A new study published today in Health Affairs examines how “inequalities in marriage laws and domestic partnership benefits” have implications on health care costs and the lives of LGBT Americans.
The analysis looks at access to health insurance for same sex couples in California and concludes that the federal income tax burden on dependent employer-sponsored coverage for same-sex couples (as well as other factors) results in lower levels of insurance for partnered gay and lesbian men as compared to their heterosexual counterparts:
Partnered gay men are less than half as likely (42 percent) as married heterosexual men to get employer-sponsored dependent coverage, and partnered lesbians have an even slimmer chance (28 percent) of getting dependent coverage compared to married heterosexual women….We found no strong evidence to suggest that employers in California are discriminating in providing health insurance to gay and lesbian workers. However, our results on the dependent coverage disadvantage in the partnered or married population provide strong evidence of compensation discrimination, in which employers setting coverage rules for dependents favor legally and heterosexually married employees.
Moreover, we suspect that the dependent disadvantage we observed is a consequence of not just compensation discrimination, but also the unequal federal tax burden that influences employees to enroll their dependent spouse or partner for health insurance at different rates. Another possible factor is that enrolling a same-sex partner or spouse as a dependent frequently requires that an employee “come out” as lesbian or gay if the employee has not done so already. Some employees are likely to find this a deterrent.
Indeed, the taxation of employer-provided domestic partner health benefits costs couples some $1,069 per year more in taxes than would a married employee with the same coverage. Employers also pay a total of $57 million per year in additional payroll taxes because of this unequal tax treatment.
The new health care law, will certainly increase the rate of insurance among LGBT Americans, but these kinds of inequalities may present serious impediments to achieving the goal of universal health coverage. If same sex partners who are not offered dependent coverage see the exchanges as an expensive option and opt to remain uninsured, this will certainly lead to increased health care costs down the road. The House version of the health care bill, of course, extended the ESI tax exclusion to domestic partnership benefits, but it was not included in the final version of the bill.