CMS Administrator Seema Verma’s remarks to the Centers for Consumer Information and Insurance Oversight’s (CCIIO’s) Industry Day
(As prepared for delivery – January 29, 2020)
Thank you all for coming today. It’s a pleasure to be with you, and I want to thank Preston Rutledge from the Department of Labor and Carol Weiser from the Treasury Department, both of whom are here today. Your agencies have been indispensable partners in driving competition and affordability in American health care and it’s been a pleasure to work alongside you.
As many of you in the audience know, there are countless health care challenges that claim our attention every day: surprise billing, rural health, the uninsured, the sustainability of Medicare and Medicaid, and the list goes on. But a common thread runs through all of them, and that’s the issue of affordability and cost. We all know it… we’ve all felt it… as ordinary people using the health care system.
Today, if you happen to be a family without access to employer coverage or government subsidies, health care can be completely unaffordable. Premiums for the lowest cost silver plan for a family of four in Coralville, Iowa can mount to a quarter of their income, and that’s before taxes. And so, it should come as no surprise when this family decides to forego insurance entirely. And it’s scary to imagine what would happen if they receive an unexpected cancer diagnosis. Unfortunately, too many Americans don’t have to imagine at all.
As ever, there is no shortage of grand plans promising that one more drastic government intervention will finally make health care more affordable. But years and decades of confident policymaking have failed to fix the problem. And I think it’s fair to say that a government takeover of the entire private market will be no different. It won’t bring down Americans’ costs or even meaningfully constrain growth. What it will do is increase our taxes.
Take just the most recent government intervention as an example: Obamacare. For all of its promises, it ultimately failed to address the problem of cost; premiums went up and choices went down. Even people who got subsidies still face unaffordable deductibles. And now since its passage, we have witnessed the rise of a new category of uninsured, among the middle class. Millions of people who make too much to qualify for subsidies simply can’t afford to pay Obamacare’s sky-high premiums. That’s because the law failed to address the basic problem in our system: cost and cost drivers.
You’ve no doubt heard the critics accuse this Administration of undermining Obamacare. That is nonsense. The truth is, we inherited an individual market in crisis. Premiums had already doubled and even tripled in some states, and issuers were fleeing the market.
So we charted a different course. We implemented policies designed to prevent people from waiting until they were sick to enroll by tightening the standards governing open enrollment periods, as well as shortening them – just as we do in Medicare. We gave states more flexibility to innovate on their own to stabilize their markets and approved 12 reinsurance waivers – all of which have driven premiums down.
We took action to make the Exchanges run more efficiently and created new pathways to access coverage through enhanced direct enrollment, which directly reduces premiums by using savings to lower fees.
The result of these reforms was unprecedented reductions in cost and increased competition. In 2020, average premiums for plans sold on HealthCare.gov dropped for the second consecutive year. And this year, the percent of counties with just one issuer available to consumers dropped to 24 percent, down from 51 percent just two years ago.
But these advances, important as they are, don’t change the fundamental reality that Obamacare remains flawed, and growing numbers of people can’t afford care. Some suggest that the answer is to institute yet more government control… to throw more taxpayer dollars at the problem – more subsidies, more taxes. But our administration is focused on actual solutions, policies that will make care more affordable while preserving the quality that Americans have come to expect.
That’s why President Trump’s health care agenda focuses on policies that boost competition, put patients first, lower health care costs, and increase quality. Under his leadership, we are addressing long-standing public health issues like kidney care, delivering price transparency, lowering drug prices, promoting interoperability, and reducing unnecessary regulations that drive up cost. His agenda – reflected in CMS’ 16 strategic initiatives – is comprehensive and transformative. The items that are the focus of your meeting today form a crucial part of it.
Our Administration has delivered dramatic improvements across the health care system. I mentioned the exchanges and the individual market a moment ago. We’ve also strengthened Medicare by maximizing choice and competition: Medicare Advantage premiums have gone down 28 percent from 2017 to their lowest level in 13 years, and part D basic premiums have decreased by 13.5 percent over the last three years. Importantly, these price reductions have come with added benefits.
