Larry Levitt (00:04): 

In many ways, the ACA is now a third pillar of public coverage in the US along with Medicare and Medicaid. The ACA has filled really important gaps in the healthcare system. 

Speaker 2 (00:24): 

Welcome to Hospitals in Focus from the Federation of American Hospitals. Here’s your host, Chip Kahn. 

Chip Kahn (00:34): 

Today we have a very special guest, Larry Levitt, the Executive Vice President for Health policy at KFF. This is Larry’s second appearance on the podcast, and you’ll remember that he is a leading light on Medicare, Medicaid, the healthcare marketplaces and the Affordable Care Act, generally. We’ll discuss the importance of healthcare coverage and its profound impact on individual Americans and their communities. 

(01:01): 

Health insurance provides more than a financial safety net. It is a pivotal bridge for access to necessary medical care. Those with coverage, experience better health and better outcomes. Despite the progress made in recent years with nearly 45 million Americans gaining health insurance coverage, more than 25 million people in the United States still lack that coverage. This puts their physical, mental, and financial health at risk so there’s always more to be done. 

(01:31): 

As we air this episode in July 2024, it’s particularly timely to note that July 30 marks the 59th anniversary of President Lyndon Baines Johnson signing the Medicare and Medicaid law. This landmark law has been instrumental in providing health coverage for American seniors and the most vulnerable among us. Fundamentally, that’s transformed the nation’s healthcare landscape. Now to the show. So glad to have you today, Larry. 

Larry Levitt (02:04): 

Thanks for having me back, Chip. 

Chip Kahn (02:06): 

Larry, to get started, I know it’s been a professional quest of yours to see the spread of healthcare coverage, what makes health coverage so critically important to individual Americans and their families. 

Larry Levitt (02:24): 

And it has been a lifelong adult quest of buy-in. I mean, my first job out of graduate school was working in Massachusetts on healthcare reform and trying to get people covered. Everything in our healthcare system starts with coverage. People having insurance have better access to services, they have better health, they’ve got better financial security and I think that’s an underappreciated aspect of health insurance is that it helps people avoid medical debt and just improves their financial security generally. And it has broader economic effects, as well. I mean, as you well know, if more people having insurance stabilizes our healthcare system, it improves the payer mix of hospitals and physicians and avoids uncompensated care. So kind of everything starts with more people being covered. And there was a time when that was controversial. I mean, the idea that actually getting people covered made a difference. I mean, there were periods where there were arguments that having people with Medicaid made no difference. It was no different from being uninsured and that’s just not the case. 

Chip Kahn (03:34): 

Larry, you’ve heard from both presidential candidates that Medicare cuts are off limits, but in the Republican platform there was silence on Medicaid, that raises some concerns. What do you think that means? 

Larry Levitt (03:49): 

Yeah, and I do think the silence on Medicaid is quite notable. The Republican platform calls for no cuts to Medicare or Social Security, but does not say the same for Medicaid. And I think there’s going to be enormous pressure, particularly if we have a Republican in the White House and Republican control of Congress, there will be enormous pressure to reduce federal spending, to reduce the budget deficit, to fund tax cuts. And if you take Medicare off the table, Social Security off the table, defense off the table, that leaves Medicaid as a very big target for funding reductions. And if you look back at former President Trump’s record when he was president previously, he proposed in his budgets converting Medicaid into a block grant along with the Affordable Care Act and included about a trillion dollars in cuts to those programs over a decade. So I think Medicaid is on very shaky ground if there’s Republican control. 

Chip Kahn (04:56): 

Well, I guess we’ll see what happens, but without question, Medicare and Medicaid almost 60 years ago was a game changer. As I mentioned in my introduction, the whole landscape of the financing and delivery of healthcare changed. ACA was a game changer too. Can you talk about how its introduction into American life a little over 10 years ago changed the dynamics of health insurance and what has made it so successful in spreading coverage? 

Larry Levitt (05:31): 

Yeah, and I mean in many ways the ACA is now a third pillar of public coverage in the US along with Medicare and Medicaid. The ACA has filled really important gaps in the healthcare system. Certainly guaranteeing coverage for people with preexisting conditions has made an enormous difference. 27% of adults have a preexisting condition that would’ve led to a denial of individual insurance before the ACA that’s now prohibited. And the ACA marketplaces have provided a place to go for people who don’t have employer coverage, aren’t eligible for Medicaid, aren’t eligible for Medicare and the premium subsidies that are available in the marketplace has made that coverage more affordable. Now, the ACA was off to a fairly rocky start in the beginning, healthcare.gov, the website didn’t work. There was a lot of controversy about people’s non-compliant insurance plans getting canceled. A lot of concerns about affordability. And the public opinion was largely turned against the ACA and that’s really turned around in recent years. 

Chip Kahn (06:43): 

We have sort of a natural experiment across the country, not one that most of us wish for, but where we have Medicaid expansion in most states, but we have still a double-digit number of states, some very large states that haven’t expanded Medicaid. Yes, the marketplaces do buffer that some, but there is a difference between those that have and those that haven’t. Can you talk about that a little bit, describe the implications of the fact that we have major, major states that have not expanded Medicaid? 

