Remarks by Administrator Seema Verma at the America’s Health Insurance Plan’s (AHIP) 2019 National Conference on Medicare
(As prepared for delivery – September 24, 2019)
Good afternoon. It’s a pleasure to be here to discuss the future of Medicare. Any discussion about Medicare, or for that matter Medicaid, the Exchanges and the entire employer insurance market is really a discussion about the American health care system as a whole. In the time we have together, I want to share with you my conviction that the system is unsustainable, the Trump Administration’s vision for healthcare, and how you can help lead the reinvention of healthcare markets.
Our system is at a crossroads. As the unacceptability of the status quo becomes clearer and clearer, and the frustration of the American public grows, there is no question that a change will take place. The debate we will have is what vision of the future will prevail. Medicare-for-All, the public option – these frightening government intrusions go down one path. They involve tightening the fist of government on the system. These one-size-fits all policies simply impose Washington decision-making nationwide, and in the worst possible way. Instead of addressing the root causes of the system’s problems, they’d play a big shell game with the American people, simply shifting control and costs to the government. This will just increase taxes, thwart innovation, lead to rationing and decrease access to care – like it has in every other country that has tried socialized medicine.
As the person that runs our nation’s government healthcare programs, I see clear evidence of government failures and inadequacies every day spend my days trying to unravel them… Which leads me to conclude that more government is not the answer. We have many examples to prove it.
Take EMRs: Washington made a $36 billion investment, but doctors continue to struggle with billing systems that don’t support their workflow, patients don’t have access to their medical records and, data can’t be transferred from provider to provider. And government programs lag far behind private payers in adopting new technologies – it literally took an act of Congress for Medicare Advantage to pay for telehealth. And government’s misaligned programs result in odd payment structures that prevent site neutrality, reward hospitals for delivering care in more expensive settings, encourage consolidation, monopolies, and primary care shortages. And just last week, a federal court delivered a setback to our efforts to correct this market distortion. Endless litigation from entrenched special interests is the calling card of any government run program. Under a complete takeover of our healthcare system, such blunders would only multiply.
Our administration believes there is a better future for America’s health care, a better path. We want to strengthen and preserve the market catalysts that reward innovation. These catalysts will usher in a new era of personalized medicine, while reforming what doesn’t work in the system – like the hassles, the cost and the lack of accessibility. We believe in a healthcare system in which patients – not the government – are empowered with choice and control, price and quality transparency; a system in which patients have access to their health data, and providers vigorously compete for patients on the basis of cost, quality and efficiency. Competition and the free market are bedrock American values and have driven innovation and lowered costs in almost every sector of the economy. When consumers have choices and are empowered with information, businesses deliver value to attract customers to succeed. A competitive market creates a clear incentive to innovate and develop new and better ways of providing services. The government, on the other hand, faces no such pressure to excel.
Our policies leverage the power of market competition and innovation to address the problems we face.
The Trump Administration is turning the page in healthcare….delivering tangible results to the American people. CMS’ 16 strategic initiatives represent a vision in which the healthcare system provides Americans with the affordability they need, the options and control they want, and the quality they deserve.
We have been working tirelessly to bring this vision to life. At the front and center of our work is President Trump’s executive order to “Cut the Red Tape,” a massive deregulatory effort. One of CMS’ most important contributions to this landmark effort – our Patients over Paperwork initiative – has saved almost $6B per year for the health system. Today I will focus on the historic changes to the Medicare Advantage program and Part D, where we overhauled the framework to decrease regulation, increase competition, and give plans greater flexibility to innovate.
Under the President’s leadership, we increased Medicare Advantage and Part D plans' negotiating power for prescription drugs, so plans can get the best deal for beneficiaries from pharmaceutical companies. And today, I’m pleased to announce that Part D plans are delivering a 6% reduction in premiums, the lowest level since 2013. The Trump administration and the private market has delivered.
And, I’m also thrilled to announce the 2020 Medicare Advantage Landscape. Our new policies are increasing competition among Medicare Advantage plans, and this competition is creating more choices for consumers – nearly 1200 new plans have been introduced over the last two years. The results speak for themselves. Next year, Advantage Plans will provide a 14% decrease on premiums. Combined with the premium decreases we have seen since the Trump Administration came into office, premiums are at their lowest level in 13 years, almost 30% lower than when we began. These plans continue to focus on quality with nearly half earning 4 Stars or higher in 2019, and we expect them to deliver even more improvements next year.
What’s remarkable about these premium decreases, is that they come with new benefits. For the first time, we are encouraging Medicare Advantage plans to offer more innovative telehealth benefits for primary care and mental health. We are also allowing plans a new level of flexibility around supplemental benefits, providing plans with a new level of flexibility around the social determinants of health that are so critical to improving the quality of life for our beneficiaries. Plans can now provide access to benefits, like caregiver and in-home support. And for the first time, they can specifically tailor benefits to those that are chronically ill, providing benefits like pest control for those who have asthma and healthy foods for those with heart disease.
