Health Care's Affordability Crisis Is Getting Worse w/ Larry Levitt, CEO-Elect & EVP, KFF

Welcome back to Healthcare Rounds, where we give you smart conversations with the people moving healthcare forward. Today I'm speaking with Larry Levitt, one of the most trusted nonpartisan voices in American healthcare policy, really the person that reporters and policymakers call when they need a straight answer to a question. In January, he will take on a new role becoming just the second chief executive in KFF's history. So with that, Larry, welcome to Healthcare Rounds. Thanks for having me. So I'm going to give you the easiest question first. That's a setup because it's because we could talk on this first question for hours. So but I'll what my question is when you think about it, if you had to name sort of the single underlying force that's shaping most of the fights in American healthcare today, right now. So the thing behind the headlines, not the headline itself, what would you say that would be? Well, um, you're right. We could talk about this for hours, but um I mean it's money, right? It's uh that uh healthcare is 18% of GDP. Um, healthcare is the number one affordability concern for consumers. Uh healthcare is a huge and growing expense for employers. Uh and you know, for the healthcare industry, healthcare is their revenue source. Um all of the fights we see, whether it's fights in the marketplace or fights in in Congress or state capitals, um it's about money. Uh and you know, we saw that recently with the uh so-called one big beautiful bill uh passed by Congress and signed by by President Trump, um, which is will be the biggest rollback in federal uh spending on healthcare ever uh over the next decade. Um and uh you know that that's a huge savings for the federal government, but the flip side is it's gonna make uh affordability uh worse for consumers uh and will be a huge revenue hit for hospitals. You know, on to that point, is it is this a values argument? Is it a policy argument? Is it a political argument? In other words, as you say, there are some savings, right, um, to to be achieved, or the I guess that's the goal. But what what is driving that? And I I I ask the question because I try to be as unbiased as possible too. Um our clients don't want me offering slanted opinions or political opinion. But just on the face of things, it just seems very wrong-headed. I I don't know how's how else to say it. So what what's behind that? I mean, there is um so besides money, uh, there are big ideological fights uh over healthcare as well. And and that's that's always been true. Uh, you know, conservatives believe in a smaller role for government, uh, whether that's in regulating the marketplace, in in spending money to provide coverage, or uh uh more affordable health care for patients. Um and generally liberals believe in a bigger role for government, uh, you know, and and there's even a spectrum there from the left, which wants to see a Medicare for all system where the government would act as the insurer for everyone, uh, but even more moderate Democrats who uh helped push the Affordable Care Act, um, which certainly envisioned and has meant a bigger role for government in regulating insurance, uh, protecting people with pre-existing conditions, and and spending money to expand Medicaid and provide subsidies in the individual marketplace. So, you know, a lot of these fights, money is at the root of it, but it but it is also um uh uh a difference in values about about the the role of government. Um and and we see that very much in the debate over Medicaid. Uh, you know, the uh first part of that uh one big beautiful bill uh will go into effect in January, which is a work requirement for uh Medicaid expansion enrollees. Uh and you know, conservatives generally see Medicaid as a welfare program that's there for uh who they consider the deserving poor. Liberals see it as a you know, as a piece, a stepping stone towards universal coverage. So is it just that, and I promise, this is the last question, we can move on from the politics, but is it is it just that I get the small government idea? There was um, you know, if I go back in my history, I think there was a one point when I was in grad school, like first time around, I I thought I was a libertarian, right? That lasted about I don't know, six months. Um, but so I I I I get the small government uh issue. I also know that Uncle Milty, Milton Friedman, um was very well aware of and talked about and wrote about market failures. And I literally did just the last, it's not posted yet, but probably will be by the time that this episode goes up. I had a conversation with Elliot Fisher about market failure and um collective action problems. And it just seems like a pretty basic public policy 101 collective action issue and market failure with healthcare period of how we do it in this country. And I that's where the the bigger, smaller argument I just I struggle with because I feel like a good conservative economist should be able to recognize market failure when he or she sees it. Yeah, and and uh and I think in many cases they they do. Um and you know, certainly if you look, there are many ways in which healthcare uh does not follow the the uh economics 101 textbook of a perfectly functioning market, right? I mean, um it it is uh there are asymmetries of information. You know, as a patient, you know a lot less than the doctor knows uh who you're seeing, um uh, or the insurance company for for that matter. Uh prices are not transparent. Maybe we're making a