WEBVTT - World Freeloads Off U.S. on Drug Pricing, Miller Says 0:00:04.760 --> 0:00:08.080 Welcome to the Bloomberg pm L podcast. I'm Pim Fox. 0:00:08.119 --> 0:00:11.200 Along with my co host Lisa Abramowitz. Each day we 0:00:11.280 --> 0:00:14.480 bring you the most important, noteworthy, and useful interviews for 0:00:14.520 --> 0:00:16.560 you and your money, whether you're at the grocery store 0:00:16.800 --> 0:00:19.960 or the trading floor. Find the Bloomberg p L podcast 0:00:20.000 --> 0:00:28.320 on iTunes, SoundCloud and at Bloomberg dot com. Right now, 0:00:28.560 --> 0:00:31.240 I want to bring in Dr Steve Miller, chief medical 0:00:31.360 --> 0:00:35.479 officer and senior vice president at express script. It is 0:00:35.560 --> 0:00:37.839 one of the largest companies in the country. It is 0:00:37.880 --> 0:00:41.239 an American Fortune Fortune one hundred company, h the twentieth 0:00:41.360 --> 0:00:43.840 largest in the US, and it is the largest pharmacy 0:00:43.920 --> 0:00:47.960 benefit management organization in the United States. Dr Miller, I 0:00:48.000 --> 0:00:51.159 want to start with drug pricing. We hear a lot 0:00:51.200 --> 0:00:54.120 about you know that the price is too high? Uh 0:00:55.160 --> 0:00:56.520 do you think do you agree? Do you think that 0:00:56.560 --> 0:00:59.120 the cost of drugs in the US is too high? 0:00:59.200 --> 0:01:01.560 Let's start there at least I definitely think they are. 0:01:01.840 --> 0:01:04.479 Americans are actually should during their burdens for the rest 0:01:04.520 --> 0:01:06.680 of the world. So we're four point six percent of 0:01:06.680 --> 0:01:10.560 the world's population, We're thirty three of world drug spend. 0:01:10.600 --> 0:01:13.759 We're somewhere between fifty and seventy percent of drug profits. 0:01:13.760 --> 0:01:16.440 So we truly are funding all innovation for the rest 0:01:16.480 --> 0:01:19.600 of the world, and they're actually freeloading on America. So 0:01:19.680 --> 0:01:22.360 what could be done to actually bring prices down? So 0:01:22.560 --> 0:01:24.880 you know, we've worked very hard, and there's certain things 0:01:24.880 --> 0:01:28.479 that we can do every day, uh that, and that 0:01:28.640 --> 0:01:31.000 patients can actually do every day. So, for instance, if 0:01:31.000 --> 0:01:33.920 there's a generic available for a branded product, you should 0:01:33.920 --> 0:01:36.280 be taking the generics. The FDA approves them under the 0:01:36.319 --> 0:01:39.360 same process. They've been proven time and time again to 0:01:39.440 --> 0:01:42.360 be equally effective. But there's also things we got to 0:01:42.360 --> 0:01:45.399 do dramatically if we're going to continue that, and that 0:01:45.520 --> 0:01:48.640 is we've got to make biosimilars available in this country. 0:01:49.120 --> 0:01:54.080 So biosimilars are generic versions of the complex drugs for cancer, 0:01:54.160 --> 0:01:59.280 rheumatoid arthritis, other diseases. American companies have been making these 0:01:59.320 --> 0:02:02.320 drugs for Europeans. They've been taking advantage of them for 0:02:02.360 --> 0:02:05.680 the last eight years. The discounts are somewhere between sixty 0:02:05.680 --> 0:02:09.560 and sev yet they're unavailable in the United States and 0:02:09.600 --> 0:02:12.760 that makes no sense. Dr Miller, You've been described as 0:02:12.760 --> 0:02:16.360 a cost fighting ninja. You must there must be a 0:02:16.400 --> 0:02:19.760 target on you from all of the pharmaceutical companies because 0:02:20.160 --> 0:02:23.040 I want you to tell us about formularies and how 0:02:23.200 --> 0:02:25.360 you arrive at the how do you go through the 0:02:25.400 --> 0:02:29.919 process of determining which drugs are covered and how much 0:02:30.000 --> 0:02:33.120 is paid, Because this is something that you're dealing with 0:02:33.200 --> 0:02:35.800 by looking at your own data, not relying on the 0:02:35.880 --> 0:02:38.280 data from let's say the drug companies or even from 0:02:38.280 --> 0:02:42.440 healthcare providers. Yeah, so formularies are listed drugs, and that 0:02:42.520 --> 0:02:45.680 list has to have any a drug to treat any 0:02:45.680 --> 0:02:48.920 patient