American Enterprise Institute Health Care That Matters: Real Choices For

American Enterprise Institute Health care that matters: Real choices for real competition Introduction: Thomas P. Miller, AEI Address: Promoting choice and competition Brian Blase, National Economic Council Panel I: Revisiting and redefining choice and competition Panelists: Jeff Goldsmith, Navigant Healthcare Mark Hall, Wake Forest University Scott Harrington, University of Pennsylvania David Hyman, Georgetown University Barak Richman, Duke Law School Moderator: Thomas P. Miller, AEI Panel II: Can choice and competition theories work in practice? Panelists: Rajiv Bhatt, HCG Cancer Centre India Neil de Crescenzo, Change Healthcare Lewis Levy, Teladoc Health Tony Miller, Bind Thomas Moriarty, CVS Health Moderator: Regina Herzlinger, Harvard Business School Introduction: Michael R. Strain, AEI Address: A new direction for health care: Choice and competition Alex Azar, US Department of Health and Human Services Discussion and Q&A: Alex Azar, US Department of Health and Human Services Thomas P. Miller, AEI 9:00 a.m.–12:50 p.m. Tuesday, December 4, 2018 Event Page: http://www.aei.org/events/health-care-that-matters-real-choices- for-real-competition Thomas P. Miller: Good morning, everyone. Welcome to the American Enterprise Institute. Our conference today is “Health care that matters: Real choices for real competition.” I’m Tom Miller, chief entertainment critic for health policy here at AEI. Here’s what we’re going to do today. Yesterday, the Trump administration released its multi- departmental report on reforming America’s health care system through choice and competition. We’ll start with an address by Brian Blase, the White House adviser on health policy at the National Economic Council, about how the report came about, why it’s needed, and what sort of policy reforms based on greater choice in competition could help provide higher-quality health care at more affordable prices. Then we’ll hear from two different panels. The first will take a closer look at what a more fleshed-out approach of enhanced choice and competition could accomplish, of both its potential and its limitations. In other words, as those of us in the think tank and academic worlds usually reflect, even if it works in practice, should it work in theory? Our second panel will dive deeper into current health care markets with real people in real businesses, highlighting what could be done differently in delivering care and improving health outcomes and actually succeed — not that some better public policies wouldn’t help in making it come about. Finally, we’ll wrap up at a high point with a very special keynote address by Health and Human Services Secretary Alex Azar. Then we’ll link the administration’s policy aspirations with the concrete steps that it’s taking and will continue to pursue in regulatory and reimbursement reforms to deliver change that matters. Before we start the more technical, higher-level, and sophisticated portion of today’s discussion and analysis, let me just set up a more stripped-down oversimplification of the current context for health care and health policy with regards to choice in competition. Or as I usually call it, my opening monologue. First of all, we’re not all working from the same dictionaries. Similar words and terms don’t mean the same to everyone. For example, a more government-centric, top-down view of getting from here to somewhere in health care for once in future kings of health policy might prefer very straight lines. There are less flexible regulatory approaches. They’ve had difficulties in fitting those meddlesome square human pegs into round bureaucratic holes. “Probably needing more hammers” is too often the habitual response. A differing view of more limited competition in health care tends to favor dominant incumbents and protect them by pulling up the entry drawbridge before potential competitors can storm the castle. Views of competition and choice can be shaped and limited by some other overriding goals, like protecting the sacred relationship between doctors and payments. Now, many high-minded health policy reforms come up a little bit short when they commit one of the classic blunders. Not blunder number one, never start or get involved in a land war in Asia. Not blunder number two, never try to match wits with a Sicilian when death is on the line. But number three here, never go up against red medical pirates when money is on the line. A very different though older perspective on health care regulation would argue that bigger is more beautiful and better, if only those who first succeed are not later tied down and hampered by smaller minds with too much red tape. More recently, we’ve seen stronger incentives to grow bigger in various sectors of health care, arguably to gain leverage over opponents or to absorb higher regulatory compliance burdens or just as a defensive measure, either to be the last competitor standing or at least among the last ones surviving when the rents are distributed. An opposite theory then would try to argue that the only way to check the appetite of one heavyweight is with an opposing behemoth. Okay. A common nostrum for what’s needed to boost meaningful choice and simulate more responsible — stimulate more responsible, not simulate — stimulate more responsible competition is more information about health care prices and quality. We do already have some degree of transparency in health care, primarily at the hospital level. But it’s more of a rear view than a leading indicator of what’s ahead. There really isn’t a shortage of data in various areas of health care, but what goes in doesn’t necessarily come back out again in accessible and useful information forms. Any similarity to the simulated view of a black hole in front of the large Magellanic cloud image as an event horizon is purely coincidental. Some hopes remain that strengthening incentives and tools for patients and other perspective health care consumers to become more engaged and responsible for their health care decisions might produce more meaningful choices and stimulate competition among providers to serve them more accountably. But there’s far more skepticism among health policy experts about how this would work in practice, with consumer-driven health care predicted to head quickly over the nearest cliff. Well, we could close our eyes as an act of faith, make a wish, and hope for something better to materialize more magically, if not organically, sort of like spontaneous combustion. But that’s a rather tall, rare phenomenon outside of band members playing to their own tunes. So there might be some ample room for caution, if not skepticism, when one reflects back on health policy history and whether we actually mean what we say. But not to end on a down note. We should always hope for better and keep trying, just not maybe in exactly the same ways that disappointed us before. Why? Well, let’s find out how it could be and then give it another shot because we’ve seen worse. But hope is not dead. It’s just mostly dead. Like Miracle Max, we’ll soon see where the patient is heading in a few more hours. Our first speaker this morning is Brian Blase of the White House, a good sport for sitting through that because now Brian has some serious things to say. He’s a special assistant to the president for economic policy, focusing on health policy particularly at the National Economic Council. He was previously a research fellow at the Mercatus Center at George Mason University with some really pioneering work in taking a look at what was going on in the Affordable Care Act. For another four years, five years, he was the staffer at Capitol Hill, both at the House Committee on Oversight and Government Reform and the Senate Republican Policy Committee. Brian has received a Ph.D. in economics from George Mason University with a dissertation on the Medicaid program. And he reminded me this morning that a long time ago, he was a research assistant at the American Enterprise Institute. So all those who’ve worked for me, there’s still hope for you if you work for someone else. Please welcome Brian Blase. Brian Blase: Thank you, Tom. I apologize in advance. I don’t have any slides. Thank you, Tom, and for AEI for putting on this excellent forum today. I’m honored to spend a few minutes discussing the administration’s work advancing health care choice and competition and to discuss the administration’s report, “Reforming America’s Health Care System Through Choice and Competition.” President Trump called for this report in an executive order he signed in October last year. The report represents an administration-wide effort. After more than a year of careful discussion, we came to agreement. The president was right, and health care is complicated. I learned from Tom to try to start with a joke. Tom’s jokes got more laughs. We also agree that health care policy should increase consumer choice, inject competitive forces into delivery of care, and permit innovation to flourish. We believe that consumers working with providers are in the best position to determine value. And we look to create better incentives for consumers and providers to maximize health care value. Under the leadership of the president and key administration figures like Health and Human Services Secretary Azar, we’ve already made some significant progress in this direction. Why are choice and competition important? To quote one of today’s speakers, the great Professor Herzlinger from her book “Who Killed Health Care,” choice supports competition, competition fuels innovation, and innovation is the only way to make things better and cheaper.

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