Lessons Learned, And Not Learned, From The Pandemic

The COVID-19 pandemic lies at the intersection of healthcare delivery and public policy. Deborah Freund and Terry McGann have spent much of their professional lives at that crossroads, studying and steeping themselves in the issues.

Freund, a university professor and former CGU president whose academic expertise is in health economics and health policy, recently co-authored a major study of the Affordable Care Act and its impact on insurance coverage over the past decade. McGann earned his PhD in political philosophy and government from CGU (’75) and has taught at the university. He began his career in healthcare economics and policy in the 1970s, served elected officials, and developed a reputation as a dean of Sacramento lobbyists.

Freund and McGann recently shared their thoughts about the pandemic and its ramifications in the following Q & A.

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Should more have been done to prepare for a pandemic? Did politics get in the way?

Terry McGann: In 2017 the Smithsonian had a dramatic article predicting that the next pandemic would come from China, so it’s not like there wasn’t a discussion about this possibility. But there are pressures that always confront government. It’s not easy to pick and choose which crisis you’re going to prepare for because it involves money, time, energy, and risk. If you start spending hundreds of millions of dollars on something that might not happen in your lifetime, you open yourself up to a lot of criticism.

Though we were hopelessly unprepared for COVID-19, we’ve moved toward something that might hopefully lessen the horror of the pandemic, thanks to the resilience of the American economy and the kind of talent we have in the private and public sectors.

There’s no question that in the new world of politics, if you’re a Democrat, and a Republican has a bill that would provide infrastructure, for example, it’s good for you if they can’t win—even if the country loses. When the GOP controlled the Senate during President Obama’s administration, they basically didn’t approve any of the bills that came out of the House. This kind of thing shows that our leaders have not been good stewards, and we need people in politics to be stewards. Maybe this crisis will create a real opportunity for better thinking about that responsibility. Without it, the political system is hopelessly compromised.

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What has the pandemic revealed about the state of our nation’s healthcare system?

Deborah Freund: The pandemic has really highlighted disparities in health outcomes and access to care. For a whole host of reasons, people who are African American and of Mexican or Latin American descent, and other at-risk populations such as those who are incarcerated or homeless are in worse health than anyone else. And they are much more likely to die of COVID-19. Some problems go back to the Tuskegee experiment—you have a level of distrust among some groups about going to doctors when they aren’t the same race. As a result, they don’t go.

Unlike other developed countries, we have a significant number of people–about 8 percent of the population—not covered by health insurance, which may be keeping them from seeking care even if they need it. There is also a lot of evidence that individuals who are having strokes and heart attacks may not be going to the emergency room or hospitals for care.  If you are really sick—if you tested positive for COVID-19—you could go to an emergency room and get admitted to a hospital, but the bills would follow you later. When you have no insurance and there are high costs, there are problems.

Something that isn’t being talked about very much—I sit on several health system boards—is the way hospitals are accommodating COVID-19 by planning for surges in intensive care. Hospitals are running at low occupancy because they are waiting for surges, and they are losing money because a lot of other types of care are being deferred. They are getting money through the CARES Act, but I don’t think that is going to offset the extent of the financial damage to many of them. What that does to the future of healthcare and innovation remains to be seen.

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How much damage to the economy will the pandemic cause, and how much will be long term?

 McGann: This virus is very likely going to come back in the fall, and there hasn’t been a great deal of discussion about that except from the experts. It’s difficult predicting what the endgame will be. We already have a significant national debt. Thanks to the Fed’s ability to print money—let’s hope that doesn’t go away—we were able to get a lifejacket and stop a depression. But we’re going to be up to $25 trillion in debt, and there is a formula on the relationship of the national debt to GDP. It’s not an irrelevant number. It’s something that policymakers have to focus on, and they have to make it part of their decision-making.

Freund: The economists agree we will see a transformation. It will not look like it did before the pandemic. Forecasts indicate that the unemployment rate and national debt will exceed anything we have experienced before, such as the recession that began in 2008. So, regrettably, I fear that things will not be back to normal anytime soon.

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How will the pandemic inform discussion about national health policy?

 McGann: Administrations going back to Teddy Roosevelt have talked about universal health insurance. In 1954, the IRS ruled that pensions and health insurance would be tax deductible, which incentivized employers. When Medicare and Medicaid came along in 1965, millions more came onboard. Now, healthcare providers are subcontractors to the four big insurance companies, which control an overwhelming majority of the market. They are allowed to measure their own risk and are under no obligation to insure who they don’t want to insure. Health insurance companies aren’t evil. They’re not villains, but they need to do what life insurers have done, which is to not cherry-pick a region within a state.

About 75 years ago life insurance companies were prohibited from establishing different rates for specific regions within a state.  A single rate for the entire state was required. They could, of course, establish different rates based upon the age of a person. In healthcare insurance today, companies should be required to create “community rating” price calculations and be barred from “experience rating,” meaning cherry-picking various policies would not be permitted. The Kaiser Health Plan was originally dedicated to this principle.

Since health insurance is so complicated, I would not be opposed to a large state like California being divided up into several regions, but each would be required to have a singular community rate. As it stands now, it’s almost impossible for the large insurance companies to fail. They increase their rates every year and they pick who they want to serve. Their ability to control costs and risks is non-sustainable.

I used to represent Hospital Corporation of America for 24 years as a lobbyist in California. I tried to convince them that their future would be compromised forever if they didn’t adopt universal healthcare. If everyone is insured, you don’t have this uncompensated care gestalt of financial accounting that makes no sense. That structural issue may come front and center as a result of COVID-19. It will be clear by the end of the year that a lot of people who died because they didn’t have access to healthcare shouldn’t have died.

If the health insurers can’t figure it out, we’re going to have a single-payer system in this country—and I don’t think that’s a great idea. I think the public-private partnership is better, but if they don’t get moving, they’re going to get crushed.

Freund: We have identified many weaknesses in providing access to care and coordination of care, of providers not being ready, and a shortage of doctors and other health practitioners. Special provisions are allowing people from one state to practice in another in which they are not licensed, and new graduates who were supposed to start residencies are now on the front lines. I would hope that we will use the science and data to go forward with greater collaboration so that we’re able to work together to do the things we need to do. It’s a very complex business, and shortcuts are doomed to fail.

McGann: All these people who are uninsured are now a big risk to the people who are insured. They’ve never had this kind of exposure to this side of the issue—direct health risk. To me, that is one of the seminal things that is happening right now.

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The future of healthcare policy, with additional insight from Deborah Freund and Terry McGann, will be featured in an upcoming issue of The Flame.

• Read more stories of “CGU Heroes” here.