with any disease. It walks into a doctor and 0:02:49.000 --> 0:02:52.040 so there's about twenty five thousand different products in the 0:02:52.120 --> 0:02:55.400 United States, but it turns out that doctors need about 0:02:56.639 --> 0:02:59.160 dred of them, and so it allows us to put 0:02:59.240 --> 0:03:02.000 drug company against drug company to get better deals. So 0:03:02.040 --> 0:03:07.399 the simplest example is there are six different statins like lipatore, zoe, 0:03:07.480 --> 0:03:11.120 core crust or other things. What you do is you 0:03:11.200 --> 0:03:14.520 say to the pharmaceutical manufacturers, I need a statun for 0:03:14.600 --> 0:03:18.000 my patients. But the data shows that you're all equivalent 0:03:18.080 --> 0:03:21.440 who will give us the best price, and so by 0:03:21.440 --> 0:03:24.480 pitting them together, we can actually drive market share and 0:03:24.520 --> 0:03:28.320 get lower prices. And so we have a process in 0:03:28.360 --> 0:03:33.520 which our formularies are designed by external experts to express scripts, 0:03:33.600 --> 0:03:36.720 no employees of express Scripts. The only thing they can 0:03:36.760 --> 0:03:41.040 consider is clinical. They're not allowed to consider price. This way, 0:03:41.040 --> 0:03:43.880 we can guarantee to our plans and our patients that 0:03:43.920 --> 0:03:46.600 we've always put clinical first, that we always have the 0:03:46.680 --> 0:03:50.120 right drugs available for them. But then we once we 0:03:50.200 --> 0:03:53.440 have their parameters, can drive to the lowest net cost. So, 0:03:53.680 --> 0:03:57.040 Dr Miller, how do you respond to, let's say a 0:03:57.040 --> 0:03:59.680 pharmaceutical company that would say to you, by you're doing this, 0:04:00.240 --> 0:04:02.760 you are reducing our R and D budget and you're 0:04:02.800 --> 0:04:06.760 sort of inhibiting the production of new drugs. Yeah, so 0:04:06.920 --> 0:04:11.000 I will tell you that the typical responses is that 0:04:11.080 --> 0:04:14.200 you know what is we uh, there's nothing in the pipeline. 0:04:14.240 --> 0:04:17.760 It turns out that because of American ingenuity, we have 0:04:17.839 --> 0:04:21.680 over seven thousand products in clinical testing in the United 0:04:21.720 --> 0:04:24.240 States right now, and that's the data according to the 0:04:24.240 --> 0:04:28.239 pharmaceutical manufacturers. When you look at FDA approvals, two thousand 0:04:28.320 --> 0:04:31.200 and fifteen was almost a record. You have to go 0:04:31.240 --> 0:04:34.320 back twenty years to have that many drugs approved. So 0:04:34.360 --> 0:04:38.520 we actually have a very vigorous drug pipeline. That's funded 0:04:38.560 --> 0:04:41.640 by the ni H, it's funded by the pharmaceutical manufacturers, 0:04:41.920 --> 0:04:45.680 it's funded by others. And so I'm not worried that 0:04:46.080 --> 0:04:48.680 US trying to drive to the lowest cost. This is 0:04:48.680 --> 0:04:52.680 still a four hundred billion dollar industry. There's plenty of 0:04:52.760 --> 0:04:55.800 profitability there for the drug companies to do R and D. 0:04:56.880 --> 0:05:01.360 The President has publicly come out against high drug prices. 0:05:01.400 --> 0:05:06.120 He's singled out various pharmaceutical companies. What can the president 0:05:06.200 --> 0:05:10.120 do without Congress? Can he do anything in order to 0:05:10.200 --> 0:05:14.359 change drug pricing? Yeah? So we there are things that 0:05:14.640 --> 0:05:17.440 require legislation, obviously, but there's a lot that can be 0:05:17.520 --> 0:05:21.839 done by regulations. So the f d A, cms all 0:05:21.960 --> 0:05:25.800 have really a lot of influence over drug pricing. So 0:05:25.839 --> 0:05:29.000 I'll give you a couple examples. Right now, we have 0:05:29.120 --> 0:05:32.120 a backlog of generic approvals that the f d A. 0:05:32.720 --> 0:05:36.560 The FDA could obviously do things to accelerate those approvals. 0:05:36.600 --> 0:05:40.680 Getting those generics out into the marketplace lowers drug prices. 