The Impact of COVID-19 on Reform

Just four months into the new year and the news of 2020 has been absolutely dominated by one single topic. The COVID-19 pandemic has impacted families, businesses, and philanthropic organizations like Arnold Ventures, which produces this podcast. So on the latest episode of Deep Dive with Laura Arnold, a look inward and an in-depth conversation about how the coronavirus is impacting two of our key issues, health care and criminal justice. With that, here's Laura Arnold and our latest Deep Dive conversation. Happy to be back here on Deep Dive after a short hiatus given the coronavirus crisis that we are all living through right now, both in the US and worldwide. I'm sure I need to give no introduction on COVID-19 or its devastating effects on public health on the US economy and in fact on the world. We're experiencing that and living through it every day. As of today, April 22nd, the day of our recording, we're seeing over 775,000 cases in the United States and over 40,000 deaths. We're also, of course, experiencing devastating effects on the US economy, including unemployment numbers that sit at over 22 million and growing, basically undoing net job growth over the past decade. We're, of course, seeing health consequences for all kinds of populations, both at-risk populations and ostensibly healthy populations. And we're all struggling with the new normal, what that means, working from home, juggling work and children, showing and experiencing empathy for all of us who are suffering. As I reflect on our new reality, I'm struck by a statement that we've heard from epidemiologists describing the crisis. And they say that pandemics fracture society along known fault lines. So this particularly resonated with me because this is exactly what we're seeing in our work. At Arnold Ventures, we work to relieve that tension around those fault lines, specifically by seeking solutions that maximize opportunity and minimize injustice. And this crisis has highlighted, for us, the importance of addressing each of the issues that we're already dedicated to. So today, I'm pleased to have the opportunity to check in on two major areas of the Arnold Ventures portfolio, health care and criminal justice, both of which are led by leading experts in the field. Today, I'm joined virtually, of course, by Mark Miller, executive vice president of health care at Arnold Ventures, and Jeremy Travis, executive vice president of criminal justice. Mark, Jeremy, welcome to Deep Dive. Glad to be with you. Thank you. Now, we're conducting the session virtually. I'm in Colorado. Mark, Jeremy, where are you joining us from? I'm sitting at home in Brooklyn, New York. I'm in Arlington, Virginia, just outside DC. Good, good. Well, Mark, let's start with you and let's talk about health care for your entire career and certainly for your time here with us at Arnold Ventures, you've been working on issues like drug pricing, surprise billing, and overall lowering the costs and improving the value of health care. Tell us what's changed for you in the last six weeks. There's a number of things we could talk about, but to try and focus more narrowly on some issues that we've been pursuing. What has changed for me, for example, with respect to surprise billing is I think this crisis has really elevated the issue. Right, so let me interrupt you there for one minute. So we're talking about somebody who goes in sometimes for a program surgery like a knee replacement or something that might be somewhat routine and they go to an in-network hospital with an in-network doctor and you think everything is absolutely fine and suddenly after your surgery you get hit by a surprise bill that may be thousands of dollars for someone you never saw. For an anesthesiologist who you never approved or radiologist that you had no idea was going to be part of your procedure or an assistant surgeon who happened to be in the OR. That's correct. It is very much an affordability issue and our agenda as you walk through at least at a high level is really focused about affordability, whether it's a medical care issue or whether it's a drug issue. The other version of a surprise bill is not the one where you show up in the inpatient in a planned instance. It's when you show up at the emergency room and then may end up an inpatient in an emergency situation which is very much what's going on in that current situation. And surprise billing has a couple of problems. First of all, people were afraid to seek care because they're afraid of a surprise bill. And in a public health emergency that's not what you want to go on. And then if you hit the emergency room and then ultimately get admitted to the hospital, a couple of the areas that are the prime location of a surprise bill, the emergency room and anesthesiologist involved in venting the patient are very much places where those bills will be generated. Now as I understand it, before the pandemic the average surprise bill hovered around over $600 which is far more than what many families are able to pay without borrowing or selling something. So this is a real problem for many, many Americans. The Congress could solve this problem now today. There's legislation in front of them. They could legislate as part of these bills. They could end surprise billing. A legislative fix should say that the provider cannot render a balanced bill, a surprise bill to the patient. So if you go in and they get served by that anesthesiologist, you are liable for your in-network insurance to follow up on your earlier example. So if there's co-payments related to that, you pay your normal co-payments. But the second part of the problem which is often missed in the debate is you should also prohibit that anesthesiologist from just taking that inflated bill and sending it to the insurer and trying to force the insurer to pay that. Because then that just travels into all of our premiums. Some work by Zach Cooper at Yale suggested that we have $40 billion and extra spending in our premiums that comes out of the surprise billing phenomenon. So a piece of legislation would prevent both parts of that from occurring. And in the second part, what you want to do is set a limit on what can be charged when a provider goes out of network and tries to set their own prices. Most of the legislation says you use market determined rates for that area to determine the limit that they can bill the insurer. So stop the bill from hitting the patient and then limit how high the provider can go back to the insurer and try and get paid a higher price. So some of these providers would no longer be able to charge eight times, ten times what they would have received if they were in network. But in fact, they would be capped at something that would be reasonably benchmarked to the local market. That's exactly right. And I just want to just reinforce. 