POLITICS - Spin Doctoring Example 2

"Louie Gohmert’s Health Care Hooey" by Eugene Kiely, FactCheck.org 8/14/2013

Rep. Louie Gohmert is wrong when he says a “poor guy out there making $14,000? is “going to pay extra income tax if he cannot afford to pay the several thousand dollars for an Obamacare policy.”  In fact, that “poor guy” will be eligible for Medicaid coverage or heavily subsidized private insurance, depending on where he lives, without fear of being penalized if he cannot afford insurance.

Under the new law, an individual earning $14,000, which is currently 122 percent of the federal poverty level, would be eligible to receive:

• Medicaid if he lives in a state that expands Medicaid to include coverage for individuals and families earning up to 138 percent of the federal poverty level.  A provision of the Affordable Care Act funds the Medicaid expansion, at the state’s discretion.

• A significant federal subsidy to help pay for private insurance, if he doesn’t live in a state that expands Medicaid.  But he doesn’t have to buy insurance, because he is also eligible for a “hardship exemption” that would exempt him from any tax penalties.

Gohmert, a Texas Republican, made his comment on ABC’s “This Week.”  He was criticizing President Obama for delaying implementation of the health care law’s employer mandate but not its individual mandate.  Under the law, most Americans will be required to purchase health insurance or pay a penalty, beginning at $95 per person or 1 percent of income in 2014, whichever is higher, and rising to $695 per person or 2.5 percent by 2016.

Gohmert, Aug. 11:  What about the poor guy out there making $14,000?  He’s going to pay extra income tax if he cannot afford to pay the several thousand dollars for an Obamacare policy.  Who’s caring about him?

Well, a lot of us do, but it’s not this president because he didn’t let the individual mandate have a year off.  He — that only goes to big business.  That’s not fair.

Gohmert has repeatedly expressed concern about the guy making $14,000, as he did in a July 17 statement and in an interview on the “Sean Hannity Show” on Aug. 6 (at the 4:47 mark).

Gohmert, July 17:  To force higher income tax rates on people making as little as $14,000 or so a year is grossly unfair by any standards, no matter how badly he wants to force Americans into ultimate government healthcare control.

Gohmert, Aug. 6:  We’re doing this for America, for the guy that’s making $14,000 that would ultimately have an extra two and a half percent tax because Obama went after the little guy in Obamacare.  We’re doing it for those people.

But Gohmert is wrong, for several reasons.  Let’s start with the fact that the federal poverty level currently is $11,490 for one individual, so $14,000 is 122 percent of the federal poverty level.  A person earning that little would qualify for Medicaid next year in at least 23 states.  That’s because the ACA expands Medicaid to include those earning up to 138 percent of the federal poverty level, which is $15,856 a year for 2013.  The Medicaid expansion will not occur in every state, because the Supreme Court’s June 2012 ruling gave states the option not to expand it.  As of July 1, 23 states and the District of Columbia support the expansion, while 21 are opposed and six are still considering it, according to the nonpartisan Kaiser Family Foundation.

So what happens to the “poor guy out there making $14,000? in, let’s say, Gohmert’s home state of Texas — one of the states that so far has opted not to expand Medicaid?  He can buy a qualified health plan through an insurance exchange that will be set up under the law, beginning Oct 1.  But it is not a requirement that he buys insurance.  That’s because he will be eligible to receive a “hardship exemption” to the individual mandate and its tax penalty, under a final rule published July 1 by the Department of Health and Human Services.  (See page 39525 under “eligibility standards for exceptions.”)

Federal Register, July 1:  Ineligible for Medicaid based on a state’s decision not to expand.  The Exchange must determine an applicant eligible for an exemption for a calendar year if he or she has been determined ineligible for Medicaid for one or more months during the benefit year solely as a result of a State not implementing section 2001(a) of the Affordable Care Act;

The Centers for Medicare and Medicaid Services announced the final rule in a June 26 press release.  That release provided a list of reasons why a person would qualify for an exemption to the individual mandate — including this one:  “Individuals who are ineligible for Medicaid solely based on a state’s decision not to implement the Medicaid expansion under the Affordable Care Act.  This rule will protect individuals in states that, pursuant to the Supreme Court decision, choose not to expand Medicaid eligibility. …”

So, Gohmert’s guy making $14,000 won’t be penalized even if he lives in a state like Texas.  But he would be eligible to receive a significant tax credit subsidy to help him buy insurance on the exchange, because the law also provides a sliding scale of subsidies to people with annual incomes between 100 percent and 400 percent of the federal poverty level, as the Kaiser Family Foundation explains.

Someone with a modified adjusted gross income of $14,000 would receive a significant tax credit to help pay for insurance.  How significant?  A 27-year-old nonsmoker who has no children and earns $14,000 might expect to pay only $280 a year for insurance on the exchange.  That’s because he would receive a tax credit subsidy of $2,883, covering 91 percent of the estimated $3,163 annual premium, according to the Kaiser Family Foundation’s (KFF) “Health Reform Subsidy Calculator.”

KFF estimates the subsidy would be even larger for a 57-year-old nonsmoker. That person — who, again, has no children and earns $14,000 — also would pay just $280 a year toward his insurance premium, even though the cost of his plan is estimated at $7,355.

(The calculator is for illustrative purposes only to give people an idea of how much they can expect to pay for insurance and receive in subsidies. Premiums on the exchanges are still being set.  KFF assumes that the average premium for a single adult before subsidies would be $4,827, which is then adjusted based on a person’s family size, age, tobacco usage and income.)

The new federal law allows insurance companies to charge higher premiums based on age and tobacco use — up to a point.  Older policyholders can’t be charged more than three times the rate for younger policyholders and smokers 1.5 times more than nonsmokers.  It’s under this scenario that someone earning as little as $14,000 — and living in a state that chooses not to expand Medicaid — might have to pay “several thousand dollars for an Obamacare policy,” as Gohmert said.  KFF estimates, for example, that a 57-year-old smoker would have to pay nearly $4,000 even after receiving federal subsidies.  But, as we said, that person isn’t required to buy insurance and won’t get hit with an extra income tax if he doesn’t — despite what the Texas congressman says.

Even low-income individuals who are not eligible for Medicaid because they earn above 138 percent of the federal poverty level — currently $15,856 a year for 2013 — are eligible for subsidies and possibly a hardship exemption.  That’s because the eligibility standards for exemptions also state that a person must be granted an exemption if “[t]he expense of purchasing a qualified health plan would have caused him or her to experience serious deprivation of food, shelter, clothing or other necessities.”