Remarks by CMS Administrator Seema Verma at the National Association of Healthcare Underwriters (NAHU) Capitol Conference 2020
(As prepared for delivery – February 24, 2020)
Thank you for having me. Going back to my time in Indiana designing health care plans, I have always valued the knowledge and expertise that agents and brokers bring to the table, because they have front line experience. In this town, policy experts are a dime a dozen, but you all understand the healthcare system in a more concrete way. You see the impact of policy and know how it affects real people. Many of these people are our Medicare and exchange beneficiaries, and they rely on you to direct them to coverage that meets their health needs and those of their families.
Our administration strongly supports the role of agents and brokers. Our beneficiaries are grateful for what you do, and so are we. In short, the Trump administration wants to support you – not take your place.
Unfortunately, that’s not true of everyone. Some want to eradicate private health insurance and hand the reins over to the government. But our administration believes a well-functioning market is the solution – not the problem – to many of the healthcare issues our country faces. Unlike the free market’s big-government alternatives, it can actually lower healthcare costs without sacrificing the innovation and quality Americans count on.
Government’s role in the healthcare system should be limited. It should restrict itself to tasks that only it can perform: setting the rules of the road and allowing private actors – providers, clinicians, insurers and brokers – to compete for consumers on the basis of cost and quality. We all know the innovations that make our lives better come from private enterprise. Government should be facilitating that dynamic, not attempting to replace it. Unfortunately, for decades – and to the detriment of our healthcare system – government has been doing exactly that.
Foolhardy proposals that would allow the government to enter the private market with a so-called public option would only magnify the same error.
A public option violates an important principle: just as we don’t let referees play in the game they oversee, government shouldn’t be permitted to compete against the market it regulates. Otherwise, what would prevent the government from creating policies that work to the benefit of its own plan and to the detriment of its private competitors?
In a public option, government has no incentive to control costs or improve quality. States are already struggling to pay for their Medicaid programs, and Medicare is projected to run out of money by 2026. Furthermore, government programs like Medicaid already face access problems due to their low provider reimbursement rates. Imagine what that would look like if we extend that model to the entire healthcare system. Existing access problems for the poor, the disabled, children and pregnant women would get worse, and they would be extended to everyone else. And somebody will have to pay the difference that results from lower provider reimbursement – namely, the private sector. This would increase costs for private and employer based plans, and over time it would erode the private market, as private plans would find themselves increasingly crowded out. Consumers would be left with no affordable options other than the government plan and the inferior product it would offer. In other words, the public option is a Trojan horse with single-payer hiding inside.
If I was a broker, I would find it hard to sell that product to my customers with a straight face.
And Medicare for All would be even worse. By stripping 180 million Americans of their private insurance, it would supersize our existing program past its breaking point, eliminating choice and decreasing quality – with a massive tax hike to boot. The Trump Administration is protecting the Medicare program for current and future beneficiaries – and not making promises we can’t keep.
So-called solutions like Medicare for All and the public option fail because in calling for yet more government to solve our problems, they ignore the role government has played in creating them. Americans are concerned about ever growing healthcare costs, afraid of being uninsured, and afraid their healthcare bills will drive them into bankruptcy. Decades of prescriptive government regulations have not eased those worries; they’ve exacerbated them. We are fooling ourselves if we think another utopian, top-down scheme will turn out differently. That approach has already failed, and without a change of course, it’s only going to get worse.
We’re delivering that course correction. The Trump Administration believes that one of government’s core responsibilities is to ensure that our safety net programs are sustainable and that health care is affordable for all Americans. And we believe that can only be done if government sets the framework for vigorous competition on the basis of cost and quality. In short, we believe in the power of a free market.
The Trump Administration is demonstrating the enormous potential of this patient-centered approach… of a more sustained focus on deregulation, promoting competition, choice and policies that loosen, rather than tighten, Washington’s vice-like grip on the healthcare system. We are protecting and empowering patients and making the healthcare system easier to use. Our administration is tackling our nation’s most challenging and pressing health care issues to provide high quality care, lower costs, and ultimately improve the health of Americans. The President is leading efforts to finally implement both price and quality transparency in healthcare. People have talked about this for years, but talk is cheap: this administration is finally getting it done. We’re ensuring more organs are available for transplant, reducing burden on providers to allow them to focus on caring for patients, getting rid of policies that create monopolies, lowering drug costs, and giving patients access to their health records.
Our policies are working. The Trump Administration has taken historic action to strengthen Medicare with improved access and treatment for seniors. Medicare Advantage premiums are their lowest level in 13 years while Part D basic premiums are at their lowest in 7 years. Our policies have provided an unprecedented level of new supplemental benefits for our seniors in Medicare Advantage. We’ve updated our payment policies to ensure beneficiaries have access to the latest technology and treatments.
We’ve seen similar advances in the individual market, which our policies have stabilized. The truth is that we inherited a crisis. Premiums had doubled and even tripled in some states, and choices had plummeted as issuers fled the market.
So we set to work to implement policies 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, approving 12 reinsurance waivers – all of which have driven premiums down, in most cases by double digits.
In 2020, after years of double-digit increases, average premiums for plans sold on HealthCare.gov dropped for the second consecutive year after years of double-digit increases. 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.
And we enhanced the role of brokers and agents through our implementation of enhanced direct enrollment. You may have heard of it – it allows consumers to enroll in Exchange plans directly through an approved issuer or web-broker. Currently, six EDE partners host a primary EDE pathway and another 25 issuers and web brokers have been approved to use these new pathways. This was the first year EDE was available through the full open enrollment period and it already accounts for 12 percent of agent and broker assisted enrollments. When consumers go to brokers, they place less demand on Exchange resources, reducing the cost of running the Exchange, and allowing CMS to, in turn, reduce the user fee charged to issuers. Much of these savings has been passed on directly to consumers.
The Trump Administration is keeping what works and fixing what’s broken in this law. But since the Affordable Care Acts’ 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 premiums that remain in the stratosphere. 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 Hannibal, Missouri can mount to a quarter of their income, and that’s before taxes. So it should come as no surprise when this family decides to forego insurance entirely.
Many of the so-called fact-checkers in the media would do well to recall that like any other population, this middle class group is not immune to preexisting conditions. If Americans who don’t get subsidies can’t afford their premiums, the promise of coverage for preexisting conditions rings hollow.
And let me be clear: as the President has clearly said, we are committed to protecting people with preexisting conditions. But that goal cannot be fully realized if we continue merely to shift costs or throw more taxpayer money at our problems, while ignoring the underlying cost drivers in healthcare.
In closing, I want to remind us all of how we got here. For decades, lawmakers and regulators have dreamed that they could run the healthcare system better than the people who compose it. They have micro-managed, intruded, over-promised – and ultimately, they have wildly under-delivered.
The Trump Administration is abandoning this stale, decades-old approach that reflexively defaults to more government intervention. We will fiercely resist any attempt to revive it in the form of Medicare for All or the public option. We will continue to solve problems previous administrations have ignored – price transparency, interoperability, surprise billing, organ donation, regulation, and drug costs… We will continue to transform the healthcare system by lowering the cost of care and taking on special interests as we pursue the best interests of patients. I’ve focused today largely on our efforts on the individual market and the Exchanges, but hopefully during our question and answer session, we’ll be able to get into some of our other transformational reforms.
Again, as market players operating on the front lines, your work is important, and I urge you to stay engaged. Thank you, and I’d be happy to take a few questions.
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