High Marginal Tax Rates Discourage Work
The bills’ health insurance subsidies for individuals and families between 133% and 400% of the poverty line fall in value as income rises, which means that an increase in earnings (through more hours of work or a pay-raise) results in a higher cost for health insurance. The subsidies would tack on an additional 12% to 20% to marginal tax rates, which already approach 40% to 50% for families receiving cash welfare (TANF), supplemental food assistance (SNAP), and earned income tax credit payments (EITC). Tacking on the additional marginal tax rates caused by subsidies would result in marginal tax rates of 50- 60% for most affected families.

Young Workers Discouraged from Working; Their Earnings Reduce Family Health Subsidies
One provision of Senate Democrats’ proposed health care bill would target families with children—teenagers or college students—who work and earn income. It is very common for teenagers and college students to obtain jobs so that they can have some spending money of their own or help with their educational expenses. Whereas the measure of income used to determine the eligibility of a family for various low-income benefits does not include the wages of teens and college students, the Senate bill penalizes the families of these younger workers by including their wages in benefit eligibility calculations.