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unidentified
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| Joining us now to talk about the expiring ACA enhanced subsidies is Brian Blaise. | ||
| He's president of Paragon Health Institute. | ||
| He was former White House National Economic Council policy advisor under the Trump administration. | ||
| Brian, welcome to the program. | ||
| Thank you, Mimi. | ||
|
unidentified
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Great to be here. | |
| Just if you could tell us about Paragon Health Institute, your mission, and your funding. | ||
|
unidentified
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Sure. | |
| Paragon has been around now for just about four years. | ||
| We are focused on evaluating how government health care programs are working and designing solutions that empower patients and inject competition, really get at a lot of the bad incentives that emanate from government programs. | ||
| We are a nonprofit, so we are funded by a pretty broad set of individuals and foundations, and we do not accept any corporate funding. | ||
| So we're one month into the government shutdown. | ||
| The ACA enhanced subsidies are at the center of that funding impasse. | ||
| What do you want to see happen to those subsidies? | ||
| Well, I think those enhanced subsidies have led to enormous problems and that Congress should allow them to expire. | ||
| They have, one, they're very expensive. | ||
| Keeping them would be over $40 billion a year in cost. | ||
| They're also very inflationary. | ||
| They put upward pressure on health care prices and premiums. | ||
| They have led to enormous fraud in the Obamacare program. | ||
| And they are payments that go directly to health insurance companies. | ||
| And I think it's really important to know for the vast majority of enrollees in Obamacare, they are covered by the original subsidies. | ||
| Those subsidies don't expire. | ||
| And for the vast majority of them, they will have access to a health insurance plan for less than $75 a month. | ||
| And the government will be covering the majority, the vast majority of the cost, again, for the vast majority of enrollees. | ||
| So as far as the estimates on how much premiums will go up, what are you thinking as far as how much they'll go up if these enhanced subsidies are done away with or expire? | ||
| So there's two ways to think about it. | ||
| There's a percentage premium increase. | ||
| There's also just what the raw premium increase is. | ||
| Because of these enhanced subsidies and because there's been very lax income verification, about half of the entire market now has a fully subsidized plan. | ||
| So the enrollees aren't paying anything for it. | ||
| That's been the main driver of this tremendous amount of improper enrollment and fraud and really a lot of people that don't use their health plan for anything. | ||
| So for most of those individuals that are now paying zero, they will go from paying anything between $10 and $60 a month for their coverage. | ||
| Based on their income, you mean? | ||
| That would be based on income? | ||
| So the subsidy is a function of income. | ||
| So the lower income enrollees receive a greater government subsidy. | ||
| The vast majority of Obamacare enrollees are low income. | ||
| 75% of them are below 250% of the poverty line. | ||
| Now, 250% of the poverty line is about $40,000 for an individual, but they receive giant subsidies, and those subsidies are part of the original Obamacare law. | ||
| They're not going to go away. | ||
| So for the average enrollee in that category, once these enhanced subsidies expire, the government is still going to be picking up 70 to 90% of the premium. | ||
| Now, you said that these subsidies go to the health insurance companies. | ||
| Explain how that works, because I thought the subsidies were tax credits for the individual. | ||
|
unidentified
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Yeah, so thank you for that question. | |
| So the subsidies, it's complicated. | ||
| People estimate their income and the subsidy amount is a function of their estimated income. | ||
| So I'm going to, right now, we have the 2026 open enrollment. | ||
| I'm going to estimate my income for 2026. | ||
| I'm going to get a subsidy amount that's based on that estimated income. | ||
| But every month that I'm enrolled, the government is sending a check to the health insurance company on my behalf. | ||
| So this goes directly to the health insurance company. | ||
| At the end of the year, when I file my taxes, so in the spring of 2027, there's a reconciliation process and the amount that was advanced to the insurer is then reconciled with the amount that should have been advanced to the insurer. | ||
| And there might be an overpayment, there might be an underpayment. | ||
| But there's tremendous opportunities for gaming here because if the insurer receives too much money, in many cases, the government says, okay, the insurer can keep the excess money. | ||
