President Trump is committed to making regulatory reform an administration-wide effort, and it’s absolutely crucial that we get it right at HHS in particular. … It’s especially important because, at HHS, the cost of poorly designed rules or overregulation is measured not just in dollars, but in lives — in days, weeks and years we get to spend with our loved ones thanks to medical breakthroughs, as well as a higher quality of life made possible by new technologies and therapies.
As Prepared for Delivery
Thank you for that kind introduction, Randy [Johnson], and good afternoon, everyone.
I want to thank the Chamber of Commerce for having us today to discuss a topic that is so deeply important to all of us. And I want to thank each and every one of you for the work you do to improve the lives of the American people.
It is a great privilege to join you here as Acting Secretary of the Department of Health and Human Services, to share what the Department is doing on a cause we all care so much about.
What Is Health Reform?
We’re here to discuss the topic of healthcare reform.
In Washington for the past several years, and certainly in the intense negotiations of the past several months, that phrase “healthcare reform” has often been shorthand for the urgent need to repeal and replace Obamacare.
But I suspect all of you here today would agree that the need for healthcare reform in America reaches well beyond the four corners of Obamacare.
As someone who served under the Bush Administration at HHS in a variety of capacities, I had the chance to see a wide range of places where HHS is deeply involved, outside of the individual and small group market.
We implemented Medicare Part D, for example, which has delivered popular benefits for senior citizens at a reasonable cost — in fact, at costs that are billions of dollars less than projected.
Yes, you heard that right, it’s not a phrase you hear often in Washington — billions of dollars less than projected.
We also bolstered the Medicare Advantage program and made other changes to Medicare—the world’s largest single healthcare system in dollar terms—to make it more responsive to its customers.
Under the Trump Administration so far, HHS has taken a similarly broad view of health reform, looking at every way we can to move us toward a health system that’s responsive to the needs of patients and their doctors, while considering the impacts to employers, nonprofits, payers and all other stakeholders. We see these stakeholders as part of the solution to healthcare challenges, not just another third party.
Individual and Small Group Markets
But don’t let that take anything away from our emphasis on the individual and small-group markets, those insurance markets most affected by the Affordable Care Act.
As you all know, those markets, and the millions of Americans who rely on them for coverage, have suffered greatly under the ACA.
Individual-market premiums in the 39 states on the federal exchange rose 105 percent from the year before the major parts of the ACA were implemented in 2013 through the final year that the Obama administration oversaw enrollment, this year, 2017.
President Trump is deeply concerned by this situation, and the administration is doing what we can to provide relief for Americans suffering from it.
That effort began back in the early weeks of the administration, when we released a draft rule, now finalized, to help expand choices and promote affordability in the individual market.
Then last week, as you know, the President signed a powerful executive order instructing HHS and other departments to pursue several different avenues for opening up more affordable coverage options.
At HHS, we will be looking at ways to expand access to short-term, limited-duration plans, a consumer-friendly option that had been significantly restricted by the previous administration.
And in conjunction with the Department of Treasury and the Department of Labor, we’ll be looking at new ways for Americans to use association health plans to finally allow Americans to purchase insurance across state lines.
We’re also looking at new, better and easier ways for employers and employees to use Health Reimbursement Accounts to afford coverage that works for them.
Outside of the individual and small group market, the ACA also greatly expanded the Medicaid program—without trying to address how its flawed structure has driven spending out of control.
We need Medicaid to work smarter and do more to provide solutions than just throwing more money aimlessly at the problem.
We’re eager to engage with states on this issue and to look at ways for them to innovate within the Medicaid space, including considering more use of managed care and potentially applying health savings account-like features to plans.
Regulatory Reform at HHS and Stakeholder Engagement
So there are opportunities for reform and improvement even within the deeply flawed Affordable Care Act.
But now I want to widen the lens a bit, and talk about how HHS oversees our health system more broadly.
And I do mean broadly—if the U.S. healthcare system were a national economy, it would be bigger than every single economy besides us, China and Japan. And HHS touches about every corner of it.
So I want to comment on three major issues: regulatory reform across all of what HHS does, the way we’re looking at reforms to the Medicare and Medicaid system, and how we’re looking at drug pricing and innovation.
I know regulatory reform is a phrase that warms hearts here at the Chamber of Commerce in a way it does relatively few normal human hearts.
But it warms mine, too: I was HHS’s deputy general counsel – regulations, the chief regulatory officer of HHS; a professor teaching administrative law and healthcare regulations; and a regulatory lawyer at my former law firm. Getting regulations right is my passion.
President Trump is committed to making regulatory reform an administration-wide effort, and it’s absolutely crucial that we get it right at HHS in particular.
For one, the Centers for Medicare & Medicaid Services is the major driver and regulator of the one-sixth of our economy taken up by healthcare.
And the Food and Drug Administration alone has responsibility for overseeing products that represent 20 cents of every dollar the American consumer spends.
The stakeholders we affect are equally broad:
- Every American who hits the age of 65, in a way, becomes a customer and a stakeholder of ours, through Medicare.