little bit of progress towards that, but uh the prices are certainly not known in advance to patients in all cases. Um markets are incredibly concentrated. I mean, we did an analysis recently. I mean, virtually 100% of metropolitan areas have a concentrated market by the the measures that uh antitrust regulators use. Um, and the third-party payment system means that consumers are not necessarily actually exposed to the prices of healthcare. I mean, there's some good reasons for that because most people couldn't afford those prices if they get seriously sick. But uh, but you know, you have insurers footing most of the bill. Um so yes, I think most economists would would see those market failures and recognize some some role for government in in healthcare. Um but I think there is still big debate over uh how big government should be, how much government should spend, um, what the role of the federal government versus the state. So still plenty of room for for the left and the right to disagree. Which is always interesting to watch from the the sidelines. Uh unless you run into issues like millions of people no longer having access to Medicaid, let's say, for example, um then I think it becomes problematic. Well quick switching gears a little bit to the the what I think I don't know that people would have said that it's a panacea, but when you know kind of the the the term value-based care came into being, depending on your definition, I don't know, 20 years ago, 15 years ago, I think a lot of people thought, okay, we're moving in the right direction here. There are elements of that in uh the Affordable Care Act, right? Sprinkl throughout. Um, some some overt, some not quite so uh obvious. W from your perspective, Larry, what what would the jury say on where we are today with with value-based care and as has it lived up to uh its promise? You know, it it it has uh you know, value-based care, accountable care, uh capitation. I mean, we could go way back, right? Right. Uh and and you and I have been around, we've been around long enough to know these things. So yes, yes. Uh you know, it has a it has intuitive appeal. I mean, for anyone who works in healthcare, uh it it just makes logical sense that uh fee-for-service medicine will result in higher costs, poorer quality, less coordination. Um, so it just kind of makes sense that we should uh get the incentives uh uh better aligned so that the the people making the decisions uh about care um have an incentive to do that in a cost-effective, value-based way. Um and I should say value uh and the late Uwe Reinhard used to talk about this a lot. I mean, there's a numerator and a and a denominator in value, right? I mean, you you can improve value uh by lowering costs or by improving quality, right? I think I think most of us uh are focused on the cost side, uh, but you can you can you can do it in in either way. Um, you know, I I I would also say that uh, and I'll I'll I'll get to your question in a second, but um that that I think it was a terrible term, value-based care. I mean, uh while it makes intuitive sense in healthcare, if you think about it in other contexts, um like if you're looking for someone to paint your house, right? Um you know there's value painting out there. You probably don't think uh they're gonna do a great job in painting your house. They they may be cheap, but they're probably not gonna be the best, the best paint job. So if you're looking for a good quality paint job, you're probably not gonna go with value painting. Um and I so I think for for for patients and consumers, it's got a negative connotation. Uh and it looks like we're just trying to spend less and and skimp skimp on care. Um I think you know, for for all the sense it makes intuitively, uh, the results have not been great, right? I mean, that you know, there are plenty of studies out there now that show um it's probably improved, uh uh, may have improved quality some, may have lowered costs some without any effects on quality. But it it sure seems far from the panacea um to to our to our cost and quality problems. It reminds me of another recent conversation uh that I had here uh on healthcare rounds. Um I'm wondering if so I agree with everything you said, by the way, Larry. I mean a terrible term, uh jury is out, so to speak. But I but I wonder if it's so much focus on the event and the payment and the bundle and what's actually happening at that moment, uh, and not enough attention paid uh to all of the health care that goes on uh between visits, right? You know, the things that that are can and should be done uh by health systems, the things that uh uh consumers and patients should be thinking about between visits. But there's so much of this, like a bundle payment is a great example, right? You're gonna get a hip, a convener puts together, you know, the the bundle, uh, there's a fixed payment amount. It's all very you know, from a budgeting standpoint, it can be very convenient because there aren't a lot of surprises. It doesn't do much for utilization, but not a lot of surprises could, and I think some documentation that it does improve quality, um, right, and in many cases. Um, but that's about an event. It's not so much about what led that person to need that hip replacement or knee replacement. And maybe that's a maybe using bundles is a bad example. Maybe talking about blood pressure or cholesterol or weight or things that are so much more common out there would be a better way of thinking about it. But what are your what are your thoughts on that, sort of like the the