But before we begin talking about healthcare costs I would be remiss if I didn’t ask you both about the news of the day. And we’ve just gotten word that the president has signed an executive order overturning the policy of separating families at the border. [APPLAUSE] And I first generally just want to get both of your reactions to the president doing that this afternoon.
Cassidy: That’s a good thing. After Hurricane Katrina there were researchers at LSU Health Science Center that found separation between a mother and her new or near newly born child actually had an enduring impact. And so just approaching as a physician, if you will, I think it’s good policy. Approaching it as an American I think it’s good policy. We still have to secure our border. We have to make sure that this doesn’t give folks a way to circumvent our law, but as regard to separating children from their parents it’s something we should not be doing.
Bennet: I agree with Bill. We may not agree on some things today, but I would add that, to me, it was just shameful because this was a manufactured crisis. It didn’t have to happen. We have enough in this country to keep us occupied without causing these kinds of problems. And we sent a signal out to the entire world that in the name of the American people we were separating children from their parents. And I think we need to grapple with that. I’ve got three daughters at home. I dropped one off today on my way to work, and I said, “I just want apologize to you because the country that I grew up in would never do this.”
Itkowitz: So, senators, President Trump had said previously to today that this was a congressional problem, that congress needed to take care of this. So I wonder if you both think that congress should be responsible for coming up with some kind of long-term solution to handle families that come across the border illegally.
Cassidy: Yes. I mean, that is something which is going to take deliberation, and I do think it’s going to have a more enduring, positive impact if it something which is bipartisan, and it won’t be reversed by someone’s executive order next time. So, simple answer, yes.
Bennet: So I would just add onto what Bill just said, which is we have to get to a place in our politics again where we’re actually legislating to create enduring results. This idea of going back and forth every two years just because of who won an election, that’s something new in our politics. It’s not the way it used to operate. And the founders of this country who were creating the first real democratic republic that humankind ever had knew that at the heart of that republic we would have disagreements. That was the whole point, to not have a tyrant tell you what to think. And we behave in these legislative halls like you can’t make a compromise that’s principled or that any compromise is unprincipled. And that’s another way of saying we’ll never get anything done until there’s one party rule.
And on the subject of immigration I would say as part of the gang of eight in 2013 that wrote a bipartisan bill that secured our borders, that provided internal security, that created a pathway to citizenship for the 11 million people here that were undocumented, that dealt with our agricultural workers, that dealt with high tech; that was a bipartisan effort that took seven months, got a 68 bipartisan vote on the floor of the Senate. It never saw the light of day in the House of Representatives because of the tyranny of the Freedom Caucus. And if the president would like to find a model that really does secure our border and does it in a humane way, there is a lot to recommend that piece of legislation.
Itkowitz: Senators, thank you. So now we will move on to healthcare, which is why all of you are here. In one minute I want you each to defend. Senator Bennet, why is the ACA now Trumpcare? And Senator Cassidy, defend why it’s still Obamacare.
Bennet: Well, I would say this instead. My constituents are incredibly unhappy with the way their lives intersect with America’s healthcare system. They were incredibly unhappy with it before the Affordable Care Act was passed, after the Affordable Care Act was passed, and they’ve been made more unhappy by the stuff that Donald Trump has done. I don’t know what it is anymore. But what I do know is we as an industrialized country are spending more than twice any other industrialized country is spending and making people’s lives a misery in the way they intersect with the system. So I hope together we can drop, whether it’s Trumpcare or Obamacare, and work together to deliver a model of healthcare that’s more affordable, that covers everybody in America, and that continues to provide the kind of innovation that’s been so important to our medical history.
Cassidy: You know, as Michael did, I’m going to restructure your question just a little bit. [LAUGHTER] I’m a physician. Now, for 25 years you try and put the patient in the middle of the room and everything is to serve that patient. I worked in a public hospital for the uninsured, and I found that when politicians controlled healthcare policy the system lines up to serve the politician or the academician or the person who just seems to know more than the patient. When the patient is in control of the dollar or whatever, then the system lines up to serve here. If you go to a woman’s hospital that woman’s hospital is competing for that woman, and you walk in and it is an experience designed to help someone who is expecting to have a wonderful experience, for example, having concierge parking so that if she’s pregnant nine months she doesn’t have to come through the parking lot.
So I think what is wrong with the ACA and the enduring negative legacy is there is a sense that power was taken from the patient and her physician and it was brought to Washington, D.C. and she is told what she must buy, how much she must pay with other restrictions. If you can’t afford the insurance you’re going to be penalized, on and on. Now to that extent there is an ongoing—I totally agree—dissatisfaction. And that dissatisfaction, I think, is driven because the patient feels like the power has left her and it is now with someone whom she does not even know.
Bennet: I would say that someone is more likely to be a private insurance company that is keeping her on the phone, not paying her claim, and has people who are able to do that for hour upon hour after hour before she has the opportunity to go and do something else. And I’m not disagreeing with you when I say that; I’m just adding to your thesis.
Cassidy: There is enough out there that you can pick this example or that. It could be a pharmacist who is not allowed contractually to tell a patient that she would be better off paying cash for a drug than paying her deductible, because the PBM tells the pharmacist he loses the contract if he tells her what’s in her best interest. Or it could be the individual mandate, until repealed, that tells the family in Louisiana paying $40,000, after-tax dollars for insurance, and then with a $10,000-copay $50,000 before they see benefit that if you don’t buy insurance we’re going to penalize you. There is a lot not to like. If you give the patient the power though, then things begin to serve her, and I think she begins to like it more.
Bennet: You know, in a way I think Bill has put his finger on exactly the most legitimate critique of the Affordable Care Act which I would hear, which was from people living in rural parts of my state in particular who were saying, “There is no competition for insurance where I live. The insurance is very expensive. The deductible is very high. And yet you’re telling me that I have to buy that for my family. That doesn’t seem fair.” And it doesn’t seem fair. It doesn’t seem fair to me. But there were other aspects of that law that were very important like establishing a threshold of essential health benefits so that people knew that the insurance were something.
I hear some politicians on the floor of the Senate talking about the opportunity to buy lousy insurance as freedom. You know, they describe it as freedom. Well, it’s an opportunity to buy lousy insurance. And part of the difficulty we have when it comes to health insurance is that if we don’t find ways of pooling people into large enough pools you end up in a place where healthy people go in one direction and can buy cheap insurance and take the risk that they do and people that are sicker end up costing more and more and more. And that is at the heart, I think, of the dilemma of how to solve that, bridge that in our country.
Cassidy: Great conversation. If I may.
Cassidy: Just to say that I totally agree with you. Wouldn’t it be great if we could say, “Okay, you have to have these benefits because it puts us all in the same pool”? But if you can’t afford the insurance then you don’t have the insurance anyway and you’re not in the pool. A young medical resident I was working with after the law passed—I was still seeing patients—he goes, “You know, I used to pay $800 a month for my catastrophic policy, and now I’m up to $3,200.” Now probably he’s now up to $6,000. Now, when you’re 28 years old and you’re paying that much money for insurance, effectively cost subsidizing other people for a policy that you don’t think you’re going to need, then that just becomes problematic and he can no longer afford.
Bennet: I agree completely with that. We probably disagree on the cause of that expense, but that’s okay. We should figure out how to solve it in this country because it’s unaffordable to people.
Itkowitz: And to that end, Senator Cassidy, the Justice Department said it’s not going to defend the preexisting language in the ACA. And so I wonder without that in place what is your idea to keep sicker people from paying exorbitant prices for health insurance?
Cassidy: If you’re speaking about my idea in particular?
Bennet: Sure, yeah.
Cassidy: The thing I proposed on a couple of different occasions, first with Susan Collins then with Lindsey Graham, is that you allow states to pool their individual market with their Medicaid expansion market. Now the problem with—insurance is about the law of big numbers. The more people you have, if one person gets sick and you spread that expense of illness over hundreds of thousands of people, it doesn’t even cause a blip in the premium. But if you have a very small, little pool and you get somebody sick it raises the rates for everybody.
Now in my state, Louisiana, we have 400,000 people in the Medicaid expansion and maybe 100,000 people in the exchange or maybe less than that. If you combine those two you suddenly have got a much bigger pool. One person’s illness spread among many is much more affordable. We need to restore the law of big numbers to insurance. People were rejecting our policies. I don’t think they ever though them through. But it’s effectively what Ron Wyden was speaking about when he said we should have 1332, 1115 combined waivers under the ACA. We just made it easier, and it’s about restoring the law of big numbers.
Itkowitz: Senator Bennet, what would you say to that?
Bennet: Honestly, I don’t remember the details of the legislation except that it cut Medicaid a lot in my state. And that was one—
Cassidy: It didn’t, but that’s okay.
