Pandemic to Bring Painful Choices for States, Policy Makers: A Q&A With Larry Levitt

May 15, 2020
Interview by Allison Inserro

Volume 26, Issue 05

To mark the 25th anniversary of the journal, each issue in 2020 will include an interview with a healthcare thought leader. For the May issue, we turned to Larry Levitt, MPP, executive vice president for health policy for the Kaiser Family Foundation.

Am J Manag Care. 2020;26(5):192-193. https://doi.org/10.37765/ajmc.2020.43150

AJMC®:

AJMC® launched in 1995, after the attempt at creating the Clinton health plan, which you worked on, and 15 years before the Affordable Care Act (ACA) was enacted. As we talk in 2020, it has been 6 weeks since the World Health Organization declared coronavirus disease 2019 (COVID-19) a pandemic, and it seems to have ripped open and exposed every fault line in American healthcare, whether we talk about access and price or about things like racial disparities.

What does that illustrate for you, as a health policy expert, in terms of the ACA’s achievements and failures?

Larry Levitt: The ACA has had a tremendous effect and without the ACA, we would be in even worse shape right now heading into this double whammy of a public health crisis and an economic crisis. Without the ACA, we would have upward of 20 million more people uninsured, and there would be no safety net as people are battling these [issues], as people are losing their jobs and their health insurance. So, the ACA has certainly not solved all the problems in healthcare and certainly not dealt with all the problems we’re facing right now with the pandemic, but it has made an enormous difference and positioned us much better to respond. If you compare countries, the coronavirus doesn’t respect international borders, and every country in the world is facing it in some way. But even with the horrible stories you pull out of Italy or Spain, you’re not hearing stories about people dealing with big medical bills when they get sick with COVID-19, and we are certainly hearing those stories in the United States.

I think the pandemic is exposing faults in our healthcare system like racial disparities, like insurance and underinsurance. But I think it’s even more complex than that: It gets to how we finance healthcare in this country. I mean, we’re now scrambling to bail out hospitals [and] physician practices, because they’re either dealing with the effects of outbreaks in their communities or dealing with massive declines in elective procedures and big revenue losses. In many other countries where hospitals are globally budgeted, it’s a much more stable financing system than what we have here.

AJMC®:

In that answer, you just encapsulated a bunch of future questions. The ACA also created value-based payment reform mechanisms. Given the massive amount of resources that we need to cope with a pandemic here as opposed to other countries, do you think that makes payment reform here more imperative?

Levitt: I think the public health crisis and the economic crisis, in some ways, do make payment reform more imperative but also probably politically more difficult. As we headed into this crisis, we were talking about addressing drug prices, we were talking about addressing surprise medical bills, and we may still address some issues, but it feels like a bridge even further than it was [before]. I think it drives surprise medical bills, some of the biggest come from emergency rooms or physician practices. These are people on the front lines of the epidemic. I mean, politically, it’s hard to imagine Congress taking on emergency room doctors in the middle of this public health crisis. We’re depending on drug companies to develop antiviral treatments and hopefully a vaccine, and again, I think politically it would be very difficult to take them on and try to lower prices.

Then I think, more broadly, the ACA did provide a push toward value-based and more integrated delivery. I would say it has been largely unsuccessful, and this crisis does sort of illustrate how ill-equipped our payment system is to deal with surging demand like this.

AJMC®:

In a previous interview, I phrased it as “nibbling around the edges,” and the interviewee responded by saying politicians will have to make really tough choices and Americans will have to accept them, and that’s not likely to happen on either side. Is that your assessment?

Levitt: Yes, I think that’s true. It’s often the case that big social change happens out of big crises, and I think it’s fair to call this a big crisis at this point. So, in some ways, this does create an environment for much bigger change in healthcare than we might normally expect. On the other hand, I think we’ll see a return to all of the same political forces that tend to stop that kind of change from happening. Even if Democrats take the White House and take control of the Senate, it’s still going to be a very divided Congress and is unlikely to take on big change in the healthcare system.

The federal government is also spending enormous amounts of money to provide relief and stimulus to the economy. And I think at some point, people are going to start also worrying about the deficit and that will make it difficult to put more money into coverage. And again, it’s always politically difficult to take money away from providers.

AJMC®:

What kind of decisions do you think states will have to make in terms of areas like their Medicaid budgets? States and private payers were already figuring out how to deal with very expensive or curative treatments. Louisiana did an innovative payment program [for pharmaceuticals]. And now there’s this other expense coming from the pandemic, whether it’s treatment or people just getting coverage now. What do you expect to see at the state level?

Levitt: States really are facing a double whammy, from both the expected increases in healthcare costs from the pandemic and then including people relying on Medicaid as millions lose their jobs and their health insurance. And arguably, it’s a triple whammy because states are also dealing with declines in revenues and generally states have to balance their budgets. This pandemic will put enormous fiscal pressure on states, and I think they will be looking for ways to control costs. Often that comes out of the hides of healthcare providers and restrictions in eligibility, but this combination of higher healthcare costs, lower revenues, and more people relying on Medicaid could put more fiscal pressure on states than we may have ever seen.

AJMC®:

You talked a little bit about change coming out of a crisis before. Do you think it’s possible we will see a silver lining come out of this? In 1995, the term social determinants of health wasn’t really kicked around as much as it is now. We see now that not everyone is social distancing in a large suburban house; many are crowded in apartments. Do you think there’s any hope that any good will come out of this?

