to be a really hot topic going forward.
Sommerhauser, thanks very much.
>> The whole government shutdown was over extending
enhanced tax credits for Affordable Care Act
policies, with Democrats warning of big increases in
people's monthly premiums come January if they're not
kept in place. Aside from those extra subsidies going
away, why are marketplace plans proving more
expensive? And what of Republican calls to do away
with the ACA altogether? In response, we asked
Wisconsin School of and Insurance Justin Sydnor.
And thanks very much for being here.
>> Thanks for having me. >> So is it in dispute that
ACA premiums could more than double without the
extension of the enhanced tax credits?
>> No. uncertainty about that. You
know, it's basically pretty straightforward, simple
math. The way the tax credits work is that
they're tied to a share of the percent of your income.
And the enhanced tax credits increased or
decreased the share you would have to pay an
increase the income range for people who are eligible.
So they'll definitely go up. The share that you're
up. If those subsidies expire. How much? Depends a
lot on your income level. And in particular, we could
maybe think about a nice example here. So take a 50
year old couple so married couple in Wisconsin, 50
years old, no children. They're facing a total
premium of about $18,000 for a middle middle plan
this year in the ACA marketplace in Wisconsin.
If they had the enhanced tax credits and they made
$85,000 or more a year, that's 400% of the federal
poverty line. They'd get about $11,000 subsidy, and
they'd have to pay about $7,000 themselves. So if
those subsidies expire, they're on the hook for
that whole 18,000. So that's an $11,000 increase
now for people who have lower incomes, the
subsidies protect them more, even if the enhanced
subsidies expire. So let's take that same family and
move them way down the income spectrum. Make them
at 25,000. Now they're just above the poverty line in
the enhanced subsidies. They don't pay anything for
that middle tier plan. They're paying zero. But
without them they're paying about $500 a year. So about
a $500 increase. So that range, you know, in the
ballpark some it's 500 a year, some people it's
$10,000 or more a year. >> You know, there's so
much political consternation around not
just the tax credits but the ACA altogether is the
Affordable Care Act in a freefall?
>> No, I don't think there's any reason to think
of it as being in a freefall. It's actually
been quite stable. So if you look at the cost of
plans for ACA marketplace plans, both in Wisconsin
but also nationally over the last five years or so,
those premiums have actually been very stable.
And in fact, they haven't risen in the same way that
the employer sponsored premiums that we've seen
for, you know, that most people get through their
employers have those premiums have been up about
25% over the last five years. ACA premiums are
pretty stable. >> What's driving that 25%
increase? overall in the US our
healthcare costs are just high. So we pay about
$15,000 a person per year in health care costs across
the entire country. You know. And those costs
reflect a lot of things. They reflect our market
based system. So our costs are about twice what they
are in, say, Europe or Canada. And, you know,
that's partly a trade off. We have a market based
system. So we have a lot of innovation. We have good
access, we have the best technology. So if you get
very sick, you probably want to be here. On the
other hand, it means that our prices are set by
competitive forces and the down prices that well
through those competitive about why are they
increasing, why are they steady rise over time. You
know there's a confluence of factors. So we have an
aging population. So we have sort of more demand
for health care and the expansion of health care
services. How many nurses you can bring on, how many
doctors you train. Hospital systems doesn't always keep
up with that rising demand. Well, we've also seen a big
explosion of newer pharmaceutical drugs. You
know, innovations in genetics have allowed us to
treat rare diseases. Those Now, of course, they're
also highly beneficial. If you have a rare disease,
you're really happy that there's a new drug for it.
But that's been a big part of the cost. And then
there's also just overall inflation. So there's been
inflation in all parts of the economy. And that also
hits the health care prices. >> So I wanted to ask you I
know that President Trump and members of the GOP talk
about giving people direct payments like $2,000 or
something to to pay for their health care and a
health savings account or something like that. What
do you think of that? >> Well.
>> So, you know, it's hard to react too much. So, you
know, the details and specifics really matter in
health care. And so far the proposals haven't been very
detailed. But if you instead gave people direct
money that could be spent on anything health care
premiums or out-of-pocket costs, you expose them to
some more risk. If those subsidies don't keep up
with the rising costs of health care, well, they're
going to see that. On the other hand, you create more
competitive pressure and competitive pressure and