800% of Medicare is not uncommon. Sorry, the market-based in-network rates that I'm referring to are often 400% of Medicare. And even that would be a reduction in savings to the system. But as you can see, that's still a very excessive price. No matter what's as appropriate, around 100 billion in stimulus money to hospitals. And the Trump administration has said that hospitals taking the money must agree to not surprise bill. So that sounds very positive. Does that give you comfort? Does not give me comfort. But you know that I'm not easily comforted. So there's that. So the first thing I would say is it relates just to COVID, you know, to a patient who goes in for testing or treatment. From an Arnold Ventures point of view, we think that the same protection should be extended to cancer patient, to a diabetic patient, to a person who's walking in with an acute emergency. Let's talk about affordability and access, Mark, because that's also a core component of your strategy. What are you seeing in that debate in light of the pandemic? There is a widespread expectation that premiums are going to go up next year in order to cover the cost that they encountered through COVID, the uncertainty that they're going to be facing. And then the revenue that they lost during this particular year. So what I think you're going to see is you're going to see increased spending in Medicaid because the unemployment rates are going to go up. People are going to lose their insurance and some people are going to move to Medicaid. I think you'll see Medicare spending go up because people who go who become sick and go into the hospital for COVID, they will likely be very sick and you'll be at your high end hospitalizations. And while there may be some foregone care that's discretionary on that, I would expect the Medicare spending to go up. And then in the commercial sector, you'll have all the money. all of the patients who are hitting the emergency rooms in the hospital for their COVID illnesses, some reduction in discretionary care. Mark, one last topic that I want to cover, the question of vaccines, of developing drugs to address the symptoms of the coronavirus and developing cures. There is so much missed opportunity there in terms of creating a policy landscape that could actually advance this work. Can you talk about what you think about when it comes to pharmaceutical development and development of vaccines? What are we doing right? What are we doing wrong? What could we be doing better as a country? I think right now the way our R&D and then our process of bringing drugs to market is all driven by in large part by the notion of a revenue model. So a drug manufacturer has to see a level of revenue that makes it worthwhile for them to take the risk in innovating the drug and then bringing the drug to market. And that of course is only true for chronic diseases or for things like cancer or diseases that are specific to certain populations, is that right? Agreed that the way to make this work is you want to minimize your trial expenses and focus on smaller and narrower populations. Bring a drug to market that either has an effect on a small population but a clear effect that allows you to charge a very high price or bring a drug to market or just as you said, a chronic condition so that it's an ongoing and potentially broad based population and that will generate the revenue that a manufacturer may be looking for. So where we generally fail and I think and our drug development, there's not a lot of incentive to develop say the next generation of antibiotics because you have to run very large trials because it's broadly through the population and you're trying to develop a drug for example that doesn't get used, that is used sparingly so that you don't develop resistance to it. And so I think what we struggle with in this country are things like vaccines, antibiotics and antivirals because they don't have the same kind of revenue attraction that other kinds of drug development have. So Mark, when I look on my Politico Weekly Roundup which is sponsored by Farma and in the middle of my summary that I'm scrolling through I see an ad that says Farma working to battle COVID-19, is that not true? No, no, it's definitely true but I think what's really interesting to take out of it is how they're battling it. So first of all, in these areas in particular a lot more public dollars have been and are now going into that development. Specific companies have been given millions of dollars in order to start thinking about vaccines and about treatments. The companies are doing- And I hate to spend something like $600 million is there right? Oh yeah, but there's even a bigger slug of dollars that was dropped more recently I want to say that there was like a 1.7 billion that was appropriated to NIH just recently. So a lot of public dollars have been put into this. To the credit of the companies, they're starting to do things like share patent, share trial information, talk about shared production. And the point I really want to make here is that sometimes the patenting process and sort of holding intellectual property is an incentive for somebody to develop. But here, and I would argue in the space of vaccines, antibiotics and antivirals, generally, we should have a different thought process. More public funding, shared patent, shared production so that when a crisis like this arrives, we've had work that's been going and then we can move more quickly. And the last thing I'll say about this is as much as everybody gets upset about this conversation, we have to have a conversation about what the price will look like. Whoever develops that vaccine will have benefited tremendously from public dollars. It does, like you said, have to be a low cost vaccine that can be applied to the entire population. And so discussions now about how to set that price