Levitt: I do. You know, even before this crisis, there’s been a growing recognition of social determinants of health. There have always been discussions in some circles about the need to address issues outside the healthcare system that do affect people’s health. But I think in recent years, there’s been a growing recognition of the effect of poverty and race and inequality on healthcare, and I’ve seen a growing number of states and health systems start to take steps to address it.…In the midst of the crisis, it’s going to be hard for anyone to do anything but survive. But coming out of it, I could see kind of a further push for addressing some of these broader issues, like housing, in particular.

AJMC®:

Where are the opportunities for candidates to respond in the fall—either on the state level or, nationally, presumably Joe Biden, to respond about the health crisis that we’re facing right now?

Levitt: Sitting here in the spring, it’s so hard to know what the environment is going to be like in the fall when people cast their votes. Healthcare was always going to be a big issue in this election, and a public health crisis makes it much that more personal for people. I think healthcare will be very top of mind as the campaign progresses and people cast their votes. What I don’t think we know is whether by the fall, we will feel like the worst is behind us and the debate will be about what comes next, or we’ll still be in the middle of a crisis and debating about how to respond.

AJMC®:

It dies down and then it comes back.

Levitt: Right. I mean, if you look at the 1918 flu, the second wave was bigger than the first wave, and that could certainly be the case now. Who could have predicted a few months ago that one of the biggest political divides in our country was whether to open bowling alleys and massage parlors? I think our politics are very hard to predict right now. I do think, you know, there are still 14 states that haven’t expanded Medicaid and that will be increasingly an issue as more people get sick with COVID-19 and more people lose their jobs and their health insurance.

AJMC®:

Speaking of health insurance again, because most people in this country still do have their coverage through employer-based insurance: If more people are uninsured in the fall, which it looks like they will be, do you think that will put pressure on states, or anyone else, to act?

Levitt: People who lose their jobs and their health insurance qualify for a special enrollment period. The people facing jarring changes in their economic circumstances will qualify for the ACA special enrollment and subsidies. There are many people who were already uninsured even before they lost their jobs and made a decision about health insurance before there was a pandemic. If they live in a state where the exchange is controlled by the government, they have an opportunity to get insured now, and I think there will be growing pressure to give them that opportunity. Going back to the campaign, Joe Biden has put forth a proposal to increase subsidies under the ACA, including expanding them to [people in] the middle class who don’t now qualify, and also providing a public option open to everyone. I think while the ACA will be here as a safety net for the first time during a recession, it will become apparent that the safety net does have holes and doesn’t necessarily provide affordable coverage to everyone.

AJMC®:

And then we could have the prospect of the Supreme Court making their ruling on the ACA during a recession.

Levitt: Supreme Court justices presumably follow the law, not politics or the economy, but this is certainly not the environment that the court expected when they when they took this case.

AJMC®:

Have you seen any research showing how many people who are infected and sick have insurance or don’t have insurance?

Levitt: No. The administration has floated the idea of covering hospital uncompensated care costs for people who are uninsured and get sick with COVID-19, and we’ve done some estimates of how much that would cost, with a big range given how much uncertainty there is around how many people will be infected and need to be hospitalized.1

But we have never seen job losses this rapid and this steep, and that’s no doubt leading to millions of people losing their health insurance, but we have no way of measuring in real time how many people are losing their coverage and certainly not how many of those people are getting sick with COVID-19.

AJMC®:

Where do you think we’ll be in 2025? Where do you think this is all going?

Levitt: In healthcare, we often focus on access to care, whether people have insurance or not, and I think we don’t focus enough on whether that healthcare is truly affordable for people, even those who are fortunate enough to have insurance. And as the cost of health insurance and healthcare prices continue to outpace people’s stagnant incomes, the affordability crisis in healthcare is simply going to get worse and worse. The ACA made tremendous strides in getting more people covered but didn’t really address the challenge of affordability for the many more millions of people who were already insured and struggling with bills. Rising prices, and the effect [they have] on affordability, will be the biggest issue in healthcare until we figure it out.

AJMC®:

I guess those will take some hard choices, and because of the current crisis, no one’s going to be making those choices anytime soon. Would you say that’s probably accurate?

Levitt: On the one hand, you know, a crisis like this presents an opportunity for major change, but [on the other, it] also will make people very cautious about challenging some of the powerful and entrenched interests, including physicians and hospitals who are on the front lines responding to the crisis.

AJMC®:

Do you see any other cultural issues or cultural wars arising out of this, like how we’ve seen Texas try to call abortion an elective procedure? You know, what’s a necessary procedure, what’s not? People are demonstrating over guns, for instance. Do you see any other cultural/health divides coming out of this?

Levitt: It’s often the case that healthcare advocates sell proposals to increase coverage as protecting the health of the entire community. This crisis has illustrated that in a way that we’ve never seen. An infectious disease of pandemic proportions makes clear that there really are risks to everyone when people are uninsured or don’t have access to healthcare.

So on the one hand, this crisis has brought a sense of solidarity to healthcare professions in the United States that is usually not present. But we’re starting to see fractures in the idea of social solidarity and “we’re all in this together.” We’re starting to see that state by state, where some states are prioritizing economic activity over public health for the larger community.…Most people, even if they’re infected with coronavirus, do not get severely ill and do not face risk of mortality. So we’re starting to see fractures between the people who were at less risk of illness here and more at risk of economic dislocation versus the more vulnerable segments of our community who are at greater risk from frailty and sickness.

Keep in mind, this has become something of a political divide, as well. There’s always been an ideological divide between Democrats and Republicans about the role of government and regulation. And that’s emerging in a very visible way now in the debate over how much social distancing should be required.