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Remarks to the World Medical Innovation Forum

Alex M. Azar II
World Medical Innovation Forum
April 9, 2019
Boston, Massachusetts

To deliver American patients the quality they deserve, the options and control they want, and the affordability they need, we need to move to a system where patients and providers can work more closely together to drive value.

As Prepared for Delivery

Thank you for that introduction, Dr. Meyer—it’s always a pleasure to be introduced by a member of the HHS family.

Before his time in the private sector, Dr. Meyer was a director at the Agency for Healthcare Research and Quality at HHS, which plays an important role in supporting the work that many of you here today do: aggregating and analyzing data to improve patient care.

I’m glad to be here because the enthusiasm so many of you have for the future of healthcare is infectious—many of you are innovators who are charging toward a new kind of healthcare system, one that delivers better value, puts the patient at the center, and provides affordable, quality care for every American.

I suspect many of us share the same vision for our healthcare system, and many of you see the same desires from your patients every day.

We all want a system that’s affordable. No American should be going bankrupt due to the cost of healthcare services. No American should be stuck with a shocking surprise bill when they leave the hospital.

We all agree that we need a safety net for our vulnerable citizens, that we need to maintain the promise of Medicare for our seniors, and that we need to do both in a sustainable way. The cost of healthcare services and prescription drugs should be accessible, transparent, and, to the extent possible, predictable.

We also want a system where the patient is empowered, and in control — not left at the mercy of decisions and forces they don’t understand.

Almost every one of us, at some point, has felt how disempowered today’s system can make patients feel—I’m the secretary of Health and Human Services, and I’ve spent more hours than I can count trying to find out how much a service a loved one or I need might cost, what might be the highest quality option, or whether it’s covered by my insurance.

Finally, we all want a system that’s high quality— a system that makes you feel like a person, like a valued patient, not like a number. Quality care means quality outcomes, and care that keeps you healthy, rather than only comes in when you’re sick.

So, how do we move to that kind of system? How do we deliver the affordability that patients need, the options and control that they want, and the quality that they deserve?

Today, I want to lay out to you several ways that this administration has worked toward these goals, and some sense of where we believe we need to go next.

I’ll start with affordability, because that is first and foremost in the minds of so many American patients. Half of American families fear that a major medical expense could bankrupt them. The average four-person American household spends a stunning $28,000 per year on healthcare costs. The lowest-priced silver plan on the Affordable Care Act market available here in Boston costs $975 a month for a family of four—with a $4,000 deductible.

Even seniors on Medicare face substantial costs, such as those who have hit the catastrophic phase of Medicare Part D, as more than a million seniors do each year, facing upwards of $5,000 in out-of-pocket drug costs.

Governments at all levels are burdened, too.

At current trends, the federal government is on track to spend 40 percent of its budget on healthcare by 2048, a level that states like Massachusetts have, I’m sorry to say, already reached.

These problems demand a comprehensive set of solutions: We need to provide Americans with financial peace of mind, we need to drive down underlying healthcare costs by harnessing competition and paying for value, and we need to do it in a way that is fiscally sustainable.

Take the way we are looking at prescription drugs. This week, the comment period closes for our proposal to replace Medicare Part D’s current system of backdoor rebates with a new system of upfront discounts, delivered directly to the pharmacy counter.

By requiring these discounts to be passed on to patients, we will not only provide dramatically lower out-of-pocket costs, especially for seniors with the most expensive drugs, we’ll also provide more predictability around seniors’ health spending.

No longer will seniors picking up their first prescription of the year in January be hit with having to pay based on the full, undiscounted list price of a drug.

Meanwhile, the President’s 2020 budget proposes the first-ever out-of-pocket cap for Part D.

Now, that kind of peace of mind does come at a budgetary cost. But by improving incentives within the Part D program to harness competition and drive better value, the budget reduces federal spending in Part D at the same time it provides more protection for seniors. This drive toward value is also reflected in a model we put forth earlier this year from the Center for Medicare and Medicaid Innovation, which will allow Part D plans to test approaches that better align incentives to keep drug costs low.

It’s crucial for these changes in financing to drive more competition and value in the underlying prescription drug markets.

Moving from backdoor rebates to upfront discounts, as I just mentioned, will drive even more adoption of low-cost generic options, for instance.

Over the last two years, under Commissioner Scott Gottlieb, the Food and Drug Administration has approved historic levels of new generic drugs, saving consumers an estimated $26 billion already.

The FDA has also launched a Biosimilar Action Plan to support the approval and adoption of these lower-cost options.

