Actually very likely will see their insurance premiums rise pretty sharply next year. Joining us right now with insights on the current state of the health insurance industry is Mark Bertolini. He is the CEO of Oscar Health. He's also the new chairman of Verizon and the former chairman and CEO of Aetna, a long time friend of the show. Mark, thank you for joining us.
Good to be here, Becky. Thanks.
We spoke earlier this year when you came in about the problems in the health care industry. Nothing changed. Nothing happened. But here we are, and we're probably at a moment where it's going to be getting a lot more attention because of what just happened with the government shutdown. Yes. There's a lot of confusion out there about premiums going up. And how much of that is related to the subsidies ending, how much of that is related to a broken health care system that sees inflation far outpace inflation in other arenas?
So what's happening currently in the Affordable Care Act and the enhanced subsidies is that there's a lot of rhetoric about who's getting access to these funds, like $1.5 trillion being spent on illegal immigrants. Not true. 50% of American small businesses use the Affordable Care Act. Small businesses are 50% of our GDP. They're the engine of our economy. 27% of farmers use the Affordable Care Act, and the average farmer makes $60,000 a year gross. Their current premium is $75. With enhanced subsidies, it's going to go up to $300. So $225 a month more out of 60,000 gross is going to pretty much make it difficult for them to do other things like put food on the table, buy seed, do all those other sorts of things that operate their farms. So we're talking about the very basis of our economy and the people that make our economy work. 75% of the people in the ACA today are from red states. 100 million Americans don't have access to employer sponsored health insurance in this country. And so with all of those characteristics coming together and the high cost of health care, drug development, skyrocketing health care costs in facilities everywhere else, we have a system built 80 years ago that has built into it inflation. Everybody gets they're not price sensitive to their benefits, for the most part. And we build hospitals in every nation in the country, every city and state in the country, so that we created a demand pull into the system that has driven costs up inexorably. Now what the Affordable Care Act has done that most people don't understand is it's reduced uninsured from 15% to 8%. That has saved $10 billion a year in uncompensated care and charity costs that used to go to hospitals 10 billion a year. That will reverse to an $80 billion problem over the next ten years if we start moving that uninsured rate back up.
The answer isn't simply subsidies, though. No. There are so many broken things in the system, and so many reasons that health care costs go up annually, with or without the subsidies.
So how do you get at that? And what kind of problem solving can we actually do in the next, I don't know, two months.
So we should create a qualified account. And there has been some concern about fraud, waste and abuse in the system. There has been some, not as much as people would put on the table. 2.4 million was the number last year. People that are cheating the system was really 450,000. At Oscar is 27,000 people out of 2.1 million people that we cover. So it was 1.3% when we got down to the actual understanding of each of those people. But let's create a qualified account. That is the basis, the doorway to employers, government or individuals putting money into a qualified account that allows them to spend health care their way. So if we're consumers in charge of buying the product, you're going to have an impact on price. Every time consumers get control of what they purchase, they have an effect on the underlying costs and the price of the services they buy.
When you say an HSA account like that, an account where money goes in, I think of a defined benefit going to defined payouts on what you can see with some of these things, much like we did when we got rid of pensions in favor of 401s, it puts a lot more of the freedom in the hands of the individual buyer, but it also puts a lot more of the potential burden. If you mess it up, that there's no safety net there to catch you.
Currently, 95% of people that buy in the individual market today use a broker who have the tools to help them understand which plans they should pick. So I think the first order of business is, do we have the technology and the support to be able to help people pick the right plan, have money left over after they pick their plan and turn around and be able to pay their out-of-pocket costs.
Replacing Obamacare in addition to Obamacare, would you?
I would redo the whole thing. I would use the individual market as a single risk pool. I would use the risk adjustment that's used to allay all the catastrophic costs that go through the system, get spread over many more people than it can happen to any one employer.
This is the Republican holy grail. What they want to try to do. It sounded like you started with making an impassioned plea for Obamacare, but you'd really like to do what Republicans would like to replace it with.
But we would like to allow people to get subsidies where they need it. The farmer, the small business owner. And that's.
Couldn't they get subsidies and then buy the HSAs?
Yes. Well, no. You put the subsidies into the HSAs, right? You put the employer money from your employer into an HSA, right? And you could put your own money into an HSA.
And then when you own it, you're not going to be well, you don't care about what anything costs. You're going to watch very closely what everything comes.