process around all of that? Yeah, and I think um, you know, again, these bundled payments, uh, particularly for orthopedic procedures, um, may make a lot of sense. And I I agree there's there's some evidence that they've uh had had a positive effect. Um, you know, I think when we're looking for examples, we we often, and I'm um, I'm guilty of this as well. I mean, we we look for those uh kind of simple, obvious ones like hips and knees and um and uh you know unfortunately the list, I don't think the list is that long that where you can really naturally create a bundled payment like that. Um but you're right. I mean, we our system is not designed to uh to focus on longer-term care coordination and and prevention. Um, you know, people switch insurers all the time, um often because they're switching jobs or their employer uh switches coverage. So, you know, no given insurer really has uh the incentive um to do something uh that might save money or improve quality of life 10 years, 15 years down the road. They're they're only seeing the cost uh from this year. Um and you could certainly see that with something like GLP1s, right? I mean, I I think the the prices of GLP ones have now come down so much uh that they uh I think I think almost everyone would agree they're now uh um cost effective uh in terms of what they provide. But the benefits may may not come immediately. Um so we're seeing uh actually insurers and employers who who who jumped in and started covering GLP1s now backing off uh because they they won't necessarily see the savings. That's an terrible indictment. I mean, it's a fact. I agree, I agree with you. It's a fact, but it's an indictment at another level of our system. If you know profit-motivated, nothing that there's nothing wrong with that, but if our time horizon is so short term that we're not gonna want it to make a patient better over the long haul, and especially GLP1s, uh I mean I should do a whole pod episode on on GLP ones alone. There's so much there to talk about that if your goal is to improve patient care, if your goal is sort of aligned with the triple aim or the quintuple aim, however you define that, um it should be a no-brainer. Yet what you say is is entirely accurate. They jumped in and now pulling back because maybe they're not gonna see that direct benefit with people switching insurance. Yeah, and and they're definitely seeing the increased cost. I mean, you know, employers, uh insurers started covering it, and uh, I mean, there are a lot of people out there who uh can benefit from from GLP1. So the cost was meaningful. I mean, the the the immediate cost. Um, you know, the crazy thing is, I mean, our system is now dominated by just a handful of insurers uh nationally. Um so you know, collectively, we we absolutely do have the incentive, and even those handful of insurers have the incentive uh to think about the longer term. Um and you know, in some ways it's not even just now uh until people turn 65 and qualify for Medicare, because over half of people in Medicare are on private Medicare Advantage plans, which are dominated by those same big insurers. Right. So one of the questions that I've been really dying to ask you, just because of your tenure, you've been through started in the Clinton administration, if I if I remember, if I got my notes right, but you've been through several cycles of what I would think of as you know big swings at health care reform, right? Um is there a pattern that you see repeating? Are there things you talked about money, and we can just set that aside. We know that's that's I underlying problem, get it. But is there a pattern that you see that every time that you know policy-wise, we try to take, as I said, a big swing that just keeps repeating itself over and over, or is it something different that we see from Clinton health care reform? Actually, we can go back to uh you know the 60s, right? And the introduction of uh Medicare and then Medicaid and things like that. So what are your thoughts on that, LarryYeah, so um, I mean, health policy is groundhog day, right? I mean these uh uh the issues don't don't tend to change uh day to day and and year to year. Um I mean, it it things evolved, right? So if you look at uh, for example, the the Clinton uh health reform debate uh and the unsuccessful um uh debate, um I mean the Clinton administration and I was there tried to take on every every healthcare industry into interest, right? I mean, doctors, hospitals, physicians, insurers, um, everyone, employers. Um and uh I mean you can't do that and and pass a bill. Uh I mean those those interests are just too powerful. Um you and you need allies. And and the the the Clinton White House really didn't have allies. Um the passage, successful passage of the Affordable Care Act um was due to learning the lesson that uh, okay, you can't take on all these powerful interests and and get a major piece of legislation passed. Um and uh you know all those powerful interests were either allied with uh the Obama White House or at least at least sat on the sidelines. Um so a bill passed has had tremendous effect at bringing the uninsured rate down to the lowest level ever. Um, but it didn't really meaningfully tackle uh the underlying cost of healthcare. Because if you're gonna do that, you have to you have to take on uh some of those some of those healthcare in industry uh interests. Um so you know, I think the the the the lesson I I've learned is um we're a we're a very incremental nation. Um you know, we we uh it is uh you know, I'm not even sure Medicare and