Healthcare reform penalizes married couples, says report

President Obama’s healthcare law penalizes married couples by making it tougher for them to get insurance subsidies, Republicans charge in a new report obtained by The Hill.

The 22-page report from House Oversight Committee Chairman Darrell Issa (R-Calif.) concludes that married couples will get only 14 percent of the law’s tax credits, even as more than 7 million mostly single people cease paying income taxes altogether.

It is based on a staff analysis of new information provided by the nonpartisan Joint Committee on Taxation.


By raising questions about the law’s subsidies, Republicans are seeking to undermine one of its most popular provisions. Seventy-nine percent of respondents favored the subsidies in a January Kaiser Family Foundation/Harvard School of Public Health survey.

In contrast, 50 percent of those polled by Kaiser said they opposed the law, compared to 41 percent who supported it.

“While the intent of the [healthcare reform law] was probably not to penalize marriage and take millions of people off the tax rolls,” the report concludes, “it will be the result.”

The report is expected to be made public ahead of an Oversight Health panel hearing on Thursday. The title of the hearing is “ObamaCare’s Hidden Marriage Penalty and its Impact on the Deficit.”

The report concludes that fewer than 2 million couples — out of 60 million nationwide — are projected to benefit from the insurance subsidies, while “almost half of the beneficiaries of the tax credit will be unmarried individuals without dependent children.”

“These numbers,” the report says, “suggest that an impact of the [law’s] health insurance tax credit will be to introduce a significant new marriage penalty into the tax code.”

Issa’s report says two main factors combine to discriminate against married couples.

One reason is that subsidies, which start in 2014, are tied to the federal poverty level, which does not increase proportionally along with household size.

Another problem is a snafu in the law that The Hill first reported back in July.

The law offers insurance subsidies for workers if their employer doesn’t provide affordable coverage, but proposed regulations released in August peg that affordability to individual, not family, coverage. As a result, a worker’s spouse and children would not have access to subsidies if that worker were offered affordable coverage — even if the worker could not afford the family coverage offered by the employer. 

Republicans argue that creates an incentive for employees to ask employers to drop coverage so their families can go into the federally subsidized exchanges, driving up the federal deficit.

The discrimination charge is especially damaging because many of the administration’s allies on healthcare reform share similar concerns.

The American Academy of Pediatrics, for example, is spearheading a sign-on letter to the Centers for Medicare and Medicaid Services (CMS) that decries a “family penalty” that will “negatively impact the opportunity to access quality health insurance for significant numbers of children.”

The letter, obtained by The Hill, urges the Treasury Department to “use the discretion it has under the [health law]” to base tax credit eligibility on family coverage, but Treasury officials have said their hands are tied because of the way the law was written.

“The policy result of the Treasury interpretation violates the intent of the Affordable Care Act and would impact the families of millions of children without affordable coverage,” argues the letter from the pediatric group, a supporter of the healthcare law.

Some supporters of the healthcare law said the GOP is singling out the subsidies in the healthcare law for criticism even though tax credits often benefit single people.

Judith Solomon, vice president for health policy at the liberal Center on Budget and Policy Priorities, said it’s not unusual for tax credits to be pegged to the federal poverty level, which assumes that people benefit from economies of scale when they’re living together.

She also pointed out that one of the Republican witnesses testifying at Thursday’s hearing estimates that pegging subsidies to family coverage would cost the government an extra $50 billion a year.

Solomon said Republicans aren’t interested in fixing the problem they are spotlighting given the cost.

Issa’s report also raises concerns with the tax rolls.

About 85 percent of filers who claim subsidies will end the year with zero or negative income tax liability, the report concludes. By 2020, the subsidies will “directly move between 7.4 million and 8.1 million tax filers off the tax rolls.”

Furthermore, because the tax credit is refundable — meaning eligible people can get back more from the government than they ever forked over — some 11.3 million people will have negative income tax liability and “will no longer pay the cost of government by contributing federal income taxes.”