The Great Society Declared War on Marriage: Obamacare Made It Worseby admin on 04/10/2015 10:48 AM
by Devon M. Herrick
President Lyndon B. Johnson declared an “unconditional war on poverty” in 1964 and followed up a year later with an avalanche of domestic social and antipoverty programs known collectively as the Great Society. Johnson persuaded Congress to support his welfare agenda — sending him more than 80 pieces of legislation to sign in a short period of time. Read the full article. –
Among the plethora of poverty-alleviating Great Society programs were food stamps, Medicare, Medicaid, Head Start, federal educational funding, housing assistance, increased welfare spending and other income transfer programs. The Great Society was intended not only to reduce poverty, but also to better peoples’ lives across the board. Ironically, the Great Society legislation seemed to simultaneously both ignore — and hinder — the most effective antipoverty program: marriage.
Indeed, this “War on Marriage” is a major reason for the lack of progress on poverty over the past 50 years! [See the side bar “Little Progress in the War on Poverty.”] And President Obama’s signature piece of legislation — the Affordable Care Act — has only exacerbated federal marriage penalties.
The Great Society without Marriage. Marriage has been on the decline for decades. According to the Pew Research Center:
- Around 1970, about 84 percent of native-born 30-to-44-year-old adults were married.
- By 2007, this proportion had fallen by nearly one-third to 60 percent.2
- The marriage rate is even lower for men and women who lack a college degree (56 percent in 2007).3
And the marriage rate is even lower still for some racial demographics. According to Pew:
- Only one-third of black women ages 30 to 44 were married in 2007, compared to 62 percent in
- For black men, the corresponding rates are 44 percent (2007), down from 74 percent in 1970.4
Why do more low-to-moderate income couples skip the wedding bells? The reasons are partially economic: Financial penalties in the tax code kick in when couples get married. According to research from the Brookings- Urban Institute Tax Policy Center, the combined marriage penalty is significant for families earning less than $40,000.5 The method used to calculate income eligibility and antipoverty programs is the primary culprit: the so-called federal poverty level (FPL). The FPL’s income thresholds are for individuals or families of various sizes, and those with incomes below the FPL are by definition in poverty. The FPL is used to determine both eligibility and the amount of benefits for many different programs.
- The Federal Poverty Level Penalizes Working-Class Marriages. The FPL does not rise proportionally with the number of individuals in the family. For example, the poverty level is $11,490 for an individual, but only increases to $15,510 for a married couple — just $4,020 more. Because this poverty designation does not increase equally for each additional family member, two unmarried individuals living together qualify for larger federal subsidies than they would if they were married.
- Consider the example of two young lovers moving in together to share expenses. Assume each earns twice the poverty level (about $23,340 annually). If the couple were married, their combined household income would rise as a percentage of the poverty level from 200 percent (individually) to nearly 300 percent for a family of two. Depending on the program, this increase could have a profound effect on their eligibility for benefits ranging from food stamps to health insurance exchange subsidies (and many others). Thus, these two unmarried individuals living together qualify for larger federal subsidies than they would if they were married. As a result, this young couple, who might otherwise marry, may decide they cannot afford to.
- Granted, not all couples meticulously calculate the loss of benefits and consciously decide whether or not to marry. Yet, the marriage penalty can still inhibit marriage as mores change over time. This can occur as others around them — friends, neighbors, siblings — forgo marriage to avoid loss of benefits and influence them to do the same.6
- The Obamacare Marriage Penalty. Additional penalties under Obamacare may further discourage couples from “tying the knot.” The Patient Protection and Affordable Care Act (ACA) establishes health insurance exchanges where qualifying individuals can purchase subsidized individual or family health coverage. The exchange subsidies are more generous to cohabiting partners than to married couples. This disparity creates perverse incentives that further discourage cohabiting couples from marriage — especially moderate-income couples.
Why? Federal subsidies to purchase coverage in the health insurance exchange are based on the federal poverty level, and are rather generous to low-income individuals. Qualifying individuals and families earning 100 percent of the FPL will pay no more than 2.01 percent of their income for coverage that costs anywhere from $3,000 per individual to $15,000 per family, depending on their age and region. The federal government will cover the rest of their premiums. As income rises, the subsidies phase out, but a family earning 400 percent of the poverty level will pay no more than 9.56 percent of its income in premiums.
If the young couple (mentioned above) were to marry, their combined household income of $46,680 would rise as a percent of the poverty level from 200 percent (individually) to 297 percent for a family of two. As a result, instead of paying premiums that are capped at no more than 6.34 percent of income as two individuals earning 200 percent of FPL, their premiums would be capped at 9.47 percent of income for a married family of two earning 297 percent of poverty. Thus:
- Individually they would each qualify for a subsidy of about $1,151 each, or $2,302 per (cohabiting) household.
- If that same couple were to marry, their combined subsidy would fall to $845.
- Their marriage penalty is $1,457 annually.
The Obamacare exchange marriage penalty is especially pronounced for couples with combined incomes of $30,000 to $55,000 annually. [See Figure I.]
What Causes Poverty? Some experts claim poverty is the result of bad choices, while others say bad choices are explained by cognitive overload.8 One theory posits that poverty becomes self-perpetuating by creating stresses that inhibit sound decision-making and the ability to think rationally.9 But those theories do little to explain the preventable lifestyle choices that cause many people to become poor and remain poor. When comparing those who are poor with those who are not poor to identify the differences in demographics and life choices, a handful of common poverty traits emerge. To quote George Mason University Professor of Economics Walter Williams, “[a]voiding long-term poverty is not rocket science.”10 Williams’ antipoverty strategy can be paraphrased thusly: 1) finish high school, 2) don’t have children until you’re married, and then stay married, 3) get a job, any job, and 4) avoid criminal activities.11
- Williams’ advice is consistent with the conventional wisdom that research has confirmed over the years. Yet, while common sense suggests that educational attainment boosts lifetime earnings, people often don’t realize the degree to which marriage plays a role.12 Out-of-wedlock childbearing is highly correlated with poverty for both the mother and her child. Thus, marriage is an important institution for avoiding child poverty.13
Read more at http://www.ncpa.org/pdfs/bg177.pdf
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