We plan to encourage new competition in that space through the demonstration we put forth in Medicare Part B, which secures a share of discounts given on these expensive drugs to other countries, while also spurring more biosimilar competition.

A similar approach applies to our work on the costs of insurance and care.

We want to offer affordable, sustainable ways to protect Americans from high healthcare costs, while also supporting healthy competition and driving toward value in the underlying services.

In the individual insurance market in particular, Americans who make too much to receive subsidies are increasingly finding themselves shut out of the market altogether: 1.3 million unsubsidized enrollees left the individual market from 2016 to 2017.

In total, the individual market under the Affordable Care Act only covers 3 to 4 million more enrollees now than it did before the ACA, at a cost of more than $50 billion in annual subsidies.

That’s why this administration has opened up new insurance options, including short-term insurance plans that are now on the market for up to 50 to 70 percent less than ACA plans, and association health plans that have cut costs for some employers in half.

We’ve also proposed to inject more life into the individual market through expanding how employers can use health reimbursement arrangements, with as many as 10 million Americans gaining access to new insurance options under our proposal.

But part of the reason for high insurance costs is the high cost of underlying services. Last year, the administration put out a historic report on how federal, state, and local policies may be hindering competition in the supply of healthcare services.

Americans need more freedom to seek out value from lower-cost providers, like nurse practitioners or other health professionals.

We also worry that there is too little competition among healthcare facilities, in part hindered by regulations like certificate of need laws. Certain federal policies can be driving consolidation of facilities, too.

This year, we finally began to tackle the disparity between what hospital-owned and independent physicians’ offices are paid for certain services, to move toward what is known as site neutrality.

The change we made in 2018 alone will save seniors $150 million in out-of-pocket costs this year, address a significant driver of consolidation, and cut taxpayer spending that was driving no added value.

Now, contrast these reforms to an alternative approach: the government takeover of our healthcare system that many have proposed under the guise of Medicare for All. It is little surprise that these government takeover proposals have scored as costing $32 trillion or more over the next ten years.

This would require an almost 50 percent expansion in the size of government, financed by new taxes, and push the share of federal spending devoted to healthcare to 58 percent.

Now, that is assuming that the government can, by fiat, impose substantial, indiscriminate payment cuts on all providers—a decision that will mean the end of options, control, and quality for so many American patients.

There’s a better way—and complementing our work on driving affordability, value, and competition is our promise to deliver Americans the options and control they want.

The high cost of American healthcare is one source of stress, but another challenge is that you’re almost never even able to find out what that cost is, leaving you as a patient feeling not just confused but utterly powerless.

I don’t know how many of you have ever tried to get an honest answer about the cost of a health procedure, but I’ve tried plenty of times.

Once upon a time, I thought it was frustrating that, say, the Deputy Secretary of Health and Human Services couldn’t find out the cost of stitches for my young son. Well, now I can tell you the answers are just as hard to find even once you’re Secretary.

Fundamentally, American patients will never have the options and control they need until they have pricing information regarding their healthcare choices. That’s why this administration has already taken historic steps around price transparency, including requiring hospitals to post their price lists in a machine-readable format online for the first time, and proposing to require the disclosure of prescription drugs’ list prices in television ads.

Lack of transparency burdens providers, too, making it impossible for them to help patients navigate the system. Physicians end up blindly prescribing expensive medications without knowing what they’ll cost the patient or whether there’s a lower cost option.

I recently spent a whole weekend trying to determine whether a drug prescribed for a relative was even covered by her insurance, or whether her plan preferred her to use a different drug—the insurance plan would not tell us.

To address this challenge, starting next year, we proposed to require that Medicare Part D plans make available a real-time pharmacy benefit tool, already used in the commercial market, which can provide instant electronic access to the kind of information that patients and physicians find so hard to track down today.

Just as patients and providers need real access to pricing information, they need seamless access to information about their health, as well.

Yet few experiences in American healthcare are as disempowering today as trying to assemble or access your own health records.

We have already taken major steps to fix this situation, by allowing seniors to give private-sector apps access to their Medicare data, and proposing new rules around the interoperability of health information that will ensure patients have seamless access to their own data, at no cost.

These measures will deliver American patients and providers more options and more control over their own care. The alternative path some suggest, a government takeover of our entire healthcare system, would mean much less control for patients and providers. No one would be able to choose among insurance plans or drug plans that offer different benefits and options.

