June 9, 2016
Remarks of CMS Acting Administrator Andy Slavitt at the Marketplace Innovation Conference
Remarks of CMS Acting Administrator Andy Slavitt at the Marketplace Innovation Conference
Marketplace
Innovation Conference
Welcome. And thank you for coming to a session that allows us to
look at a deeper level at what is happening inside the Health Insurance
Marketplace. And I'm not talking about what's in the headlines, but below the
surface-- what's happening with millions of Americans as they get coverage--
many for the first time-- and also how the system is adapting. At the same
time, the consumer is beginning through the Marketplace to shape many of the
changes in health care as they make decisions about the coverage and care they
want. My focus today isn't really just on the success stories, of which I see
many, but on the lessons we have learned and are still learning from what's
going on inside and across the Marketplace.
I stood up here a year ago and reflected on another program
which served millions of people as it reached not its third year of operation,
but its 50th-- the Medicare program.
Before it became the beloved program that millions of Americans
rely on for their health and financial security, Medicare had, for those of you
that know the history, fairly controversial beginnings and has gone through a
number of evolutions. In large part, Medicare has been successful because it
has adapted to the progress of medicine and the needs of the consumer, moving from
a medical benefit to prevention to the pharmacy and now to coordinated care
models. Medicare today is not only a leading force in value-based care, but it
also offers widely popular consumer choice and competition for services and
benefits from private plans across Medicare Advantage. The Health Insurance
Marketplace, in many ways, picks up right there, bringing private sector
competition and services to make health care available in an even more open
market fashion-- and creating greater opportunities for us to learn to serve
consumers successfully.
As I reflect on the progress of the Marketplace, I will cover
three important topics:
-First, that the Marketplace is succeeding by almost any
benchmark, but it is still in its early trial and error stage. Progress
won't be even and for the first five years, we will continue to be in a
learning and experimentation period-- where a lot will be tested before best
practices are more widely developed.
-Second, that the Marketplace, stepping back from the daily headlines,
is a highly strategic opportunity for those who see health care evolving into a
more B2C market to create new competitive advantages.
-And, third, is that even though we are in the learning and
experimentation stage, we are confident we have the tools to make sure the
market is stable and succeeds for the long term
Success but Early
Secretary Burwell talked this morning about how far we've come
thanks to the ACA and thanks to so many communities across the country--
the many physicians and clinicians, consumer advocates, assisters, health plans
and hospitals who have worked together to have a remarkable impact. We've
brought the uninsured rate to a record low and for the first time, our
country is providing access to care for people regardless of their medical
condition or how much money they make. Competition has worked to create
more affordable choices. Last year, as 4 million new consumers signed up
for coverage, over 90 percent of them had an average of 3 insurance companies
to choose from, translating into 50 plan options. Two-thirds of HealthCare.gov customers had the option
of selecting a plan with a monthly premium of $75 or less after tax credits.
And thanks to tax credits, consumer's rate increases averaged only 4
percent.
But more important is what consumers are getting for their
money. Commonwealth reports that consumers say they can afford primary care and
prescription drugs they just couldn't afford before. And a good-sized majority
are satisfied with their coverage. So we are beginning the process, in
community after community across America, of re-connecting consumers to the
health care system. Employer-sponsored coverage has not been disrupted and
yet employees now have options to move jobs without fear of their families
being unable to afford and obtain coverage. And contrary to what some headlines
may suggest, the Marketplace has launched at and maintained costs well below
CBO estimates. This is true for both consumers and the government-- even
as we provide care more comprehensively and to many who had conditions that had
gone untreated.
While this represents a good start, we are in the very early
stages-- particularly, in the context of how programs like Medicare
developed. And the Marketplace is right in the middle of what i will
call a 5 year "learning and experimentation stage." During these
early years, consumers are getting educated about their options, while market
participants-- payers and care providers-- learn their needs and experiment
with the best ways to meet those needs. We are hearing promising approaches
every day. But it's not every day, or even every decade, that a new market
totaling in the $10s of billions of dollars is created and launched across the
country-- and in places as diverse as rural North Dakota and Center City
Philadelphia-- where consumers have a diverse set of health needs, languages,
cultures and incomes. So today, I hope we recognize that while we have learned
many things, we are still only in this first stage of learning how best
to bring affordable high quality care and service to this new market.
Strategic opportunity with consumerism
A fair question is why is it worth investing in all of this
learning in all of this experimentation to serve the individual consumer
market.
What makes the Marketplace an important strategic opportunity is
very simply how squarely it puts power into the hands of the consumer. I
mentioned this when I talked about the development of Medicare into Medicare
Advantage and Medicare Part D, but the Marketplace is consumerism in the purest
form. Over the years, the consumer has been much talked about but had very
little power to shape what they wanted and paid for. There have been a
lot of forces over the years that have shaped health care. Until now, everyone
but the consumer has had a say in it.
