Help shed a light on what’s broken in American healthcare, and we’ll go to work on fixing it. That work has already begun, and President Trump’s administration will continue it until every American finally has access to affordable healthcare that works for them.
As Prepared for Delivery
Thank you for that introduction, Janet [Trautwein], and thank you all for inviting me here today.
I’m glad to be here because you all represent an important perspective and play a vital role in our healthcare economy, but also because I have a special appreciation for insurance work.
It’s not just that I have the privilege of running what is technically the world’s largest health insurer, but because my uncle George spent his whole career selling life insurance.
This was back in the day when he would go around and collect premiums the old-fashioned way—literally going door-to-door with receipts to ask customers to pay their premiums.
Needless to say, that wasn’t an easy job—my uncle maybe drank more coffee than anyone I’ve ever met, and I myself drink a lot of coffee.
Of course, you don’t have to collect premiums door to door anymore. Now, insurance brokers and agents spend a lot more time sitting through presentations in Washington conference rooms, and hoofing it from congressional office to congressional office. I suspect those, however, are still coffee-friendly activities.
Today, I want to talk to you about an issue that all of us care deeply about: providing Americans with access to affordable healthcare, and affordable ways to finance that care.
I first want to discuss how this pertains to how Americans finance care through the individual insurance market, before moving on to talk about some factors that underlie the cost of care.
The previous administration’s major healthcare effort, the Affordable Care Act, was focused on the individual market, imposing more government regulation and intervention on this market in order to provide every American with affordable access to care.
Despite its great cost, it simply hasn’t delivered on this promise. Premiums in the individual market have skyrocketed, while choices disappeared.
By one estimate, during the first year of ACA implementation, more than 4.7 million Americans had their insurance plans canceled. Then, from the year before ACA implementation through the final year the Obama administration oversaw open enrollment, premiums in the individual market more than doubled—in some states, they tripled.
Immediately upon taking office, President Trump set about fixing this situation.
On January 20, 2017, he signed an executive order to run the ACA as efficiently as possible, give states more flexibility, and minimize the costs the law imposed on Americans.
Within a month of the President’s inauguration, HHS proposed a national “market stabilization” rule. That was actually its title.
Literally, one of the first significant actions by the President elected to repeal and replace Obamacare was stepping in to help the American people by stabilizing the market as best he could.
Drawing on what we heard from insurance experts, the rule cut down on ways that the system could be gamed, reduced incentives for putting off the purchase of insurance, and provided more flexibility about the kinds of plans that could be offered.
Since then, we’ve worked closely with the private sector and with states to further stabilize markets.
Particularly important for all of you, we implemented a new streamlined and simplified direct enrollment process for consumers signing up for exchange coverage through private agents and brokers and issuers. The more pathways consumers have for purchasing coverage, the easier it is to find an option that works for them.
The results of all this work speak for themselves: For the 2019 plan year, the national average benchmark premium on HealthCare.gov dropped for the first time ever. The number of insurers on the exchanges rose for the first time since 2015.
In other words, the President constantly accused of sabotaging the Affordable Care Act was the President who finally succeeded in stabilizing it.
Importantly, this market has stabilized while we’ve also aggressively opened up new options for consumers, a few of which I’ll mention today.
In 2016, in order to push Americans into the ACA exchanges, the previous administration sharply restricted access to another form of coverage, called short-term limited-duration insurance. Last year, President Trump significantly expanded access to these short-term plans, allowing them to last up to one year and allowing consumers to renew this coverage for up to 36 months.
These plans are dramatically more affordable than the plans regulated by the ACA: We’re now seeing plans that last up to a year come onto the market with premiums that are 50 to 70 percent cheaper than ACA plans.
Now, these plans aren’t for everyone, and they don’t always offer the same benefits as ACA plans. But consumers deserve affordable options, and we’ve taken even stronger steps than the previous administration to ensure that consumers understand how these plans differ from exchange coverage.
In taking these steps to inform consumers about their options, we were informed by the input NAHU offered during the rulemaking process.
The second new set of options we’ve opened up are offered under a new regulation for Association Health Plans. HHS has worked with the Departments of Labor and Treasury to ease the regulatory environment to open up broader access to these plans, which allow smaller employees to join together with other similar groups and associations.