should be going on. Well, Mark, thank you for that explanation. These are all issues that will be actively involved in going forward, that will keep an eye on and be hopefully part of the solution. So thank you for your leadership. Jeremy, I want to turn to you and talk about criminal justice, which is probably the most hot topic other than health care, other than sort of public health issues relating to COVID-19. We're seeing a number of articles and discussions about how to preserve the health of people who are incarcerated, people who work in jails and prisons, people who are in the criminal justice system. There's a perception that these people are especially vulnerable to the virus. I'm curious as to how you're thinking about these issues immediately and also how you're viewing this as a window for addressing the systemic issues that you focus on in your criminal justice work. So the criminal justice population, particularly the incarcerated population, really is just sitting right in the sights of the oncoming epidemic. I heard a report last night about the state prison, the Marion prison in Ohio, where 78% of the people incarcerated there, 2,000 people have tested positive. You can look at this from another angle, which is to look at positive as a percent of all positive tests within a state. And in the state of Arkansas, the Cummins prison has 850 people who have tested positive. That's 38% of the total population testing positive in the state of Arkansas. So as we've focused rightly on other congregate settings, whether it's cruise ship or nursing homes or the USS Roosevelt or places where people gather like Mardi Gras and how the virus just spreads wherever it finds people, we have not paid enough attention in my view to those of us who are incarcerated in jails and prisons. So these institutions are also distinct in that people can't leave there. And there are elderly people there like a nursing home. And the architecture and the life within a prisoner jail lends itself to rapid spread. I'm curious as to whether you see a meaningful distinction between jails and prisons when you talk about the strategy for addressing it. Jails broadly defined are places that hold people pretrial, whereas of course prisons are institutions for people who have been convicted. It seems to me that a short term solution might be somehow easier than addressing the issue of people who are already convicted who are in prisons. It's easier, and I put that in air quotes, to release people from jails because there are more policy levers available for those who want to seek that outcome. So judges have been dismissing cases. They've been reducing bail amounts to zero and letting people be released on their own recognizance. Prosecutors have been saying we're not going to prosecute this case anymore. So to me that's the easy part. The jails is sort of the easy part. Let's look at what the hard part, which is prisons. Share with us your thinking of what our perspective should be and how we grapple with these very, very tough issues of people who are incarcerated for violent crimes. It's so interesting, Laura, to look at what's happening around the country to answer the question, what mechanisms are states using to achieve the goal of reducing the prison population in light of the COVID era? And here the mechanisms are many of them are found in statute, many of them are found in tradition basically. And they're quite constrained. Clemencey, pardons, early eligibility for parole, giving people accelerated credit for good time and performance well in programs in prisons. I think the going forward question is, are those vehicles being used to maximum extent to keep prison populations low and if not, why not? In our country we have quadrupled the per capita rate of incarceration. We have lengthened senses. And one result is we have what the New York Times once called nursing homes behind bars. We have the fragile population of people who are in prison, who are in essence in nursing homes. And they're old. The experience of being in prison accelerates the aging process. So we have this phenomenon that we've created over decades of stuffing our prisons with more and more people who die there, not because they're sentenced to life imprisonment, but because they are old and die there. So the new focus in the COVID era of looking at fragile populations has required us to look at people who are incarcerated and asked, Why do we have people who are on dialysis machines in prison? Why do we have people who are suffering from dementia in our prisons? What's the public safety value of this reality? And why do we have so many people in prisons on parole violations, on technical violations for basically missing minor appointments and drug tests and the like, and being sent back to prison? So it feels like it actually isn't really a deviation at all from the strategy on jails, which is to ask a simple question, who needs to be there in the first place? In the case of jails, our answer is you shouldn't be incarcerated only because you're poor. In the context of prisons, the answer is more complex, but it's along the same lines, which is asking, why is it that people are incarcerated in the first place? And does it make sense to keep this person in prison? Can you share with us what second look is and whether you view that as a promising strategy going forward? It's fairly simple. It gives judges power to revisit a sentence that's already been imposed hence the name second look and ask the question whether continued incarceration is in anybody's interest. And so a judge could say a time of sentencing based on what I see in front of me. I'm sentencing this individual to 10 years. A second look provision allows that judge to revisit that sentence, presumably on motion of defense counsel, but in California, the statute there allows prosecutors to do this as well. Or maybe the judge can himself or herself bring a case back, but allows this recognition of what criminologists have documented for years, which is the people change. People change even if in prison, and sometimes that needs to be recognized in granting somebody their freedom in essence, and quotes early. So parole boards were supposed to do this, but parole boards are just now risk averse and don't, aren't willing to take that second look. The vehicles of commutation and pardon in essence allow