The phrase “only in America” was one I heard frequently as a child. It was often said in a light-hearted manner, sometimes with a faux Eastern European accent, but always with a deep reverence for what my parents believed to be it’s central truth: that the United States was a special place. Its unique blend of opportunity, freedom and compassion had allowed our family to go from poor immigrants to prosperous professionals in 2 generations. What a country!
I thought of that phrase this morning in a darker, ironic sense, as I read about a middle-aged couple in Tennessee who were struggling to figure out how to afford health insurance. The husband is retired, and the wife makes a solid salary at a small company. Yet they found that they were trapped by their circumstances: they were too young for Medicare, earning too much for Medicaid, not offered health insurance by the wife’s employer, and not able to afford the market rate for an individual policy on the ACA exchange. After considerable study they decided that they had two options – they could get a divorce, which would allow the husband to qualify on the basis of his lower income for an insurance subsidy, or the wife could take a substantial pay-cut, which would make them eligible for an exchange subsidy. They chose the latter, and actually appear to have come out ahead, since the subsidy was greater than the after-tax difference in her pay before and after.
What is wrong with this picture? Here are a few things that come to mind:
- The health insurance “system” is clearly broken if it creates incentives, no matter unintended, to dissolve marriages and earn less
- There is a huge “complexity tax” that we are all paying to prop up the Rube Goldberg arrangements of the current health insurance marketplace. How much time, effort and anxiety were spent by this couple to figure this out? For those of you fortunate enough to have employer-provided benefits, how much time did it take you to do your benefits enrollment? Did you get it right?
- All this is playing out while Congress cut taxes on the most fortunate in our society
Only in America.