McCourt Faculty Document the Policy Failures of COVID-19 and the Opportunities Revealed

“We are still seeing over 1.4 million new unemployment claimants in all unemployment insurance programs every week, and over 26 million people continue to make claims seven months after the beginning of the pandemic,” notes Adriana Kugler, professor of public policy, “and that is way above what we ever saw during the Great Recession, when the maximum job-loss claims reached about 600,000 per week. We are in a situation that is unprecedented in terms of job loss. Consumption dropped drastically in March and April before the CARES Act funds made their way through the economy, and while the economy recovered some, it has stalled as the programs under the relief plan have started to expire. Unfortunately, this has translated into negative GDP growth in the first half of the year, and, given the lack of a new relief package, right now we don’t see an end in sight.”

Harry J. Holzer, John LaFarge Jr. S.J. professor of public policy, laments that the U.S. now lags dozens of other advanced nations in both job recovery and virus containment. “The CARES stimulus bill passed by Congress in the spring was extremely effective. We were making great progress in the U.S. until early May. Then the President pushed for a premature opening that resulted in a disastrous second wave. The recovery began to flatten out in July due to a resurgence of cases in many states that had opened up.”

In this report, McCourt faculty from across expertise areas and disciplines describe a combination of policy and political failures regarding the coronavirus pandemic that have exposed severe vulnerabilities. The good news: They are also developing innovative recommendations to stabilize the economy, address the spread of COVID and strengthen health care, education and job training.

“While long known to some, the events of the past year have further revealed underlying inequities in our health-care and justice systems and our economy,” says McCourt Dean Maria Cancian. “The opportunity—and urgent need—for evidence-based policy change and systemic reform has never been more clear.”

More than half of u.s. adults under age 65 rely on employer-sponsored health insurance. That’s why, as COVID-19 and its economic fallout spread in 2020 and millions became unemployed, many in the U.S. lost their health insurance as well as their jobs.
Some workers were only furloughed temporarily and kept health benefits but still had to pay insurance-related costs. Others never had health coverage. The uninsured were usually unable to afford private plans, and many did not qualify for Medicaid.

The dangers of having inadequate or no health insurance for much of the population during a public-health crisis became evident. Many went to work sick and feared the costs of being tested, treated and possibly hospitalized for COVID-19. “The pandemic has put a powerful spotlight on how inequitable and gap-ridden our health insurance system is,” says Sabrina Corlette, research professor, founder and co-director of McCourt’s Center on Health Insurance Reforms (CHIR). “It’s a moment of remarkable dislocation and transition.”

Corlette offers this example: States that run their own Affordable Care Act health-insurance marketplaces opened a special pandemic enrollment so people could gain coverage outside of the usual sign-up period. But the federal marketplace, used by 38 states, did not open enrollment except for workers who lost employer insurance.

A key innovation arising out of a rule change by the Trump administration promises to become a popular feature of getting health care in a post-pandemic world. Due to social distancing, telemedicine use grew and became popular with many insurers, doctors and patients. That is likely to continue, even as insurers question whether payments should match those for in-person visits.

As the pandemic lingers, Corlette expects health insurance trends to show more people becoming uninsured or in public programs and fewer covered by employer-based private plans. “A lot depends on the election,” Corlette says. “It is a fork in the road in so many ways concerning health-care policy.”

Medicaid protects public health in an economic downturn by acting as a safety net when employer-sponsored insurance erodes. Fortunately, the program is working as enrollment has increased throughout the pandemic. “It’s a source of coverage the unemployed and underemployed can turn to,” says Edwin Park, research professor at McCourt’s Center for Children and Families. Medicaid also plays a countercyclical role by increasing health care spending to offset losses in consumer spending.

Medicaid and Children’s Health Insurance Program (CHIP) expansions have been remarkably effective in covering low-income children, with over 90-percent participation rates and reaching historic low in the child uninsured rate in 2016, notes Park. “This is a huge success for means-tested programs, but unfortunately, the insured rate has been going backward for the last few years.”

“From a state policy perspective, federal aid is critical. States have to balance their budgets, so states must cut education, health care, job training and other programs as revenues fall. Because every dollar a state cuts in Medicaid means a dollar lost in federal matching funds, kids can suffer a double hit. We know cuts in Medicaid lead to worse short- and long-term outcomes in education, health and income status for children in particular—even as those cuts deepen and prolong recessions.”

Looking ahead, Park identifies three urgent priorities for the next Congress and administration:

• Increase emergency federal financial support to state Medicaid programs.
• Ensure Medicaid can provide access to all participants when COVID-19 vaccines and treatments become available.
• Invest in outreach and public education to reverse the erosion in children’s Medicaid and CHIP coverage.

As the director of FutureEd, Thomas Toch spends much of his time examining and explaining how the COVID-19 pandemic affects education. It’s not good. “At the K–12 level, we’ve seen tremendous learning loss,” says Toch. “It’s expanding already wide achievement gaps that fall along socioeconomic and racial lines.”