Bennet: Well, that is not the view that my rural hospitals had about that bill, who believed they’d have to shut down as a result of it. And I would have to say, in the absence of people in Washington having the imagination to figure out some solutions on this, one of the things that has been a success from our point of view in Colorado was the Medicaid expansion because it really dramatically reduced the number of uninsured people in our state. The challenge that we continue to face—I mean, we face the broad challenges that Bill was talking about, but the challenges we continue to face are people that make too much money to be on Medicaid but not enough money to buy private insurance. And that’s a lot of people.
I mean, there are huge percentages of people in our rural mountain communities, our ski towns, and places like that where people, as I said, are making too much to be on Medicaid but not enough to have private insurance. And we’ve got to figure that out. The rest of the world—this is not a pain point in the rest of the world. People don’t worry about going bankrupt in the rest of the world because of healthcare. They don’t worry about government saying, “We’re going to allow insurance companies that don’t cover preexisting conditions,” in the rest of the world. Somehow only here do we have to worry about these things.
Itkowitz: And Senator Bennet, you have embraced an idea called Medicare-X, right? I’m wondering why you chosen to support that over a more progressive, like a Medicare-for-all like Senator Bernie Sanders has been pushing.
Bennet: Well, I wouldn’t describe my proposal as less progressive. I think it may be more doable. And there should be a virtue in that. I mean, I believe that we should have universal coverage in the United States. I think it makes economic sense for the United States, and I think it makes moral sense for the United States to have universal coverage. And we should have passed a public option in the original Affordable Care Act bill and we didn’t. This is in a bill call Medicare-X; that is the sexiest name of any legislature that I’ve ever introduced. [LAUGHTER]
It is a plan that would be administered by Medicare. So it’d be the benefit of having the much lower administrative cost of Medicare than in a private plan. You would pay in a premium, and you’d have coverage from this public option. We start it in rural parts of America where there’s only one or no insurer, and we say that you can then pool everybody. Bill was talking about the importance of pools. There are counties in my state where no private insurer will ever make a market because there aren’t enough people to do it. This allows us to pool it national; it allows us to use the Medicare reimbursement structure and provider networks so you don’t have to set any of that up.
And over three years we make it available to everybody in the country; and over five we make it available to small business in this country. I think it’s the kind of thing that people really are looking for as they struggle with the kind of private insurance hikes that Bill Cassidy was talking about. We weren’t ready for that discussion 10 years ago, but I think we are ready for it now.
Itkowitz: If that was an option would people still buy insurance?
Itkowitz: Or private insurance?
Bennet: No. Well, sure. Sure, no, absolutely.
Itkowitz: So what would be the incentive to buy private insurance?
Bennet: People who want private insurance could buy their private insurance. Then that’s one of the issues with the single-payer bills, is that you remember it, the Affordable Care Act when a few people lost their insurance, thousands of people lost their insurance, and all hell broke loose because President Obama had said, “If you like your insurance you can keep it.” You remember that? There are 180 million people in this country that have private insurance through their employer, and 80% of the people say they like their insurance. There are 20 million people that are on Medicare Advantage in the United States; they love Medicare Advantage. And so my bill is not about taking that away; it’s about giving people an additional option if they want. And I think it’s absolutely true that different people in different parts of the country are going to want different things, and so why not give them a choice?
Itkowitz: So, Senator Cassidy, why not do that?
Cassidy: Medicare for all will be Medicare for none. Medicare is going bankrupt, according to the actuaries, in eight years. Now, what we know is that if you open this up the folks that join will typically be sicker with a higher-cost experience. I don’t think that Michael or other proponents are suggesting that we charge them more, so they will come in having—and believe me; this has happened with the individual exchanges, according to my insurance companies. People who are on group plans who are sicker are encouraged to go onto the public option, if you will, in this case the individual market in the current case but in this coming case Medicare-X, and so you’ll have your sicker patients in Medicare which is going bankrupt in eight years according to the actuaries.
We’ll suddenly have an influx of more expensive patients. Now, I suppose you could raise taxes dramatically to pay for this, and I assume that is part of the plan. Because otherwise it won’t be going bankrupt in eight years; it’ll be going bankrupt in four years. And so Medicare for all will be Medicare for none. And by the way, again, I’m a doc; I worked in a public hospital system for 25 years trying to bring healthcare to those who did not have. Politicians overpromise and they underfund. And that’s why Medicare is going bankrupt in eight years. And the idea that even though we would have to raise taxes in order to pay for this, that it’ll be adequately funded is just not borne out by experience.
Bennet: So let me just be clear that my proposal is not Medicare for all; it’s Medicare-X. It is a plan administered by Medicare, not the Medicare system. The Congressional Budget Office during the healthcare debate scored a public option designed like mine. It actually saved $160 billion for the federal government. There are no taxes raised. People do have to pay a premium, but that’s modeled in the CBO report. Second, on Medicare he is quite right. We are collecting one dollar for every three dollars we spend on Medicare, largely because George Bush passed Medicare Part D at the end of his deficit-inducing presidency and didn’t pay for it. And we have not managed the cost of drugs at all since then, and the result is that we’ve got a mess on our hands which we have to find a way to fix.
Cassidy: Although Part D is not paid for by the Part A trust fund. And the A trust fund is what is said to be going bankrupt. But I accept your also that Part D is also a drain.
Bennet: All right.
Cassidy: But, anyway, the Part A trust fund is the one that’s going down. And we could elaborate more, but I think I made my point.
Itkowitz: So, Senator Bennet, to Senator Cassidy’s point, how do you pay for it, a Medicare-X?
Bennet: With the premiums that people would pay.
Itkowitz: With the premiums? And that would be enough to pay for it?
Bennet: It would be more than enough. It saves $160 billion according to the Congressional Budget Office because people would be opting to buy that instead of private insurance, which then we’re paying high subsidies for the benefit of insurance companies instead of doing this. And, you know, in places in my state where 10 years ago people might have said, “Don’t bring that Bolshevik experiment into my county,” people are now saying, “Thank you for thinking of us first because we have no options for insurance.” And you’ve got a bunch of politicians in Washington who are making excuses every day for why they can’t fix our healthcare system, not to mention a bunch of other things that we should be working on.
Itkowitz: Senator Cassidy, you tried last year. You and Senator Graham put together legislation to repeal and replace the Affordable Care Act. The majority leader has essentially said there’s not going to be any votes on healthcare at least before the august recess. Do you have any reason to hold out hope for a repeal bill? And do you think it’s something that the Republicans should still be pursuing?
Cassidy: Let me, again, reconstruct your question a little bit.
Itkowitz: Sure. [LAUGHTER]
Cassidy: Arguably, when Republicans repealed the individual mandate we got rid of that which was considered most noxious about the Affordable Care Act. And, by the way, the individual mandate did not impact premiums according to Jonathan Gruber, the author of the Affordable Care Act. And indeed this year we’re actually seeing lower premium increases in the states, and this is the first year in which the individual mandate has been repealed. So you can argue that republicans actually have been able to achieve part of their goal and that which the public felt most noxious. But we’ve got to do something on healthcare. We’ve got to. Healthcare costs are exploding. One thing we are absolutely in agreement on is the need to lower healthcare cost. It’s important for the people sitting around the family table, the kitchen table; it’s important for state governments who have expanded Medicaid and now Medicaid is cannibalizing their budgets; and it’s important for the Medicare trust fund. We can hopefully extend the life of it if we can reduce those costs.
Now, I would love to partner on some bipartisan legislation that would help lower healthcare cost. It might be the price transparency bill that Michael and I are working on, as one example. It might be where you would allow states to combine their individual market with their Medicaid expansion population to create a pool with more numbers and therefore lowering cost by as much as 20% by taking out the uncertainty associated with small-risk pools. That would be another solution. I can promise you, if we do that, people are going to say, “Oh, Graham-Cassidy 2.0. Oh.” I can’t help that. All I know is we’ve got to do something to lower healthcare cost, the cost of insurance, the cost of the procedure itself, and I will talk with anyone in order to achieve that goal.
Bennet: And I completely agree. I mean, Bill and I sent a letter out asking interested parties to comment on how we could create transparency in our healthcare system because, you know, I used to be a school superintendent before I got here, and I never thought I’d see incentive and disincentives more unaligned from the stuff we were trying to achieve than I did there. And I found it in America’s healthcare system. And a big part of the problem is that for, I think, too many parts of this system opacity has become a business model. And the result of that is nobody knows what anything costs. Sometimes a person can figure out what they’ve been charged maybe but not what things actually cost. And there you don’t have to have a debate between Democrats and Republicans about what the role of government should be, what it shouldn’t be. This is just saying, “Let’s understand what the market is and see where we can reduce costs.” And anybody who has spent a night in a hospital or spent three hours on the telephone with an insurance company knows how much cost there is in the system that could be taken out.