Medicaid could pass now, um, give given our politics. Uh but we we just you know incremental change is is the only kind of change that's really possible in our system right now. Is there anything that feels different with this point in time, this administration? And I'm thinking of like on the one hand, you have the whole Maha um movement. And then at the same time, you have this rapid escalation in AI. I mean, I feel like every week I could be writing about AI or talking about it. Everybody, AI, AI, right? But it but so there are some, from my viewpoint, there are some things that are new, but at the same time, a lot of recycled thoughts. Where do you see this is in 2026, you know, really the the the key the key issues that may be a little different today than say back um not even going back to Clinton, but even at the start of the Affordable Care Act? Yeah, I mean I think uh I mean you raised Maha, and I I had high hopes for uh for for Maha and the focus on chronic disease and the drivers of chronic disease. Um, I mean, this this felt at least like a possible moment where um you could bring people together uh to focus on those issues, people across the ideological spectrum. I think the the the uh in fact what happened is that got so tied up in anti-vaccine movements and the anti-science uh movement uh distrust of uh of medicine um and uh and and i think that that got in the way of any any chance of of bipartisan uh um cooperation on on addressing chronic chronic disease um and i think you know the the uh what we're seeing now with this uh attacks on science attacks on medicine attacks on established institutions uh is a dramatic uh distrust on the part of uh the public um in government and in particular in government science agencies so our polling has picked up um and it started in COVID but uh but now it's been accelerated uh with the second Trump administration you know a a profound distrust in the FDA the CDC uh and in government generally and I think that's um uh you know that that that's gonna get in the way of of any kind of change because if people don't trust the institutions that have to uh lead lead change then it's gonna be very hard to to get people on board wow there's so much we could talk about there um uh but even just starting with the trust issue um and I think about in particular uh I really worry about misinformation and disinformation the whole vaccine like I wanted to do a completely separate episode I might even do this just tackling what's happened to the CDC website um it's astonishing uh on on vaccines so there is the the the sort of twofold issue of misinformation, disinformation, how people get their information, what they believe, what they don't believe and that cascades I guess into the lower trust that you're talking about or it's at least related to it. I'm wondering have you thought about how to fight that? I mean in some sense before you answer in some sense you've as a policy person at KFF you've kind of been doing that all along I'm I I would imagine you you feel that that's your kind of your role as an arbiter in some sense. But now that where we are with this kind of anti-science sentiment among a pretty healthy percentage of the population, lack of trust in science and medicine, some of which I think as you pointed out yeah kind of started in COVID there were elements of that before the whole pseudoscience and things like that. Have you thought about what we can do about this because I really really think it's a it's an enormous problem. Yeah I mean we uh we think about that a lot um and uh I mean the one encouraging sign is that uh and and we just put out a survey uh showing this that um you know we focus a lot on these these people who believe these these myths uh or uh you know facts not not grounded in evidence about vaccines or or what have you um you know it's a pretty small share of the population that are that are true believers uh in these myths um much larger share of people uh don't believe them or don't believe all of them and there's this huge swath of the population that's in uh you know what we think of as the muddled middle uh or the persuadable middle who just aren't sure um you know they they don't necessarily trust the institutions anymore so they're not sure they trust what they hear um but they don't they don't necessarily believe the myths um you know it's all kind of confounded as you said by AI um and uh and and what to what to believe and and trust there but the good news is they're there they're people are persuadable um you know it's it's not a lost cause um and I I was talking to someone the other day who said you know the the the if we want trust uh we have to be trustworthy um and uh I think you know we uh we at KFF I mean our our business is facts facts and evidence and and information um but I I think in this new environment we have to think hard about how you um how you get through to people uh with that how how do you communicate to people that you are trustworthy uh that you are deserving of trust uh and and I think you know one thing COVID taught us is uh we've got to be honest with people right I mean you you you we gotta we've got to be honest when we don't know things uh we have to be honest when there are trade-offs and there are trade-offs everywhere uh in healthcare uh you know there's not one right answer um not one policy that uh where everyone will benefit there are always winners and losers uh and I think we have to be up front with people about that yeah yeah I mean it does does that necessarily mean though do we take