Claire Haas and her husband are at a health insurance crossroads.
If they were single, each would qualify for a federal tax credit to help reduce the cost of their health insurance premiums. As a married couple, they get zip.
“We talk about getting divorced every time we get our health care bills,” said Haas, 34, of Oakland, Calif. She has been married to her husband, Andrew Snyder, 33, for two years.
“We kind of feel like we messed up. We shouldn’t have gotten married.”
The couple pays about $900 in monthly premiums — which adds up to about 14% of their annual income, said Haas, a self-employed leadership coach and consultant. Snyder is an adjunct professor of ethnomusicology.
Under a proposal by Gov. Gavin Newsom, an estimated 850,000 Californians could get help paying their premiums, including people like Haas and Snyder, who together make too much to qualify for federal financial aid but still have trouble affording coverage.
To pay for the health insurance tax credits, the Democratic governor is proposing a tax penalty on Californians who don’t have health insurance — similar to the unpopular federal penalty the Republican-controlled Congress eliminated, effective this year.
If Newsom’s $295 million plan is enacted, California would be the first state to offer financial aid to middle-class families who have shouldered the full cost of premiums themselves, often well over $1,000 a month.
“This is a gap in the Affordable Care Act, but there’s been no action at the federal level,” said Matthew Fiedler, a fellow with the USC-Brookings Schaeffer Initiative for Health Policy.
In California, legislators are debating Newsom’s penalty and tax credit proposals as part of budget negotiations, which must be wrapped up by June 15. Democrats control the legislature, but Republicans and taxpayer groups are opposed to the proposed penalty, saying people should have a choice about whether to buy insurance.
“It’s a very costly and regressive tax on young people who can’t afford it,” said David Wolfe, legislative director of the Howard Jarvis Taxpayers Association. “They likely aren’t going to get sick, and they want to take that chance.”
Three other states — Massachusetts, New Jersey and Vermont — and the District of Columbia already have adopted state health insurance requirements. Health experts say these mandates encourage young, healthy people to buy coverage alongside older, sicker — and more expensive — enrollees.
If lawmakers approve a state tax penalty, modeled after the now-defunct ACA mandate, some Californians could owe thousands of dollars if they fail to buy insurance.
“Without the mandate, everybody’s premiums go up,” Newsom said at an event in Sacramento in early May. “Every single person in this state will experience an increase in their costs if we don’t have a diversified risk pool.”
Massachusetts and Vermont provide state financial aid to low-income people who qualify for federal aid under the ACA, according to the USC-Brookings Schaeffer Initiative for Health Policy. Newsom wants to go a step further and give financial help to middle-income earners — which could include families of four earning up to about $154,500.
Under his proposal, 75% of the financial aid would go to about 190,000 of these middle-income people who make between 400% and 600% of the federal poverty level. That’s between about $50,000 and $75,000 a year for an individual and between about $103,000 and $154,500 for a family of four.