Reframing Healthcare as an Economic Good with Former HHS Secretary Alex M. Azar II

The Business of Health Initiative at Georgetown’s McDonough School of Business hosted former U.S. Secretary of Health and Human Services Alex M. Azar II for a fireside chat with Maria Ghazal, president and CEO of Healthcare Leadership Council. Their conversation focused on the microeconomic forces shaping U.S. healthcare and the challenges to align economic principles with health policy.

As U.S. healthcare continues to represent nearly 20% of gross domestic product (GDP), its systemic inefficiencies, opaque pricing structures, and fragmented delivery systems increasingly pose macroeconomic challenges, noted Sandeep Dahiya, Crnkovich Family Business of Health Chair and director of the Business of Health Initiative. 

In a system driven more by policy inertia than competitive pressures, Azar emphasized the urgent need to reframe healthcare not just as a public good, but also as an economic one – subject to the same laws of supply, demand, and incentives as any other major sector.

Healthcare and Economic Laws: Not So Different After All

Azar opened with a fundamental economic truth: “If you subsidize something, you get more of it.”

While this principle applies across markets, he noted healthcare behaves differently due to the distortion created by third-party payers – namely insurance providers – who separate patients from the direct costs of care.

“Healthcare, in some ways, defies the natural corrective forces of a free market because it is so heavily regulated,” said Dahiya. “What this conversation underscored is that even in this setting, we cannot ignore economic fundamentals if we want to achieve sustainable reform.” 

Secretary Azar highlighted examples of where market forces work in U.S. healthcare and what can be done to make markets more effective.

The Case of Lasik

When Azar asked the audience to identify a medical procedure where costs have dropped and quality has risen, the response was unanimous: Lasik eye surgery. Azar used this to illustrate how price competition can drive improvement when consumers pay out of pocket and are empowered to shop for value.

PBMs and Misunderstood Market Power

Addressing the common perception of “big pharma” dominance, Azar redirected attention to pharmacy benefit managers (PBMs). He emphasized that with only four major PBMs controlling much of the drug reimbursement system, it is these intermediaries — not necessarily pharmaceutical companies — who often dictate pricing and market terms.

The Power of Interoperability

One of Azar’s most passionate points was the call for interoperability in health data. 

“You should be able to move to different providers, and your data should follow you,” he said.

Without seamless access to medical records, patients are unable to compare providers, shop for services, or ensure coordinated care – obstructing true consumer-driven healthcare.

Tools for Reform: Putting Patients at the Center

Azar outlined four key reforms to promote competition and efficiency in healthcare:

Ending on a pragmatic note, Azar reflected that, “Healthcare is messy. There’s no utopian fix.”

As the event concluded, Dahiya noted, “Secretary Azar’s remarks challenge us to think not just as healthcare practitioners or policymakers – but as economists. If we want a more equitable and efficient system, it starts with aligning our incentives with patient outcomes.”

This special event was made possible through the generous philanthropic support of Georgetown University alumni Dr. John de Csepel (B’86, M’95) and Dr. Kevin Ban (C’90, M’96), whose commitment to health innovation and education continues to inspire future leaders in the field.