00:00 Speaker A
Growing concerns about medical costs and affordability are brought into focus as a deadline for Affordable Care Act subsidies approaches. However, President Trump is reportedly proposing an extension to enhanced subsidies. For more on what this means for consumers and insurers, let’s welcome here Raymond James, Managing Director and analyst of Washington Health Policy Research. Chris Mekens will be there. Chris, great to see you. So, I guess big picture, what is the significance of Chris Trump potentially supporting the short-term extension of ACA subsidies? And I want to make sure I do it right, Chris. Why do you still put the odds of an extension below 33%, Chris?
00:44 Chris Meekins
Yes, I am the most bearish on the road and have been for, well, more than two years now. I think we wrote about it on Halloween 2023, and as you know, we’re now two Christmas seasons into our third. Uh, what I’m saying is that the President, what was reported today by uh a few outlets was that the President could be supportive of a two-year extension with significant reforms. Those include the income limit to 700% of the federal poverty level, which is about for one person, $109,000. it says that everyone will have to pay at least some amount every month. There will no longer be zero, zero monthly premiums. You will have to pay something, which can be really significant and make a difference. they say they want to pay back these technical things, a reduction in cost sharing. And then on top of that, looking for um uh expansion HSAs if people downgrade their plans. What I’m going to say and it’s very important and why we have to be very careful about making stock picks based solely on some reporting is that the president didn’t come out and say any of that. And the White House today, and I’ll read it so I don’t misunderstand, uh the press secretary said, as you know, sometimes people report things and then President Trump comes out with an announcement and those things are not always true from what you hear from sources inside the building. This implies that the White House is still making changes to what they may support at some point. Back in 2017, the former Speaker of the House, John Banner said, as he was leaving, you know, in his 25 years of Washington, he’s never seen Republicans rally behind a health care package, and I think that’s, um, something that we have to keep in mind how challenging it is.
02:40 Speaker A
Yes, the warning, the warning you mentioned, Chris, is worth listening to. The reports described a few different pillars though. You saw this, didn’t you? So it looks like income limits, minimum monthly premiums, funding CSRs, HSA expansion. What does this mean for insurers, Chris? How to walk through this this and think about this?
03:00 Chris Meekins
I think it’s complicated. Insurers want to see an extension. If there was a clean extension with only 700% of FPL, they would be very happy with that. Minimum monthly payments will be a challenge. and I think what you’re going to see is that if that were to go into effect, you’d probably have uh millions of Americans, maybe up to 5 million, uh fall outside the exchanges. and these are likely to be the low utilizers. So the people who are paying a premium or for whom the government pays a premium, but do not utilize any medical expenses. Those are the insurers’ favorite people. You have money, but you don’t have to spend anything on it. And so when we look at these potential changes, I think there is a scenario where um the solution could actually be worse than just the extended subsidies that go beyond the health insurer. So, while I saw Centene and Oscar today, notably, uh, I’d be a little more cautious about the potential reforms being thrown out there.