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Donald Trump has no idea what health insurance costs

President Donald Trump speaks during an interview in the Oval Office of the White House in Washington.
Andrew Harrer | Bloomberg | Getty Images
President Donald Trump speaks during an interview in the Oval Office of the White House in Washington.

"In a short period of time," President Trump recently told Time magazine in an interview about his first months in the White House, "I understood everything there was to know about health care."

Around the same time, Trump gave another interview, this one to the Economist. He talked a lot about health care in it. And his comments suggest he still has a lot to learn — starting with how much health insurance actually costs.

Speaking with editors from the Economist, Trump seemed uncertain about how the health insurance industry works, or how the Republican plan to overhaul it would work. He waffled on how he'll continue running the Affordable Care Act.

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Trump cited numbers that don't seem to come from any recent version of the health care debate. He talked about how health insurance ought to cost "$15 a month" — a premium that anyone who has ever purchased coverage, let alone studied the health insurance market, knows is unheard of.

The president estimated that the Republican bill would save "$400 to $900 billion" in government spending — an amount significantly higher than the $337 billion in savings that the Congressional Budget Office has referenced in its analyses of an early version of the bill.

But perhaps most concerning to health insurance plans was the uncertain answer he gave on whether he would continue paying a key Obamacare subsidy program, known as the cost-sharing reduction subsidies. If Trump stopped making those payments, which are currently challenged in court by House Republicans, it would leave insurers with about $8 billion in unpaid bills.

"We're subsidizing it and we don't have to subsidize it," Trump told the Economist, referring to the law's contested cost-sharing reduction payments. "You know if I ever stop wanting to pay the subsidies, which I will..."

Trump's answers likely don't give much comfort to the insurance plans that participate in the Obamacare marketplaces right now, which have begged for more certainty on this particular issue. And they don't suggest that Trump has familiarized himself with the details of the Republican health care plan either.

Trump has reiterated his promise that Americans will have "guaranteed absolutely coverage." The Republican plan doesn't deliver that.

The Economist asked the president about the fact that many Americans are expected to lose coverage under the Affordable Care Act. This was Trump's response to that question (emphasis added):

The state governments are in much better position to, you know, help people. In terms of, you know, just the size, the mere size of it. But we're putting in $8bn and you're going to have absolute coverage. You're going to have absolute guaranteed coverage. You're going to have it if you're a person going in…don't forget, this was not supposed to be the way insurance works. Insurance is, you're 20 years old, you just graduated from college, and you start paying $15 a month for the rest of your life and by the time you're 70, and you really need it, you're still paying the same amount and that's really insurance.

Trump makes a promise of "guaranteed coverage." But the Republican bill doesn't deliver on that. When the Congressional Budget Office analyzed the last version of the American Health Care Act, it estimated that 24 million fewer Americans would have coverage if the bill were to pass.

As Trump mentions, the more recent iteration of the bill adds an additional $8 billion to fund high-risk pools, but analysts of all political stripes agree that is not nearly enough to cover all the Americans who would want access to those programs.

There's also this other line in the response that caught my eye, where Trump discusses how he thinks health insurance ought to work.

"Insurance is, you're 20-years-old, you just graduated from college, and you start paying $15 a month for the rest of your life and you really need it, you're still paying the same amount and that's really insurance," Trump says.

The fact that Trump settles on $15 as the appropriate amount to pay for health insurance betrays a lack of familiarity with the actual cost of coverage. You do not have to be a health policy expert to get this — just someone who has ever purchased a health plan.

Most voters I talk to don't have this expectation. I often ask Obamacare enrollees what they think would be a fair price for health insurance. Usually I hear something between $50 and $100 seems reasonable. The mental math going on here is that you have to pay something in order to get a plan that will cover doctor visits and hospital trips and prescription drugs. They know, from their experience, that health coverage is not as cheap as $15, and have more realistic assumptions than the one Trump makes in this answer.

Trump waffles on a key Obamacare policy — and that's bad for the Obamacare marketplaces

There is a lengthy exchange in the Economist interview over the future of Obamacare's cost-sharing reduction subsidies. These are payments to especially low-income Obamacare enrollees to help make their deductibles and copays significantly cheaper.

The House filed a lawsuit arguing that these subsidies are illegal. The Obama administration has historically defended the payments as legal, but the Trump administration has been cagey about their plans — whether they will defend the subsidies in court or simply drop the case and stop making payments.

This is a huge deal for insurance companies. Every industry official I talk to says this is the biggest uncertainty right now — the thing that keeps them up at night, deciding whether or not to sell Obamacare coverage in 2018.

Trump's answers here certainly won't give the industry a better night's sleep. Here is the exchange:

TRUMP: We're subsidizing it and we don't have to subsidize it. You know if I ever stop wanting to pay the subsidies, which I will.

You'd pull the plug on that? If this bill doesn't go through you'd stop those subsidies?

No, this bill only gives them one month. They don't realize that, that's another thing. Good point. This bill gives them one month, it gave, you know the subsidy…

The continuation of the subsidy?

The subsidy to the insurance companies, yes. Anytime I want because actually…

But my question is if the bill doesn't pass…

In actuality Congress has to approve it. Congress…

If the bill doesn't pass would you cut the subsidies?

If the bill doesn't pass, I'd be in a different position. Because, if the bill didn't pass the Republicans would have let me down. And then I'd have to decide what I want to do because I want people to have health care.

Within the span of a few sentences, Trump seems to hint that he is ready to stop paying the subsidies — but that his course of action may be tempered by what Congress does on the Obamacare repeal strategy.

A few weeks ago, congressional Democrats seemed assured that the White House would keep making these payments. White House Chief of Staff Reince Priebus made reassuring calls to legislators that reportedly put Democratic leadership at ease.

Trump, however, wants to make it clear that these payments are not a done deal — using this interview to emphasize how he could end the subsidies "anytime I want."

These remarks are unsettling to health insurance companies, which are still deciding whether to sell on the marketplaces next year. By injecting more uncertainty into the situation, Trump is destabilizing the Obamacare marketplaces and raising the possibility of collapse. Whether he understands that is an open question.