Dan Gorenstein: The judge had had it with Liana Wolk and Owen Marshall.

Liana Wolk: You could just hear it in his voice and he’s just going, I don’t know why these people are wasting my time. He was like, something fishy is happening.

DG: Liana and Owen had definitely had it with the judge.

This was the second time they were appearing in front of him asking for a divorce.

He’d denied the couple a month earlier, when he’d peppered them with what seemed like patronizing…

LW: What assets do you own together?

Owen Marshall: What grounds are you asking for this divorce?

DG:..and prying questions.

OM: Are you going to continue to live together?

LW: Will you continue to have intimate relations with each other?

OM: After that intimate relations question, I just blacked out really. I was just so furious we were being asked such personal questions over something that was really none of his business.

DG: Now, here they stood, worried he’d deny them again. 

Owen looked across the courtroom to Liana whose eyes were filled with panic.

She steadied herself and leaned into her microphone.

LW: Well, frankly, we’re doing this because Owen’s health care is not affordable.

DG: Today, the Obamacare policy that pushed one couple to file for divorce. 

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein, this is Tradeoffs.

******

DG: Before Liana and Owen got divorced, they got married. 

OM: We got married in Peru … Maine. Peru, Maine.

DG: Owen is a professional musician, and their May 2019 wedding doubled as a music festival at the farmhouse they’d rented.

OM: Irish music was being played multiple locations. I think some friends were playing some Quebecois music. There was this dingy sauna as part of it and then three people packed in there and were playing a bunch of like Swedish music.

DG: At the end of that summer Liana landed a full-time job teaching English as a second language to adults. She was thrilled, and it came with health insurance. 

Great timing: Owen was recovering from a hand injury that had kept him out of work for a few months. The need for good health coverage was more obvious than ever. 

But when Liana called HR to sign them both up, her wonderful news turned bizarre.

OM: We were going to have to pay over $16,000 a year in premiums.

DG: The couple was shocked.

$16,000 was at least 20 percent of their household income.

Liana and Owen didn’t know it at the time, but under the Affordable Care Act, if premiums go over about 10 percent, you can get federal assistance to buy a plan off an ACA exchange.

So the two figured Liana would get insurance through work which for just her, would only be $1,500 a year in premiums.

And Owen would stay on the ACA exchange.

This way they’d save at least $10,000. Problem. Solved.

OM: I was like, Phew, well, this safety nets here. Great. I can just go back to this. I’ve already met my deductible and we’ll just continue along.

DG: Liana called Healthcare.gov to get Owen back on an ACA plan.

LW: The person I talked to said he lost all of his subsidies.

DG: Why would Owen no longer qualify for federal financial help?

Liana’s work plan would cost more than 10 percent of their income.

So would an exchange plan without any federal aid.

None of this made any sense.

Late one night, after days of head-banging phone calls, Liana pulled out her computer.

LW: I just googled like a string of keywords that were like Spouse. Employer health insurance. Not affordable. Affordable Care Act. The most key words I’ve ever Googled.

DG: As she read, Liana’s eyes lit up. 

LW: Oh, my God, this is what’s going on. We fit into this category.

DG: Leaning over her laptop, just three months into their marriage, the puzzle pieces started falling into place for Liana.

Owen couldn’t get ACA subsidies because Liana — now his spouse — had been offered an individual insurance plan that fell under the 10 percent income threshold.

Back in 2013, the Obama administration made a major decision about spouses and dependents of workers who were offered individual plans under 10 percent.

Those family members were blocked from getting any federal assistance with their premiums, regardless of how expensive a family plan was.

In other words, an affordable plan for an employee — like Liana’s — could be a roadblock to getting a spouse or kid covered too.

That night the couple learned Owen had joined an exclusive club, one of about 5 million people in the country stuck in something health policy people actually call “the family glitch.”

They were stunned.

OM: It’s just like a gut punch of like what’s happening?

LW: What are we going to do?

OM: Totally overwhelmed.

DG: If Owen had any thought of going uninsured, reinjuring his hand a week after learning about the glitch quickly changed his mind.

Going from Obamacare with subsidies to Obamacare without subsidies, Owen’s premiums jumped more than 1000 percent — $40 a month to over $400.

The couple was lucky. They could take that financial hit, for a few months.

In January though his premiums climbed to over $500.