- We have tens of millions of other Americans who are beneficiaries of Medicaid, CHIP, mental health and substance abuse programs, and more.
- Then there are America’s millions of healthcare providers, from major hospital networks and insurers all the way to single-physician offices and your family doctor or nurse practitioner.
- There are also many intermediaries who work with HHS to provide services: You’ve got states, counties, municipalities, tribes, civil society groups, and faith-based and community organizations.
- And then there are employers, who provide insurance for more than half of all Americans — 177 million individuals.
- There are also innovators and researchers, in both the public and private sector, who are constantly advancing American science and medicine in near-miraculous ways.
- These are deeply valued stakeholders – some of the most respected institutions in our society.
But our task is crucial not just because of the breadth of our work and those we work with.
It’s especially important because, at HHS, the cost of poorly designed rules or overregulation is measured not just in dollars, but in lives — in days, weeks and years we get to spend with our loved ones thanks to medical breakthroughs, as well as a higher quality of life made possible by new technologies and therapies.
So with all that in mind, HHS has developed a robust strategy for reviewing our rules and regulations, and has aggressively studied what we do from the ground up.
In response to President Trump’s Executive Order 13777, we have assembled a Regulatory Reform Task Force, which includes top officials from across the department and have required all HHS components to designate regulatory reform officers and undertake review of all of their regulatory activities.
I chair the Task Force, and will continue that role even after a new secretary arrives.
I’ve been very proud to come in and see the extensive efforts that have been ongoing since January.
One crucial piece of our efforts, which the White House has particularly emphasized, is stakeholder engagement.
Each component of HHS has put together a plan of their own for engaging the firms, organizations, and people it regulates.
On just the provider front alone, the department has held listening sessions with hundreds of groups representing hundreds of thousands of healthcare providers.
The new payment rules from the Centers for Medicare & Medicaid Services we are issuing each include an RFI to solicit input from stakeholders and the public.
We’ve seen highly encouraging and productive responses to those requests.
Similarly, each center at FDA has issued its own RFI, seeking input on how to reduce burden on the community it regulates.
I would urge every one of you to look into these opportunities and engage with us.
Medicare and Medicaid
More broadly at CMS, we have ambitions for moving the center’s programs, chiefly Medicare and Medicaid, in a market-oriented direction.
Going back to Medicare Part D and Medicare Advantage, we are still seeing those programs bear fruit.
This year, at a time of rising prescription drug costs, the Part D premium will actually drop.
Meanwhile, each year the Medicare Advantage rolls continue to grow.
These programs are successful because they’re designed to harness the power of competition and people, rather than trying to micromanage from Washington.
In order to have competition, of course, you need to have two things: You need price transparency, so that consumers get signals about costs and you need a market with a meaningful number of players.
So we are looking closely at ways in which we can improve price transparency for the tens of millions of Medicare and Medicaid consumers, to help encourage them to understand options they have that are lower in cost.
And we want to ensure that we are not piling in new regulations and mandates that will advantage larger systems over smaller providers.
Economies of scale can be tremendously important, but we are wary of the pricing pressures that can be created in concentrated healthcare markets.
As I said earlier, we are also excited to work with states that want to innovate in these areas under the Medicaid program, and we want to work with private-sector providers on payment innovation as well.
We are always interested in product innovation, but we cannot forget about service delivery, payment, and systems innovation as well.
Competition is also essential to driving innovation and affordability in the world of pharmaceuticals and medical devices.
As you know, rising costs in this area are a pressing issue not just for American patients but also for employers, insurers, and everyone with a stake in our health system.
President Trump recognizes this is a tremendous challenge, and we’ve been working on it from the administration’s very first days.
Under the leadership of Commissioner Scott Gottlieb, the FDA has laid out a number of avenues for encouraging the development of, and speeding approval of, biosimilars and generic drugs, including complex generics, which will increase competition and help keep drug prices down.
Importantly, we want to keep costs down in a way that protects the crucial incentives that drive innovation, as well as serves the individual patient.
Charge to Stakeholders
That is a broad view of all we are doing, but even that is far from exhaustive.
We are working hard on how HHS can better empower families, civil society and local communities to deal with three challenges we’ve identified as clinical priorities: the opioid crisis, serious mental illness and childhood obesity.
And we have worked with the entire department to develop a transformative agency reform plan requested by the White House earlier this year, which we’ve named ReImagine HHS.
All of these efforts are focused on getting us to the goals that we want from a successful healthcare system and all our work at HHS: healthier people, stronger communities, a safer country.
But we cannot do any of that alone.
This administration knows well that it’s not just government that wants better health, stronger communities and a safer country. It’s civic organizations, it’s churches, it’s employers and innovators in the private sector, it’s hospitals and benefits administrators and doctors and nurses—it’s every single American.
When it comes to the next generation of American healthcare innovation, ideas that will revolutionize the quality of care, boost access and bend the cost curve — we know those ideas will come from the ground up.
So we are committed to bringing your ideas to light, allowing those ideas to flourish, driving reforms to the great system that we run together, and making it even greater for every American.
Thank you very much.