That brings me to one of the main topics of today’s meeting: Health Reimbursement Arrangements. We worked on this exciting policy with our federal partners at the Department of Labor, and Treasury, and I am truly grateful for their vital contributions. It’s not an exaggeration to say that the HRA rule holds the potential to revolutionize the health insurance market. The new HRA rule allows employers to give their employees pre-tax dollars to purchase an individual health insurance plan that the employee chooses, owns and controls.
For the first time, employer contributions to individual premiums receive the same tax benefits as traditional employer sponsored plans. This helps correct a long-standing distortion in the tax code.
As you all know, the rule only went into effect this year, so its impact is still emerging. But over time, it promises to inject large numbers of consumers into the individual market that can further decrease premiums and stabilize markets.
We estimate the new HRA rule will nearly double the size of the individual market. And because the newcomers’ coverage is tied to their job, their participation will be steadier and more consistent. The result could be an unprecedented level of stability for the individual markets, translating into more competition and lower premiums.
HRAs are also a boon for consumers. Without an HRA, employees with a traditional employer-sponsored plan have to accept their employers’ choice, which – of course – is no choice at all. While that may be a good plan, an HRA allows them to shop for one that best meets their needs and that of their families.
In light of such reforms, the tired canard that the Trump Administration is sabotaging the ACA rings hollow. Rather, we are keeping what works and fixing what’s broken.
But that barely scratches the surface of the consumer-friendly, market-oriented reforms President Trump is advancing. Thanks to his Executive Order on Price and Quality Transparency, we’re shining a bright light on health care prices, which have been withheld from consumers for far too long.
Health care is virtually the only sector of the economy that fails to offer consumers prices upfront. It’s a black mark on the industry that it holds this dubious distinction. Health care is a large expense – patients should be able to shop around for the best deal. They can hardly be consumers, making choices on the basis of cost and quality – if prices remain obscure.
So in addition to finalizing a rule that requires hospitals to post prices, we also recently proposed one that would apply to health plans. It would require all insurance companies to make a tool available to their customers that offers a personalized out-of-pocket cost estimate for all health care items and services. That way, patients would be able to know the price to expect based on their specific plan and deductible, shop around for the best deal, and force providers to compete for their business on the basis of cost and quality.
President Trump’s price transparency efforts are arguably the most consequential change to the health system in decades. And its impact on the market will only be augmented by the third policy on your agenda today: interoperability.
To drive down Americans’ health care costs, we must fashion a more efficient system. That’s why CMS is using our Patients over Paperwork Initiative to reduce burden that diverts precious time and resources from where it belongs: the patient. Our historic efforts through the MyHealthEData Initiative to drive interoperability are a critical part of that effort. A truly interoperable health care system has the potential to deliver the access, safety, and quality patients need while unleashing data that will help researchers innovate new cures and treatments to save lives and make health care more affordable.
As part of the MyHealthEData Initiative, CMS has taken important strides towards making interoperability a reality. We have made it clear to providers that they don’t own a patient’s data and they must give it to their patients. We’re also proposing a groundbreaking new rule that would require insurance companies doing business with CMS to make claims data available to patients in an understandable format, while keeping that data safe and secure. Patient privacy and security have been at the forefront of our minds as we work on this rule.
That said, it’s important to understand that the disingenuous efforts by certain private actors to use privacy – vital as it is – as a pretext for holding patient data hostage is an embarrassment to the industry. Access to one’s data can be a matter of life and death, and this Administration will not waver in ensuring that patients enjoy full ownership of it when they need it.
And before closing, I want to extend that point to the entire industry: the sort of consumer-oriented revolution that will make the health care system more affordable and accessible is undermined by those bad actors throughout the system that continue to guard the status quo because it’s in the interest of their short-term profits. The short-sightedness of such efforts is deeply troubling, considering broad frustration with the status quo is the fuel that drives calls for the destruction of the entire private health care system. This self-serving mentality must be immediately and permanently retired. The problems of affordability in the health care system are too dire for the American patient to wait any longer.
So, as I conclude, I hope it’s clear that the policies you are here to discuss – and all of the Trump administration’s efforts – are united by a common purpose: to bring down cost through choice, competition, and consumer-oriented reforms, so that every American can have access to high quality affordable health care.
Thanks to all of you in the audience today for being here and for your work to make health care more affordable.
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