| We'll either write it off, which happens a lot, or we'll go after the individual for any overage. | ||
| Brian Blaze of Paragon Institute is with us to talk about ACA and the expiring enhanced subsidies. | ||
| If you'd like to ask him a question, you can go ahead and call us now. | ||
| Democrats are on 202-748-8000. | ||
| Republicans 202-748-8001. | ||
| And Independents 202-748-8002. | ||
| If you're on the ACA, if you're insured through the Affordable Care Act, we'd really like to hear from you as well and hear about your experience. | ||
| We have a line set aside for you that is 202-748-8003. | ||
| That's the same line you can use for texting us your comments as well. | ||
| Brian, who qualifies for the ACA? | ||
| How does it work? | ||
| Who is typically on the ACA as opposed to other types of insurance? | ||
| Great question. | ||
| So the Affordable Care Act had two parts of its coverage expansion. | ||
| So we're not talking about people that have employer-sponsored insurance, which is most people get their insurance through their employer. | ||
| We're not talking about Medicare. | ||
| We're also not talking about Medicaid, even though the Obamacare, the Affordable Care Act, contained a massive expansion of the Medicaid program. | ||
| What we're talking about is the individual market for health insurance. | ||
| So this is generally people that are of working age who don't get coverage through their employer and who don't qualify for a government program. | ||
| So the Obamacare significantly impacted the individual market. | ||
| It contained a host of regulations. | ||
| So it required insurance to cover procedures to cover conditions that it didn't have to cover in the past or where there was flexibility around. | ||
| It contained regulations on how that insurance could be priced. | ||
| And all of that increased the price of individual market health insurance. | ||
| Now, in order to make the market work, there was an individual mandate, which was a tax penalty on people who didn't buy the required coverage. | ||
| And there was a set of large subsidies, which were largest for lower income enrollees. | ||
| So Obamacare launched in 2014, significant premium increases in the individual market. | ||
| And really, the individual mandate proved to be ineffective. | ||
| It didn't bring a lot of people into the market. | ||
| So it was one of the sort of big thoughts of what was important for the Affordable Care Act, which played out very different in reality. | ||
| That individual mandate penalty was eliminated in 2019, and it didn't affect the market at all. | ||
| What really is the underlying characteristic of the market is it is it was enrollment was very low and it was only people who received really giant subsidies or people that expected expensive medical conditions to enroll. | ||
| That was the state until 2020. | ||
| In 2021, the Congressional Democrats used reconciliation and they passed an extension, an enhancement of the subsidies. | ||
| So it increased the generosity of the subsidies and it lifted a cap that had existed at four times the poverty line. | ||
| In 2022, the Democrats and the Inflation Reduction Act, again using reconciliation, so there were no Republican votes for the enhanced subsidies ever. | ||
| They extended those enhanced subsidies through 2025. | ||
| So that's the issue that's before us right now, is that the Democrats, they set this subsidies to expire, the enhanced subsidies to expire after 2025. | ||
| And the question is, you know, is that going to happen or not? | ||
| Now, the argument is that a lot of people are going to be priced out of the Affordable Care Act if those enhanced subsidies are allowed to expire. | ||
| How many uninsured Americans are there in the country currently? | ||
| How many do you expect will lose health insurance coverage if these subsidies were to expire? | ||
| So there are approximately between 20 and 25 million people without health insurance now in the U.S. | ||
| Now, a lot of them qualify for a subsidized coverage, but don't enroll, actually the vast majority, or they're unauthorized immigrants. | ||
| According to CBO, if the under current law, so current law has these expanded subsidies expiring, there'd be about 3.5 million fewer people with health insurance. | ||
| But I would caveat that number and say, you know, one of the things that we have found in our research is there are tremendous numbers of these Obamacare enrollees that didn't use their health plan for anything. | ||
| So 35% of all Obamacare enrollees in 2024 didn't use their plan a single time. | ||
| No doctor visit, no prescription, no lab test. | ||
| And what you have is the insurer sending the large, or the government sending the large subsidies to the insurer on behalf of, on an annualized basis, 8 million people that didn't use their health plan a single time. | ||
| So the number of people who would lose their insurance is less than half the number of people that don't use the plan for anything. | ||
| All right, let's talk to callers. | ||
| We'll start with Ron in West Chesterfield, New Hampshire, Democrat. | ||
| Good morning, Ron. |