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Brady Opening Statement: Ideas to Improve Competition in the Medicare Program Remarks as Prepared For Delivery

May 19, 2015

WASHINGTON — Today, Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX) delivered the following opening statement during a hearing on ideas to improve competition in the Medicare program.

“Welcome to today’s hearing on improving competition within the important Medicare program. This is the first in a series of hearings this summer and fall to identify solutions to saving Medicare for the long term.

“Today we’re going to explore how much competition exists in Medicare: its impact, benefits and savings for Medicare patients as well as the potential for improving Medicare access and choices through more competition.

“We’re also going to hear about two ideas to make Medicare more responsive to seniors’ needs while also driving down costs and expanding access.

“Competition is a good thing. It drives down costs and increases access while improving quality. And, most importantly, it empowers consumers.

“Competition and the choices it offers is how we discover information on prices and quality. And it gives families the power to decide what they want to buy and how to stretch their dollars farther.

“Competition is a critical component of virtually every sector in our economy save one: Medicare. More often than not, Medicare stifles competition and choice. Through legislative action and agency enforcement, Medicare sets prices and sets the standards by which it determines quality. Rather than empowering consumers, the Medicare program limits choice. The system is set up so that providers are more likely to fight rule-making decisions handed down from government agencies than they are to compete with each other to offer better services to Medicare patients.

“The Medicare Fee-For-Service program is a perfect example. For this fiscal year, FY 2015, Medicare is projected to pay $375 billion for Part A and B services—that is, doctor and hospital services. For the vast majority of that spending the Centers for Medicare and Medicaid Services—CMS—is directly responsible for setting, implementing, and managing those payments. In other words, a massive bureaucracy picks winners and losers among countless health care providers. Competition and choice—and the preferences of Medicare seniors—play little role in the administration of all this spending. And it shows: the program is going insolvent.

“By contrast, competition and choices for seniors play a proven, critical role in two successful programs: the Medicare Advantage program and Medicare Part D which provides prescription drugs. In these two extremely popular programs Medicare seniors are the ones in control—not the government. Plans compete fiercely for their health care business, offering services and benefits to fit the needs of Medicare patients, not Washington.

“And if consumers are unhappy with their service, they can say ‘no thanks’ and change their plan to one that meets their needs. It’s that simple. And it works.

“Right now, seniors have access to more than 3,600 Medicare Advantage plans tailored to meet their specific needs. Competition is robust, and not surprisingly, patient satisfaction is high. The same is true with the Part D prescription drug program—which is one of the few government health programs to actually come in under budget projections—and whose average base monthly premiums are as low today at $33.13 as when the program began in 2006, at $32.20.

“For Medicare prescription plans, seniors have dozens of choices in each state and can pick a plan that works for them. Studies show this very fact has led to a decrease in their out-of-pocket costs, which is great news for seniors.

“Competition is proven to work in Medicare Advantage. And it works in the Part D prescription drug program. So how can it work in the larger Medicare Fee-For-Service system?

“Today we will look at two proposals to do just that.

“The first is expanding seniors’ access to local physician-owned hospitals. This is an issue Mr. Johnson of Texas has been working on for quite some time. Physician-owned hospitals are full-service community hospitals that serve both rural and urban communities. They specialize in providing essential health services in areas that are considered ‘underserved.’ But since 2005 these hospitals have been prevented from growing to meet the needs of their communities.

“As a consequence there are just over 230 of these kinds of hospitals in operation around the country compared to 3,400 national acute care hospitals. The questions before us include: should seniors continue to be blocked from access to these high-performing hospitals? What are the impacts—pro and con—of this discrimination against one model of acute care, and is the current ban based on quality of service or a desire to restrain competition? At this point, a decade into the ‘temporary’ moratorium, it is the right time to have a thoughtful discussion on this issue.

“The second idea seeks to improve the way Medicare currently administers the Durable Medicare Equipment benefit. Dr. Tom Price of Georgia has spent a significant amount of time looking at this issue. He has been working on a reform that would inject a more market-based approach to help address some of the serious concerns members of Congress from both parties have all heard about from constituents.

“These two proposals have potential for improving competition and the benefits within Medicare. But ultimately Congress needs to examine how we administer the Medicare program overall. The current program is critical, but unsustainable. Everyone from the program’s own actuaries, to non-partisan scorekeepers like the Congressional Budget Office, to outside watchdog groups has warned us about this growing problem.

“Members of both parties in Congress have a responsibility to save Medicare for the long term—to improve and protect Medicare for today’s seniors and for future generations.

“We recently took the first important step by solving the way Medicare pays its doctors. For the second step we must turn immediately to exploring how we improve the way Medicare pays its other health care providers—from the testing and evaluation leading into the hospital, to inpatient and outpatient care, and post-acute care after leaving a hospital.

“The health subcommittee will continue to hold hearings on this topic over the course of this year and develop reforms that will put Medicare on a sustainable path.”