Health insurance subsidies and the expansion of an implicit marriage penalty: a regional comparison of various means-tested programmes

Any subsidy provision for healthcare premiums, including those embedded in Affordable Care Act (ACA), has the potential to result in some couples facing an implicit penalty when married relative to unmarried. To illustrate such consequences of means-tested subsidies of health insurance premiums, we construct hypothetical households earning different levels of income who are eligible for current subsidies in the USA. and compare the estimated implicit marriage penalty faced by these households to the one faced by low-income households who are eligible for various means-tested programmes (e.g. TANF, WIC, SNAP) for each of the 48 contiguous states. We find that, like very low-income households, marriage can potentially penalize couples who receive health insurance premium subsidies by decreasing their overall disposable income by as much as 14%. We find that the ACA increases the number of households subject to marriage penalties embedded in means-tested programmes for low-income couples. This distortion will exist for any future health insurance premium subsidies that are means tested at the household income level.