Will Very Poor Citizens of States That Don’t Expand Medicaid Try To Increase Their Incomes By Working More?
For many Americans, ObamaCare imposes perverse incentives that will induce some (maybe 11 million) to reduce their earned incomes by working less. But some very poor people in states that declined to expand Medicaid will face incentives to work more, according to Aaron Schwartz and Jacob Wallace:
F
or example, if, during enrollment, a sixty year-old Miami man projected that he would earn $11,500 in 2014, he could purchase a bronze plan using a full subsidy so there would be no cost to him in premiums. But if the same man projected earning just $500 less, $11,000, he would no longer qualify for any subsidy at all and the same coverage would require him to pay the full $6,573 premium.
The reason: If you are eligible for Medicaid or if your income is below 100% of the federal poverty level, you are not entitled to a subsidy.
…[I]f individuals respond to this incentive by seeking a second job or working longer hours, then the policy may increase labor force participation for individuals near the coverage threshold, which may be a desirable outcome.
Maybe. However, if applicants project a higher income than they actually end up earning during the year, the IRS will not claw back any of the subsidy if their household incomes fall below the Federal Poverty Line. The incentive to misrepresent projected income is obvious.
“Will Very Poor Citizens of States That Don’t Expand Medicaid Try To Increase Their Incomes By Working More?”
They won’t be able to receive Medicaid, and they don’t make enough for an ACA subsidy, they will have to earn more to qualify for a subsidy.
Its strange to read that a person can be too poor for a government subsidy.
Especially when they are just giving them away.
They are not poor enough for the government’s free money.
You know that things are not going well when you realize that you are too poor to even receive a subsidy. If the government is giving not giving subsidies to those who need them (poor) then who are they giving it to?
People who need them more (i.e. the slightly less poor)
“States that have not expanded Medicaid under the ACA have created substantial, and likely unintended, incentives for individuals to ensure their incomes exceed 100 percent of FPL.”
But it is creating an incentive to work more, so for the right it may be unintended, but a positive incentive.
“First, the magnitude of the cliff and the fact that individuals can earn too little to qualify is, as far as we can tell, unprecedented in social welfare programs.”
Yes one of those unintended consequences.
Well, liberals will just blame the states for not choosing to expand Medicaid.
This is a somewhat controversial topic. Do people work more or less when faced with a tax increase? Basically, people will adjust to a tax hike in various ways.
If they are starving and can harvest food by collecting it in the forest, they probably work more to collect food. If they are about to lose their home; they may increase their work to avoid losing their most important asset. But if they already have food and a home, they may take the other approach where they buy leisure instead. Leisure is relatively cheap when marginal tax rates are high. How do people adjust to tax hikes? In countries that tax alcohol, home brewing is common. In countries where food away from home is expensive, people cook more.