ObamaCare incentivizing divorce?
posted at 5:51 pm on October 2, 2013 by Ed Morrissey
My friend and editor at The Fiscal Times, Jacqueline Leo, offers an interesting analysis of a set of perverse incentives in ObamaCare. Middle-income earners might do better by divorcing if both spouses end up in the exchanges — and perhaps a lot better, according to BizzyBlog’s Tom Blumer:
Earlier this year, TFT showed that a high-earning couple, each with incomes of $400,000, would save about $27,000 annually if they divorced and filed their taxes separately. Now we learn that the Affordable Care Act, a.k.a. Obamacare, is dangling a similar fate in front of middle income earners.
A typical 40-year old couple with two kids could save $7,230 a year by divorcing if one partner earns, say, $70,000 and the other $23,000. Sixty year-olds earning $62,041 each a year would save $11,028 annually if they broke up.
This analysis below, written by Tom Blumer, a blogger at PJ Media, points out the unintended consequence of what Obamacare will do to marriages and families. He used this calculator from the Kaiser Family Foundation to run the numbers.
In January 2010, two months before Obamacare’s passage, Robert Rector at the Heritage Foundation gave the impact a name: the “wedding tax.”
Some of this relies on the sharp “cliffs” seen in the premium-to-subsidy calculations. The ACA ended up with those rather than more graduated subsidies, which produce these kinds of effectts. We’ve seen the same phenomenon for workers who could get a raise that would cost them thousands of dollars in lost subsidies, at least in theory, thanks to these sharp cliffs in the calculations.
Will ObamaCare cause a couple to split up in reality? Probably not, but it might wind up producing divorces that replace legal marriage with cohabitation. It’s the kind of strange effect that perverse incentives produce.