Itkowitz: This panel went by so quickly. There are so many healthcare policy question to still be asked, but I did want to acknowledge that the two of you are working on this healthcare transparency issue together in a bipartisan fashion. And I know that you’re looking for answers from the industry and people in the community. I’m wondering where the process stands, what you’ve learned so far, if you can tell us in a quick 20 seconds?
Cassidy: We’ve gotten 800 pages of feedback, as Michael mentioned.
Cassidy: Our staffs are meeting together to try and come together. There’s about six of us, but there’s a broader group who are interested. Hopefully we can get agreement among the six to advance legislation; ideally that would be the case because we want it to be bipartisan. But already we have some components of it, for example, working with Susan Collins Claire, Claire McCaskill, Debbie Stabenow on eliminating gag clauses, as one example, where the pharmacist could tell the patient that she can save money by paying cash. So that’s one aspect of it. So we’re bit by bit but hopefully a whole piece ultimately.
Itkowitz: Fantastic. Did you have anything to add, senator?
Bennet: The only thing I would add is that I think it creates the opportunity for us to move beyond the kind of the debate that we started here with, which is, “Is this Obamacare or not Obamacare? What is it?” And just focus our attention where it should be focused, which is on how we can create a healthcare system in this country that actually works for the American people because the one we have right now is not working well enough.
Itkowitz: All right. Well, thank you both so much for being here.
Cassidy: Thank you, Colby.
Itkowitz: We really appreciate it.
Bennet: Thank you.
Itkowitz: That’s all the time we have. [APPLAUSE] I’m now going to be turning things over to my colleague Mary Beth Albright who is going to be moderating our next panel, so thank you very much.
Bennet: See you, everybody.
The cost of chronic disease:
Albright: Good afternoon. First rule of preventive care: do not drink other people’s bottles of water, so I’m replacing them for our new guests. How is everybody doing today? Great. Terrific. Come sit down, Dr. Nestle, Dr. Kessler. Hello.
Kessler: Good afternoon.
Albright: So I am Mary Beth Albright. I am the on-air food anchor for The Washington Post, and I am so honored today to have two titans of the industry with us here at Washington Post Live, Dr. Marion Nestle, professor emerita at NYU and author of several books on food politics; and Dr. David Kessler, former FDA commissioner. Dr. Kessler is also a pediatrician, also a lawyer, and author of many publications on nutrition as well. And today we’ll be examining the role of chronic disease and the role that chronic disease plays as a driver of healthcare spending and discussing how preventive care and lifestyle management measure tied to proper nutrition can lower costs. And if you have questions as before, you can tweet them to us using hashtag #Health202. So let’s get started.
Okay, look, so trillions every year are spent on chronic disease, on rising healthcare due to chronic disease. And in 2012 half of all U.S. adults had at least one chronic condition and 86% of healthcare spending was for patients with at least one healthcare chronic condition. These numbers have to be able to be reduced. Right? And so your work has been spent on figuring out how we get to this, to the nexus between chronic conditions and healthcare spending. And so my question for you is, if you were able—because you also study policy—and if you were able to have one or two policies that you think, and no holds barred, nothing in your way, if you were able to have one or two policies that you could make in Washington, D.C. about healthcare, chronic disease, reducing spending, what would they be?
Nestle: Well, on the macro level I would link agricultural policy to health policy and set up an agricultural system that produces foods that are healthy for us. On the micro level, much better food for schools and much better food for any childcare institutions—with a lot of support for that, universal school meals, absolutely.
Albright: It sounds like you’re talking a little bit about the farm bill.
Nestle: You can’t not talk about the farm bill. You cannot not talk about it because the farm bill is set up to do exactly the opposite of what I’m—it doesn’t involve healthcare at all. And the agricultural policy has to take health policy into consideration if we’re going to have dietary approaches to prevention of chronic disease that work. We have to have fruits and vegetables cheaper for people, more readily available, grown in places where we’re now growing—we don’t grow food in this country; we grow feed for animals and cars. And we need to change that and grow food for people that’s going to make them healthy.
Albright: I have a quote from you. I’ve been reading up on you.
Nestle: Oh dear.
Albright: Of course. Right? “Agricultural policy in our country is not only hazardous to public health and the environment but also to American democracy.”
Nestle: Ah, yes.
Albright: So you know that quote? [LAUGHS]
Nestle: That sounds like something I would say.
Albright: Yes, and we just had two members of congress with us. How do you connect that?
Nestle: Well, they’re talking about a healthcare system that doesn’t work for most people in the country, and both of them admitted that. And if we’re going to lower healthcare costs we have to have healthier people who don’t use as much of the healthcare system or need as much. And the way to do that is through lifestyle changes that involve—oh, it’s so boring—diet and exercise. [LAUGHTER] And that’s the problem; it’s boring.
Albright: Well, Dr. Kessler, you’ve done so much research on the brain and how the brain reacts to food and how companies work with the human brain to have it react to food. What would your policy be or, you know, any other reactions to Dr. Nestle’s comments?
Kessler: First of all, I think the problem is worse than we think. The more I study the effects of obesity, the real metabolic chaos that ensue in our bodies, I am struck. There are diseases that are not even listed on the CDC website that I think are associated with obesity. And yet I think the answer, I think if we’re honest, is we have no solution. We are clueless as far as what interventions work. Right? I’m not sure I know what to eat. I mean, I walk into an airport and I see there’s nothing, you know, if I’m hungry, I can eat. And I think we have failed in giving nutritional advice to people. If diet and exercise were the answer we’d all do it and there wouldn’t be a problem. It doesn’t work in the long run. We could talk for hours on what’s stimulating us, what got us into this problem over the last several years, but I would go back to the basics.
We spend literally billions of dollars throughout my different departments. I would go back to the very basics. I would set up international institutes of health. I know we try to avoid setting up new institutes. I think it’s time to set up a national institute for nutritional sciences. I would try to get answers to very basic questions. Is a calorie a calorie? Can I eat unprocessed meat? What’s the basis of insulin resistance and diabetes?
What’s going on with my brain? I think we have failed the American public when it comes to giving them basic information.
Albright: When you say “we,” do you mean the government? Do you mean the media? Do you mean the—
Nestle: The physical—
Albright: Do you mean science? Do you mean the food industry?
Nestle: The food industry.
Albright: Do you mean corporations that create food? Do you mean all of these things?
Kessler: I think we’ve created foods. I think we began processing foods in the 1920s, 1930s in order to feed a hungry nation to be able to ship our foods longer distance, safer foods in some way with food-borne illness, reduce costs, and I think no one has a clue the effect of processing on human physiology. Something has driven all of us to get bigger and bigger. And we’re leading the world and we’re exporting it and it’s coming from what we eat and we don’t fully understand it.
Nestle: Yeah, I’m not sure we have to fully understand it. We know that the United States agricultural system produces about twice the number of calories per capita than the country needs and those calories have to be sold and that people started eating more and starting in about 1980, people started eating more calories and the number of calories consumed increased per capita by somewhere between 300 and 500 calories a day and people gained weight. Not complicated. Some of that came from larger portions and some of it came from food marketing and just pushing food absolutely everywhere. If you eat more, you’re going to gain weight. I think we know what healthy diets are. They’re diets that contain a lot of fruits and vegetables, balanced calories that don’t contain a lot of junk food.
Kessler: So why don’t we do it?
Nestle: We don’t do it because we’re being marketed to the tune of billions and billions of dollars a year in every possible way and in every way that you described in your books about the way that that marketing reaches us in ways that we’re not conscious of. So we’re not even aware of the way we’re being encouraged to eat more all of the time.
Albright: So don’t you think that if there’s that kind of money being spent on research by corporations, that it would behoove us to spend that kind of money on prevention and that perhaps we have spent money on looking at prevention, because obviously, prevention is less expensive than trying to treat these conditions. And maybe we haven’t come up with how to prevent or how to circumvent whatever advertising is coming at us.
Nestle: Well, there are actually quite a lot of studies about interventions that work. There’s a real interest in childhood obesity as the place where people are really concerned about it and if you put restrictions on marketing to children, that works. If you had better food in school, that works. The soda taxes, reduce soda consumption. There are a whole stream of policies and catalogs of them that when implemented help individuals reduce consumption of the foods that make them gain weight.
Albright: So Mike on Twitter asks, “Is there anywhere you won’t cross in the quest for”—I’m sorry, I don’t quite understand his question. Let’s go on with the conversation. I’m trying to understand Twitter. So when I have sugar and fat in front of me and I’m trying to control that part of my brain, Dr. Kessler, one of the things that you’ve written about is that you have seen people on weight control drugs, such as fen-phen and they will say to themselves, “This is the first time I’ve ever felt normal around food. This is the first time I’ve ever felt I could control myself around food.”
Kessler: It was highly effective. It worked. It shut off appetite. We don’t fully understand.
Albright: And tell me about the brain.
