This is the health system that Biden inherits from Trump

President-elect Joe Biden will inherit a health system that is trying to care for a population made sicker by both the coronavirus and skipped preventive care, all while trying to make up for money lost in 2020.

But he will face another immediate challenge: Hospitals that tend to care for the poor and the vulnerable are facing major financial pressure, while wealthier hospital systems expect to emerge slightly bruised but not broken.

“This is all going to push inequality up,” said Alan Morgan, president of the National Rural Health Association. “There is no way around that.”

The policies that Biden decides to pursue in his first months as president — for example, how to pay for telemedicine visits as the pandemic continues or whether to pursue additional stimulus for health providers — will be crucial in shaping the long-term future of the health system.

“Any crisis produces change, and this one will clearly produce big change,” said David Cutler, a health economist at Harvard who served as a health care adviser in the Obama administration. “We don’t know yet if it will be good or bad.”

For decades, American doctors and hospitals have been accustomed to constant spending growth. But 2020 has been on track to be the only year in this era when health care spending goes down. Even with the pandemic overwhelming some providers’ capacity, they seem set to lose money because of the scores of profitable elective procedures canceled this spring.

For Biden, this is likely to mean fights between hospitals, insurers and patient advocates, who fear that the gains in equality made from the Affordable Care Act have been eroded. Health providers that typically care for vulnerable populations may face tough choices between closing or selling to a larger competitor.

“The health care system lost a ton of money when people didn’t show up in March and April,” Cutler said. “It’s not clear it’s going to get that money back. I fully expect we’ll see a wave of providers go under, demand higher prices, and demand bailouts.”

Pick nearly any metric, and it will show the U.S. health system’s tremendous growth in recent years. Overall health spending rose to $3.6 trillion this year from $2.9 trillion in 2010, buoyed by medical prices that increased faster than inflation. Health care jobs grew in tandem, peaking at 16.5 million workers this February.

Insurance enrollment increased significantly during the 2010s, largely a result of the Affordable Care Act’s coverage expansion. Even with some backsliding under President Donald Trump, the uninsured rate is still lower than it was at the start of the decade, about 9% last year versus 16% in 2010.

This past decade’s growth did not just mean more dollars flowing into hospitals and doctors' offices. It also appears to have made access to health care, and certain health outcomes, more equal.

The health law’s coverage expansion, for example, had an outsize impact in providing insurance to Black Americans and Latinos and reducing disparities in uninsured rates. In 2013, there was a gap of 25.7 percentage points between the uninsured rates for Hispanic and white Americans. By 2018, that figure had fallen to 16.3 percentage points, a study from the nonprofit Commonwealth Fund showed.

The Medicaid expansion in many states is credited with keeping rural hospitals up and running. Some research has found that the expansion has reduced unequal outcomes in areas like maternal and infant mortality.

Now experts see those gains eroding. The change started under the Trump administration, which cut health law advertising and allowed states to impose new restrictions on Medicaid enrollment. One million Americans lost coverage between 2017 and 2019; experts were especially alarmed by declining public coverage among children.

The trend accelerated with the pandemic and a sharp decline this spring in medical revenue. Across the country, hospitals lost billions as patients canceled lucrative procedures like hip replacements and cataract surgery. Primary care doctors struggled to stay open as preventive care appointments plunged. Federal aid offset some but not all of those losses. Experts who study the health system now think much of the care canceled this spring will not be rescheduled.

Safety net health systems, which by mission or mandate give care regardless of people’s ability to pay, say they are already starting to see richer hospitals pulling further ahead. Employment in the health sector is recovering: About two-thirds of the 1.5 million jobs lost during the recession have come back. But there is some evidence those gains are not being distributed equally.

Morgan, of the rural health association, hears from members who say they are struggling to retain nurses. Some workers are getting better-paying offers from wealthier health systems in need of traveling nurses to help fight the pandemic.

“Two weeks ago, I heard from a hospital chief executive saying he was losing his clinical staff because they can make more money elsewhere,” he said. “His clinical staff is getting knocked offline in the middle of a pandemic. It’s a workforce crunch.”

Margaret Mary Health System, which operates a 90-year-old nonprofit hospital in rural Indiana, expects to run a 4% deficit this year even after accounting for federal aid payments. The hospital has treated hundreds of coronavirus patients, who have sometimes occupied 23 of the hospital’s 25 beds.

“The thing that makes this all so difficult is how hard we’ve worked this year,” said Tim Putnam, the hospital’s chief executive. “We’ve put in so much to serve our community, and it’s tough to face a loss as the financial outcome.”

Before the pandemic, Margaret Mary executives felt it was on solid financial footing. The hospital received a boost from Indiana’s Medicaid expansion in 2015. Things looked so good last year that it decided to buy a new electronic medical record system.

Now Margaret Mary is bracing for even heavier financial losses after Indiana announced Thursday it would once again suspend elective health care procedures.

“It’s hard to determine where this ends up until we figure out how the pandemic ends,” Putnam said. “To remain viable, to continue to serve our community, we’ve got to do better than break even, and we’ve got to find a way to do it in 2021.”

North Oaks Medical Center in Hammond, Louisiana, is a public hospital that serves predominantly low-income patients. It was projecting its “best financial year in the hospital’s history” before the pandemic struck, said the chief executive officer, Michele Sutton.

Instead, it ended up furloughing many workers this spring in an effort to break even. North Oaks ran into problems that a hospital with wealthier patients would not face — like the fact that many of its patients did not have access to internet reliable enough to support video doctor visits.

“Because of our parish being poor, we didn’t have a lot of access to telemedicine,” Sutton said. “We didn’t have the fiber-optic capacity.”

Her hospital had to do extra work to set up stations where doctors could video-chat with their patients, a cost other health systems did not have to bear. Now it is bracing for another difficult year treating sicker patients.

“We’re seeing an increase in suicide, a lot more stroke, a lot more heart attack,” Sutton said, “and a decline in routine maintenance for fear of contracting COVID.”

Some of the early decisions facing the Biden team are small, practical ones: Should Medicare continue paying the high but temporary reimbursement rates it offered for telemedicine visits this year, a signal that would encourage private plans to do the same?

“Imagine I’m a primary care practice, I’ve taken a big financial hit already, and I’m trying to decide: Do I make a big investment in telemedicine or not?” said Dr. Ateev Mehrotra, a Harvard health researcher. “It’s tough for a clinical practice to not know what you’ll get paid in a week or two.”

Other decisions are bigger, like whether to provide additional stimulus funding for health providers and how to allocate it.

Doctors know patients have been putting off some kinds of care and are bracing for the consequences. Mehrotra and his colleagues published research this week finding that fewer patients are starting opioid addiction treatment during the pandemic, as some providers feel uncomfortable prescribing a new drug without an in-person meeting.

The Biden administration’s policies will help determine how providers care for this sicker population while health insurance coverage is declining. To increase sign-ups, the administration could use waivers expanding Medicaid coverage or restore the Affordable Care Act’s advertising budget. Bigger coverage expansions, like a public option that would allow all Americans to sign up for Medicare, would require congressional approval.

“There’s a big population I’m really worried about that has diabetes, hypertension and heart failure and deferred all this care,” Mehrotra said. “The accumulation of not getting care will result in complications. But at this point it’s unclear what exactly those complications of illness will look like.”