This moves us away from what seniors have increasingly shown they want within the Medicare program itself, where more and more every year choose from the options offered by Medicare Advantage plans—a consumer-driven ecosystem that would be put to an end by proposals for a single government-run system.

We want to preserve options and control for patients not just because they are good things in their own right. They’re also essential parts of delivering the care Americans want because they help provide signals about what patients value, and they provide incentives for the private sector to deliver better, higher-quality care.

One place we’ve already seen this occur is in Medicare Advantage, where this administration has opened up opportunities for plans to offer new supplemental benefits. Plans can now offer not just support for a home health aide to assist a senior with their health needs, but even assistance with meals, or modifications to their home to avoid falls.

No one’s telling these plans exactly what they can offer: They offer services that they think will lower patient costs, and seniors show what they value most.

The simple nature of these added services tells us something important about what quality means to patients: Quality does mean knowing that you can have access to advanced treatments for complex health challenges, but it also means access to care that gives you peace of mind, that improves your quality of life, and treats you like a person, like a valued patient, not like a number. That means care that considers all your needs, and tackles your health challenges long before they become a major challenge.

Historically, our government payment systems have not reimbursed generously for the kind of care, especially primary care, that can prevent more serious health challenges.

We believe it’s time for that to change. This year, we will be unveiling new ways for primary care providers to be paid for the value they deliver to our system and to the American patient.

Now, contrast this kind of forward-looking approach with the effects of a single government healthcare system.

The way the federal government currently pays for procedures rather than outcomes explains a great deal of why our system doesn’t place the right value on care that keeps patients healthy and out of the hospital.

Medicare has been moving away from this procedure-oriented paradigm for some time, but we have a very long way to go. The last thing we want to do is impose a rigid government system, oriented toward services rather than outcomes, on all American patients and providers.

A government takeover of healthcare will also mean that all of our seniors are just another number—not protected by a special promise of quality and access through Medicare, but competing for attention with every other American, regardless of their need. More than anything, a one-size-fits-all system will be the end of that vital core of quality care, the doctor-patient relationship.

Rather than your doctor being accountable to you, they’ll be accountable to a far-off bureaucrat in Washington—me.

To deliver American patients the quality they deserve, the options and control they want, and the affordability they need, we need to move to a system where patients and providers can work more closely together to drive value.

But to give you a sense of the kind of healthcare system we envision for the future, I want to briefly take you back in time. The sponsor of today’s conference, Partners HealthCare, is home to America’s third oldest hospital, Mass General—the kind of institution that has made American healthcare the envy of the world.

The first Nobel Prize winner affiliated with Mass General—and there have been a few—was a physician named George Minot, who received the prize back in 1934.

He was an intern at Mass General, before going on to serve as a physician at Boston City Hospital. One of the things that set Minot apart was fastidious attention to the whole patient, and his rigorous observation of their health.

One area in particular that interested him was their diet: ask patients how they’re eating, he thought, and you might be able to understand a lot about what was driving their health.

He noticed a pattern regarding the disease of pernicious anemia, which at the time was a deadly, nearly untreatable condition. He was seeing much less anemia among patients who ate a lot of leafy vegetables and pork.

Over the years, he experimented with recommending alterations to their diets, eventually realizing that iron in food was essential to treating pernicious anemia.

Liver, in particular, was quite effective. George Minot’s prescription for pernicious anemia was one half-pound of liver per day—and patients had to put up with this before they knew he had a Nobel Prize-level insight. In fairness, raw liver juice was also offered as an option.

Thankfully, within a couple decades, others discovered that you could isolate the beneficial effects of all that liver within vitamin B12, and that was the end of the liver prescriptions.

Think about what that story says about the kind of successes we can have in healthcare when we put the patient at the center, when we listen to them, and when providers have the freedom to think about what drives health rather than how we pay to address sickness.

Today, thanks to the kind of technological innovations many of you have been discussing here at this conference, it wouldn’t have required all of that note-taking by George Minot to understand why some of his patients were healthier than others.

Today, all of that data could be at our fingertips. That is why I want to leave you today with an optimistic vision—and an ambitious one.

What we need is a healthcare system that allows the free flow of data and price information, that pays for providers to discover and implement treatments based on all that data, and that keeps the patient at the center of that process.

Such a system will finally deliver American patients the affordability they need, the options and control they want, and the quality they deserve.

With all of your help, I believe we can build that system much sooner than many expect. Thank you so much for the honor of addressing you all today.

Content created by Speechwriting and Editorial Division 
Content last reviewed on April 12, 2019