The Marketplace gives the consumer a voice they have never had
before. And every day, the Exchange gives us unprecedented insight into how
consumers behave and what they want from the health care system. There's a
short list of learnings and a far longer list of things to be learned.
Let me start with some of things that we have learned.
-First, Marketplace consumers are much more engaged and
increasingly educated about what they purchase particularly compared to other
health care consumers. 70percent of renewing consumers on the Federal
exchange-- seven-zero-- came back to the exchange to proactively
choose a plan instead of opting automatic enrollment. That creates
millions of opportunities for consumers to find the right offering at every
open enrollment. As they say in my home state of Minnesota, the hockey
capital of Minnesota, many more shots on goal means more opportunities to
score-- useful as plans experiment with different offerings.
-The second learning is that many consumers actually want
to shop for their health care, in addition to their health coverage. Last year,
the Marketplace began to offer consumers the option of selecting
plans not by looking at the plan first-- but by first finding
a hospital or physician or prescription . . . then looking at
which health plan offers them. Even in a pilot year, consumers chose this path
3.6 million times in just the 38 Federal marketplace states.
-Third, consumers want access to routine services without
a deductible, with 8 in 10 consumers selecting plans which provide direct
services outside of their deductibles like primary care and generic drugs.
Health plans are responding in what I think is a promising early example of the
consumer shaping a need and the market fulfilling it.
-Finally, consumers are saying loudly and most clearly that affordability
matters more to them than it does when they select a plan through an employer--
and is the most important concern. 90 percent of people have selected bronze or
silver plans. And those large number of consumers who came back to shop?
Those who switched plans saved over $500. So if consumers want savings, what
are they willing to compromise on? According to a recent Kaiser Family
Foundation report, consumers would much prefer a narrower network to a higher
deductible or higher premium. This needs to be explored more as it opens the
door, not just to narrow networks, but to innovative contracting and network
strategies. While we have long wrestled with affordability as a
country, the Marketplace allows us to see it in a new way-- through
the eyes of a consumer as they seek out high-quality care they can
afford. And that reminds us-- the millions of us who work in health
care-- that affordability and affordable care must be a part of everyone's job.
So, while we've learned a lot about consumer preferences, there
is still a longer set of questions that can be explored and experimented with
over the next two years. And here are seven of mine but I know there are many
others.
-How do we reach out to and connect with communities that are
still left behind?
-What role will quality ratings and consumer reviews play
in shaping the market and in improving quality as they are piloted and
promoted?
-What role will exposing the actual cost of services play in
consumer decision making and in increasing affordability?
-Will consumers choose the ease of a more standard set of
"simple choice" benefits or will they opt for more
customization?
-What about consumer loyalty? Working on health means
building relationships with consumers and I expect this to be a big area of
learning. There are examples of highly active markets where people can switch
frequently, like cell phone service, music subscriptions or auto insurance.
Competitors in those areas have found innovative ways to build long-term
loyalty. Several companies are aggressively experimenting on the
Marketplace. One, Centene, with its Ambetters product, offers a loyalty account
to consumers and deposits money for consumers to use towards deductibles,
coinsurance, and other health care spending.
-Next, what are innovative and consumer friendly ways to help
consumers manage the costs of care -- particularly in rural or other
under-served locations? Companies are experimenting with enhanced primary care
access, telemedicine, personalized health interventions, and other approaches
you've heard today. These innovations will be ripe for scaling well beyond the
Marketplace.
-Finally, what Marketplace specific contracting approaches will
create aligned incentives and reduce the underlying unit costs that are a
significant part of a consumer's premium? Health plans must be successful
in partnering with hospitals-- who have seen a significant benefit from the ACA
in reduced bad debt and increased patient flow-- to lower the cost of care for
consumers.
The point is that consumerism brings a trial and error phase
with new approaches to everything from network strategy, to care management
models, to new product approaches, benefit designs and new customer retention.
Many of the companies in this room and a number of others have found success
and have passed that on to consumers in the form of lower and more predictable
costs and innovative services. Others haven't yet but are beginning to follow
best practices or look for other competitive advantages. And some will end up
as more pure B2B companies. In the age of Uber and the consumerization sweeping
our economy, we need to allow everyone the opportunity to innovate in this
space. Outside of health care, the B2C economy has upended businesses
like stock trading, travel and even data storage that once had only a
limited consumer presence but now give consumers the ability to do for
themselves on their mobile phones what they couldn't before.