the message to TikTok? Do we take the message is is YouTube is this a a platform in other words the old school way of reaching people through you know KFF newsletters or um maybe on a news program at night is that kind of what you're getting at to to be to be able to um you know maybe turn that tide a bit of a I think so and you know we we may not be the right right messengers there um and uh you know we think a lot at KFF about who who our audience is and it's different for different types of information so for the policy research or the polling we do that's mostly going to be uh uh you know opinion leaders policymakers the media uh people in the healthcare industry uh advocates um we also run a journalism operation KFF Health News there we're trying to reach more of the general public um and and I I do think we have to you know uh recognize that people's attention spans are shorter than they they used to be uh and I I know it's true for me um you know I uh um I want things in shorter quicker bytes we've got so much information coming at us um so it you know it can't just be that the information is is is right is is fact based is uh evidence based it's it's you know it's got to be compelling to people too. But what if when that compelling I'm not naming any names but what if that that compelling person has 30 million followers on YouTube and they're preaching staring into the sun for five minutes uh a day is the right way to optimal health I mean there's always been uh sort of quackery right uh in in medicine but it just feels like there's this confluence of highly influential entertaining people with a platform various platforms this one being one of them right podcasts that uh that people listen to and they get their information from and it it isn't necessarily you know sort of what uh I don't know Eric Topel would say uh is give them right or what Larry Levitt might say is the best policy and right so yeah I mean that that's that's gonna exist right I mean that that that entertaining quackery is is going to exist and and there are now channels to get that out to people uh you know so fast and and so broadly um which uh just appears to magnify it. Um but I you know I I think the challenge is to uh you know it's it's not gonna work to counter that with you know boring fact sheets and no uh you know it's it's uh I mean the facts the facts have to be uh made compelling uh as well maybe there's some room for uh schoolhouse rock for uh for for for for this century in this time frame you know I'm just a bill or I'm just a vaccine and you know something like that. Of course if you if you look at the way Congress functions now it's not quite the race the way schoolhouse rock taught us right exactly the way that the way that it should be um so Larry you know you've you've you've had this storied career and you've spent so much of that career at at KFF um and now you're gonna be moving into uh the as of January 2027 the CEO spot so you're in my view completely from the outside I mean we literally just met today um hopefully it's not the last time that we're gonna be talking um but you're going from this sort of think spot arbiter neutral arbiter policy guy to being the one who is responsible for you know fundraising and you know truly management and strategy and all of these things what have you been thinking about um what's been going on in in in your mind about this transition and what you want to bring to the role yeah I think and and it it's a it is a different role than than uh I've been in uh up and up until now but you know in many ways what distinguishes KFF is we are an organization of incredibly high performing experts uh at what they do whether that's policy research or polling or or journalists um it's it's uh um I mean it it's it's our expertise that that I think gives us our our influence um and and that's always been true from the top to the bottom of the organization um it it is you know we don't we don't have managers and doers everyone's a doer uh here here at KFF so um uh so I hope to still be talking and writing uh about all the issues I've been I've been working on up until now uh even when I take on the on the new role um but uh you know I I want to take the organization same mission um as it's as it's had but into this evolving um environment uh yeah the environment where we have to reach new audiences we have to reach them in in compelling ways in in the age of uh TikTok and and YouTube um and we've got to deal with uh you know incredibly um contentious political environment uh a changing news environment you know where it's not uh it's not just a few uh uh news uh um organizations that uh that people are listening to but you know they're getting information from everywhere uh and AI I mean we you know we've spent years uh getting our Google search rank up so uh you know so our information gets out there when people are looking for information about healthcare costs or uh people who are uninsured. You know that's not necessarily the way uh people are going to get their information anymore. So as as you're moving into the new role is it you still want to be the truth teller you still want to be able to do that kind of work and yet um maintaining that trust which I would argue I mean Larry for years almost every day I'm on your site looking at something so it's a wonderful wonderful resource um the work that you do is is really outstanding and I haven't seen because you haven't had the outside influence I haven't seen the hit to the brand that let's say the CDC has taken for uh you know for