0:05:40.720 --> 0:05:45.599 We have these situations where we have only one generic 0:05:45.800 --> 0:05:48.800 in the marketplace, they've been jacking up the price. You've 0:05:48.839 --> 0:05:52.479 seen this with situations like Derra prim The FDA could 0:05:52.520 --> 0:05:57.279 actually prioritize a competitor to uh DERA prim So don't 0:05:57.320 --> 0:06:00.560 just accept the applications as they come in in but 0:06:00.640 --> 0:06:03.039 when there's a shortage in the marketplace, put that at 0:06:03.080 --> 0:06:06.360 the top priority list and get a competitor and faster. 0:06:06.560 --> 0:06:09.359 So there are plenty of regulatory things that can be 0:06:09.360 --> 0:06:11.719 done to bring down drugs. Thank you very much for 0:06:11.800 --> 0:06:14.600 being with us. Dr Steve Miller is the Chief Medical 0:06:14.640 --> 0:06:18.880 Officer Senior Vice president Express Scripts. Joining us here at 0:06:18.880 --> 0:06:22.960 the National Medicare Advantage Summit taking place in Arlington, Virginia. 0:06:23.000 --> 0:06:39.320 It is hosted by a Better Medicare Alliance. We are 0:06:39.320 --> 0:06:43.560 broadcasting for the National Medicare Advantage Summit taking place in Arlington, Virginia, 0:06:43.720 --> 0:06:47.520 right across the River Potomac from Washington, d C. And 0:06:47.560 --> 0:06:50.080 here to tell us more about the healthcare system in 0:06:50.120 --> 0:06:52.920 the United States is Tom Scully. He's a general partner 0:06:52.960 --> 0:06:56.360 with Welsh, Carson, Anderson and Stow. He has also senior 0:06:56.400 --> 0:06:59.560 counsel at Austin and Bird. But perhaps more importantly for 0:06:59.600 --> 0:07:02.320 our conversation, he was the administrator of the Centers for 0:07:02.440 --> 0:07:09.760 Medicare and Medicaid Services under President George W. Bush. And yes, 0:07:09.960 --> 0:07:14.680 both both bushes, one push, one end push too. Um, 0:07:14.840 --> 0:07:18.160 and you also really played a very important role in 0:07:18.320 --> 0:07:24.280 helping to design Medicare Part D Medicare Advantage both. Right, um, so, 0:07:24.440 --> 0:07:26.440 where do where do you? Where do you start when 0:07:26.520 --> 0:07:29.640 you try to explain to people the current state, because 0:07:29.640 --> 0:07:33.200 there's so many pieces to this, whether it's Medicare advantage, 0:07:33.200 --> 0:07:36.640 whether it's supplemental, whether it's Medicare Medicaid. You say you're 0:07:36.680 --> 0:07:40.160 on the board of a Medicaid insurance program here in 0:07:40.480 --> 0:07:43.640 d C. How do you tease all this out so 0:07:43.760 --> 0:07:46.120 that we can understand at least where we are and 0:07:46.440 --> 0:07:48.200 what are some of the options to move forward to 0:07:48.240 --> 0:07:51.320 make it better. Who would ever know healthcare was so complicated? 0:07:53.160 --> 0:07:57.920 Well maybe maybe the best way the reason you were 0:07:58.000 --> 0:08:01.000 you were the admit you would the administrator for the 0:08:01.120 --> 0:08:05.600 Centers for Medicare and Medicaid Services. What does the c 0:08:06.120 --> 0:08:10.160 m S. C MS is a giant agency in Baltimore, 0:08:10.200 --> 0:08:12.360 which most people in Washington you know. It's in Baltimore, 0:08:12.600 --> 0:08:15.280 and it runs Medicare and Medicaid and it also runs 0:08:15.320 --> 0:08:19.080 the exchanges, the Obamacare exchanges, UH and a number of 0:08:19.120 --> 0:08:22.560 other things. But it's um so you probably have seventy 0:08:22.600 --> 0:08:25.400 seven million people. One of the four Americans roughly in 0:08:25.440 --> 0:08:29.520 the Medicaid program, which is lower income you know, lower 0:08:29.520 --> 0:08:32.280 income healthcare for women and kids, covers seventy the nursing 0:08:32.320 --> 0:08:35.560 homes in the country, covers most the disabled mentally retarded 0:08:35.559 --> 0:08:38.240 people in the country as far as mentally disabled UM 0:08:38.920 --> 0:08:43.240 and Medicare is forty four million seniors and chronically disabled people. 