Kessler: It certainly acted on those neural circuits and it was profoundly dangerous. Think about it. First of all, what are the circuits that are involved in eating? They’re the learning, memory, habit, and motivational circuits. Those are all if I’m stimulated—if that chocolate chip cookie is here and has power over me, right? That’s because of past learning, habit, motivation. Those circuits are the ones that are being affected. I can quiet down those circuits but what happens if I quiet down those circuits? What are the circuits necessary for? They’re not necessarily just for eating. You’re going to have to give me back five or six IQ points if I quiet those circuits. So that’s why. I was at the American Gastroenterology Association and the answer there was just drugs and more devices and more surgery. That can’t be the answer long-term.
The reason why they’re backing it against the wall is because they don’t have effective solutions to shut down our appetite. What’s gone on that stimulated our appetite so that we can’t stop?
Nestle: But the real question is what happened in 1980 that changed? Genetics hasn’t changed since 1980 but people are eating more. What happened? I would say three things happened. We overproduced food to a much greater extent that food had to be sold. The shareholder value movement on Wall Street meant that food corporations, like all other corporations, not only had to make a profit but they had to grow their profit. And we deregulated a lot of controls around marketing.
Kessler: Can I answer, Mary?
Kessler: We took fat, sugar, and salt. We put it on every corner, we made it available 24/7. We made it acceptable to eat anytime, right? We not only made it acceptable to eat anytime. Walk into any place to eat. It’s the way I have a good time, I can unwind, I can feel good. What do you expect to happen?
Nestle: If you eat more, you’re going to gain weight.
Kessler: But why do I keep on eating? There’s something that’s stimulating to eat that’s driving me to eat.
Nestle: Well, what changed between 1980 and now that didn’t happen before 1980 when the prevalence of obesity was much lower than it is now?
Kessler: McGovern had his report what year?
Kessler: And what did that report say?
Nestle: Eat less.
Nestle: Yes it did.
Kessler: No, if you read that report—
Nestle: Eat less sugar, eat less fat. The assumption was that calories would—
Kessler: No, if you look, it said, “Eat less fat, eat more carbohydrates.”
Nestle: But eat less sugar.
Kessler: Right, but it said, “Eat more carbohydrates and substituted carbohydrates.” We’re clueless on what’s going on.
Albright: Right, but where we are now is that 7 of the top 10 causes of death care from chronic disease. And where we are now is that we’re spending trillions of dollars in healthcare on chronic disease. That’s where we are now. So what do we do about that where we are now? What is the intersection between corporate health and public health? Because you have these corporations that are now built into the system of the way things work. We have a public health that is some people say, in crisis, and we have a media who is trying to give people information and we have you two, who are scientists and experts help us understand what to do about this, what some people call a crisis—about the rising cost of healthcare due to chronic diseases.
Kessler: We have to get very serious about nutritional research and take it up in quality. We have to figure out better methodologies. We have to understand our physiology so we can shut down or quiet down our appetites without simply drugs and extreme surgery.
Albright: And food, funding nutrition?
Nestle: I would say we need some policies that deal with the way that food is marketed; produced, marketed, distributed, and sold. That we need some policies to deal with that. I talk to a lot of food company executives and they all want to be part of the solution. They don’t want to be part of the problem, but they’ve got stockholders to please. Maybe we should—
Albright: And there’s food funding in nutrition research that you’re not so happy about.
Nestle: Well, there is corporate funding in nutrition research that I’m not so happy about because it skews the way the research comes out and the alcohol. It’s a study that just got shut down at NIH.
Albright: So how can they be part of the solution if they—
Nestle: They can make different kinds of products and market them differently and they’re looking at ways to do that, but at the same time, they’re caught because they’ve got stockholders to please.
Kessler: The fact is there’s something in the way we’ve been processing food that makes that food so highly absorbed so quickly. In essence, if you look at food is so highly processed, it goes down in a wash. It’s like we’re all eating baby food and it gets absorbed so quickly and you look at the physiological consequences of that. They’re profound.
Albright: We’ve been talking a lot about the chronic health issue of obesity and eating and excess alcohol. We haven’t gotten to the chronic issue of loneliness and depression and the immediate former surgeon general is taking that on as his public health crisis and how that factors into lifestyle problems: underactivity, overeating, overdrinking. We have a minute left, but—
Nestle: Let’s solve these. [LAUGHS]
Albright: Let’s solve the issue of depression. But I do think it’s worth mentioning and I wonder if you, before we leave this stage, have any advice to people in this room in various walks of life and particularly to the media about the way that we cover things.
Nestle: I would say food is one of life’s greatest pleasures and you don’t want to lose that in anything that you do. We have a lot of problems in society. Food connects to an enormous range of problems in society. That’s why it’s so important and I think it’s great we’re talking about it.
Kessler: Some of the neural circuits—and I know people will not—it doesn’t come naturally to think about this, but that chocolate chip cookie has power over me, right? I start thinking about it. It becomes front of mind. I can’t shake that. What’s depression? What can’t I shake? I’m a failure. I’m no good. Things are not going to get better. What becomes front of mind? They can be very salient stimuli and I think in the end, we need things that are better. We need better food that are going to capture us. There’s got to be something more than that chocolate chip cookie that I want. It’s hard to get there but there’s something more than hopelessness. The rancor, the anger, the political partisan; we need people who inspire us, to give us hope, the better angels. There are going to be people who are lonely, but this has a profound effect on what we’re doing in this town on our mental health.
And mental health that affects all of us.
Albright: Thank you. I wish we had more time. Unfortunately, that’s all the time we have today. Thank you, Dr. Marion Nestle. Thank you, Dr. David Kessler. Always a pleasure to see you and at this time, we will move onto the next panel. Thank you.
Content from Blue Cross Blue Shield Association: Improving health through personal touch, technology:
Serota: Well, thank you all for being here. I’m Scott Serota, the president and CEO of the Blue Cross Blue Shield Association. I’m joined today by Brenda Schmidt, the CEO of Solera Health and Pat Geraghty, the CEO of Florida Blue, the Blue Cross Blue Shield company in Florida and its parent company, GuideWell Mutual Holding Corporation. Sorry, Pat. We’ve heard a lot about chronic disease and how it impacts America’s health and well-being and from my perspective, we’ve heard a lot of theoretical conversation about it and theoretical solutions to the problem. We’re here to take a few minutes of your time and talk about what’s really happening and what we’re really doing in the market today as an example of how the private sector can and does intervene and try to make a difference.
Time is short, so I’m going to jump right into the questions. Brenda, tell us a little bit about your vision for Solera, how you got into the business, what inspired you, and then Pat, talk about how you interact with Solera and how you use them to help solve this problem in Florida.
Schmidt: And so Solera Health acts like a Match.com service to connect people at risk for diabetes and other chronic conditions with organizations delivering diabetes prevention and other types of lifestyle change programs in the communities locally. And patients see their doctors every day who give them advice about how to prevent or better manage diabetes and other chronic conditions and eat well, exercise more, take your medicine, sleep, lose a few pounds, and then they send them out into a world where that’s not very easy. And at the same time, there are thousands of community organizations who are primarily public health grant-funded programs who have these programs that can help, and they struggle to find individuals to participate in these programs. And Solera sits in that intersection. We work with about 24 Blue Cross Blue Shield plans to offer their members the opportunity to match them to these programs and services that can help them maintain or improve their health, where we always say, “Live, work, play, pray, and shop.” And so we’ve been extremely successful in that Match.com model where if we treat patients like consumers and say, “Based on your needs and preferences, how would you like these programs delivered in the community or digitally, they’ll do well, and they’ll really make a difference.”
Serota: Pat, how does that interface with what you’re doing?
Geraghty: Yeah, so we are doing a number of things in Florida. One of the things we have are retail centers where we have 20 locations around our state and in a retail center, you can either buy the individual product. You can do your member service, meaning you can actually present a claim and we’ll resolve it for people face-to-face. And then we have clinicians there who do health risk assessments, nutritional counseling. Solera is in 11 of our retail centers across our state. We also have a partnership with an organization named Sanitas, where we’ve built 11 medical clinics in the State of Florida. And Sanitas works with Solera on this diabetes prevention program. And already, we’re seeing that people who have completed a year in that program are saving about $166 PMPM from executing the program.
Serota: That’s terrific. Brenda, how do you interface with the community and the community groups and how do you bring them in? There are so many unique cultures in Florida, Pat. So how does that play into this and to your work?
Schmidt: I think it’s one of the benefits of our model because if you look at markets like Florida or Texas or California, those patient populations are extremely diverse and there isn’t a silver bullet or a single community or digital organization that can meet the needs of everyone. And so we look for those organizations that have built the capacity to deliver these evidence-based programs like diabetes prevention. But even falls prevention, tobacco secession, other types of non-medical services that can not only provide these services in a culturally competent language-specific way, but they have already engaged in their community and are a trusted resource. So if we can leverage those trusted local resources as a high access, lower cost network, I think we can make a big difference in chronic health.
