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The overhaul of the nation’s health-care system -- and how Rhode Island is preparing for its impact -- dominated a recent segment of WHJJ-AM's "The Helen Glover Show."
Glover's guest was Amy Gallagher, a local benefits consultant with the Cornerstone Group and a member of the health exchange work group of Governor Chafee’s Healthcare Reform Commission. The two were criticizing the federal law, warning that it will be too costly to taxpayers.
Glover talked about how when she was younger, she couldn’t afford health insurance but managed to get by -- by tapping her savings to pay for doctor’s bills with cash.
"How do we pay for it?" Glover asked about the new health care system and the planned exchanges that are an attempt to provide affordable insurance to the masses.
After a commercial break, Glover said that Gallagher "was just telling me that a family of four can make up to $88,000 a year and still get a subsidy for health insurance, which of course begs the question, who is paying for that in the long run? We all know that all of us are."
We’re not going to delve into a debate about whether the health care law is going to save the country money or cost more by extending coverage to millions of uninsured Americans. But we were curious whether a family with that much income would truly qualify for a federal subsidy.
But before we hook up the Truth-O-Meter to Glover’s statement, let’s first revisit the basics of the Patient Protection and Affordable Care Act, which President Obama signed into law March 23, 2010.
One of its centerpieces is the so-called "individual mandate." Beginning in 2014, most U.S. citizens will be required to obtain health insurance, according to a summary of the law published by the Kaiser Family Foundation, an often-cited source of information on health care policy. If they don’t, they’ll face penalties that by 2016 will rise to $695 or 2.5 percent of taxable income for individuals, whichever is greater.
Enter the exchanges. Their purpose is to create a marketplace that helps keep costs down by spurring competition between insurers while delivering to them vast numbers of consumers, including younger healthy people, many of whom lack insurance now.
Exchanges will be established in every state, with the federal government stepping in to create ones in states that opt not to participate. Rhode Island was moving toward establishing a state-based health-benefits exchange when Gallagher appeared on Glover’s show on Sept. 7. (On Sept. 20, Governor Chafee issued an executive order directing the establishment of an exchange.)
Both individuals and small businesses will be able to purchase coverage through exchanges when they open in 2014.
While the exchanges are intended to be affordable, it’s expected that plenty of people will still need financial assistance. That’s where the federal subsidies come in.
Called "premium tax credits," the subsidies will be offered to income-eligible consumers who purchase insurance through an exchange. The credits will be paid directly to an insurer to help families that might not have the cash to make timely payments.
So back to Glover’s statement. Would a family of four making $88,000 a year qualify for the subsidies? The short answer is yes.
The guidelines are spelled out clearly in the Kaiser summary, as well as at HealthCare.gov, a Web site of the U.S. Department of Health and Human Services.
They state that taxpayers with household incomes up to 400 percent of the federal poverty level -- $89,400 a year for a family of four in 2011, according to the U.S. Treasury Department -- will be eligible for credits.
Families at that level would contribute 9.5 percent of their income -- $8,493 -- to their health insurance premium. The tax credit would cover the remainder.
Those with lower incomes would contribute less and get bigger credits. A family at poverty level -- $22,350 for a family of four -- would contribute 2 percent of their income, about $447.
The Treasury Department, in an Aug. 12 notice, noted that the Congressional Budget Office estimates that individuals receiving tax credits will get an average subsidy of more than $5,000 per year.
Glover, quoting a talk show guest, said a family of four with an income of $88,000 would be eligible for a health insurance subsidy. That figure is actually $1,400 below the threshold to receive a subsidy.
And it’s in 2011 dollars, meaning that by 2014, when exchanges are scheduled to begin operation, it could be adjusted upward to reflect inflation.
While the diagnostic services of our Truth-O-Meter are not covered by any known health plan, we administer them freely. This claim gets a True.
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The Helen Glover Show, "Amy Gallagher: Health Exchange 9-7," accessed Sept. 28, 2011
Patient Protection and Affordable Care Act, March 23, 2010. Accessed Oct. 3, 2011.
Web site, Kaiser Family Foundation, "Summary of New Health Reform Law," "Health Reform Gateway," "What are health insurance exchanges," and "How people get coverage under the Affordable Care Act," all accessed Sept. 25-27, 2011
Web site, U.S. Treasury Department, "Treasury lays the foundation to deliver tax credits," Aug. 12, 2011.
HealthCare.gov, U.S. Department of Health and Human Services, "Affordable Insurance Exchanges," accessed Sept. 27.
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