executive branch entities, governors typically to do this. But this puts the sentencing in essence on a contingent basis, and allows the judge to say, "You're sentenced to 10 years, but you can come back in whatever time to ask for a reconsideration." It's particularly appropriate for people who serve long sentences, those who are elderly or those who are infirm, or who are compassionate releases an option, but it should be available for everybody. So we're big fans of the second look provision in our strategy, and are watching it closely as it evolves. Let's talk a bit about another area that is an anchor area for us in criminal justice, and that's community corrections. Sorry, community supervision. We've seen certainly the pandemic have an effect on how we think about probation and parole. What are you seeing in practice in your work in terms of how this has been impacted by the pandemic? For us, and many advocates and practitioners, a clear priority is that with rare exceptions, people should not be sent back to prisoner jail for a technical violation of a condition of supervision. And that by technical violation, you mean failing a drug test, not showing up for a meeting with your probation officer, things like that. Those are technical violations. Missing a curfew. We distinguish technical violations from what we call new crime violations. And technical is just that. It's not core to the public safety mission. And we know from research that Arnold Ventures had sponsored with the Council of State Governments that 40% of new admissions to state prisons are there for violations of probation or parole, and large share of those are technical violations of probation or parole. So here's a clear opportunity for us to really push hard as a country and say there just have to be limits on this use of bed space of state power for what purpose to simply enforce the rules of supervision. The other issue that's brought to the forefront in the COVID-19 era are the terms of supervision that created by state legislation. So state statutes set the length of supervision. So why do we have people on supervision for so long? Why do we have so many conditions placed on one's probation or parole? And the reform alliance, which you said on the board and Arnold Ventures is a proud member of, is also using this moment to ask the legislatures to take a fresh look at the enabling statutes regarding probation and parole and try to do only that, which makes sense from a public safety point of view, and certainly try to rethink the ways in which supervision is carried out. Yeah, it seems to me that this is a unique opportunity to, again, revisit, just go back to core principles and think about what is the objective of this entire program, in this case, community supervision, granting somebody probation instead of incarcerating somebody should be an opportunity for redemption and reform. And the question is whether the existing system with its requirements and technical violations and red tape and everything else is fosters the spirit of that objective or whether it does the exact opposite and people wind up being revoked and incarcerated for things like technical violations. So this will be an interesting moment, a era for us, to start asking those basic questions. Do you really need to make somebody schlep across town every three days to meet in person with a probation officer, or can you do that remotely? Are there better ways to help somebody succeed in her new environment that don't require all of these onerous conditions? The last category among many, many that we could talk about, but the last category that I'd love to get your thoughts on, Jeremy, is the broad area of fines and fees. The fact that people are assessed fees for participation in the criminal justice system is a manifestation of the criminalization of poverty. If you revoke somebody's driver's license or incarcerate somebody for failure to pay fines or fees, you're simply punishing somebody for being poor. What are you seeing in the context of the pandemic with respect to this issue? It seems to me that this issue is moving forward at a lightning pace. I would agree, Laura. I think the reform momentum around fines and fees has picked up speed because of the COVID-19 era. For decades and for perhaps understandable reasons, although frankly I find it hard to understand, have decided to charge poor people for their supervision. So that reality is exacerbated in the COVID-19 era. We have people struggling to make ends meet and still they have a bill. This bill, however, if it's not paid, could land them in jail. And so we've seen around the country that some courts have said, we want to force warrants for nonpayment anymore. Well, that's a good first step. Other jurisdictions are saying we're waving all fees for a period of time. That's a good first step. We're seeing that some jurisdictions are reinstating drivers licenses so that people can look for work, get to work, be with family. Our hope, of course, is that this re-examination of the connection between poverty and financial obligations that a court imposed allows us to ask the deeper question, which is why do we do this at all? And why should poor people have to pay for their supervision? Why should we offload this particular government's service on these individuals? There's a countervailing force that we have to be aware of, which is that local jurisdictions are seeing their revenue cut because of the same crisis that brings this into the foreground. So they're going to be scrambling to try to find ways to raise revenue. And our job is to really set up a defense mechanism to make sure they don't continue to charge poor people and even better that they stop charging poor people for their court-related expenses. Thank you both so very much for joining me on DeepDive. I'm proud to be your colleague and I look forward to seeing the result of your leadership in the next several months. Thank you both. Thank you, Laura. Thank you. You've been listening to DeepDive with Laura Arnold, produced by the Arnold Ventures Philanthropy. If you'd like to learn more about the organization, visit ArnoldVentures.org. By maximizing opportunity and minimizing injustice, we make change for the greater good. Again, that website is ArnoldVentures.org. Thanks for listening, everybody. And we'll see you again next time on DeepDive.