other reasons but is that sort of job one to start restoring trust in science policy medicine is that on your mind absolutely um and uh you know it starts with with uh maintaining the trust in us uh but I I I do think I mean for for the issues we work on and and care about uh you know trust in in institutions trust in government trust in science trust in facts is is key to to everything we we do uh and and we have to keep earning that that trust I mean there are uh I often talk about all the all the words that uh uh I prohibit in everything we we write I mean words like must and should and need and recommend and critical uh because those you know those suggest you've got a uh you know a policy position that you're advocating which we we don't um and there are words I always want to see in everything we write like trade-offs um because there there are trade-offs in in in everything we we do in health policy and we have to be up front with people about that so just to wrap it wrap this up I want to do a lightning run because those are always fun I haven't done one in a while but uh but Larry I'm sure you've you've thought about as I have kind of like the fixes what what are some of the fixes that we can can apply to our system so and maybe it's not intuitive maybe it's not the one that everybody goes for but if if if as a policy guy if you were able to enact one one change at the margins that you think would have a major impact on healthcare in this country what would that be? Where would you put your efforts? Well I'd say so as I say we don't we don't advocate particular policy positions so I won't direct I won't directly answer your question. Understood understood but I I think you know we're we're in this moment now where uh there's a focus on affordability um and uh healthcare affordability in particular and I will say we we we have been we at KFF have been talking about that for for years that that is at the heart of uh the issues with healthcare that that consumers and patients have um yes they want coverage uh but even people with coverage uh have affordability concerns i mean deductibles in employer coverage are now uh you know about $1900 per per person so um so I I I won't name a specific policy but I will say that we should we should be focusing uh on on affordability particularly affordability for people with with series and chronic illnesses sure sure well Larry thanks let's uh let's let's do a couple of um a few lightning round questions and this is not a dissertation I'm sure you you know you know the the drill with these it's just what first comes to mind um first instinct answers so um one number about the US health system that still shocks you even after 30 plus years uh for roughly 40 percent of people have medical debt yeah um the most common mistake a reporter makes when they call you for a quote um uh thinking that uh we're have we're affiliated with Kaiser or that we're a foundation uh neither of which is true can I interrupt the lightning round for a second I meant to ask you this in the beginning because it is a misconception can you just explain to people Kaiser Family Foundation LKF um the what you just said but maybe in a little bit more detail so we can put this thing to bed. Yeah sure so uh the Kaiser Family Foundation the Henry J. Kaiser Family Foundation was originally started by the Kaiser family. Henry J. Kaiser uh also started he was an industrialist he also started Kaiser Permanente uh originally as a clinic for his his workers um and it grew into the the biggest biggest HMO with his personal wealth started the Kaiser Family Foundation so at that time we were affiliated with Henry J. Kaiser never with Kaiser Permanente uh but we're a foundation for for many years that that changed when the modern day KFF uh started in in 1990 when Drew Altman came on as as CEO and president uh we are an information organization a nonprofit uh not a foundation we don't give out grants uh we do all of our work uh in-house with our with our researchers and journalists thank you for that clarification um uh couple more uh the thing about becoming CEO that you feel least prepared for um the uh how I'm gonna spend my time excellent um a health policy position uh well uh I'm looking for your thinking on this not KFS but how a policy uh position that maybe you had a long time ago that you've changed your mind about uh that uh prevention uh would save money um sometimes it does uh it doesn't always uh but I think we don't sell prevention enough as improving people's quality of life we we try to couch it in in money saving terms which uh often is not the case excellent well um thank you thank you Larry this has been um wonderful at talking about these big heady topics um but I'm sure that uh love to have you come back um as after you've been in your role for a while and just see if you're viewing things differently um you never know once once you sit atop that perch maybe you'll have a different viewpoint. But we'd love to have you back and and again thank you for for taking the time. We're really this was a lot of fun. Thanks. And to our listeners if this episode made you think differently about the challenges in healthcare please share it with a colleague or someone who needs to hear it. And if you're already following the show great and if not please follow us on Spotify, Apple or wherever you get your podcast. A rating or review really goes a long way as well because it helps people find the show that otherwise not might know about healthcare rounds. I'm John Marchica and we'll see you next round.