Geraghty: I think the key to all of that is engagement. It’s how to get somebody involved in the process. So what we’ve seen as differentiating is having reasonable goals. What happens a lot of times is people set unreasonable goals and then failure is right around the corner. So have reasonable goals in place, have community-based partners. We use the YMCAs all across the state and with Solera as a partner working with the YMCAs, we’re now surrounding people with reinforcing models that help them stay engaged. The whole key to this is keeping people in a process where it’s an easy option and they’re being reinforced in every step of the way. That’s very hard for our current medical infrastructure to do, but other players like our plan, Florida Blue. Like Solera, like the YMCA, like the churches that we work with can wrap around folks that are trying to make a lifestyle change and help them get there.
Serota: And what’s in it for those community groups? What do you use and how do you keep them engaged once they start?
Schmidt: So I think for the community groups, many of these have been grant-funded or volunteered out of a church. And through our relationships with the health plans, we can actually reimburse those hyperlocal community organizations paid through medical claims. And that’s really hard. These organizations don’t speak payer and the health plans certainly can’t contract with thousands of hyperlocal community organizations who are delivering programs with individuals who don’t have any certification or credentialing. So Solera sits in the middle of that to allow the patients to access this network.
So they have referrals and since we’re sort of the Match.com. None of these organizations want the most people. They want the people who are going to do best in their program and then they have a sustainable revenue model and they can just do what they do best, which is deliver the program. And we take out all of the back-office messiness around compliance and data integrity and payment so that they can just do what they really want to do and what they’re good at.
Geraghty: Again, the key here is the hyperlocal. So when Washington, D.C. thinks about healthcare, often they’re trying to solve it at a minute level. What we need is a framework and then partnerships that are hyperlocal. Because healthcare is very much about what’s happening in the community and the health and well-being of the community is really about all of the things that we think about when we talk about social determinants. The things that influence people’s healthcare, only about 20% of it has to do with the care that they’re receiving. Much of it has to do with what zip code do they live in, lifestyle issues, and services available to them. Education, particularly early childhood education. So we invest in early childhood education in a very big way in our state.
Schmidt: Yeah, health behavior change is inherently really personal, and I think the opportunity to ask someone, “Do you want to go participate in these programs in the community? Would you like a digital app?” When you ask people that question, about 40% of them will prefer to go to a community location. So while there is certainly an opportunity to also network and integrate digital apps and digital therapeutics, that’s not the silver bullet here. People really want that human connectedness. Loneliness is a big factor for chronic illness. So the opportunity—these programs are delivered in group settings once a week for an hour in many instances.
So this isn’t something that happens cost-effectively at a doctor’s office. These things are things that happen effectively in a church or a pharmacy or a grocery store or a YMCA or other—
Geraghty: Scott, when we built our retail centers, many people said, “Why would you build brick and mortar? Everything is going online.” And what we say back is, “Why did Apple build Apple stores?” It’s about an experience. Healthcare is more expensive, it’s more complicated, and it’s more personal. So when we bring people into our center to have a dialog involving Solera, involving folks from the Y MCA and others, we’re having a dialog in a place that’s familiar to them with the right resources wrapped around them. And what we’re hearing back is our members are saying when they engage our retail centers, they are anywhere from 92% satisfied if it’s a customer service issue, and 97% satisfied if it’s a clinical issue. Those are numbers you just don’t get over the phone line.
Serota: In Medicare alone, just diabetes is a $42 billion problem. We only have about a minute-and-a-half, but what kind of impact are we really having, are we able to have, and where do you go next?
Geraghty: Well, I had mentioned before that it’s $166 per member, per month that we’re talking about having savings in the pilot group. So clearly, we want to expand this beyond the people that are currently in the program. That pilot was done in the Medicare space, but we also have the commercial marketplace where we’re starting to do some work and we’ll expand there. Florida is a very diverse place, as we were saying before. So we’re like five different regions minimally. So we have lots of ways to try and bring that culturally competent to the people in our state, depending upon which language they’re speaking, what’s their cultural heritage, and how they can access the information most effectively so that it sticks.
Serota: And how about Solera? Where do you go?
Schmidt: Well, CMS just made the diabetes prevention program a covered Part B preventative service for all Medicare beneficiaries April 1st because they showed that it was a $2,650 return on investment in 14 months. There are not very many other clinical programs that can show that sort of return in that time frame. So now we’re looking at expanding that model into other types of social determinants of health, food, and security—medically-tailored meals, eviction diversion, transportation. We think this model has legs to address lots of other factors that contribute to chronic illness.
Serota: It’s a terrific testament to identifying a problem and at a local focus, bringing resources to bear to solve it. And we’re very excited to see where you go next. Thank you both very much for your time.
Geraghty: Thank you, appreciate it.
Schmidt: Thank you.
Serota: I’ll turn it over to Washington Post.
One-on-One with Health and Human Services Secretary Alex Azar:
Cunningham: Good afternoon. I’m Paige Winfield Cunningham, health policy reporter and author of the Health 202 newsletter here at The Post. And I’m very pleased to be joined by Health and Human Services Secretary Alex Azar. Thanks so much for being here.
Azar: Thanks, Paige. Glad to be with you.
Cunningham: Secretary Azar has spent his career working in both the public and private sectors as an attorney and in senior leadership roles focused on advancing healthcare reform research and innovation. Today, we’re going to be talking about reducing healthcare costs, a topic you have been very vocal about. I know for the last few months of covering HHS. We’ll discuss a range of issues in this vein, from your plans to lower drug prices, advance Medicaid and Medicare payment reforms and offer lower cost health insurance plans. First, I’d like to spend a couple of minutes on the top line news this week about these migrant children and the administration’s zero-tolerance policy and I know we’ve had some breaking news just in the last few minutes, even of this order the president has issued ending his policy.
I think there’s a lot of questions right now since we’ve just heard this. Can you explain exactly what this policy is and what it means for HHS?
Azar: So what we do at HHS is we have an unaccompanied children program and the Obama Administration had it, the Bush Administration before it set up by statute and what we do is we take care of any minor children who enter the country unaccompanied, as the name—
Azar: As the name says, it’s for unaccompanied children and historically, those have been children who have come into the country by themselves or their parents are in another country, have sent them up here. And we run facilities and they’re provided education, they’re provided athletics each day, entertainment, medical care, dental, vision care. And on average, they’ll be with us for about 58 days and what our job is to work to find them sponsors with whom they’ll then be placed. Fifty percent of the time, historically, they’re placed with their parents. And about 40% of the time, they’re placed with other relatives, and about 10% of the time, non-relative sponsors. So that’ the history of how the program operates. And of course, now with the individuals who are entering the country illegally, being charged. Just like you or me, if we were charged and arrested, our children don’t stay with us if we’re in jail. They then become unaccompanied. And so any children who are coming into the country illegally with their parents were being given to us.
The president’s order today would say that he has ordered for the families that come into the country illegally to remain in the care and custody of the Department of Homeland Security and to remain together. So at that point, if the parents are not separated and sent to jail, if they’re there in a processing capacity and they remain with their children, the children are not unaccompanied, therefore they don’t come to HHS. They’re no longer unaccompanied children.
Cunningham: So this is basically reverting to the original practice? How is this different?
Azar: No, it always would have been the case if in the Obama Administration or otherwise, that if a child is unaccompanied, they would be sent to HHS for care and unaccompanied could be either because the parent has been arrested for violating the law or it could be that the child—if ICE or Customs and Border Patrol determine that even a parent with the child is for some reason, the child is in jeopardy or in any way at risk, that child could be then taken and be unaccompanied and given to us also. Those would be other circumstances. But with now the ending of the catch and release policy so then the individuals who enter the country illegally being charged, the kids become unaccompanied, they would become in our care. So under the executive order, now the president is ordering that the parents and the kids remain together so they don’t come over to our facilities.
Cunningham: So just to be clear, this influx of children that HHS has been handling, these children will no longer be placed under your care?
Azar: Again, if it’s appropriate for them to remain with the parents if they’re valid, if they confirm their parents, and if there’s no safety or jeopardy issue with them remaining with their families, then the president has said they stay together in DHS care and custody. They wouldn’t be unaccompanied, so they don’t come to HHS.
Cunningham: Okay, and did you yourself work with the administration on this executive order?
Azar: We get the children once they’re unaccompanied and take care of them. So immigration policy isn’t really what we at HHS do. That would be the Department of Homeland Security working with DOJ and the White House.
Cunningham: So you didn’t have any input into the announcement the president just—
Azar: So what we do is if we get kids, the unaccompanied children, we work to take care of them.
Cunningham: So what does this mean then for HHS? I know that you have several thousand kids that have been placed into your custody and there’s been a lot of talk this week about what’s happening to them. What does this mean now? Are you going to be starting today, this week, next month to try to reunify them? What does that mean for those kids?
