How Will the COVID-19 Pandemic Affect the Health Insurance Industry?

Accelerating the shift to value-based care, as well as the growing presence of telehealth, may be potentially beneficial long-term effects of COVID-19 on the health care industry, said Dan Mendelson, MPP, founder of Avalere Health.

Transcript

AJMC^®: Hello, I'm Matthew Gavidia. As part of our coverage of AHIP’s Institute & Expo 2020 Virtual Conference, The American Journal of Managed Care^® is pleased to welcome Dan Mendelson, founder of Avalere Health, who will speak on his session, “The Impact of COVID-19 on the Health Insurance Industry.” Can you just introduce yourself and tell us a little bit about your work?

Mendelson: Sure! I'm Dan Mendelson, I founded Avalere in 2000 and grew the business as the CEO for many years. Now an advisor with the business as a private equity investor.

AJMC^®: Notably, the affordability of health care served as the primary consumer concern back in January 2020. In the midst of the COVID-19 pandemic, how have these concerns been amplified? Are any priorities now at the forefront of consumer requests?

Mendelson: Yeah, it's amazing how much things have changed, actually, since the beginning of the year. When you look at the polling results for the beginning of the year, what you saw was that consumers were primarily concerned with the cost that they were paying out of pocket. The cost of drugs, for example, surprise medical bills, those kinds of unanticipated costs in particular were of concern to consumers.

Now, the priorities have shifted completely. Consumers are concerned about job loss, they're concerned about the recession, they're concerned about coverage. So with that shift, coming into the election, coverage becomes incredibly important. Part of it is just this feeling of wanting stability, and part of it really is just the reality that so many Americans have lost their jobs. So, in addition to the crisis itself, coverage has really emerged at the forefront for the next election.

AJMC^®: What implications has the pandemic had on state budgets and may continue to have on health care costs as the year progresses?

Mendelson: Yeah, so this is also a very important point. So, 1 of the things that has happened is that there has been a dramatic increase in the number of people eligible for Medicaid. Again, this really stems very directly from job loss, as well as from employers deciding that they can't afford to continue to offer health insurance, which is another reason why people sometimes end up on Medicaid. So, there are millions of new Medicaid enrollees. In some states, actually, there are millions of new Medicaid enrollees, and so the Medicaid rolls are swelling.

What this does is it really stresses state budgets. States, unlike the federal government, actually have to balance their budgets every year. So, they will tend to look to health plans to help them square that out. So, there's a lot of growth in Medicaid managed care, and there's a lot of growth that ultimately will enable the states to better address the needs of their population, and that's really kind of the goal.

AJMC^®: Being in an election year, there are a flurry of new ideas and proposals being generated by Republicans and Democrats to address health care coverage. Can you discuss some growing trends to observe and how government presence has grown in managed care?

Mendelson: Yeah, well, first, I think for starters, there's bipartisan agreement that health plans offer predictability and stability in government programs. One thing that I find really remarkable is how much in the Medicare program and the Medicaid program, the presence of managed care has grown.

I worked in the Clinton White House and when I was running OMB health, we had about 7% of Medicare beneficiaries enrolling in Medicare Advantage. Now it's over 35%, and by our estimates, it'll continue to grow double digits over the next few years and it has been growing double digits really in the first quarter, as you can see from the earnings reports from a lot of the larger companies.

What this means is that by the year 2024, which is a scamp 4 years away, it's likely that managed care is going to be the dominant form of Medicare. Medicaid also, managed care is growing really rapidly. So that's a place where, frankly, I think that there's a fair amount of agreement. Then with reference to going forward into the election, first, we're going to have a relatively centrist debate here. What I mean by that is with Bernie Sanders out of the race, and with Joe Biden, appropriately focused on the economy and COVID-19, and many other kind of really front burner issues for the American public, we're not going to be having a debate about Medicare for all in this election, it's just not going to happen.

So, it's really going to be about centrist approaches to increasing the amount of coverage in this country, and that's really where I think frankly, from my perspective, I think that's a productive discussion. If we can drive towards full coverage in this country, that will have been a really significant accomplishment over the next 4 years.

AJMC^®: Can you discuss the growing influence of telehealth amid the pandemic? And are any other services seeing increased usage?

Mendelson: Yeah, telehealth has been an incredible bright spot here. It's been years since the tools and the methods of telehealth have been available to plans and to providers. This pandemic, I think, was kind of the kick in the pants, that we all needed to bring telehealth into the mainstream. Patients prefer it—it's broadly applicable in a lot of situations. It uses less gas, it's environmentally beneficial, and I think, from really all accounts, it's going well, that if you have video and audio, you can have a meaningful interaction with a patient and, in many cases, address their needs.

Now, it's not a panacea. There are many things—you can't touch a patient through a video and that's something. Then, in addition, we're not configured to have vital signs read accurately through telehealth at this point. So, there's a ways to go, but the thing I think that is going to change and the durable change will come out of this is that telehealth is coming into the mainstream and the government is going to have to pay for it.

So, telehealth is covered right now by managed care plans generally and has been for some time. The federal government has given a fair amount of latitude to do that, and now it's being covered in fee-for-service (FFS). Now, going forward, the Medicare program in particular is going to have to figure out better ways to understand what is being delivered to make sure that fraud does not occur in billing, relative to telehealth, and ultimately that the federal government is paying an appropriate amount for these telehealth visits.

It is definitely the case that it's less expensive to see a patient virtually than it is to see a patient in the office, and again, our tax dollars should not be paying the full cost of a visit if the cost of a visit is now actually coming down. So, I think that these are issues that will be addressed over the coming years. There'll be active policy debates that will happen, but telehealth is definitely not going away.

AJMC^®: In the managed care pipeline, can you discuss some projections for health care and changes precipitated by COVID-19 in the next decade?

Mendelson: So, telehealth is kind of first among equals, which we just discussed, but then there are many other ways in which COVID-19 is going to change plans kind of on a going forward basis. I think, first is just growth in enrollment, because as the recession has come in, polling of beneficiaries says that they care really deeply about predictability of expense, and plans offer that and FFS does not. So, that's something where I think that growth will be kind of a lasting durable effect.

Generally, I think it's fair to say that during COVID-19, in addition to trying to deliver care remotely, 1 of the other things that has happened is that state licensure rules have loosened up a bit, in many cases to allow medical professionals to be practicing at the top of their licenses. So, for example, you don't need, and most states have relaxed the rule that you needed to have a respiratory tech to adjust a respirator. That's something that can be done by a capable clinician that is not a respiratory tech. So, some of those protective roles, if you will, I think are being pulled down, which is productive.

Nurses able to prescribe is another 1. There's no reason why nurses should not be able to prescribe, and if a patient has obvious signs of a respiratory infection, that patient shouldn't be able to get a needed antibiotic through a televisit. So, it's just a much less expensive and frankly, less germ intensive way of practicing medicine that I think will really be with us for a long time.

Then, I'd say lastly, that COVID-19 will accelerate the shift to pay for value, because a lot of hospitals—we have a hospital consulting practice, and a lot of the hospitals are coming to us and saying, if there's 1 thing that I've learned in this crisis, it's that the FFS model is not serving us in the long term, and that we really need to move towards more of a value-based model. So, I think that COVID-19 will, in a lot of ways, accelerate the interest and engagement from providers in pursuing value-based models.