The newlyweds’ choice was clear and heartbreaking.

OM: We’re just blowing through this money for no reason other than the stupid piece of paper that says we’re married. It was just, like, so frustrating and demoralizing and dehumanizing. 

LW: We just didn’t see any other options.

DG: Liana and Owen realized they could only live the life they wanted together if they got a divorce.

A painful decision for sure, but one that even their skeptical judge accepted once they walked the judge through the family glitch.  

OM: He said we’ve made you jump through a lot of hoops, and I apologize for that. And I’m willing to continue this farce — his exact words — I’m willing to continue this farce and grant you a divorce.

DG: Owen and Liana held hands as they left the courthouse about a year after getting married. 

The newly divorced couple celebrated by picking up a fancy takeout lunch.

Before they ate, there was one last thing to do.

OM: We got home, and I immediately called healthcare.gov and reported a life change. And no questions asked, no proof of divorce, anything. Just said, what happened? I had a divorce. And my plan dropped back down to $40 a month. Immediately. Immediately.

DG: When we come back, the Biden administration’s plan to fix the glitch and why it won’t be a fix for everyone. 

MIDROLL 

DG: Welcome back.

For Liana Wolk and Owen Marshall, divorce was their way out of the family glitch.

Some of the 5 million people caught in this predicament have decided to go without health insurance. Others have gone without coverage for themselves but purchased plans for their kids.

Tough choices that the Biden administration hopes to make a thing of the past by “fixing” the glitch.

It’s wonky, it’s about the law, and we needed some help.

Katie Keith: The family glitch is something I’ve been following for many, many years.

DG: So we called up Katie Keith.

KK: I am the director of the Health Policy and the Law Initiative at the O’Neill Institute for National and Global Health Law at Georgetown University Law Center. It is the longest title possible.

DG: Katie also writes about all things ACA for the policy journal Health Affairs.

Katie says Congress was clear when Obamacare passed: People who could get affordable coverage through work, should get coverage at work, not on the government exchange. 

KK: The government was not going to subsidize folks who wanted to move away from job based coverage.

DG: What was less clear was what should happen to people like Owen, someone whose family member had affordable employer coverage, but covering the whole family would run more than 10 percent of their annual income.

Some argued if family coverage was more than 10 percent, family members should be eligible for federal help.

This was Katie’s view, along with some health law experts, certain members of Congress, unions and advocates.

The IRS saw it differently.

KK: The Obama administration’s IRS said, we think our hands are tied. Whatever the employee is offered, that’s going to extend to the whole family. We’re not going to look at the cost of family coverage at all when we determine whether you’re eligible.

DG: Surprised the Obama administration would make it harder for people like Owen to get affordable insurance?

Politics played a role.

Letting more people get federal aid would increase the bill’s price tag.

Plus, the administration was sensitive to anything in the law that would seem to undermine employer-based coverage.

To people in Katie’s camp, the family glitch has always seemed unfair.

KK: If the goal of the ACA is to say we want people to have good, affordable health insurance coverage, and then we have this interpretation that leaves, you know, anywhere from 4.8 to 5.1 million people out, primarily kids and women, that to me, sort of reeks of being inconsistent.

DG: President Biden announced plans this April to fix the glitch.

President Biden: Starting next year working families in America will get the help they need to afford full family coverage, everyone in the family.

DG: At a basic level, Katie, I understand that the Biden administration wants to help people like Owen, who has been left out of the ACA’s promise of affordable coverage.

You’ve talked to the administration about this, and they even cited your work in their proposal.

How would this change things for people like Owen and Liana?

KK: For people like Owen and Liana. What this would do beginning in 2023, if it’s finalized, would be to say, we’re going to look at your costs as a family instead of just Liana’s costs. We’re going to say, how much would it actually cost to cover you as a couple or you as a family? And we’re going to account for that. And so in this case, Owen would no longer be barred from getting premium tax credits. The offer that Liana has from her employer would no longer bar him from getting the subsidies that he’s needed to get.

DG: Estimates from the Kaiser Family Foundation and Urban Institute say there are about 5 million people caught in the family glitch, mostly women and kids.

The White House says with their fix, about 1 million people would get cheaper coverage and 200,000 would get insurance for the first time.

Why will this help so few people?