Azar: So the vast majority of the children that we have in the unaccompanied children program are these children who come into the country totally unaccompanied. So either their parents have sent them here or they have just come of their own volition to the U.S. They’ve entered the country, they come into our care and we work with case management to try to find them sponsors and as I said, usually it’s with family members here in the United States and we’ll keep doing that work with the children who have come to us through the program where their parents have been detained and arrested and charged and then they’re hence unaccompanied and we’ll still be working on the children we’ve got to find them appropriate sponsors to get them placed.
Cunningham: Okay, but just to be clear on this, 2,300 kids that I know that have been separated I think over the last six weeks or so. What specific steps will the agency be taking to reunify these kids? And do you have confidence that you’ll be able to have the information to match them with their parents again?
Azar: Oh, so we keep in touch with the parents. We, even under any circumstance, are working to be always in touch with the parents to ensure placement with relatives; or if the parents are released, to ensure that they can go to the parents if the parents are appropriate sponsors if there’s no reason why the child would be in jeopardy. We’ll keep working to place them with appropriate sponsors.
Cunningham: But can you offer—I mean is there any timeline that you have? Is this something that you’re going to make a goal of, you know, this next week, the next couple weeks? How long will it take to—
Azar: Well, we are always working aggressively. We need to get the children out of our care as expeditiously as possible. We’re subject to a court order, a consent decree, to get them in proper sponsor care as quickly as possible. I said the average is about 58 days, and so we want to get them with appropriate sponsors as quickly as we can.
Cunningham: I also want to ask you about a report this week that they were showing estimates that HHS has lost track of 6,000 kids that were placed with sponsors. Are those numbers accurate? And if so, what is your agency doing about that?
Azar: So, the whole notion of “lost track” is just a false one, as you’ve reported. When we place them with sponsors, our task set by Congress is for us to place the children with sponsors, usually with a family member. At that point, they are subject to local and state child welfare protection procedures. We aren’t running a national child welfare, child protective services. They’re then placed with appropriate individuals—appropriate sponsors, and at that point, they’re in the system, and they’re subject to local and state systems for that. We’re not running a national child welfare system.
We have had a practice of calling at the 30-day mark the sponsors, to just check to see do they need anything, is everything okay—can we be helpful? And sometimes they don’t answer the phone. That’s the report—the numbers you’re citing are the sponsors who don’t answer the phone, and if we leave a message don’t call us back. It was a check-in call. “Do you need anything from us? Is everything okay?” They’re not in our jurisdiction. We can’t pull them back. They are under state and local laws. They’re with sponsors and in custody locally. They’re not, quote, “lost.”
Cunningham: What does Trump’s order today mean, then, for the plans that I know you had talked about the last couple weeks to increase capacity, and I believe you were trying to hire more workers to care for these young children. What changes now about that?
Azar: Well, the executive order was just signed, so we’ll be working on the implementation planning to see. In terms of moving forward, I would suspect we’ll still keep moving forward. It’s always good to have good contingency plans and make sure we have adequate capacity there to take care of the children. So we were working on additional capacity, and I think we’ll still keep working to ensure that we have flexible capacity. We tend to get more unaccompanied children generally, and we were already seeing this, during the spring and summer months—that’s just historic trend—and so we always are looking to make sure we’ve got adequate and appropriate capacity for—[OVERLAPPING]
Cunningham: But does this mean you don’t need to go ahead with some of those hiring plans and those plans to open more of these semi-permanent tent facilities and that sort of thing?
Azar: Well, as I said, the executive order was just signed, so we are working on that to determine what our needs are in light of that. We have a regular flow. The vast majority of the kids that we get are children who come to the country unaccompanied—totally unaccompanied, and we have to take care of them, and we need the capacity, so we’ll have to assess what our needs are there. That number has been on the rise, again, because of the need to change our immigration laws. I mean, we need Congress to act to change our immigration laws. We are still getting these kids coming into the country, and if they come in unaccompanied as minors, they’re going to come to us and we’ve got to have capacity to take care of them.
Cunningham: And do you support those policy changes? Is it something you think is a good order that the president issued?
Azar: So, nobody has ever desired to separate families. But just like for you or me, if you are arrested, your kids aren’t going to be with you. Okay, that’s why the message that I’ve said, the attorney general, the homeland security secretary have been saying is, “If you want to remain with your children, don’t come across the border illegally.” Because if you’re stopped, you’re going to be arrested, you’re going to be charged. Your children will then be separated from you, as they would be for you or me if we were arrested. So present yourself at a legal border crossing, make your case if you have a case to make. Hopefully you already have a visa. Come across the legal way or present to make any claim that you’re going to make for legal entry into the country in that setting. Don’t come across illegally because you’ll be separated from your children.
Now, with this change, the kids will be able to stay with their parents while they’re adjudicated—while they’re either prosecuted or adjudicated for deportation proceedings.
Cunningham: And, last question on this, have you visited any of these facilities where they were kept?
Azar: I have indeed. Yup.
Cunningham: Where and when?
Azar: I’m not going to disclose the particular facility. I think it’s not good that we have been having so much attention focused on them, and that can actually subject our children to risk. I don’t want to do that. I have in fact recently been to a facility, and as I said, the children are—these grantees who take care of these children have a deep passion and sense of mission for caring for these kids. I mean they are out in the child welfare business to make sure that these kids are well cared for. They are case managing to try to get them placed with appropriate sponsors. They’re providing them with education. They get medical, dental, vision; medical and psychological care and counseling. They’re getting their meals. They have athletics every day. So we believe we are doing our best to care for these children extremely well.
Cunningham: So do you feel as though you’ve been treated unfairly by—there have been a lot of criticisms charged in the last couple of weeks about how these children are kept.
Azar: I think once members of Congress have—the ones who have actually visited facilities and toured it, as opposed to those who are simply talking about it, I think they’ve been impressed by our grantees, the level of care and the quality of services provided to these children. We’re doing it under a consent decree, so there’s court monitoring, and I think we do it quite well, and we take the mission quite seriously.
Cunningham: Okay. Well, this is about healthcare costs, so let’s turn to that for a few minutes. I wanted to start off asking you about your efforts with Medicare payment reform, because this is something I remember covering a lot under the Obama administration, and they had set out a goal of tying half of Medicare’s payments to alternative payment models by the end of this year actually. Is that a goal that HHS is still pursuing?
Azar: So I actually was just meeting with the head of our Center for Medicare and Medicaid Innovation just today at lunchtime, where we were talking about the precise question—we want to formulate what our actual goal is for value-based transformation, what our metrics will be for, as I would say, X to Y by when, what would be the actual concrete metrics there.
I’m not sure that simply being in an alternative payment model—which was the metric the Obama administration used—is the one that I would find to be substantive and real in terms of transformation of our healthcare system. What I don’t want to do is have an approach where it’s a tag the base, hit a scorecard number, as opposed to we genuinely want to revolutionize how healthcare is paid for in this country in an outcome-based, health-based, non-procedure, non-sickness-based way. We’re working on that, and we want to try to get to real concrete metrics.
I’m just not sure—as much as I appreciate the efforts of both the Bush administration and the Obama administration in continuing this bipartisan drive towards value-based transformation, I’m not sure that’s the metric I want to adopt as the measure of success.
Cunningham: Then what should the metrics be?
Azar: Well, again, that’s what we’re working on. [LAUGHTER] I’ll let you know as soon as we get it figured out. Paige, I’ll tell you first. Okay? [LAUGHTER]
Cunningham: Please tell The Health 202 first, yes. [LAUGHTER]
Cunningham: Okay, so that aside though, are you going to set any specific goals or timeframes?
Azar: Yes, we will. I mean that’s how we lead, that’s how we execute. We will, but first we’re working on the concrete strategy for Center for Medicare and Medicaid Innovation that will also have dimensions for what we’re doing within the fee-for-service program and Medicare Advantage around moving towards value-based payment arrangements. Also for what we’re doing in our Center for Safety and Quality at Medicare and Medicaid, and for what we’re doing at the Office of the National Coordinator for Health IT, because interoperable health IT is of course a critical element of that.
But we’ve got an agenda that lays out four critical areas of change. The first is genuine interoperable health information technology. The second is transparency. The third is using the Medicare and Medicaid programs to drive fundamental transformation within the healthcare system, including in the commercial space. We’re the biggest payer in the world, and we want to drive that change. And then the fourth is removing any kind of government or artificial barriers to integrative, collaborative care, which is actually what you need to be able to deliver that kind of outcome-based care and payment.
Cunningham: Right. But as you know—so there’s a lot of talk about alternative payment models and people’s eyes glaze over. And there has been, I think some would argue, less progress in that direction than maybe many had hoped.
