Health Insurance CEO On New CBO Report Independence Blue Cross President and CEO Daniel Hilferty talks with Ailsa Chang about the Congressional Budget Office's latest report on payments the federal government makes to insurance companies.
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Health Insurance CEO On New CBO Report

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Health Insurance CEO On New CBO Report

Health Insurance CEO On New CBO Report

Health Insurance CEO On New CBO Report

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Independence Blue Cross President and CEO Daniel Hilferty talks with Ailsa Chang about the Congressional Budget Office's latest report on payments the federal government makes to insurance companies.

AILSA CHANG, HOST:

Remember when President Trump said he will let Obamacare fail? Well, that made some wonder if he will scrap federal subsidies that help insurers cover low-income Americans. Yesterday, the nonpartisan Congressional Budget Office weighed in on what that would mean. For starters, basic premiums would shoot up an average of 20 percent.

And to talk about that now, we have Daniel Hilferty. He's the president and CEO of Independence Blue Cross in Philadelphia. They serve more than 8 million people. Thanks for being with us, Daniel.

DANIEL HILFERTY: Ailsa, good morning.

CHANG: Good morning.

So how would the insurance industry have to respond if these federal subsidies are cut? I mean, do you see your premiums going up by at least 20 percent?

HILFERTY: Well, I would say, Ailsa, when you factor in the CSRs, as they're called, the subsidies, into our rating for next year, we're looking at, on average, an 8 percent increase. Now, obviously, some of the metallic plans would be an increase higher than the 8 percent. But our overall average is 8 percent. The...

CHANG: That's still pretty substantial.

HILFERTY: Yeah, it's...

CHANG: I mean, what would that mean for people who are currently getting their coverage through the exchanges?

HILFERTY: Well, if you look at it - let's put it in context. We cover 200,000 people, roughly, in the five-county Philadelphia area, another 100,000 people throughout the state of New Jersey. Forty-six percent of them rely on a subsidy, or the CSR payments. So those folks would be impacted, as the CBO indicated, at a significant increase.

CHANG: Let me try to understand something else about what the CBO said. I mean, if insurance companies do raise premiums, those costs will be offset by tax credits. Right? So the government is still spending more money overall.

HILFERTY: That's correct because if - the folks who continue to purchase coverage on the exchanges, they will - some of them will be eligible for the tax credits. Well, ultimately, the federal government will be paying for those those tax credits to a significant increase.

CHANG: So how is getting rid of these subsidies to insurers a pitch for saving money?

HILFERTY: Well, I think that the key point here is - and I have to say, this is probably focused primarily on the political struggle between preserving the Affordable Care Act or moving towards a new type of coverage. From our perspective - what keeps me awake at night is that we have 300,000 people who rely on Independence Blue Cross for coverage. We just want to make sure that, until we figure out what reform looks like going forward, that these CSRs are funded, that the mandate stays in place so that we can provide coverage to the people who rely on us day in and day out for their health benefits.

CHANG: Well, lawmakers say that there really is a sincere bipartisan push now to figure out how to keep those subsidies. Do you have any sense of what insurers might need to give up if they are to keep those subsidies in place?

HILFERTY: Well, I think that the key thing here is, if you look at the history of the Affordable Care Act, the health insurance companies have really been a key funder of the program. Through the health insurance tax over the first three years, the industry paid out roughly $35 billion to help the exchanges run. And the truth - and Medicaid managed care expansion. And the truth of the matter is that - who funds that? The folks that fund that are all of our members in the commercial marketplace who helped us pay this 35 billion through the health insurance tax. So I think the prime thing is health insurers have been at the table, have supported the program. The key thing that we want to do is to be able to offer affordable coverage.

CHANG: That's Daniel Hilferty, the president and CEO of Independence Health Group. Thanks for joining us.

HILFERTY: Ailsa, thank you.

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