This helps level the playing field between large and small employers, giving small businesses and sole proprietors a more affordable benefits option.
You may have heard some of the impressive results of this rule described yesterday.
One AHP run under these new rules by the Las Vegas Chamber of Commerce is providing employees with coverage for an average premium of $243 a month, compared with an average of $413 a month under the old rules—a 44 percent cost savings. More than 650 employers are now working with the Vegas Chamber to secure coverage for their workers.
As with short-term limited-duration plans, we were careful to offer these new flexibilities while protecting consumers and ensuring the stability of insurance markets. We appreciated NAHU’s input on this issue, as well, and we know that NAHU has taken a leading role in educating employers about the new AHP rule.
One final area of options I want to mention for employers is the proposal we put out in conjunction with Labor and Treasury on health reimbursement arrangements, or HRAs.
The proposed rule would, in effect, extend the same tax advantages for traditional employer-funded group coverage to HRA reimbursements for individual market coverage.
According to Treasury’s calculations, full implementation of our proposals for expanding HRAs could mean a much wider set of insurance options for as many as 10 million Americans. Here, too, we want to be careful to ensure that new options aren’t coming at the expense of destabilizing the insurance market, so we’ve appreciated your input.
Another set of new options we’re looking at is ways to give states more flexibility to innovate under the ACA’s Section 1332 state innovation waivers. We’ve approved seven 1332 waivers for state reinsurance programs. In 2019, these waivers brought down premiums, ranging from a 9 percent average decrease in Maine to a 30 percent average decrease in Maryland.
This past fall, we put out some examples of other ways states could use 1332 waivers, including new uses of premium tax credits. This fleshed out guidance we issued last year, and it was a topic that Administrator Verma and I discussed a great deal with governors this past weekend when they were in town for the National Governors Association meeting.
One of the most exciting options is the idea of using ACA tax credits to fund new, consumer-driven savings accounts that can pay for premiums or out-of-pocket costs.
This is just one possible way to help use insurance design to drive value by empowering patients as consumers of healthcare. Plans with HSAs, especially funded HSAs, can protect Americans from the risk of catastrophic healthcare costs while encouraging them to be price-conscious consumers.
Many employers have already paired lower-cost, high-deductible plans with health savings accounts.
When an HSA is funded in part by an employer, an individual is protected from the risk of paying large out-of-pocket health costs, but still has ownership and control over much of their health spending.
We were told that we could never open up these new choices because doing so would undermine the ACA’s effort to accomplish its main goal: providing access to care for all Americans, including those with pre-existing conditions.
This could be the single greatest misconception about the Affordable Care Act.
If it was meant to ensure affordable care for all Americans, especially those with pre-existing conditions, what did it do for the 28 million Americans who remain uninsured?
What did it do for people with pre-existing conditions who are still in the individual market but make too much to receive subsidies? Their premiums more than doubled between 2013 and 2017—just like they did for everyone else.
It’s time to move past this debate: The ACA failed at solving the fundamental pre-existing condition problem. It did not ensure affordable access to care for all Americans with pre-existing conditions. For all the costs the ACA imposed, it came up short on that central goal.
What people with serious health conditions need isn’t a promise that they can buy insurance, in theory, at a price that’s said to be but is not in fact affordable. What they need is actual, affordable access to care.
The ACA destroyed the individual market as it had existed, piling huge new burdens on Americans who happen to be in the individual market but make too much to receive ACA subsidies.
There are any number of ideas out there about how to spread the risk of costly health conditions. Today, I’ve already mentioned one step we’ve taken, issuing waivers to help states set up reinsurance programs that hold down premiums.
The ACA’s main attempt to spread risk was regressive, inefficient, and ultimately ineffective. The burden was most painful for middle-class earners who happen to be in the individual market but make too much to receive subsidies.
It didn’t matter if you made $75,000 or $750,000. Your premiums shot up just as much, to help cover the cost of the market’s now-lopsided risk pool.
These burdens were so great that many of these healthy consumers have now left the insurance market or never entered it in the first place.
During the final year the Obama administration ran open enrollment, the portion of people in the market who didn’t receive subsidies declined by 20 percent.
That’s 1.3 million people walking away from the market in one year—leaving premiums to increase further for those remaining in the exchanges, including every enrollee with pre-existing conditions.