Larry Levitt (07:20): 

Yeah. And there’s an enormous difference in these states that have not expanded Medicaid and it’s now 10 states, it was 11 till recently when North Carolina expanded. And there’s some very large states, primarily concentrated in the South, Florida, Texas, Georgia. In those states, Medicaid is often very limited for adults. Kids have good coverage. In some cases, pregnant women and low-income parents have good coverage, but adults without children are not eligible for coverage at all. And in some cases, even parents have very, very limited coverage. I mean, in Texas, you almost have to have zero income as a parent to qualify for Medicaid. So that leaves this gap of millions of people who don’t qualify for Medicaid in those states, don’t qualify for the Affordable Care Act and are left with no options at all. 

Chip Kahn (08:19): 

Another important Medicaid issue that we’ve seen recently is that during the COVID Pandemic, basically a Medicaid eligibility was frozen. And in recent days, the states have been released from that and they’ve gone through this process, which we call redetermination of eligibility. Some states have really gone pretty far in making those redeterminations and dropped many, many, even millions of people off the rolls. What’s been the impact of this and is there anything to buffet this? 

Larry Levitt (08:52): 

This Medicaid unwinding has been a huge issue. The requirement that States keep people on Medicaid during the public health emergency was really important. I mean, it preserved coverage for millions of people, but I don’t think if you turn back the clock to early 2020, I don’t think any of us expected the public health emergency to last as long as it did. So the result is we had an enormous number of people who had retained Medicaid coverage and needed to have their eligibility redetermined. So it’s been very chaotic. Our tracking shows that about 24 million people have now been dropped from Medicaid due to this unwinding, and it varies a lot from state to state. I’d say that the good news is that Medicaid enrollment is still higher than pre-pandemic levels. So even though all these people have been dropped from coverage, we are still roughly where we were before the pandemic. So we at least haven’t lost ground in coverage relative to where we were before. 

Chip Kahn (10:00): 

And I guess for many of these people, particularly in some of the big states, there’s tremendous signup by those who were dropped or feared to be dropped, they signed up for Marketplace coverage and part of what helped them was the subsidies that Congress had put in place, the enhanced subsidies, I should say. Unfortunately, those enhanced subsidies are set to expire after 2025. According to CBO, if they’re not extended as many as 5.6 million Americans would likely lose their coverage in ’26 and maybe even as many as 8 million by 2030. What will be the likely result here? I mean, how bad is it if these subsidies are not extended? 

Larry Levitt (10:49): 

These enhanced subsidies, which as you said were enacted during the public health emergency have been transformational for the Affordable Care Act and for people’s coverage. The big knock on the ACA initially was that the coverage was unaffordable, and it was a legitimate criticism that for many people, even with the original premium subsidies, they simply couldn’t afford coverage. The enhanced subsidies have dealt with that issue in large part, and the result has been tremendous. I mean, ACA enrollment has roughly doubled from 2020 to this year, from 11 million to 21 million people. On average, people are saving an additional $700 a year from the enhanced subsidies. So it’s made a huge difference. Now, if the enhanced subsidies are not extended past the end of 2025, we’ll see, the clock will turn back. So people’s premiums will increase dramatically. Roughly the average would be about a 50% increase in out-of-pocket premiums if the enhanced subsidies disappear and millions of people would lose coverage, as you say. So it would probably be the biggest decline in coverage that we’ve seen in recent memory if those enhanced subsidies go away. 

Chip Kahn (12:11): 

Now, there are some naysayers who criticize these subsidies and they’ve done research where they allege that there’s potential fraud in the program because people get the subsidies when their actual income at a given time may be too high to be eligible either for the enhanced subsidies or for whatever level of subsidy they’re receiving. Can you help us sort of unpack what those allegations are in terms of separating fact from fiction and explain whether or not you think some of those concerns hold water? 

Larry Levitt (12:49): 

There have been reports of outright fraud among some, let’s say bad apple insurance brokers. I’d say the vast majority of brokers are not these bad apples and are actually instrumental in helping people get coverage. But some bad Apple brokers have signed people up for coverage inappropriately or switched their plans in order to get commissions without people’s knowledge and there are valid reports of that going on. Now, these other issues of this enrollment being overstated through fraud, I think are themselves overstated. What we’re dealing with are very low income people. So there’s a group of people between 150% of the poverty level who get a full premium subsidy under the enhanced subsidy scheme passed by Congress. And these are very low income people. I mean, for example, the poverty level for a family of three is about $25,000 a year. So these are families that are really struggling to get by. 