KK: I think there’s three primary reasons that might limit the overall impact of this policy. The first one is not everyone who falls in this family glitch right now will necessarily save money. It could actually be cheaper overall to stick with your family plan and not, you know, pay two premiums or two deductibles. I think the second reason is some families are just not going to want to deal with the hassle of having different family members on different provider networks, different drug formularies. It can get really complicated for families. The third is outreach and awareness. Some families might not even know this is an option.

DG: So, Katie, you’re saying for some of these 5 million folks, this won’t actually make coverage cheaper.

And even for those who could save money, the hassle of it all could keep them from taking advantage. 

KK: Frankly, it’s because of how complicated our health insurance system is, but I keep going to how important I think it is for families to at least have the choice, because right now you are sort of locked into that job based coverage. And this isn’t even an option for the million or 1.2 million people who this would benefit. 

DG: And so let’s zoom in on that, Katie. Like who who are those 1 to 1.2 million people? Are they folks like Owen, artists, other musicians? Like, what do we know about the group most likely to benefit here?

KK: So we don’t we don’t fully know who the 1.2 million folks would be. But we do have some information about the universe of the 5 million. The Kaiser Family Foundation put some good data behind this, and it tends to be employers with 200 employees or less, those in the service industry, agriculture, mining and construction. So you could see a disproportionate benefit to family members with workers in those types of industries.

DG: Researchers estimate a family of 4 making $53,000 a year could save anywhere from $2,300 to $4,100 in premiums per year.

But fixing the family glitch has its critics, mostly from the conservative side. And they point to a 2020 Congressional Budget Office analysis showing all these extra subsidies would cost the government $45 billion over 10 years. So this would definitely cost more money, there’s no doubt. And the critics argue that it’s better to keep people in private coverage, not push them into public coverage. What do you say to that critique?

KK: I think in general, the critics I have seen of this policy fix are critics of the Affordable Care Act in general. I just keep going back to the impact on children and women and families with low-income workers. So the response to we shouldn’t be spending more money? I think we shouldn’t be asking people to pay 16 percent of their income towards premiums.

DG: I guess with that question I’m trying to get us to to really think through the pros and cons of the family glitch fix. Primarily low-income people are going to have more affordable insurance or insurance for the first time. So that’s the upside. And there’s a cost to that that will be borne out by the taxpayer. Is that effectively the tradeoff? Are there more tradeoffs to consider here, Katie?

KK: I think that’s the major tradeoff. Of course, it will cost more. I think from a policy perspective, it could make it really messy for families. It is adding a level of complexity. I think there are some people who would want the Biden administration to go even further and allow the employee to come into the marketplace with their family. At the same time, I think this is the most significant thing that the Biden administration could do on its own to extend affordable coverage. So, yes, it will cost more. But I think it’s important to sort of have this option for family members in particular.

DG: Final question, Katie. What happens next?

KK: Comments on this proposed rule are due on June 6. Get in your comments now if you oppose or approve or whatever you want to say. And then assuming the Biden administration finalizes this, they indicated that it would be finalized sometime this year and would go into effect for the 2023 plan year. I say that to emphasize there’s no immediate relief for families right. But what would happen is when you start the open enrollment process in November of this year for coverage next year, that’s when you would start to see the benefits of fixing the family glitch.

DG: Katie, thanks for taking the time to talk to us on Tradeoffs.

KK: Thank you.

DG: Liana Wolk and Owen Marshall are still divorced, but things are going well.

Owen is back performing. They’re expecting their first kid in July.

But it’s been weird 

Friends said they should throw a divorce party. Liana’s mom kidded Owen about his “ex-wife.”

LW: I yelled at her a few times. I said, you’re joking about it, but it’s actually really upsetting. Like it’s upsetting to us to just be reminded of it that way.

DG: And it’s made them think twice about marriage. They’ve started warning friends who get engaged.

LW: We’ve told them you should check this out and make sure this isn’t going to happen to you before you sign that marriage license. 

OM: Have your awesome wedding, but maybe forget to file the paperwork.

DG: Liana and Owen are happy the Biden administration is trying to fix the glitch.

It’s a relief, Liana says, to think other people wouldn’t have to do what they did.

As for them, maybe they’ll get married again, she says.

Some day. Or, maybe not.

I’m Dan Gorenstein, this is Tradeoffs.

Tradeoffs’ coverage of health care costs is supported, in part, by Arnold Ventures and West Health.