Donald Trump ran for president vowing to take on Big Pharma and bring down prescription drug prices. But, like his other populist campaign promises, he has abandoned this pledge for a conventionally right-wing Republican domestic agenda. His appointment of Alex Azar to run the Department of Health and Human Services is the latest sign that the Trump administration has no interest whatsoever in wringing excessive profit out of the medical system.
Azar, a longtime pharmaceutical executive, will almost surely continue the administration’s policy of what my colleague Ed Kilgore calls doctor-centered health care. Not everything the Trump administration has done on health care has followed the interest of the medical lobby; all things being equal, medical providers prefer more coverage to less coverage, since more people with insurance means more paying customers. So the Trump administration has bucked medical providers in its relentless efforts to throw millions of people off their insurance.
On the other hand, the administration has also worked very hard to ensure those providers can wring every possible dollar of profit out of their remaining customers. The Times today reports on another aspect of the administration’s doctor-centered agenda: It is dismantling reforms that would reduce unnecessary care.
The United States spends far more per capita on medical costs than any other country. One reason is that its medical system is built around fee-for-service care, in which doctors, hospitals, drug-makers, and medical device manufacturers all have an economic incentive to make care as expensive as possible. The passage of Medicare helped to accelerate medical inflation by putting the federal government in the position of reimbursing treatments almost regardless of effectiveness or need.
While the coverage expansions in Obamacare receive the most attention, the law also implemented a wide array of reforms designed to change the incentives in the system. Under Obama, Medicare began to experiment with lump-sum payments that would reimburse doctors and hospitals on the basis of how well they cared for their patients, not how much treatment they gave them. The Center for Medicare and Medicaid Innovation had established experiments with new payment models designed to improve care and reduce costs. The Trump administration is canceling or scaling back the experiments, or putting the medical lobby in charge of designing them.
The administration has cloaked its position in free-market logic. “The system of market competition is the engine that drives innovation in other industries. No central planner gave Henry Ford a set of rules and instructions to manufacture the Model T,” explained Centers for Medicare and Medicaid administrator Seema Verma. But of course the administration’s policy position isn’t the free market. It’s having Washington write checks to the industry with no strings attached.
The Trump administration’s drive to reduce coverage has failed. But its drive to increase profitability is going full tilt.