For a number of health plan CEOs that I talk to, their view of
the Marketplace represents the opportunity to accelerate their organizations
into this B2C world and get in synch with consumer demands as many of them see
health care continuing to shift across all areas from B2B to B2C. In our
notice of rulemaking last year, we asked explicitly for ways we could make
innovation and testing of new ideas and approaches easier and must look for
more opportunities and flexibilities ahead.
Market Stability
Finally, as in all markets, strategies won't succeed the first
time, every time. Over the course of these five years, we need to allow for
continued experimentation. But problems that have plagued certain health care
markets for years, lack of access, higher prices, poor social determinants of
health also won't get solved overnight. Unlike the Medicare program, the
Marketplace is a complete private-sector solution to covering the uninsured and
competition and innovation take some time to work. Gaps, like low competition
or higher costs in some rural communities that have existed for years, will
remain and be even more visible while we all work on solutions to address
them.
Part of our job in the Administration and overseeing the
marketplace development is to create a predictable and level playing field for
consumers, health plans and care providers and to create stability in these
early years, even through these natural bumps and to allow for this
experimentation.
Even as the market signs up millions of new consumers in record
numbers, we are paying rigorous attention to adjustments that are needed as the
Marketplace matures. We have an experienced team of career operators and
actuaries, who have come from both the private sector and directly from our
Medicare Advantage and Part D operations where we know how to set up and
operate large successful marketplaces with a variety of risk structures. This
team studies the data and meets regularly with all market participants and
takes a strategic view to determine what adjustments are warranted.
This past January, I committed to complete a thorough review and
making of adjustments on what we have learned to date. And over the past
several months, we have taken a set of actions which strengthen the risk pool,
limit upward pressure on rates, and provide a strong foundation for the
Marketplace for the long term. This process is a continual ongoing
commitment but we have made meaningful progress so far.
-First, we systematically review our policies towards
Special Enrollment Period (SEP) sign ups. We eliminated many SEPs that were
unnecessary or subject to abuse, clarified the process and added validation
requirements and enforcement for those who have a need to enroll during a
SEP.
-Second, we have proposed steps to align risk adjustment
to account specifically for consumers who may need Marketplace coverage for
only a partial year, reducing the unintended consequences. One of the aims of
the Marketplace is to be there for people when people need the coverage and
when people find work, insurance companies shouldn't be penalized.
-Third, we have proposed further enhancements to
risk adjustment so health plans can invest in serving sicker, hard to treat
populations. This begins with incenting everyone to invest in the data and
analytics to understand their members better.
-Fourth, we are providing health plans with earlier and
better information for rate filings to reduce surprises and help them better
predict the cost of medical care for enrollees and price their policies
appropriately.
-Fifth, we have announced several actions that both help
consumers get or keep the right coverage and improve the risk pool: by closing
short term coverage loopholes; by significantly improving our Data Matching
process to prevent consumers from unnecessarily losing coverage; and, by improving
the transition for Medicare eligible consumers out of the exchange and on to
Medicare.
-And, of course, in recognition of the still early stage we're
at with the end of the 3-year reinsurance program, the one-year tax holiday of
$13.9 billion will also help stabilize premiums next year.
And later this year, we will talk about our innovative effort to
focus on reaching young people in the fourth Open Enrollment period.
These changes will give health insurers, supported by state
departments of insurance, the ability to become more confident in putting
together affordable offerings for consumers as they finalize rates over the
summer and fall. And more broadly, as new areas emerge, I am highly confident
in the focus and expertise of the career staff at CMS, and at the tools at
their disposal, to continue to make the Marketplace attractive, stable and
successful.
Close
In closing I would just like to emphasize a few points. I
originally came to CMS to help lead the turnaround of HealthCare.gov
and participate in the implementation of the Affordable Care Act. Thanks to the
passage of the ACA, we have finally moved past the place where many of us have
spent our careers-- in debates about how we might address the uninsured or
improve care, to a time when can now get busy actually covering people. It has
been and is uniquely rewarding to be a part of. But health care didn't
automatically become affordable and accessible the day the law passed. It has
taken incredible effort to see a system that hasn’t changed in a long long time
begin to build this new market, but much more will be learned before best
practices are more harmonized.
For all our success
to date, new coverage must only be the start of things. We have the opportunity
to change health care in America like we did 50 years ago at the dawn of
Medicare and Medicaid, back when 1/3 of seniors lived in poverty to a time,
now, when less than 10 percent of seniors live in poverty. And if we learn and
experiment in these early years, we are just getting started. And part of the
next leg of the development is not just how people's lives change in profound
ways, but how the consumer can force changes on the health system that
wouldn't happen-- or happen as quickly-- otherwise. Progress won't be a
straight line, but we are committed to working side by side with all of you in
what will have far reaching impact to improving health care across this
country. Thank you for all of the incredible hard work and innovation.
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