasing health insurance under the plan from congressional Democrats are pegged to federal poverty guidelines. That has the effect of limiting subsidies for married couples with a combined income, compared to if the individuals are single.

People who get their health insurance through an employer wouldn't be affected. Only people that buy subsidized insurance through new exchanges set up by the legislation stand to be impacted. About 17 million people would receive such subsidies in 2016 under the House plan, the Congressional Budget Office estimates.

Visit the Insurance Center

The bills cap the annual amount people making less than 400% of the federal poverty level must pay for health insurance premiums, ranging from 1.5% of income for the poorest to 11% at the top end, under the House plan.

For an unmarried couple with income of $25,000 each, combined premiums would be capped at $3,076 per year, under the House bill. If the couple gets married, with a combined income of $50,000, their annual premium cap jumps to $5,160 -- a "penalty" of $2,084. Those figures were included in a memo prepared by House Republican staff.

The disparity is slightly smaller in the Senate version of health-care legislation, chiefly because premium subsidies in the House bill are more targeted towards low-wage earners.

Under the Senate bill, a couple with $50,000 combined income would pay $3,450 in annual premiums if unmarried, and $5,100 if married -- a difference of $1,650.

Republicans say the effect on married couples whose combined income makes them ineligible for subsidies is even greater -- up to $5,000 or more -- but that is more difficult to measure because it includes assumptions about the price of insurance policies.

Democratic staff who helped to write the bill confirmed the existence of the penalty, but said it cannot be remedied without creating other inequities.

For instance, they said making the subsidies neutral towards marriage would lead to a married couple with only one bread-winner getting a more generous subsidy than a single parent at the same income-level.

"The Finance Committee, along with other committees in the Senate, took pains to craft the most equitable overall structure possible, and that's what we have here," said a Democratic Senate Finance Committee aide.

If the bill passes in its current form, it would be far from the first example of federal and social benefits creating incentives to remain single. Under current law, marriage can have a negative impact on a person's ability to claim the earned income tax credit and welfare benefits including food stamps.

In any progressive system of taxes or benefits, there are trade-offs between how well-targeted a subsidy is and how equitable it is, said Stacy Dickert-Conlin, an economics professor at Michigan State University.

"You might like to have it be progressive, equitable and marriage-neutral. But you have to decide what your goals are, because you can't accomplish all three," she said.

The marriage penalty in the health bill has not been a major focus of attack by Republican opponents of the bill, who are focusing on larger themes such as new taxes in the bill and growth in government spending.

But it has caught the attention of some conservative groups, who claim that the prospect of reduced subsidies will dissuade people from tying the knot.

"This seems to not only penalize the married, but also those who would have the most to gain from marriage -- the poor," said Jenny Tyree, an analyst at the Colorado-based Focus on the Family.

Ms. Dickert-Conlin said that isn't borne out by research in the area.

"Most of the literature says that people do not make decisions about whether or not to get married based on" government benefits, she said.

"You might see bigger effects on the timing -- someone choosing to get married in January, instead of December," she said.

Write to Martin Vaughan at [email protected]

I have always said that I am willing to pay more to provide health care to every American citizen. I really do not see how else to pay for, what i consider to be, a great step forward with regard to how our nation treats its elderly and ill.

But, there must be another way to make this happen without strange loop holes like this. Sure, we all know we are going to ave to pay more. Some of us are even, already, at peace with the concept. Anyone have any ideas on how to structure this so that you do not run into his sort of issue?

If so, i would love to hear it.

tl;dr
Every married couple needs to pay 2000-5000 more for health insurance for no other reason than they are married doesnt seem like a very smart thing to do. To rephrase if you were single, but living together, you would save 2000-5000 and still have insurance when compared to if you got married and kept the insurance.

[Atreides]

this is all just a ploy to stop gays from wanting gay marriage

[BerenTebogo]

Well this is just fantastic. Caiti will be real happy to hear this when she gets home.

[Acturus]

tl;dr
Every married couple needs to pay 2000-5000 more for health insurance for no other reason than they are married doesnt seem like a very smart thing to do. To rephrase if you were single, but living together, you would save 2000-5000 and still have insurance when compared to if you got married and kept the insurance.