0:08:43.280 --> 0:08:46.920 So their giant programs. The combined budget for CMS with 0:08:47.120 --> 0:08:49.360 between all of Medicare, Medicaid and the problems about one 0:08:49.400 --> 0:08:52.720 point four trillion dollars a year, So it basically runs 0:08:53.679 --> 0:08:56.800 about half the health care economy, and uh a lot 0:08:56.880 --> 0:08:58.480 of it is on autopilot. So I would say n 0:08:59.280 --> 0:09:01.800 of the you know, the these seven right people have 0:09:01.880 --> 0:09:04.520 the job in less twenty years. Democrats Republicans were all friends, 0:09:04.600 --> 0:09:07.840 and most of the job is running giant insurance plans 0:09:07.880 --> 0:09:09.839 and making sure all these beneficiaries getting take care of. 0:09:10.120 --> 0:09:12.920 And in certain periods of time, like with Obamacare or 0:09:12.960 --> 0:09:15.040 in my case with the Party and Medicare advantage, they 0:09:15.080 --> 0:09:18.959 get very legislative legislator in tense times, you spend time 0:09:19.120 --> 0:09:20.880 changing the problem. So when I came in with Pushing 0:09:20.920 --> 0:09:24.080 two thousand one, it was like called heck, I changed 0:09:24.120 --> 0:09:26.520 the name. The CMS been a week after I got there. 0:09:26.880 --> 0:09:28.800 You didn't want to work for HECA? No, you know 0:09:28.880 --> 0:09:33.000 what a long story. I used to run the for 0:09:33.120 --> 0:09:35.319 profit Hospital Association for eight c A and ten and 0:09:35.360 --> 0:09:37.640 those guys back in the nineties, and I had a 0:09:37.679 --> 0:09:40.280 lot of friends at HeLa. But there's a perception, fair unfair, 0:09:40.320 --> 0:09:42.600 that there's a big slumbo and bureaucracy. So I told 0:09:42.640 --> 0:09:44.760 my boss at the time, Tommy Toomp, said hey, let's 0:09:44.800 --> 0:09:47.120 change the name. And there's nothing in the statute. So 0:09:47.200 --> 0:09:49.280 we just sat around made up in her name. Well, 0:09:49.440 --> 0:09:50.959 so you were talking about at one point for a 0:09:51.040 --> 0:09:54.640 trillion dollar budget for all of these agencies, and you're 0:09:54.640 --> 0:09:57.280 saying so on a pilot. Meanwhile, we're looking at budget 0:09:57.360 --> 0:09:59.559 projections that are saying that the cost is going to 0:09:59.600 --> 0:10:03.640 balloon as the population does age. Are there conversations that 0:10:03.679 --> 0:10:05.959 are being had that you're involved with with the current 0:10:06.160 --> 0:10:11.959 legislators for making feasible changes that would reduce costs over time? 0:10:12.960 --> 0:10:15.680 And what the House bill? This is the biggest debate 0:10:15.720 --> 0:10:18.599 in the country list you know three months is the 0:10:18.679 --> 0:10:22.120 Paul Ryan House Bill didn't pass. So if you take Obamacare, 0:10:22.240 --> 0:10:24.160 I'm not trying to criticize President Obama. I think he 0:10:24.240 --> 0:10:27.280 was worthy effort to try to cover and of universal coverage. 0:10:27.840 --> 0:10:31.280 But what happened under President Obama's healthcare plan is if 0:10:31.280 --> 0:10:33.600 you look at before I kicked in two thousand twelve, 0:10:33.640 --> 0:10:36.160 you had fifty five million people on the medicaid. Problem. 0:10:36.280 --> 0:10:38.520 Between then and today, it's going from fifty five million 0:10:39.240 --> 0:10:42.080 to seventy seven million, So two million people on Medicaid. 0:10:42.520 --> 0:10:44.080 If you kept it going for the next ten years, 0:10:44.120 --> 0:10:47.080 you go to ninety seven million. Current spending on Medicaid 0:10:47.200 --> 0:10:51.040 now six hundred billion dollars a year, six hundred billion 0:10:51.080 --> 0:10:52.760 dollars here, it's a big number already, a drums round. 0:10:52.760 --> 0:10:55.160 It will be from six to nine hundred and fifty 0:10:55.280 --> 0:10:57.920 billion over the next ten years. But isn't that more 0:10:58.080 --> 0:11:00.600 of a commentary on sort of the fact that there 0:11:00.640 --> 0:11:03.520 are people who are falling into poverty or falling into 0:11:03.559 --> 0:11:07.280 a lower income bracket and help. No, you're President Obama did, 0:11:07.320 --> 0:11:09.960 I'm not trying to be good pro con that bill 0:11:10.040 --> 0:11:14.640 expanded the poverty coverage of Medicaid and mandated there was 0:11:14.640 --> 0:11:16.240 gonna go to a hundred and thirty eight percent of 0:11:16.320 --> 0:11:18.600 poverty in every state. The Supreme Court came out said 0:11:18.679 --> 0:11:20.880 you can't force the states to do that. So thirty 0:11:20.920 --> 0:11:24.120 