Azar: Well, listen, we’re talking about changing $1.1 trillion of spending in the United States just within government programs alone, and one-seventh of the economy. That doesn’t happen overnight, and I think what the Bush administration, which Secretary Leavitt, who started this, and then the continued efforts in the Obama administration are important foundational efforts. So we will build on that.
I think we are at the hockey stick moment, though. I do believe that we will, with bold leadership and willingness to, frankly, as the president allows us to, disrupt the status quo, actually hit a hockey stick moment of fundamental transformation in how we pay. We have already declared patient ownership of their interoperable health information, that when they show up, that should be theirs. And the metric will be, is their health information there when they arrive no matter what the provider is? Removing the barriers and having them be the owner of that information—not the physician, not the hospital, but their ownership. And providing vehicles like open API to enable apps to suck up that data and be genuinely putting the patient in the driver’s seat of that. Transparent information about price and quality.
We’ve already put proposals in our fee-for-service regulations, and I think that’s just the tip of the iceberg of where we need to and will go in terms of mandating requirements around price and quality transparency for patients. Through CMMI and otherwise, we will use our full authorities to drive change.
We’ll be putting out today information around Stark, asking for comment about how we can improve Stark restrictions that prevent, again, integrative care. Because I think one of the flaws of past approaches was that they incented common ownership. So because of the regulatory burdens around Stark and Anti-Kickback, the easiest way around that was to actually have common ownership—to vertically and horizontally integrate. And I’m not sure bigger is always better, as opposed to collaborative can be done virtually. I’d like to make sure that we’re agnostic to ownership structures. Let economics actually drive that, not our payment systems or our regulatory environment.
And could we have virtual teams? Could we put a procedure out to bid in the market, and not just an integrated hospital system be the integrator, but perhaps a physician practice group be the integrator from diagnosis through rehab of a procedure. I want to make sure that whole scale is available.
Cunningham: I want to step back for a minute and ask you a broader question about U.S. healthcare spending. So as you know, it’s 17.9% of GDP, projected to grow to 19.7% of GDP by 2026. Do we need to stem this growth? And is it even possible to identify—like what percentage of GDP should healthcare spending in the U.S. be?
Azar: Listen, I don’t know that there’s an objectively right amount of a percent of GDP spending that ought to go to healthcare, and frankly that’s the aggregation of individual value choices about wanting, you know, a garage on one’s house versus a type of medical care, and that aggregates up to a system. But what I do know is we’re paying twice as much as, say, the British pay for healthcare. We get great healthcare in the United States. Make no mistake about it. But is it twice as good? I don’t think so. We have a procedure-based, sickness-based system that incents more medical care. It doesn’t necessarily incent outcome-based, health-delivering care. So is it too much? Yes, it’s too much. We want to drive that percent down. We want to drive cost down across the full spectrum of services and products in our system. Again, I don’t buy into the notion there’s an objective number, but I objectively know it’s too high, just looking at good benchmarks.
Cunningham: And it seems like your job is especially challenging because we have such a patchwork system here. I mean compared to other developed countries, we have a whole patchwork system of insurance. You can pull levers with Medicare and Medicaid, but that’s only part of, you know, coverage for the fraction of the U.S. population, or a percentage. So how far can you go on your own in moving the needle as well?
Azar: So it’s a fair point, but I think that the challenge for us on driving change is offset by the patient being at the center of the system. The difference in economic speak is exit rights. The genius of our system is that, for the most part, patients have choice, and if patients don’t like what their insurer, as a key aggregator in the system—the choices that insurers make, they can often choose a different insurer. And that is a check in the system.
In other countries that have a single payer system, the check is only the political mechanism or revolution. I made that statement once at a speech in China and I was like, oops. [LAUGHS] But I mean, that is the check on the system. Whereas here, picking a different insurance company is the check. And, yes, it makes my job more difficult, but of course we have, through Medicare, the largest payer on earth. That is where we have, through the Center for Medicare and Medicaid Innovation, as well as just our payment regulations and the flexibilities that we have and the discretion that we have, the ability to drive I think fundamental change.
Let’s make no mistake about it, our healthcare delivery system is, in many respects, frozen in time from the mid-1960s, with an update in the early 1980s that really tracks Medicare. I don’t think it’s coincidental that the creation of first, the Medicare system as the largest payer on a cost-based reimbursement system, followed by a prospective payment fee-for-service model in the early ‘80s, then froze in place a system. You know, if you look at provider contracts with insurance companies, for the most part, they’re rather simple documents. They’re written 120% of Medicare fee-for-service. That’s the contract. They’re free-riding off of the payment regs that we do—or 80% of fee-for-service, whatever. So we do drive so much of the system, and so just the ability to change Medicare I think will provide the critical mass in the system.
Because look, even if you’re a major payer, in many markets, a company as big as a United, as big as an Anthem or an Aetna, they may have 2%, 3%, 4% penetration in a market, and so to be the first mover and actually drive fundamental change of the relationship with a major hospital system, they don’t necessarily have the market power to do that. We do, through Medicare.
Cunningham: I want to talk about drug prices now, because I know that’s a lot of what you’ve been working on in the last few months. And there seems to be widespread agreement, regardless of which party you talk to, that prices are just too high. But the disagreement starts over whose fault it is, I think. Who along the supply chain is most to blame for high drug prices?
Azar: I don’t think it’s productive to try to say “most to blame.” Listen, at the core of—
Cunningham: I was trying to pin you down—[OVERLAPPING]
Azar: Well, listen, who sets their drug price? The drug company sets their drug price. So in the first instance, the drug company is to blame for the price they set. They’re setting the price, okay? Nobody’s controlling that.
But then, it’s a very, very strange system that we have, just the way contracts have gotten written over the last couple of decades in the channel, that every single player in that channel—drug company, pharmacy benefit manager, and wholesale distributor—makes more money, given how the contracts are written, on a higher list price. And as the list price goes higher, they make more money. They will lose money with a lower list price.
And we’re facing that today, because, as I’ve said, we’ve had several major companies with major products reveal to us that they are looking at, and want to make, substantial and material cuts in their list prices of their drugs. They are facing challenges working through these contractual arrangements so that they are not put at an instantaneous competitive disadvantage by having a lower price. Because of the way contracts are written for remuneration is a percent of that list price.
I think it will work out. I think it is such a good thing if list prices can be lower that the players in the system—I think the major employers and the major insurance companies including the folks who were just sitting here before us, I think will demand that everyone figure that out. They’re adults, they can figure this out. Contracts can be written and reformulated to make this work. And it’s good for patients. That’s a voluntary action.
But of course, we have a comprehensive, I think revolutionary agenda for driving that to happen, so I’m not—listen, if they do it on their own, that’s great. They’ve heard the message. The president’s made it clear where this system’s going. Like Wayne Gretzky, they can skate to where the puck is going, great. But that puck is going there, and the rest of our agenda is to drive it there.
Cunningham: So does this necessarily mean getting rid of—would you advocate for actually getting rid of rebates, and how can you do that within your capacity as—
Azar: So I have said before that I believe that under the Anti-Kickback Statute, which created the rebate safe harbor for pharmacy benefit managers that what one creates, one can take away. I think that that is a reasonable and appropriate response. We need to look at that. There are complexities there. We would want to get comment on that, because that is, of course, restructuring an entire segment of the economy and how that works.
Cunningham: And you’re just talking about how this applies to Part D plans?
Azar: Primarily, the Anti-Kickback Statute would be Part D, but I don’t want to conclusively state the full reach of our regulatory authority or the import of the Anti-Kickback Statute.
Cunningham: So should we be—
Azar: I wish to be deliberately ambiguous there. [LAUGHTER]
Cunningham: Well, so, you’re taking steps toward that end? You said you’re looking into it. Should we—
Azar: We are indeed working on that—looking at how one would move to, as I said, a fixed-price discount model, to look at that instead of a rebate model around pharmacy benefit manager pricing.
Cunningham: And that’s something that could be done through the regulatory process, so it would be a proposed rule?
Azar: I believe that’s something that we could look at through rulemaking, of course, under our authorities under the Anti-Kickback Statute. I’ve said this all publicly before, and that’s in the blueprint. It’s in the president’s blueprint that we want to look at and seek comment on moving towards a fixed-price discounting model in the pharmacy benefit manager arrangement.
We also, importantly, would like to look at banning all remuneration to pharmacy benefit managers from pharma companies. Because right now, if you’re a pharmacy benefit manager, you’re making money on the rebates that you’re getting. You may be holding back a bit of that, again, based on a percent of list price. You’re also making money on administrative fees, which again are based as a percent off of list price. And there may be other remuneration in there. And I believe it is a legitimate topic for us to discuss and to consider, to ban all remuneration from the very entities you’re supposed to be banging on to get the best discounts and lowest prices possible. The pharmacy companies instead receive all of your remuneration from the entities who you’re serving, your customers.
