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Trump's Move To Cut ACA Subsidies Will Improve Marketplace, Roy Says

STEVE INSKEEP, HOST:

Senate Majority Leader Mitch McConnell says he may be open to fixing health insurance markets. McConnell tells CNN he just needs to know one thing.

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MITCH MCCONNELL: If there's a need for some kind of interim step here to stabilize the market, we need a bill the president will actually sign. And I'm not certain yet what our president's looking for here. But I'll be happy to bring a bill to the floor if I know President Trump would sign it.

INSKEEP: The president has sounded like he is both for and against a bipartisan bill that would reverse one of his own actions. The president some weeks ago cut off subsidies for insurance companies which helped to keep down insurance premiums. That is one of the factors driving the latest round of insurance premium increases. We get one view of all of this from Avik Roy, a health policy analyst and president of the conservative think tank the Foundation for Research on Equal Opportunity. He joins us by Skype. Good morning.

AVIK ROY: Good morning, Steve.

INSKEEP: Should the president sign this bill restoring subsidies?

ROY: Well, it is, I think, useful to restore cost-sharing subsidies. But it would also be useful to do other things to lower premiums. I think it's been rather strange that we're only now talking about rising premiums in the Affordable Care Act's exchanges. Premiums have been rising for four years. They've doubled, on average, prior to President Trump taking office.

INSKEEP: Well, certainly that's been a focus of a lot of discussion over the last several years. And now we have a circumstance where state insurance commissioners are describing huge increases on top of the huge increases. The Iowa insurance commissioner was on the program the other day and talked of a 57 percent increase that's coming in his state. And he pointed out that is on top of increases from the past. And they give the elimination of these cost-sharing reductions as one reason premiums are continuing to go up.

ROY: Yeah, and they will be. But I think one thing that's very important for your listeners to understand, Steve, is that there's a difference between what insurers charge and what consumers pay...

INSKEEP: Right.

ROY: ...Because of the subsidy structure under Obamacare. Because the subsidies will expand to cover that premium increase, the actual premiums and co-pays and cost sharing that will be experienced by the average consumer in the Obamacare markets will not change. So it is important to stabilize the market because the government will spend more money on the subsidies under not having the cost-sharing subsidies because they'll just pay it another way, effectively. But the average consumer will pay the same amount.

INSKEEP: Well, the average consumer will but some people are facing devastating increases. Again, citing the Iowa insurance commissioner, some people get subsidies, some people make too much. But they're still going to be paying tens of thousands of dollars for health insurance. Is this sustainable?

ROY: Again, it's important to understand that in the - for the people who are not eligible for subsidies, they also have options to avoid these increases. The increases are only relevant to silver plans. If you're not getting a subsidy on the Obamacare exchange, you don't have to buy a silver plan. The Congressional Budget Office believes that actually prices for gold plans will decrease under this structure. Again, that's separate from the issue...

INSKEEP: Yeah.

ROY: ...Of whether we should have cost-sharing subsidies, but consumers will not be that affected. So this whole situation is not going to dramatically destabilize markets. The things that have destabilized the markets over time are the things that have raised premiums over the last four years - the fact that the plans now have to cover a lot more things and have to be a lot more financially generous in a ways that young and healthy people in particular pay a lot more for their health.

INSKEEP: Well, that's interesting because there is this list of mandated benefits, which is a way to make sure that people are getting value for their money or that's what it's said to be. You feel that those mandated benefits should go away?

ROY: I think that there's a right balance. So it's not that we shouldn't have some sort of brackets or structure around what people have the ability to buy, but there needs to be a lot more choice and competition in these markets. And again, basically the way Obamacare works is it tries to make health insurance more accessible for older and sicker people by having uninsured people, who happen to be young and healthy, pay a lot more. The problem, Steve, is that the majority of people who are uninsured in America are young and healthy.

They just don't have enough money to afford health insurance. And those people are the ones who've struggled the most under this particular system.

INSKEEP: And many of them have been paying the tax penalty instead. That's true, although the insurance rate overall has been going up. Can I just ask very briefly in about 30 seconds...

ROY: Sure.

INSKEEP: ...The president has made so many statements about health insurance. He's sounded for and against this latest bill. He said at one point he wanted health insurance for everybody. He said a lot of different things. Do you feel you understand what the president even wants?

ROY: Well, as you say, I think the president said a lot of different things. I urge him to continue to stand by that last principle you mentioned, that every American should have affordable health insurance. And one way to do that is to reform the Affordable Care Act so more people can afford health insurance than currently do.

INSKEEP: OK, reforming it, not eliminating it. Avik Roy, thanks very much, really appreciate it.

ROY: Thanks, Steve.

INSKEEP: He is a health policy analyst, and he's president of the Foundation for Research on Equal Opportunity. Transcript provided by NPR, Copyright NPR.