Walker’s Changes and ACA Rules Will Create Problems for Some Married Couples
Perhaps love and marriage go together “like a horse and carriage,” but the combination doesn’t necessarily yield a smooth ride for couples trying to find quality, affordable health care.
This Valentine’s Day is a very timely occasion to examine that problem, which relates to Affordable Care Act (ACA) rules governing who is eligible for subsidies for private insurance purchased through the new health insurance exchanges that will begin in 2014. Those standards create a penalty for many married couples, and Governor Walker’s new proposal to significantly reduce the income limit for BadgerCare will exacerbate the problem.The ACA bars people from getting subsidies for purchasing coverage through an exchange if they are offered “affordable” coverage through an employer. The law defines a health plan as affordable if an employee’s premiums for that coverage would cost less than 9.5% of family income. The IRS rules, which were finalized in December, say the affordability standard is based just on the premiums for covering the employee, not on the cost of family coverage. The result is that far fewer people will be able to get coverage through the exchanges, even in many cases when their employer’s family coverage costs more than they can actually afford.
For couples, being married will typically mean that they have higher family income, making it less likely that the cost of their premiums exceeds 9.5% of family income – particularly since the calculation is based only on the cost of covering the employee, not on the substantially larger cost for the couple or for their full family. The problem is particularly acute for employees offered plans with high co-pays and deductibles, which aren’t factored into the affordability calculation.
Many argue that Congress didn’t intend that “affordability” should depend solely on the cost of employee-only coverage, and I would agree. However, the Obama Administration was caught in a bind on the issue because of the statutory language and fiscal considerations. Even though many lawmakers and advocates thought that the statute was intended to be based on family coverage, apparently the Joint Committee on Taxation and the original cost projections for the law assumed otherwise. Thus, basing affordability on family coverage would have significantly increased the law’s cost.
The proposal made by Governor Walker yesterday exacerbates the problem by limiting eligibility for BadgerCare to adults below the poverty level – which cuts in half the current income limit for parents. As a result, the marriage penalty created by the “family glitch” in the affordability standard becomes much more important because BadgerCare will be available for about 89,000 fewer parents, and it will cover considerably fewer couples who don’t have children than if the state had expanded eligibility to 133% of the poverty level.
The MSNBC story on the Governor’s plan provides a nice synopsis of the problem with the affordability standard and the relevance of that issue to the proposed income limit for BadgerCare eligibility.
Fortunately, it’s not too late to address the problem. As I discuss in the latest WI Budget Project Blog post, a Legislative Fiscal Bureau memo compares different options and indicates that using the federal Medicaid funding provided by the ACA would enable our state to cover far more adults at considerably lower cost than the Governor’s proposal. We hope Wisconsin lawmakers will be open to choosing the most cost-effective path for improving access to health insurance and a path that doesn’t create larger financial barriers for married couples and their families.
Jon Peacock