President Trump has been unequivocal in his commitment to ensuring access to care and coverage for those with pre-existing conditions. He has been clear that he will never sign any health insurance reform that doesn’t protect these Americans.
To suggest otherwise is disingenuous. It’s just as disingenuous as suggesting that we’ve somehow solved this issue while 28 million Americans remain uninsured and millions more are underinsured in the individual market.
The other issue is that having a pre-existing condition, especially a serious medical condition, is only in part an insurance problem. It’s important for Americans to have the peace of mind that comes with health insurance, and that is even more true for Americans with pre-existing conditions.
But fundamentally, what they need is not just affordable health insurance—they need affordable access to high-quality care.
That is why we’ve taken a broad view of health reform, working not just to reform insurance markets, but also improve the quality and affordability of the underlying services. Ultimately, that means shifting toward a healthcare system that harnesses the power of consumers to pay for value rather than procedures, which I’ve made one of my four priorities as secretary.
A key piece of empowering patients to drive value is ensuring that we have transparency around price and quality. Sadly, we’re a long way from where we need to be on transparency today.
The most high-profile example of this challenge right now is surprise billing, which can afflict Americans no matter the quality of their insurance coverage. If you get a procedure done by a provider who you didn’t know was out of network, you can be in for a painful surprise.
I heard about this personally when President Trump held a recent roundtable at the White House with patients who had been stuck with surprise bills.
One patient got an $80,000 bill for anti-venom medication after a snake bite. Another received an emergency room bill for $15,000—though the hospital was so generous as to offer her, up front, a 50 percent “uninsured discount.”
Who exactly would pay the list price, if there’s already an uninsured discount, I have no idea.
Just about everyone in this room knows more about insurance than 99.9 percent of Americans—and yet you are probably just as much at risk of a surprise bill as anyone else. I myself have been a victim of surprise billing!
You could literally work for the insurance company who provides your coverage, or have sold the plan you hold to thousands of customers, and yet you’re still none the wiser when a specialist who enters your hospital room isn’t covered by your plan.
The President, like so many Americans who’ve heard these stories or had such an experience themselves, has been shocked and outraged by this issue. But he also understands that it’s not just a narrow problem.
Shady pricing practices are a core problem in American healthcare, and finally bringing transparency to all of our healthcare markets is a top priority for this administration.
I want to raise one final area where the need for transparency is particularly acute: prescription drug pricing.
This is not just an issue for the millions of Americans with high drug costs, who suffer from the non-competitive, non-transparent drug market we have today. It’s also a challenge for employers and their insurance brokers and agents, who are trying to secure insurance coverage that will protect employees from high healthcare costs—with high drug costs being one of the biggest potential out-of-pocket expenditures.
You want to offer your clients plans that will protect them from these costs—and yet it is far too challenging to tell if that’s what they’re getting.
With skyrocketing list prices, drug cost-sharing is highly unpredictable, and all of you have no better way to know than the rest of us where the rebates negotiated by prescription drug plans really end up going.
With the President’s blueprint for lower prescription drug prices and lower out-of-pocket costs, we’re replacing this system with one that’s much more competitive and transparent, characterized by negotiation that actually lowers out-of-pocket costs and delivers affordable outcomes.
Last month, we took one of the most significant steps in that direction by proposing to replace today’s opaque system of backdoor rebates in Medicare Part D with a system of upfront discounts, delivered at the pharmacy counter.
While this plan would not technically extend to the commercial market as it’s written, we believe it may influence trends in the commercial space as well.
Of course, members of Congress could get to work on extending this proposal to the commercial market, too, if they’re interested in moving us toward a market where patients get transparent discounts on their drugs, rather than having to hope they’re getting a good deal from today’s system of backdoor rebates.
This President has taken aim at these entrenched, broken systems because he cares deeply about Americans having access to the healthcare they need.
You all have a role to play in making that a reality.
So I ask you to continue to engage with us.
Work with us to identify affordable ways for Americans to finance their care, and work with us to identify what’s driving up the cost of care in the first place.
Help shed a light on what’s broken in American healthcare, and we’ll go to work on fixing it.
That work has already begun, and President Trump’s administration will continue it until every American finally has access to affordable healthcare that works for them.
Thank you so much for having me here today.
