Seema Verma's American Dream: Empower Consumers, Unleash Competition

The CMS administrator views her work as public service, aims to put patients in the center of the healthcare decision-making process, and hopes to curb healthcare costs.

This article appears in the September/October 2019 edition of HealthLeaders magazine.

To understand how Seema Verma, MPH, views her work steering the Centers for Medicare & Medicaid Services, you must step back and consider the history that shaped her worldview long before she was picked for her current job.

Before she was nominated as CMS administrator, Verma founded her own healthcare policy consulting business. Before that, she was vice president of planning for a public hospital system and a director with the Association of State and Territorial Health Officials. And before that, Verma earned a master's degree from the Johns Hopkins School of Public Health, having been raised in a family that values education.

Verma says her parents are Democrats who immigrated to the U.S. in the 1960s and taught her to think for herself. Doing so led her to form more conservative political views, especially as she gained firsthand experience working closely with the government, she says. Now, as she reflects with gratitude on her upbringing, private-sector career, and current role as CMS administrator, she describes her story as uniquely American.

"It's not lost on me what my life would have been if my parents hadn't immigrated," Verma tells HealthLeaders.

"They came here with absolutely nothing, and they saved every penny that they could to make sure that my sister and I had an education, that they could pay for that education, so we would have a leg up in the world," she says. "And they taught us simply to work hard and to aim high, to have goals, and to do whatever you had to do to achieve those goals. I could see the sacrifices they were making every day on our behalf."

"To think about where my parents came from, tiny villages in India, where in some parts of those areas indoor plumbing was a luxury, for them to come to this country, to have a successful life, to raise two kids, and for me to take on this job, I look at that as the epitome of the American dream," she says. "Where else in the world can that happen? Only here."

Verma and her husband, a child psychiatrist, have two children of their own now. Their home is in Carmel, Indiana, so Verma travels to and from Washington, D.C., frequently. The arrangement is taxing, but it's a sacrifice she and her family decided to make together, she says.

"I think that in everybody's life, there's an opportunity to give back. And that's what I'm doing here," she says. "It's not an easy job. I'm commuting back and forth. There are a lot of long, hard days. But the reason why I'm doing what I'm doing is about public service. And it's about giving back to this country that has given so much to me."

As she was sworn in as CMS administrator in the early weeks of Donald Trump's presidency, Verma looked forward to what she anticipated would be a highly productive team ready to turn the nation's healthcare system on its head.

"What I was really excited about was coming to work for this administration," she says. "What I saw was a leader, the president, who had essentially run against both parties. He was an outsider. And he was doing this because he genuinely wanted to improve the lives of the American people, wanted to make change."

'We Were All Disappointed'

Trump, like many other Republican politicians in the past decade, campaigned on opposition to the Affordable Care Act. Even though his party controlled both chambers of Congress for his first two years in office, President Trump managed neither to repeal nor replace the ACA. Lawmakers jockeyed over a series of bills but failed to reach an agreement. An early-morning thumbs-down from Sen. John McCain, R–Arizona, sank a so-called "skinny repeal" six months after Trump took office, signaling that the ACA would remain on the books for the time being.

"Obviously, I think we were all disappointed with the outcome of the healthcare bill," Verma says. "But that being said, I think we've stayed true to our commitment to improve the healthcare system. I think we've taken what we've had and tried to make things better."

It's true that Verma's team has pursued a transformative healthcare policy agenda within an ACA context. Some of the agency's boldest moves, in fact, such as those taken by the CMS Innovation Center, have relied on statutory authorization from the very law Verma herself has lambasted. But critics have argued that many of the changes Verma has championed are part of a long-running effort to topple the ACA by severing one root at a time.

There's no question the Trump administration has actively tried to scrap the ACA, through legislation and litigation alike. In a lawsuit pending before the Fifth Circuit Court of Appeals, the U.S. Department of Justice has argued Congress rendered the entire ACA invalid when it zeroed out the law's individual mandate penalty. But claims that the administration has tried to "sabotage" the ACA through CMS rulemaking, regulation, and guidance are false, Verma says.

"Despite all of the accusations, at the end of the day, premiums have actually gone down," she says. "We stabilized the market, and premiums have gone down. Satisfaction is at an all-time high in terms of the user experience and the Obamacare exchanges."

Average premiums for ACA exchange plans fell about 1% in 2019, according to CMS data. That slight decline came after insurers raised their rates more than necessary in 2018 in the face of policy uncertainty and halted cost-sharing reduction payments, according to analysis published by the Kaiser Family Foundation.

"I think we've stayed true to our commitment to improve the healthcare system. I think we've taken what we've had and tried to make things better."