Not quite, re-read your article:

Married couples who purchase insurance over the subsidized exchange (as opposed to through employers) are estimated to pay $2,000-5,000 more than unmarried couples who each purchase individual policies through the subsidized exchange.

By 2016, the number of people affected with this disparty is about 17 million, or about 5.5% of the total population of the US.

It's not quite the doomsday machine you think it is, but I agree with your point. Legislative loopholes are not the way to run laws.

[Qalbert]

secret antigay conspiracy to make gay people not want to get married

[Leif]

Last I checked it was the Democrats who were pretending to love the gays.

[Headspace]

You gotta pay for your mistakes.

[willriker]

nah, i dont think i missread it.

If you have 2 people living together that make $25,000 each, and compare them to a married couple who makes $50,000 total combined income. You will see that the married couple will spend $2,000 more in the house bill and $1,650 more in the senate bill than the two single people living together.

This number grows for people who make more than 400% of the poverty level. It grows because you are out of range for the federal subsidies. An estimation for the disparity among married people in this group was quoted to be as much as $5,000. Though, to be fair, they said that this number was more difficult to hamer down because you have options to buy various types of plans if you are at that income level.

I do not see how i missread it. Perhaps i did.

Even though i do not mind paying more to make sure that as many people in this country are insured as possible, it is just the right thing to do, this seems like a sloppy way to write legislature.

[Qalbert]

Last I checked it was the Democrats who were pretending to love the gays.

well that's why it is such a secret conspiracy, gosh

[Khamsin]

nah, i dont think i missread it.

If you have 2 people living together that make $25,000 each, and compare them to a married couple who makes $50,000 total combined income. You will see that the married couple will spend $2,000 more in the house bill and $1,650 more in the senate bill than the two single people living together.

This number grows for people who make more than 400% of the poverty level. It grows because you are out of range for the federal subsidies. An estimation for the disparity among married people in this group was quoted to be as much as $5,000. Though, to be fair, they said that this number was more difficult to hamer down because you have options to buy various types of plans if you are at that income level.

I do not see how i missread it. Perhaps i did.

Even though i do not mind paying more to make sure that as many people in this country are insured as possible, it is just the right thing to do, this seems like a sloppy way to write legislature.

His point was that its only for couples who buy the subsidized insurance. It has no effect on people who just get it through their employer. For most of us, it won't change a thing. Only for those who need subsidized insurance.

[willriker]

oh, well yeah.

[Zilong]

people who need to get subsidized insurance really shouldn't get married in the first place no?

[willriker]

people who need to get subsidized insurance really shouldn't get married in the first place no?

Each one of us is one layoff away from making less than 50k combined income. That would qualify you for a subsidy.

[Zilong]

i was under the impression the cutoff point was much, much lower than that.

like welfare level of requirement to be part of subsidy

in any case, subsidized does mean they would still pay less than what they are paying now right?

[Acturus]

My point, specifically, was that the reason that this isn't breaking news headlines is because it will potentially affect a relatively small number of people.

A good chunk of the people who are covered today will see nominal increases. It is expected to hit middle class families the hardest (like everything does), but the promise of not increasing our costs by a dime seems like a promise that won't be able to be kept at this point.

Not to sound completely cynical, but of all the reasons to be upset by how mis-managed this bill is, the comparison of married to unmarried couples who purchase insurance through the (still undefined) insurance exchange is a pretty small one.

i was under the impression the cutoff point was much, much lower than that.

like welfare level of requirement to be part of subsidy

in any case, subsidized does mean they would still pay less than what they are paying now right?

I believe that, under both versions of the bill, small employer groups are exempt in some fashion from providing "employer-based" insurance. At that point, either the employer can ask for subsidies to provide for his employees, or the employees can go after insurance on the exchange.

If memory serves, neither model prohibits anyone from going straight to the exchange, but the way the system works today, the exchange is not going to be more favorable than existing coverage, or coverage through a medium- to large-sized employer. I'm pretty sure that employer packages could be sold over the exchange as well, but I doubt that would be as marketable for large insurance companies.

Add in the fact that the Medicaid eligibility is opening up too, and you'll see a relatively small number of people actually going to the exchanges, and of those people, it is expected that a number of them will be more of the high-risk types.