one northern, largely democratic states took the hundred percent from 0:11:24.200 --> 0:11:27.920 the money and expanded their problems massively, and nineteen largely southern, 0:11:28.440 --> 0:11:30.360 more conservative states said we're not going to do it. 0:11:30.920 --> 0:11:32.679 We don't want to have these giant new in talent problems, 0:11:32.720 --> 0:11:34.959 and until nineteen of them skipped it. Okay. So the 0:11:35.040 --> 0:11:37.680 real issue is what the Republicans have done. These are 0:11:37.760 --> 0:11:41.079 big policy changes that effect have an enormous impact in 0:11:41.120 --> 0:11:44.120 every American the economy. Republicans largely said we're gonna freeze 0:11:44.160 --> 0:11:46.520 it where it is, So spending a Medicaid under what 0:11:46.600 --> 0:11:48.600 Paul Ryan wanted to do would go from six hundred 0:11:48.640 --> 0:11:51.480 billion this year to about seven d fifty billion, and 0:11:51.559 --> 0:11:53.240 ten years if you left it on the cruise control 0:11:53.240 --> 0:11:55.720 from Obamacare, we go from sillion to nine hundred billion. 0:11:56.880 --> 0:11:58.560 The Republicans would freeze it where it is at about 0:11:58.559 --> 0:12:01.559 seventies seven million people. Those are big policy issues. Do 0:12:01.559 --> 0:12:03.160 you want to cover all those new people in those 0:12:03.200 --> 0:12:04.960 other states? Do you want to you know, those are 0:12:05.080 --> 0:12:07.320 you're talking about another twenty million people in the medicaid 0:12:07.320 --> 0:12:10.640 problems that good or bad those are big, fundamental, gigantic 0:12:10.679 --> 0:12:13.240 economic issues. So I have been to love to medicaid problem. 0:12:13.520 --> 0:12:16.920 But every person, let's every person is paying taxes out 0:12:17.000 --> 0:12:19.400 there listening to this, pays four thousand dollars per year. 0:12:19.600 --> 0:12:22.240 You're not a Medicaid that is your tax contribution to 0:12:22.360 --> 0:12:25.880 pay for Medicaid every year is four thousand dollars per taxpayer. 0:12:26.600 --> 0:12:28.240 And you and all make a decision do you want 0:12:28.240 --> 0:12:30.040 to cover all those people and have universal coverage. I 0:12:30.080 --> 0:12:32.559 think it's the right thing to do. The Medicaid problems 0:12:32.679 --> 0:12:34.640 of a mass I could you could spend hours explaining 0:12:34.640 --> 0:12:37.200 to you how screwed up it is structurally, but it's 0:12:37.240 --> 0:12:38.760 a wonderful problem. I happen to be a fan of 0:12:38.800 --> 0:12:40.800 usual coverage. But how much do you want to spend where? 0:12:40.960 --> 0:12:43.520 These are the single biggest issues in the government. Medicare 0:12:43.559 --> 0:12:46.680 and Medicaid are the biggest problems in the governments security, 0:12:46.760 --> 0:12:49.720 and they drive all your taxpayer spending. And these policy 0:12:49.720 --> 0:12:51.520 issues about who you want to cover where and whose 0:12:51.559 --> 0:12:54.559 air subsidies and who should get subsidies are massive and 0:12:54.600 --> 0:12:57.800 they're important to people. And I know they're incredibly complicated. 0:12:57.880 --> 0:13:01.080 Who health is so complicated, but they are the budget 0:13:01.240 --> 0:13:03.320 and they are the governments that this is the future 0:13:03.360 --> 0:13:06.679 of government policy. Is there a model or is there 0:13:06.720 --> 0:13:10.199 another country that is doing something that we can learn from. 0:13:10.280 --> 0:13:11.839 If you were given a clean I mean you're not 0:13:11.920 --> 0:13:13.679 going to ever get a clean slate, there is no 0:13:13.800 --> 0:13:16.199 clean slate. But if you were to be given, you know, 0:13:16.360 --> 0:13:18.440 half a clean slate, what would you do? What would 0:13:18.480 --> 0:13:20.320 you say? You can't? And I've been doing this forever, 0:13:20.400 --> 0:13:22.559 and I think things changing incrementally, and I look at 0:13:22.880 --> 0:13:25.040 I was not a big fan of Obamacare structurally, I 0:13:25.040 --> 0:13:26.240 think he's trying to do the right thing. If you 0:13:26.280 --> 0:13:29.760 look at President Obama's package, and I've said this publicly 0:13:29.800 --> 0:13:31.199 a