Beneficiaries like what they see and so it’s no surprise we are expecting another 10 percent increase in Medicare Advantage enrollment to an all-time-high of over 24 million, or over 30% since the Trump administration began. And e-Medicare’s new tools that allow comparison between traditional Medicare and Medicare Advantage coupled with our new Plan Finder will make it even easier for beneficiaries to shop for the best deal.
President Trump’s policies are working, putting dollars back into the pockets of our beneficiaries and saving taxpayers billions. It is a testament to what can happen when government gets out of the way and allows private market competition to flourish.
But our success doesn’t end with Medicare Advantage. We have applied the same strategy to the individual market. When President Trump took office, it was a mess. Premiums had more than doubled and even tripled in some states. Insurers were fleeing markets, and there were dire concerns about areas of the country that wouldn’t have any issuers. As premiums soared, unsubsidized enrollment dropped by 40 percent across the country in just 2 years from 2016 to 2018.
As a result of the President’s Executive Order on Minimizing the Economic Burden of the ACA, we quickly issued regulations and guidance that increased competition and choice, lowered costs, and gave more control back to states, allowing them to innovate and advance their own solutions to stabilize markets.
We are now seeing more issuers come back, increasing competition and bringing down premiums. We issued new waivers that resulted in lower premiums ranging from 6 percent in Rhode Island to 30 percent in Maryland. We reduced our administrative costs, which contributes to lower premiums.
Once again, our administration has delivered. After multiple years of double digit increases, average individual market premiums across the country declined by 1.5 percent in 2019, the very first time since Obamacare started, and we are seeing signs that premiums may go down again.
But despite these gains, the fact remains that Obamacare is not affordable. The law itself simply doesn’t work, especially for the millions of middle class Americans who earn too much to qualify for subsidies. Consider a 60 year old couple living in Grand Island, Nebraska who earn $70,000 a year. Premiums for the lowest cost silver plan cost $38,000 a year, over half their income… and that’s before an $11,000 deductible. So it comes as no surprise that the new Census data showed an increase in the number of uninsured and that 85 percent of the increase happened among people with incomes above 300 percent of the federal poverty level. Obamacare did lower the uninsured rate, but as time passes the reality is that Obamacare has also created an entirely new class of uninsured. It has raised premiums so high that the middle class who aren’t subsidized, can’t afford coverage, and this problem is only getting worse. Americans were promised that those with pre-existing conditions would now be protected against discrimination. However, if unsubsidized coverage is unaffordable, the promise of protection against pre-existing conditions rings hollow.
Simply put, Obamacare is one more failed government program. It just threw taxpayer money at a problem and created new ones. Until we actually address the underlying factors in our health care system that are driving up costs, our problems will persist and get worse.
The cost of American healthcare lies at the center of the challenges we face. Actuaries predict that by 2026 one in 5 dollars will be spent on healthcare, and the Medicare Trustees estimate the Trust Fund is expected to be insolvent by 2026.
Medicaid is the single largest source of state spending, and because it is the nation’s largest single payer of long term care, it is an expense that will continue to grow. Total spending on Medicaid beneficiaries who need long-term care services is expected to rise 500 percent by 2050. Unchecked, this growth will crowd out other priorities like roads, schools and public safety.
The bottom line is we can barely afford the government programs we currently have, so we must focus our efforts on fulfilling our commitments to our most vulnerable populations and our seniors that have paid into Medicare their entire lives and making healthcare more affordable for all Americans.
Our problems, however, are not isolated to costs and affordability. Our system is complex and difficult to navigate. Consumers are frustrated and fed up. And to address the elephant in the room, they are frustrated with you. They are concerned with the care they need being denied and they worry about getting surprise bills. They’re tired of the hassles and the complexity that gets between them and their doctor. Today insurance companies have some of the lowest satisfaction rates among Americans.
And frustration with the status quo is not only felt by patients. Doctors are exasperated with the increasing administrative burdens…hassles with prior authorization, and quality reporting. Some feel they spend more time haggling with insurance companies than taking care of their patients. The disastrous result is that physician burn-out or moral injury is now at an all-time high.
Not surprisingly, doctors, like patients, are demanding changes. Just this past summer at the American Medical Association’s annual meeting, the delegates barely avoided a decision to endorse Medicare for All, with a vote of 47 percent to 53 percent. When physicians – who have traditionally opposed more government intrusion in their work – consider endorsing government-run healthcare, something is terribly wrong. Consider that vote, the canary in the coal mine, warning of very real danger to the health insurance industry.