—Seema Verma
 

One substantial way Verma has sought to sand off the ACA's sharp corners has been by increasing the flexibility CMS extends to states through Section 1332 waivers. The added flexibility—which the agency provided through revised guidance and reinforced with more detailed waiver templates—includes a looser definition of what qualifies as "coverage," and it could be used to subsidize short-term limited-duration insurance, which is often a cheaper option because it isn't required to meet all of the ACA's coverage requirements.

That added flexibility stoked concerns that broader Section 1332 waivers could undermine the market for ACA-compliant plans. Verma, however, says opening up competition lets people make the best choice for themselves and lets states lead their own health plan problem-solving.

"In the absence of a federal solution, I felt like it was our role to empower states to create solutions that are going to work better in their markets, with the idea of lowering costs, providing more flexibility and more choices," she says.

'Skin in the Game'

It might be tempting to cast Verma as the ACA's antagonist, to frame her work for the Trump administration as primarily opposing the Obama-era law, to treat her like the GOP lawmakers who campaigned for nearly a decade on promises to supplant the ACA with something better, only to falter when their time came. To cast Verma in such a flat role, however, would oversimplify her history and her vision.

Years before the ACA's passage, Verma began earning her clout in conservative circles by advancing state Medicaid policies built on principles of competition and personal responsibility. Those themes echoed through her subsequent consulting work in an ACA context, and they are evident today in her priorities as CMS administrator.

Verma is credited as the architect of the Healthy Indiana Plan (HIP), which the Hoosier state adopted for its Medicaid program beginning in 2008. Modeled after a high-deductible health plan and health savings account, HIP promoted personal responsibility by giving beneficiaries "some 'skin in the game,' " as Verma explained in a Health Affairs article she coauthored with the secretary of Indiana's social services administration. The program required beneficiaries to contribute 2%–5% of their income, up to $92 per month. Those who failed to pay within two months were locked out of coverage and blocked from reapplying for a full year.

After the ACA's passage, Verma helped Indiana devise HIP 2.0, which incorporated Medicaid expansion into the state's program. And she helped other states devise their own Section 1115 Medicaid demonstration waiver projects through her consulting firm SVC Inc. Although the details varied, this idea of promoting personal responsibility is evident in the waivers Verma helped several other states devise, including Iowa, Idaho, Michigan, and Tennessee, according to a KPMG profile of her work.

Verma tells HealthLeaders that this idea of beneficiaries having "skin in the game" is about empowering them to make their own healthcare decisions in a market-based system.

"I think it brings patients into the centerfold of the whole discussion around healthcare," she says.

Beneficiaries of the HIP program who made their financial contributions, as required, also made better healthcare decisions, Verma says.

"They used the emergency room less. They used more preventive healthcare services, and they had better drug adherence," she says. "So we actually saw quality improve and health outcomes improve when people were more invested in their care, when they valued the care that they were getting."

This strings-attached approach to Medicaid is especially evident in Verma's advocacy for Medicaid work requirements. The administration has approved such requirements in at least nine states, including three approvals that have been blocked by a federal judge, who ruled that Health and Human Services had failed to fully consider the possibility that many beneficiaries would lose coverage as a result of such policies. An appeal is pending.

Verma argues, however, that work requirements align with a "whole person" approach to healthcare.

"There's a lot of discussion about the social determinants of health, and in order to improve health outcomes, we have to look at the person holistically and address those social issues," she says. "Part of that is finding employment."

'Create a Competitive Environment'

While past administrations had CMS focus on one or two key priorities at a time, Verma says, the Trump administration has already notched a long list of accomplishments—from simplifying reporting requirements to rolling out potentially transformative payment models, promoting interoperability of patient health information, implementing site-neutral Medicare payments, overhauling Medicare accountable care organizations, and more.

"What's been different about this administration and this CMS is we're activating the entire agency to deliver change and to improve outcomes," she says.

Looking ahead, Verma says one of the agency's big overarching priorities is figuring out how to curb healthcare costs.

"A lot of the discussion that's going on in D.C. now, and even with the healthcare bill, was about who pays and how much in subsidies. But really at the end of the day, the discussion needs to turn to how much we're paying for healthcare," she says. "We pay more than any other country pays."

"I think if we're going to address healthcare issues, seriously address healthcare issues, that's what we need to be focused on," she says. "There's not a silver bullet. It's a multi-tiered strategy, a multiprong strategy."

At the center of her strategy is a fundamentally conservative belief in the virtues of a free market—one in which consumers are empowered with the information they need to make cost-informed decisions about their care.

"Generally, I would say our approach is to create a competitive environment, where providers can compete for patients on the basis of cost and quality, that they are incentivized to innovate, to drive value in the system," Verma says.

"We're not afraid to disrupt the system," she adds. "We're not afraid of the entrenched special interests. We're about doing what's right for patients."

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