lot, it looks a hell of a lot like 0:13:31.280 --> 0:13:33.920 that George H. W. Bush Plan that I helped design 0:13:34.040 --> 0:13:37.160 nineteen ninety with a lot more money. So what they 0:13:37.200 --> 0:13:39.240 were trying to do, the unerfual covers was worthy in 0:13:39.280 --> 0:13:41.120 a in a rational goal. I think they ever did 0:13:41.160 --> 0:13:43.679 it went too far and and and and put too 0:13:43.760 --> 0:13:45.679 much on the structure. But they were trying to do 0:13:45.760 --> 0:13:47.040 the right thing. And I think when you look at 0:13:47.080 --> 0:13:48.640 the Republicans are trying to do, they're actually trying to 0:13:48.679 --> 0:13:52.160 scale back what President Obama did. So whatever happens, the 0:13:52.200 --> 0:13:54.000 problems are going to get bigger. It's a matter of 0:13:54.040 --> 0:13:56.360 how much bigger. And even on the Republican bills, Medicare 0:13:56.400 --> 0:13:58.920 and Medicator and grow dramatically. The issue is are they 0:13:59.000 --> 0:14:02.400 gonna grow really fair star less fast so you can't 0:14:02.400 --> 0:14:04.920 really change it. Did the Dutch have a pretty good system? Yes, 0:14:05.120 --> 0:14:06.719 the Germans I think a pretty good system. They have 0:14:06.800 --> 0:14:08.559 kind of neighborhood based systems. But you have to go 0:14:08.640 --> 0:14:11.320 back to and blow the whole thing up and start 0:14:11.360 --> 0:14:13.760 from the scratch. We have an incredibly complicated web of 0:14:14.400 --> 0:14:17.120 multiple problems the cover people, and you really have no 0:14:17.240 --> 0:14:19.560 choice but to build on it. Tom Scully, thank you 0:14:19.600 --> 0:14:21.960 so much for joining us. Truly a fascinating to hear 0:14:21.960 --> 0:14:25.800 your thoughts. Tom Scully was the head of CMS under 0:14:25.960 --> 0:14:29.760 both President George one. Okay, you were in the White House, 0:14:30.600 --> 0:14:32.480 but you've been making healthcare policy and you did a 0:14:32.640 --> 0:14:35.840 Medicare party and you also did Medicare advantage, and we 0:14:36.000 --> 0:14:40.040 really appreciate you being with He looks incredibly healthy. Like 0:14:40.080 --> 0:14:44.240 about nine seven, Tom Scully general partner at Wells, Carson 0:14:44.320 --> 0:14:47.880 Anderson and still also Senior council at Austin and bird 0:14:48.120 --> 0:14:50.760 l LP. We are here broadcasting live at the National 0:14:50.840 --> 0:14:54.800 Medicare Advantage Summit in Arlington, Virginia. It is hosted by 0:14:54.920 --> 0:15:12.040 the Better Medicare Alliance. This is Bloomberg. We are live 0:15:12.120 --> 0:15:15.600 at the National Medicare Advantage Summit in Arlington, Virginia, and 0:15:15.680 --> 0:15:18.600 we are so lucky to have Dr Kvita Patel here 0:15:18.640 --> 0:15:21.200 with us. She is a nonresident Senior Fellow at Brookings 0:15:21.280 --> 0:15:24.880 Institute and a former advisor to the Obama White House. 0:15:25.200 --> 0:15:29.520 She worked on the Affordable Care Act. Uh So, Dr Ptel, 0:15:29.600 --> 0:15:33.560 you really have a clear insight into what's going on 0:15:33.880 --> 0:15:36.760 right now? What should we pay attention to. What's the 0:15:36.840 --> 0:15:40.280 most realistic change that could happen in short order to 0:15:40.840 --> 0:15:43.600 the a c A Affordable Care Act. So I still 0:15:43.680 --> 0:15:45.880 think the most realistic change is going to be no 0:15:46.120 --> 0:15:48.840 change that we're not going to see a repeal or 0:15:49.080 --> 0:15:52.120 something that kind of completely rips out the Affordable Care Act. 0:15:52.240 --> 0:15:55.040 There's still a lot of discussions going on, but the 0:15:55.120 --> 0:15:57.600 bottom line is the votes are not there right now. 0:15:58.280 --> 0:16:00.760 Dr Ptel, maybe you could just disc ride to people 0:16:00.880 --> 0:16:05.720 how Medicare advantage works in the health care system and 0:16:06.200 --> 0:16:09.800 how this partnership between the public system, which is of 0:16:09.880 --> 0:16:13.840 course Medicare UH and private insurance. How does that come 0:16:13.880 --> 0:16:16.600 together and how does they How did that present a 0:16:16.760 --> 0:16:19.440 challenge because most people