Ten years ago, Congress required every American to purchase health insurance. Yet today, there’s a growing chorus to eliminate your industry entirely. What happened? It’s more about what didn’t happen: patients and doctors have been ignored. And history tells us that when businesses ignore the signs – when they don’t innovate, adapt, evolve, and listen – they go extinct. It happened to record stores; it happened travel agencies; it happened to video stores. But it doesn’t have to happen to you. I believe in your ability to be innovative and creative and to work with us to improve America’s healthcare… to go down a different path.
I believe in a free market because it spurs exactly the innovation and adaptation I know you are capable of. So, let’s talk about how we can all innovate, how we move forward, together, to evolve and transform the health care system into one that works best for all Americans.
The Trump Administration is employing an approach that empowers patients – not government. Patients acting as informed consumers is the single-most important catalyst to a well-functioning market. But today’s patients are in the dark, they don’t have transparency on quality or price, and they don’t have their medical records. As deductibles continue to rise, patients are demanding more accessible, real-time, personalized information to understand their options, to pick high value providers to avoid surprise bills, and to make decisions about their care. That’s why one of the central elements of our market based transformation agenda is increasing consumer access to information about health care prices and quality.
We’ve heard from those who want to protect the broken status quo. They say price transparency will increase costs. That’s nonsense. Economics 101 teaches us that prices are an essential signal for markets to deliver better quality at a lower price. Many insurers, like United, Aetna, and Anthem, are taking the lead in empowering patients by developing innovative transparency tools. While today they are the exception, the President’s Executive Order makes it clear that soon they will represent the norm, allowing patients to become our partners in lowering costs and seeking value.
Yet price data alone isn’t enough. Patients need quality transparency. CMS will deliver this by transitioning to a more targeted set of quality measures that will better identify high value providers, while minimizing administrative costs and burden.
But if we are serious about reducing costs, we must also accelerate our adoption of a value based payment system. Continuing to pay based only on the volume of services is neither sustainable, nor affordable for the American people.
Value based care is the future of healthcare. Outside of healthcare, customers make virtually every economic decision on the basis of value and performance. Why should our industry be so different?
We know value works: we have seen costs go down and quality go up when we exchange fee-for-service for a payment system that aligns incentives to foster and drive efficiency. So the Trump Administration is creating new opportunities for providers to join value-based agreements. In particular, our direct primary care models offer new opportunities for providers and – potentially – health plans to deliver better value within an open network.
Our goal is to drive participation in these models, and we are working on a new strategy focused purely on adoption. That effort includes driving toward more multi-payer alignment with our models, and that means working more closely with you. When a consistent model applies across payers, we can expect providers to more readily adopt value-based care. We are particularly focused on increasing Medicaid’s participation and will start putting out specific guidance for state Medicaid agencies for all of our models.
But to make value-based care work for providers, payers and patients, we need better access to data and better technology. Without these, providers can’t take on risk, payers can’t pay for value, and patients can't be empowered consumers. We recognize that clinicians and providers on the front lines need more real-time data to understand their patients better. In the last two years, CMS has been paving the path to this future. First, we launched Blue Button 2.0; then we proposed an interoperability rule that would free up even more data; finally, this year, we announced our new Data at the Point of Care pilot, which will allow providers to get a claims history on their patients. Providers will be able to review medications, visits, and previous testing. More than 500 organizations representing over 50,000 providers have shown interest in this pilot. For some of you, this idea isn’t new. But at CMS, we believe that data sharing between plans and providers is essential to the future of value and should not be optional.
We are also working on reducing provider burden. We have made many changes to ease documentation requirements, address prior authorization, and to maintain a system of program integrity and evidence based treatment. I think implementing each of those elements is possible, and I look forward to working with you to do so.
We are not done reducing your burden and getting regulations out of your way to spur innovation. Plans have expressed interest in entering into new "value-based" arrangements with pharmaceutical companies, which is vitally important as we see the advent of new drugs approaching a million dollars. We’re working to update our regulations to support your efforts around outcomes and value-based drug payment.
Each of our initiatives are inspired by our determination to bring life to our vision of a uniquely American healthcare system that provides our citizens with the affordability they need, the options and control they want, and the quality they deserve.
Our playbook for this transformation is a set of policies that foster vigorous, competitive markets and innovation that delivers increasing value to healthcare consumers.
But we can’t do it on our own. While we are the biggest insurer in the nation, we’re still only one of many.
I ask you to seize the moment to effect real, meaningful change: reduce administrative complexity, become more transparent, and help us accelerate the adoption of value-based care. Your leadership is essential. Government can create a climate that fosters innovation, but only you can step into the ring, compete, and in the process innovate and create value.
While the threats we face are real, I am optimistic about the future of American healthcare. President Trump has a compelling vision for American healthcare that places individuals, not the government at the center. Together, we have proven that when the government gets out of the way and promotes a competitive market, you respond with real results: premium reductions in Medicare Advantage, Part D, and the marketplace.
Work with us to transform a broken status quo into a vigorous, flourishing market – one that offers greater convenience, more choices, and lower costs for all Americans.
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