The Affordable Care Act’s 'Family Glitch' Strikes Back

There is possibly no issue more emblematic of the federal government’s dysfunctional approach to healthcare law than the Affordable Care Act’s “Family Glitch.”  When the Obama Administration ushered in the Act, the text of the final bill left a gaping hole that working families fell through. Under the Act, if a worker couldn’t afford the premiums for their employer’s health insurance, that worker could purchase government-subsidized insurance on an exchange.  (What it meant for an employer plan to be “unaffordable” was defined by a calculation in the ACA). The same rule didn’t apply to family health insurance, however. If the worker was married with children, it didn’t matter how much it would cost to get family health insurance through the worker’s employer. The family wasn’t eligible to purchase subsidized health insurance on the exchange even if the insurance offered by the breadwinner’s employer was prohibitively expensive. 

I first learned about this issue in 2021 when a stay-at-home mom and I were discussing the most important issues facing her family. Her husband worked hard at his job, she explained, but the family didn’t make a lot of money, and they couldn’t afford to purchase the expensive family health insurance offered by his employer. She was frustrated that the federal government hadn’t fixed the problem. I’d never heard of the Family Glitch before and was impressed as she skillfully educated me (a lawyer!) about the ins and outs of the ACA’s problem in a way my former law professors would likely have applauded. 

Ordinary people like that stay-at-home mom had no choice but to educate themselves on the Family Glitch, but many sophisticated policymakers debated the complexities of this issue as well. For years after the ACA was enacted, scholars disagreed over whether Congress had created the Family Glitch on purpose, or whether the Act’s omission was accidental. Both Republican and Democrat politicians advocated for bills to “fix the glitch”—none successfully. Ultimately, the Biden Administration decided to tackle the issue through an executive order. A solution was reached in 2022, after the former administration directed the relevant  agencies to create a regulatory fix that made families with unaffordable employer-sponsored healthcare eligible to purchase subsidized insurance on the exchanges.

As with several other Biden Executive Orders, however, right-of-center experts vigorously challenged whether the former president had the authority to use administrative action to fix this problem. The hole that left out working families was created by the plain language of the legislative text, they argued, so only Congress could fix it (absent textual ambiguity or a specific grant of legislative authority to an administrative agency on the issue). Notably, the Obama administration did not think they had the authority to fix the Glitch, so it was surprising that the Biden administration did. Additionally, resolving the Family Glitch was expensive, with an estimated cost of several billion annually. Those concerned with the ballooning federal deficit can point to fixing the Family Glitch as a questionable exercise of presidential power with a large  price tag. It is, therefore, unsurprising that one of President Trump’s first actions in office was to revoke the Executive Order that directed the relevant administrative agencies to correct the Family Glitch, as part of a long list of rescinded Orders. The impact of this revocation on subsidized healthcare for working families is unclear and will likely remain so for some time. Notably, the text of the recession order did not mention the Glitch by name (unlike, for example, DEI initiatives), and it is unclear how the relevant administrative agencies will proceed or when. 

In other words, working families will be in limbo while the Trump Administration sorts out what to do. Politicians speak of “kitchen table issues,” but for working families, affordable health insurance is better thought of as a “middle-of-the-night issue”; the kind of thing that keeps moms and dads awake worrying about whether they will continue to be able to afford their medical care. Ultimately, these families have been failed by both political parties as well as our executive and legislative branches of government. Congress should have considered working families more carefully when creating the ACA, and should have taken steps to fix the Family Glitch once the scope of the problem became apparent. The Biden Administration’s reliance on an executive order to try to resolve the problem reveals the pitfalls of failing to negotiate with Congress on this important issue: both because it rested on questionable constitutional authority and ultimately left the fix open to reversal with a new administration. As Patrick Brown, a fellow at the Ethics and Public Policy Center and a regular contributor to the IFS blog, told me: 

What this demonstrates is the weakness of legislating via executive order. The Biden administration sought to ‘fix’ the family glitch, not by negotiating with Congress, but by a Presidential stroke of the pen that could be—and now has been—reversed by the subsequent administration. 

The Trump Administration should know that the Family Glitch affects working families with a breadwinner and a homemaker, many of whom are part of the working-class coalition of Republicans and Independents that elected the new president.

The GOP currently controls both houses of Congress and the Presidency, but by a slim margin.  Analysts estimated that several million American families were directly affected by the Family Glitch. Republicans have legitimate concerns about how Obamacare operates, but it makes no sense to have a healthcare system where individual workers are able to access subsidized healthcare, while working-class families cannot. Indeed, many of these families are cognizant that if mom and dad were not married, they might be eligible for Medicaid—but because they are married, their income is too high for the Medicaid threshold. How frustrating for these same families to learn that their eligibility for government subsidies if they can’t afford insurance through mom or dad’s employer is now in jeopardy. That outcome is not pro-family. And this is exactly the kind of issue these families are likely to vote on next time they go to the polls. 

In revoking the Biden Administration’s Executive Orders, the new Trump Administration explained: “It is the policy of the United States to restore common sense to the Federal Government and unleash the potential of the American citizen.” But common sense indicates working families need access to affordable health insurance and shouldn’t face a tougher time because they are married and employed. Brown told me (and I agree): “A party of working-class families should seek to fix, rather than ignore, a health care status quo that doesn’t work for blue-collar families." Rather than “unfixing” the Family Glitch, the new administration should make sure all families can use the subsidies on the exchanges and convince Congress to pass a workable solution this time around.

Ivana Greco is a homemaker and homeschooling mother of four, as well as a Senior Fellow at Capita.