look at this situation they go, boy, 0:16:20.160 --> 0:16:23.080 it can't get any more complicated, right, right, So the 0:16:23.200 --> 0:16:27.400 Medicare Advantage Program really started as a way to expand 0:16:27.640 --> 0:16:31.440 kind of what we would call private sector choices in 0:16:31.600 --> 0:16:36.120 insurance for Medicare beneficiaries. And that was actually done during 0:16:36.400 --> 0:16:41.400 a Republican administration previously, the actual George H. W. Bush administration, 0:16:41.920 --> 0:16:44.680 and that failed a little bit in its first attempt, 0:16:44.960 --> 0:16:46.560 and then there was a little bit of a reboot 0:16:46.760 --> 0:16:49.800 in the in the George W. Bush administration, where we 0:16:49.880 --> 0:16:52.000 then got what we have today, which is the Medicare 0:16:52.000 --> 0:16:56.480 Advantage Program. And basically of people in Medicare are in 0:16:57.080 --> 0:17:02.200 private plans, which are Medicare Advance Plans, which are basically 0:17:02.440 --> 0:17:05.520 confusing because and what if you have a family member 0:17:05.600 --> 0:17:07.520 like I do they just get a bunch of brochures 0:17:07.680 --> 0:17:10.760 like around October and they have all these choices, And 0:17:10.920 --> 0:17:14.720 that's what you're referencing. But where we've gotten now is actually, 0:17:14.840 --> 0:17:18.320 in about five years, more than half of the Medicare 0:17:18.400 --> 0:17:21.600 beneficiaries are going to be in these Medicare advantage or 0:17:21.960 --> 0:17:27.400 private commercial insurance plans in Medicare, then the traditional fee 0:17:27.480 --> 0:17:33.119 for service a million people currently in Medicare correct about 0:17:33.160 --> 0:17:37.040 fifty five to sixty million in the Medicare program. That 0:17:37.240 --> 0:17:39.760 number is going to grow in the next five years. 0:17:40.119 --> 0:17:43.639 But then half of the people in this program in 0:17:43.800 --> 0:17:47.800 Medicare will be in the Medicare advantage program. How does 0:17:48.119 --> 0:17:52.960 Medicare advantage and partnering private health insurance companies with public 0:17:53.040 --> 0:17:57.080 ones reduce costs? So the way it reduces cost is 0:17:57.320 --> 0:18:00.520 basically by what what the government does is it actually 0:18:00.600 --> 0:18:03.399 pays the private insurance plan kind of a lump some 0:18:03.520 --> 0:18:07.119 amount to take care of basically everything. Right now, at 0:18:07.160 --> 0:18:11.399 traditional Medicare, there's hospital costs, physician costs, drug costs, and 0:18:11.440 --> 0:18:13.920 it's all pays out of separate pockets and pieces of 0:18:14.040 --> 0:18:18.040 the government. Pie Medicare advantage, the government pays one lump 0:18:18.160 --> 0:18:20.800 sum to the private plan and says you take care 0:18:20.840 --> 0:18:23.399 of everything, no matter how much it costs. And if 0:18:23.480 --> 0:18:26.760 someone doesn't necessarily need all that money, then the plan 0:18:27.119 --> 0:18:30.000 keeps that extra money. And what the plans will do 0:18:30.359 --> 0:18:32.879 in a way to save money. Is they will do 0:18:33.040 --> 0:18:35.920 really aggressive things like send a nurse out to a 0:18:36.000 --> 0:18:40.119 patient's home to do an in home assessment and not 0:18:40.320 --> 0:18:42.800 ever have to even see the doctor to establish kind 0:18:42.800 --> 0:18:45.240 of what that patient needs, all in an attempt to 0:18:45.359 --> 0:18:49.000 create a more efficient system. Okay, so talking about private 0:18:49.119 --> 0:18:51.399 health insurers brings me back to A C A and 0:18:51.880 --> 0:18:55.520 the path forward. The latest plan that was unveiled today 0:18:55.720 --> 0:18:59.439 by an Alabama Republican congressman shows that there is an 0:18:59.480 --> 0:19:03.200 attempt to try to pull out high risk pools or 0:19:03.240 --> 0:19:06.280 sort of group people by how risky they are they 0:19:06.320 --> 0:19:09.040 are and their pre existing conditions. Can you speak to 0:19:09.119 --> 0:19:11.280 that and how effective that could be? Yeah? So you 0:19:11.359 --> 0:19:13.560 remember the criticism of the American Health Care Act is 0:19:13.600 --> 0:19:16.160 that