(13:56): 

And you could have someone, let’s say, who lost their job and they’ve got zero income right now, and when you sign up for the ACA, you have to estimate what your income will be over the next year. Many people in that situation fully expect to get another job and have their income be above the poverty level, which is the minimum required to receive ACA assistance, that may or may not happen. I mean, these are people leading very volatile lives where their income may jump up and down. Maybe someone, a contractor, someone in construction who has very unpredictable income. So there are many cases where someone believes their income will be above poverty, they believe they qualify for ACA subsidies, but it turns out their income ends up below poverty and they may have to pay back a little bit of the subsidy, but they did get the coverage during that time. So in the rearview mirror, that may look like inappropriate or fraudulent behavior, but it’s really just people living very unpredictable lives. 

Chip Kahn (14:58): 

That’s really helpful. But there are some other concerns, and those have been raised where they say that there’s sort of a substitution effect here where because of the enhanced subsidies, some employers are not providing employer sponsored healthcare because their employees can go over and receive the high enhanced subsidies from ACA. Do you see that out there? Can you make some comment on whether that’s taking place? 

Larry Levitt (15:27): 

Yeah, I mean, I do think that that has taken place to some extent. It’s primarily smaller employers with lower wage workers. Those employers may have struggled to provide coverage to their workers, with the availability of the ACA subsidies that doesn’t make sense anymore. I mean, if you’re a gas station or you’re a dry cleaner and you’ve got a handful of low wage workers, it makes more sense for them to go to the ACA marketplace and get a premium subsidy. And this has been a concern raised going way back. I mean, this was a concern raised when Medicaid was expanded, when the Children’s Health Insurance Program was created decades ago, that anytime you expand public coverage, you’re going to see a slight decline in employer coverage as people respond to the availability of new coverage options. And there is some of that substitution, but it’s unavoidable if we want to try to expand coverage options for people. 

Chip Kahn (16:33): 

For so many years, for many of us. And obviously for yourself, making sure that there was access to coverage for all Americans, affordable access to coverage was job one. And I think you mentioned that having this three-legged stool, Medicare, Medicaid, and the ACA, how do you see the future? How do we hold all this together? How do we make sure that this stool is here 60 years from now as we’re enjoying the almost 60th anniversary of Medicare and Medicaid? 

Larry Levitt (17:06): 

I don’t expect that you or I will be here 60 years from now to see that, but- 

Chip Kahn (17:10): 

Well, we can hope. 

Larry Levitt (17:14): 

I don’t think these programs are going anywhere. I mean, they really are embedded into the fabric of our healthcare system now, but that doesn’t mean they won’t continue to change and evolve and swing to the left and to the right as our politics change. 

(17:32): 

I mean, look at Medicare, I mean Medicare now, over 50% of people are in private Medicare Advantage plans, and who would’ve ever seen that coming when Medicare itself was created. The same with Medicaid, the vast majority of people on Medicaid are now in commercial managed care plans. And I think our big issue going forward now that we’ve made enormous progress on coverage, we don’t have universal coverage, as you noted, but we’ve made a lot of progress. I think our big issue is affordability. Even people with insurance, whether it’s through the ACA, through Medicare, through an employer, still face affordability challenges. The average deductible in an employer health insurance plan now is $1,700 per person. So for a lower wage worker that can feel like no insurance at all. We see 40% of people say that they have some kind of healthcare debt, and that totals over 220 billion a year across the country. So while we’ve made tremendous progress in covering people, and hopefully we can preserve that progress, I think we really need to face up to these affordability issues over the longer term. 

Chip Kahn (18:46): 

Yeah, I agree. And as all of us in healthcare know, I mean the job is never done, but at least we can look back at the last few years with this anniversary with ACA coming online right after its passage in 2010. Yes, rocky at first, but ultimately I think a very successful program. We can have some optimism that we’ve at least solved part of the problem and now we’ll get onto the rest. I just really appreciate you coming today, Larry, and look forward to working with you on making sure that we can close these gaps as we go forward. 

Larry Levitt (19:27): 

Me as well. And thanks for having me. 

Speaker 2 (19:32): 

Thanks for listening to Hospitals in Focus from the Federation of American Hospitals. Learn more at fah.org. Follow the Federation on Social media @FAHhospitals and follow Chip @ChipKahn. Please rate review and subscribe to Hospitals in Focus. Join us next time for more in-depth conversations with healthcare leaders.

Larry Levitt is the executive vice president for health policy, overseeing KFF’s policy work on Medicare, Medicaid, the health care marketplace, the Affordable Care Act, racial equity, women’s health, and global health. He previously was editor-in-chief of kaisernetwork.org, which was KFF’s online health policy news and information service and directed KFF’s communications.  

Prior to joining KFF, Levitt served as a senior health policy adviser to the White House and the Department of Health and Human Services, working on the development of the Clinton Administration’s Health Security Act and other health policy initiatives. Earlier, he was the special assistant for health policy with California Insurance Commissioner John Garamendi, a medical economist with Kaiser Permanente, and served in a number of positions in Massachusetts state government.  

Levitt holds a bachelor’s degree in economics from the University of California, Berkeley, and a master’s degree in public policy from the Kennedy School of Government at Harvard University.