Cunningham: Your boss, President Trump, recently said that there would be quite immediate results from the plan to lower drug prices. Is he overpromising here? How long is it going to take to implement some of these strategies that would then have an effect on the price of drugs?
Azar: So obviously I’m not going to preempt any announcement by the president or otherwise. I did mention to you already that there are many drug companies who would like to lower list prices and do so rather quickly, and they’re working through, frankly, the difficulties of the system and the channel. I remain hopeful that the players in the drug pricing channel will all work together to make this happen because it is an undeniable good for patients. But that again is part of the plan—I mean that’s part of what could deliver lower prices. But we are driving forward on an aggressive agenda that’s part of this comprehensive plan. So we’ve already—
Cunningham: But have you, yourself, talked to drug executives about any announcements they might be making?
Azar: We are working to ensure that we remove any barriers to lowering list prices if we stand in the way. We want to make sure that we’re not standing in the way of any of that. And so we’re trying to drive that forward. Because if that—we want lower drug prices. We want lower list prices. We want better negotiation for drugs through our programs. We want lower out of pocket spending by patients, and we want more competition.
So we’ve already—historic levels of generic drug approval by FDA. We’ve changed our payment formula in Part B, which is the infusion drugs that save seniors now $320 million a year of their out of pocket spending by changing the reimbursement formula there. We have already gone after the abuses by drug companies, the branded drug companies, to prevent generic entry through abuse of these so-called “REMS” or safety programs. We’ve spotlighted the companies who were doing it. We’ve put out guidance making it clear that you cannot hide behind these safety programs to prevent access to your drug, to the generic, to do their quality testing. So we’re driving this agenda forward very quickly already.
Cunningham: One more question on this, though, and there was a lot of talk about how pharma stocks actually rose after Trump’s drug pricing speech in May, and your critics have used this to charge that you’re going too easy on drug companies. Are you?
Azar: Almost every sector went up that day, so I don’t know that we had any impact on the entire S&P or Dow Jones that day. Listen, judging your success or failure on the stock market daily and hourly price variations would be a foolish enterprise. The core of our policies are strong. They’re actually revolutionary. We are seeking nothing short of the complete rewiring of the drug pricing and drug reimbursement system in the United States—nothing short of that. Those who actually know, this is rocket science. This is a very complex area.
And those who have actually studied the blueprint say how sophisticated the president’s approach is, that this reflects a deep, deep knowledge of how drug pricing, how drug reimbursement, how pharmacy and pharmacy benefit manager negotiation works, and the varied odd incentives in that system, and how to get at them in a very micro-targeted way, and that this reflects that. And that’s why, frankly, your average stock analyst or other—it’s going to be very hard to see the import. Our job is to deliver on it. We’ll show you. The proof will be in the pudding of results.
Cunningham: I want to talk a minute about the price of insurance plans. And of course yesterday we saw the final rule on association health plans. But I have been struck by the number of health industry groups and patient groups that have expressed serious concerns. So if these are such a great idea, why are you seeing such pushback from the industry?
Azar: Well, listen, I’m sure the concerns are well founded and well meaning, but our concerns are also well founded and well meaning. We’re not only concerned about the people that are in the individual insurance markets, and are they getting quality insurance and insurance that’s affordable and not just affordable to acquire but affordable to use? Is it genuine insurance for the 10 to 11 million people in that individual market? But also, what about the 28 to 29 million people who are now priced out of, and are not able to get individual insurance because of the failings of the affordable care market?
You know, 86% or so of the people that are in the individual market are being subsidized for their acquisition of insurance by us. What about the people whose income puts them just over that limit? The forgotten men and women, 28 to 29 million—they cannot afford this insurance, and even if they could afford it, it would make no rational sense for them to buy because it doesn’t deliver a product that is financially sustainable. To spend $15,000 for an insurance package that has an $8,000 deductible when you make $50,000 or $60,000 as a family of four makes no sense for them, and they’ve told us this by their actions, as 6.7 million Americans have paid $3.3 billion of the individual mandate tax to not buy insurance that they can’t afford and do not want.
And so we’re trying to make options available for them, whether it’s association health plans or short-term limited duration plans—we’re trying to give people a range of options and choices. And we do not believe that it undermines that individual market that is already in there, because you effectively have a subsidized market. The individuals in there, we’re helping them to buy their insurance, and having another option in there is very unlikely, we believe, to draw people from free insurance over to something else.
Cunningham: Do you think this will worsen the marketplaces, though, because it will presumably draw healthier people out, and—
Azar: I don’t believe it will do so in a material way, because the people that are in that market right now are subsidized. These are individuals who are already being subsidized to get it, so why they’re going to move from being subsidized to not subsidized and have to buy insurance. So for that 84% to 86% of people in that market, I don’t see that. Reasonable minds can differ. I do not see that. Just as a behavioral matter, it makes no sense to me.
Cunningham: Because there have been some estimates that, so, you know, if you have the sicker people left in the marketplaces, pushes the premiums up, actually causes some population to actually go uninsured because of the prices in the marketplaces.
Azar: That is the system we have and that is exactly why for the entirety of the Affordable Care Act’s history, rates have been going up, and why for the last five years, they’ve I think effectively doubled—is that is exactly the system we have now, where you have either people where we’re buying their insurance, or you have a sick risk pool that’s sitting in there that’s there. And so your healthy have left. It is the healthy that have left, and so you’ve got healthier, younger people that are out of that market. They’re not there. They are not there to leave that market. And so a lot of the analytics I think are based on a false behavioral assumption. They’re sitting out there. They’re uninsured. They’re doing exactly what I said. They’re paying a penalty to not buy insurance they don’t want and can’t afford.
Cunningham: The other prong of what the president was pursuing in terms of the leaner cheaper plans was expanding short-term health plans, and I believe there was a proposed rule on that already.
Cunningham: When can we expect the final rule on that?
Azar: So we’re working as quickly as possible to consider all of the comments and decide on issuing a final regulation there through the rulemaking process. So we’re moving as expeditiously as we can through that.
Cunningham: Okay. That’s a good non-answer. [LAUGHS] So in November, you’re going to be presiding over the first open enrollment season. And as you know, enrollment last year was actually better than a lot of folks had predicted, despite some of the cuts to advertising and the navigators. How are you going to approach this year’s signup season? Is your goal to maximize enrollment? Can you share some of your thoughts?
Azar: Well, listen, I was very clear through the confirmation process and I’m very clear otherwise, is I do not like the Affordable Care Act. I don’t think it’s working for people. I think we need a different system that is both sustainable and offers affordable options for individuals. We want people to have insurance. We want them to have affordable insurance. I don’t think the Affordable Care Act delivered on that promise.
That being said, I’m the secretary of health and human services. As long as that program remains on the books, I am going to faithfully operate it, and I’m going to do so in a way that delivers as good of care as we humanly can for people and as affordable insurance as we can. And we will work to get people enrolled, make sure that they know the options, and get them enrolled if it’s an offering of interest to them. So we’ll be working diligently to make that work, and I think what we showed last year is that there are very efficient ways to target and get people in, as you said, with radically less spending, more efficient spending—especially a program that’s now more mature and well known. It was the most efficient enrollment season ever.
Cunningham: Do you have any goals, though, to exceed enrollment from last year? What would you view as a success or a failure?
Azar: We’d like as many—well, success for me is people finding that insurance is affordable, available, and they want to use it. And so if more people end up finding an offering here that they would like, or through the other alternatives that we’re able to offer, whether it’s association health plans or if we have additional short-term limited duration plans, or any other offerings, it’s people finding affordable insurance that we’ve been able to somehow connect them to. That’s success.
Cunningham: So you’ve said the ACA is law of the land, but do you back DOJ’s recent refusal to defend it in court?
Azar: Of course I support the Justice Department’s conclusions there. Again, that’s a constitutional, and then followed by statutory argument of just interpretation around whether you sever these other provisions along with—are these other provisions inextricably connected to the individual mandate?
And I need to remind people—this hasn’t been reported on, so you know, big news—the Justice Department’s position on severability of the individual mandate is identical to what? The Obama administration’s position in the Supreme Court. It is the same position they took in the Supreme Court litigation around the individual mandate, that if you were to strike down the individual mandate, the guaranteed issue and community rating are inextricably connected to the individual mandate and must fall as a matter of statutory interpretation. So again, this is a constitutional statutory judgment by the attorney general, court filing. That’s just a matter of interpreting the state of play on the statue.
Cunningham: Well, unfortunately, that’s all the time we have for today. I’d like to thank Secretary Azar for joining us, and it’s been a great conversation.
Azar: Thank you, Paige. Great to be with you.
Azar: Thank you. Thank you all.
Cunningham: If you want to watch any interviews from today or past Post Live programs, you can head over to WashingtonPostLive.com. To all our viewers, thanks for tuning in.
Azar: Great. Thank you, Paige. Excellent.
Cunningham: Thank you so much.