Azar and Verma: Competition, Value-Based Models Needed to Fix Our Cost Problem

Both the HHS secretary and CMS administrator cited the competition among Medicare Advantage plans as a model of success.

The keys to solving the U.S. healthcare system's pervasive cost problem include competitive market forces and a commitment to a value-based approach to payment, two senior Trump administration healthcare officials said during speeches this week at the Better Medicare Alliance in Washington, D.C.

Health and Human Services Secretary Alex Azar said Tuesday that social determinants of health—the solutions for which are generally considered to fall outside the purview of traditional healthcare service providers—can drive a lot of the nation's healthcare spending. So it makes sense for government-sponsored health plans to expand the scope of what they are willing to cover, he said.

"Our system can often be penny-wise and pound-foolish, spending generously on healthcare without considering how health could be improved by addressing non-health needs," Azar said, according to his prepared remarks.

"You've already seen one effort to address this through new supplemental benefits in Medicare Advantage, like home-delivered meals, transportation, and home modifications," he added. "We want to go further, and we look forward to working with all of you to think about how best to do that."

There are currently about 60 million seniors on Medicare, and they are increasingly migrating from traditional plans to Medicare Advantage options—offering a model for how policymakers might be able to "keep what works and fix what's broken" throughout the rest of our system, Azar said.

Centers for Medicare & Medicaid Services Administrator Seema Verma, who spoke Monday, said so called "Medicare-for-All," single-payer, and "public option" proposals from the left are doubling down on the Affordable Care Act's fundamental failure to curb spending.

"While the discussion over the future of healthcare has focused on who should pay for it, the real focus needs to be the cost of healthcare in our country," Verma said, according to her prepared remarks.

"We believe that our role in government should be to promote a healthy and competitive free market where providers and insurers compete on the basis of cost and quality, and patients are incentivized to seek high value providers," Verma added later.

"By unleashing the power of the American consumer, market forces—the same forces that deliver better cars, better phones, and better restaurants year after year—will address the underlying cost drivers in our healthcare system," she said.

Verma, like Azar, cited Medicare Advantage as among the administration's successes, noting that MA plans compete on the basis of cost and quality. With the added flexibility granted to MA plans, the program has gained 600 new plans, premiums have fallen to their lowest level in six years, and enrollment as risen 10 percent to an all-time high of nearly 23 million MA beneficiaries, she said.

Verma likened the administration's work on MA competition to its push for greater flexibility around the ACA, including the expansion of access to short-term limited-duration insurance, association health plans, and individual market coverage paid for through employer-funded health reimbursement accounts. 

"Unlike those who want healthcare prices set in Washington by bureaucrats, the Trump Administration believes the key to unlocking innovation and quality in healthcare is to empower patients as consumers," she said.