Question: The Affordable Care Act of 2010 provides health insurance subsidies
The Affordable Care Act of 2010 provides health insurance subsidies to families with incomes between 134 percent and 400 percent of the federal poverty line. For example, a family of four headed by a 55- year- old earning $ 31,389 ( 134 percent of the federal poverty line) in a high- cost area receives a subsidy of $ 22,740. A similar family earning $ 93,699 (400 percent of the federal poverty line) gets a subsidy of $ 14,799. But a family earning $ 1 more—$ 93,700— gets no subsidy. In a diagram with hours of leisure on the horizontal axis and consumption on the vertical axis, graph a budget constraint that depicts this subsidy scheme. Discuss the labor supply implications.
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