potentially the older or sicker you are, you're gonna 0:19:16.160 --> 0:19:19.080 have to pay potentially a thousand percent more than you 0:19:19.160 --> 0:19:21.960 would today under the Affordable Care Act. So what's being 0:19:22.040 --> 0:19:26.440 introduced now is ways to actually deal with sicker patients 0:19:26.480 --> 0:19:29.679 who are older and to try to acknowledge that they 0:19:29.800 --> 0:19:34.240 need something different than just regular old Medicare insurance. So 0:19:34.480 --> 0:19:37.240 what you're seeing proposed um not just for Medicare but 0:19:37.400 --> 0:19:40.720 for actually any age are these high risk pools that 0:19:40.960 --> 0:19:43.600 take people out based on the numbers of kind of 0:19:44.000 --> 0:19:47.040 you know, numbers of diseases that they have, or how 0:19:47.200 --> 0:19:50.000 sick they are, based on how much money they're using 0:19:50.160 --> 0:19:53.879 in the system, or potentially pre existing conditions, and then 0:19:53.960 --> 0:19:56.920 charge them more. And then well if one charges them more, 0:19:57.119 --> 0:20:00.280 but then it also puts them in a different cool 0:20:00.400 --> 0:20:04.080 almost like medicare advantage, where it's a private insurance system 0:20:04.560 --> 0:20:06.840 that then has to take care of them for a 0:20:06.920 --> 0:20:09.520 dedicated amount of money. But I don't understand this works 0:20:09.680 --> 0:20:12.040 why any insurance company would agree to take them on. 0:20:12.240 --> 0:20:15.040 So it's yes, that's a good question. Will anyone actually 0:20:15.080 --> 0:20:18.040 take on the sickest people in a population? If you 0:20:18.119 --> 0:20:20.800 pay enough money, somebody will. But who's gonna put that? 0:20:20.880 --> 0:20:22.919 This gonna put the government is so at the end 0:20:22.960 --> 0:20:25.800 of the day, you have mentioned I obviously am a 0:20:25.880 --> 0:20:27.879 fan of the Affordable Care Act, even with its warts 0:20:27.920 --> 0:20:30.720 and flaws. At the end of the day, somebody has 0:20:30.800 --> 0:20:33.640 to foot the bill. We can't skirt or get around 0:20:33.720 --> 0:20:36.480 the fact that as a society we have to pay 0:20:36.560 --> 0:20:39.320 for healthcare as a society, including people who are really 0:20:39.359 --> 0:20:42.080 sick and including people who are super healthy. And that's 0:20:42.080 --> 0:20:44.960 the bottom line. I want your thoughts on prescription drug 0:20:45.119 --> 0:20:49.840 prices and the insurance plans around those, because the president 0:20:50.000 --> 0:20:53.160 has the President Donald Trump has come out via tweets, 0:20:53.320 --> 0:20:59.159 via verbal uh rhetoric, he's saying drug prices are too high. Correct. 0:20:59.359 --> 0:21:03.320 So the emphasis on drug pricing is very interesting for 0:21:03.600 --> 0:21:07.080 a Republican administration, and it's largely, as you mentioned, because 0:21:07.080 --> 0:21:11.320 of President Trump's quotes. Translating that into something that will 0:21:11.440 --> 0:21:14.639 change the way all of us receive our prescription drugs 0:21:15.200 --> 0:21:18.760 is very hard to do. However, that's something if you 0:21:18.920 --> 0:21:21.879 listen to all the people who work under President Trump, 0:21:21.920 --> 0:21:24.280 they've said that this is one of the top priorities 0:21:24.359 --> 0:21:27.320 for the White House. The way prescription drug plans work 0:21:27.440 --> 0:21:30.240 right now, most of us in America don't even realize it. 0:21:30.480 --> 0:21:33.840 It's a third party that deals with the way your 0:21:33.920 --> 0:21:38.159 drugs are paid for, and those are called prescription benefit plans. 0:21:38.320 --> 0:21:43.080 And so there's a whole different entity and industry outside 0:21:43.080 --> 0:21:45.720 of your insurance card that actually deals with all of this. 0:21:46.040 --> 0:21:49.200 And that's why it's complicated and I am not likely 0:21:49.240 --> 0:21:51.280 to see a change happen soon. Well, I want to 0:21:51.320 --> 0:21:53.080 thank you for helping us understand that at least a 0:21:53.119 --> 0:21:57.680 little bit. Dr Kvita Patel, Nonresident Senior Fellow, Brookings Institution. 0:22:10.000 --> 0:22:13.080