Furchtgott-Roth: Obamacare's Marriage Penalty

"At one time, getting a job was not that much of a problem. Neither was getting married," writes economist Diana Furchtgott-Roth. "But the Affordable Care Act appears to create substantial disincentives both to hiring and marriage, potentially changing the fabric of American society in serious ways."

By now, most people know Obamacare is turning the U.S. into a part-time nation. Since moving from 49 to 50 full-time employees can cost a business $40,000 more a year, many businesses are opting to add part-time rather than full-time employees.

They may not yet know about the penalties against married people. Furchtgott-Roth explains:

Under the Act, if workers have affordable single-family coverage from an employer — coverage that by law workers are obligated to accept — their family members will not be eligible for premium subsidies on the exchanges. This can make the cost of insurance for some low- or middle-income families unaffordable. But if they divorce, they get the subsidy.

In a 2011 National Bureau of Economic Research working paper, Cornell University professor Richard Burkhauser, Indiana University professor Kosali Simon, and Cornell PhD candidate Sean Lyons showed that in 2014, when the law will take full effect, 13 million low-income Americans may be unable to get subsidized health insurance through new state health care exchanges because one family member has employer-provided coverage for that person only.

Perversely, the only way for other family members to get subsidized coverage would be for the spouses to get divorced. Then the spouse without coverage and the children could get coverage on the exchange.

This provision of the Act also discourages marriage. Say that Jeff, who receives health insurance from his employer, wants to marry Jenny, who is buying her subsidized health insurance from the state exchange. If they married, Jenny would no longer qualify for subsidized coverage.

Furthermore, since premium subsidies are on a sliding scale, two married people getting their coverage on the exchange would pay more than if they were single.

The author argues that Obamacare will produce significant long-term negative consequences:

The structure of the Affordable Care Act will increase the already widening gap between the rich and the poor. More divorces and fewer marriages at the lower end of the income scale result in more households headed by singles. Children in these families often have fewer advantages and lower educational performance, making it harder for them to get a well-paying job when they grow up.

There will be many glitches when the state exchanges open for business on Oct. 1. But the effects of the Act on job creation and marriage — two of the stepping stones to the American dream — are even more damaging.