- HHS Secretary Alex Azar says Trump’s administration is not afraid to disrupt the health care system
- “Today’s healthcare system is simply not delivering outcomes commensurate with its cost,” he said
- A focus for HHS going forward will be pushing the administration’s goal of extending short-term health insurance plans
Health and Human Services (HHS) Secretary Alex Azar has one message for major players in the health care sector: President Donald Trump’s administration is not afraid to “disrupt the system” in its ongoing campaign to lower costs, chip away at Obamacare and move towards a system of geared towards “quality and value.”
“This administration, and this president, are not interested in incremental steps. We are unafraid of disrupting the system simply because it’s backed by powerful special interests,” a likely reference to Trump’s “drain the swamp” motto, Azar said Thursday at America’s Health Insurance Plans’ (AHIP) 2018 Policy Conference in downtown Washington, D.C.
The new HHS chief’s speech echoed — almost verbatim — many of the talking points he rolled out earlier in the week Monday, like a primary focus on driving down medical costs, increasing price transparency and competition in the health care market and making changes to Medicare and Medicaid to move towards what the administration believes will be a more effective, “value-based” system for consumers.
“Today’s healthcare system is simply not delivering outcomes commensurate with its cost — President Trump knows it, and the American people know it too,” Azar said.
“I want to focus today on something that represents both a challenge and an opportunity: the transformation of our healthcare system from paying for procedures and sickness to value and outcomes,” Azar said. “Unfortunately, our federal programs have not always kept up the same pace, or led as they could have. But on all fronts, this transition must accelerate dramatically.”
Azar characterizes the current health care market as one that is entirely complex, obfuscating the true costs of care with a system that price gouges to the benefit of large companies at the expense of the consumer and taxpayer.
“The key theme uniting these four priorities is the recognition that value is not accurately determined by arbitrary authorities or central planners,” Azar said. “It is best determined by a market of many players — in the case of healthcare: patients, providers, and third-party payers.”
To achieve those ends, Azar made a rather striking statement that works against the tenants of traditional Republican orthodoxy. Disruption may come through more federal intervention to an “uncomfortable degree,” he said. Azar even referenced Trump’s increasingly famous comment: “Nobody knew health care could be so complicated?”
“But I want to emphasize that this change will not be easy or painless,” Azar said. “In fact, it will require some degree of federal intervention — perhaps even an uncomfortable degree. That may sound surprising coming from an administration that deeply believes in the power of markets and competition. But the status quo is far from a competitive free market in the economic sense of the term, and healthcare is such a complex system, that facilitating a competitive, value-based marketplace is going to be disruptive to existing actors.”
The Trump administration is no stranger to shocking the health care market, having used a fair amount of executive influence to make changes in the marketplace in 2017. After Republicans in Congress were unable to repeal and replace Obamacare in 2017, Trump stopped funding for crucial subsidies, known as cost-sharing reductions, cut funding for both the Obamacare navigator program and for open enrollment advertising. Additionally, the administration cut the Obamacare’s open enrollment period in half, causing the number of Americans enrolled in the Obamacare marketplace to drop by the millions.
One of Azar’s and the administration’s main focuses is creating more price transparency and competition in the marketplace.
“But if we’re talking about trying to drive better value overall, we also have to do a better job of informing patients about the quality and cost of the services they’re receiving,” Azar said Thursday. “That is where our emphasis on transparency comes in — transparency about both costs and quality.”
“I believe you ought to have the right to know what a healthcare service will cost — and what it will really cost — before you get that service,” he added.
Azar has harped on price transparency since taking over as the head of HHS, but Thursday’s speech did not give any more details on how the administration plans to bring more transparency in the market. Azar simply stated that if hospitals, pharmaceutical companies and insurance providers do not respond to the administration’s demands, they have some ways to force some changes in the market.
“So this administration is calling on not just doctors and hospitals, but also drug companies and pharmacies, to become more transparent about pricing and outcomes of their services and products. And if that doesn’t happen, we have plenty of levers to pull to push it along,” Azar said.
One such way, Azar said, would be to work within the legal structure of Obamacare and federal health laws to reorient the system, although the plan is light on specific details.
“We are committed to using the flexibilities we have within the law to allow insurers to offer competitive products that work for consumers. We know the layers of regulation imposed by the Affordable Care Act (ACA) have made this almost impossible. Consistent with the law, we want to work with you to open up new affordable and flexible options,” Azar said.
The administration isn’t alone in its push for greater price transparency.
GOP Sens. Bill Cassidy of Louisiana, Chuck Grassley of Iowa and Todd Young of Indiana, along with Democratic Sens. Claire McCaskill of Missouri, Michael Bennet of Colorado and Tom Carper of Delaware, are pushing what they call a “health care price transparency initiative.”
The bipartisan group sent a letter to virtually every major player in the health care marketplace, including insurance companies, trade organizations and the industry’s lobbying arm, asking the same question as the Trump administration: How can we introduce price transparency into the market so consumers can effectively shop for the best price that meets their individual needs?
Another focus for HHS going forward will be pushing the administration’s goal of extending short-term health insurance plans that are exempt from some of Obamacare’s requirements and therefore offer a lower-cost alternative. This caused many to fear for the future stability of the Affordable Care Act state exchanges, expecting a sizable flow of younger, healthier consumers from the Obamacare market.
The administration told reporters on a call in late February that its independent analysis predicts that only 100 to 200,000 consumers will shift from the Obamacare marketplace into the short-term insurance pool. The administration expects that consumers within the Obamacare marketplace could experience premium increases of roughly $70 a month.
Short-term health insurance plans come with an important caveat that Obamacare plans do not have. Unlike plans purchased on the Obamacare exchanges, short-term health insurance plans can cap payouts, which means consumers could get hit with a huge bill if they have some catastrophic health event.
Azar rolled out such a proposal in late February that would expand access to these plans.
The administration’s proposal would expand consumer access to more affordable coverage — short-term, limited duration health insurance plans — as a direct alternative to Obamacare plans offered on the ACA exchanges. These short-term plans are cheaper because they do not have to cover pre-existing conditions or cover Obamacare’s “essential health benefits.”
GOP Sen. John Barrasso of Wyoming rolled a similar proposal on the Senate floor Wednesday, arguing that consumers should have more “freedom and flexibility” to choose plans that meet their individual needs.
Depending on where one stands within the health care sector, be it provider or consumer, Azar’s closing comments Thursday are either ominous or intriguing.
“This won’t be the most comfortable process for many entrenched players. But those who are interested in working with us to build a value-based system will have the chance to take advantage of a market where consumers and patients will be in charge of healthcare,” Azar said Thursday. “Because I assure you: Change is possible, change is necessary, and change is coming.”
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