The pandemic has also complicated how to measure performance. “We’re losing the transparency we’ve had into the performance of the school system over the last 20 years, with the suspension of standardized testing at the state level. It makes it hard to measure the learning loss,” says Toch.

The pandemic is affecting teachers, too. “Teachers are going to start retiring early or moving out of the profession altogether. We see massive upheaval there.” FutureEd has shifted its focus to help policymakers and practitioners navigate what has been an extraordinarily difficult moment. “We felt compelled to pivot,” says Toch.

Preliminary research shows that COVID-19 has been devastating on the higher-education side, too. “It puts a spotlight on the fragility of the business model,” says Toch. “The pandemic has revealed that colleges that put more resources into research than teaching are struggling to provide a good educational experience online.”

What’s more, COVID-19 is wiping out gains in racial and socioeconomic diversity as college students struggle to find time and resources to continue. “That’s going to have significant long-term consequences for our country,” says Toch.

FutureEd issued a paper laying out strategies for the next president to strengthen public education that include:

• Ensuring that teachers get the compensation they deserve for the difficult jobs they do and creating pathways to a more diverse teacher and school-leader workforce;
• Ending inequitable discipline practices;
• Measuring and improving factors to create a positive school climate, where students feel safer, more valued and supported and confident;
• Strengthening national support for testing by encouraging the development of a new generation of standardized tests that are more valuable to classroom instruction.

Marguerite Roza, research professor and director of the Edunomics Lab, examines the education crisis from an operational and financial perspective. Roza describes what she saw near her home in Seattle: “A school has been closed since March. That’s the last time the trash was cleared. The playground is covered in weeds. Things are falling down. It looks like a ghost town.”

Roza notes that across the street from that rundown school is a formerly empty office that quickly transformed into a private education hub with the help of some desks and a paint job. There are also restaurants bustling with social-distancing infrastructure.

“People are getting things done right and left,” Roza said. “There’s a lot of talented people that go to work in that school and could figure some of these elements out. I am just not sure we’ve empowered them to do that.”

Roza sees hope in how smaller school districts seem to be more adaptable, rising to the challenge of meeting their specific community’s needs. Roza asks, “If that is the model that works to deliver public edu- cation under shifting scenarios, how can we create some decentralization in the massive districts like New York City, Los Angeles and Miami so we can capitalize on the capability of these smaller units to be nimble and meet the moment?”

Knowing this, Roza hopes that districts can get creative. A one-size-fits-all approach demands that every kid hop on a yellow bus to ride to school, but that’s problematic—and more expensive—when social distancing is required. So what about a more innovative angle? For example, schools (like some across the country are doing) could strike the current “parent-proof ” system and incentivize families to get their own children to school.

This may not work in every community, Roza says, but in some districts it may free up resources for more intentional and targeted use of those dollars, possibly concentrating them in communities with fewer parental supports.

“We know there are inequities. How can we use this more customized, more targeted approach to schooling to actually solve these inequity issues now and for the long run?”

Adriana Kugler would like to be more optimistic, but she’s not there yet. “Consumer confidence is half as much as in February, and not going up,” she says. “People are concerned for good reason that things are not going to get better. If confidence doesn’t pick up, neither will buying. Businesses know this, so they’re not rehiring. Those workers that were initially on temporary layoff are now permanently laid off. Companies that initially laid off workers to survive are now going bankrupt.”

Under the CARES Act, workers can receive additional periods of unemployment checks for a total of 39 weeks. Therefore, benefits will be exhausted for tens of millions of workers by the end of the year when these additional unemployment benefits will expire. “The economy could head over a cliff if we take money away from this many people during a severe recession. That would leave many workers and their families without any income, given that only 50 % of white households and 30 % of minority households have a rainy-day fund,” Kugler worries.

For Holzer, the number of permanent layoffs is alarming. “I am anxious about the long-term damage to the labor market. One-third of Americans now on layoff are dealing with a permanent layoff. We know these are much more damaging to workers than temporary layoffs.”

Both economists cite the lack of a second stimulus as an imminent threat. Kugler notes that a re- cent paper by David Autor and his coauthors from the Federal Reserve evaluating the Payroll Protection Program shows evidence that these programs work by mitigating employment losses.

“These are good signs, but the programs have expired. The CARES Act was not only good for workers and small businesses but for all of us. Unfortunately, the uncertainty due to the lack of approval of a re- lief plan reduces consumer confidence and spending, which slows down the entire economy.”

For Kugler, a good relief plan will:

• Extend PPP but design it to reach people faster, focused on independent small businesses and distributed through local banks.
• Extend unemployment insurance. Professors Kugler, Holzer, Herd, Moynihan and Park agree in various forms that UI must be redesigned with “automatic stabilizers” that trigger payments tied to multiple levels of unemployment in each state.
• Invest heavily in workforce programs to train workers to meet the shortages in the IT and health sectors, including health counselors to help those suffering from mental health and substance abuse.
• Close the digital divide to prepare every household for the future workforce, which will likely move towards more telecommuting.

Holzer wants the next administration and Congress to address the “collateral damage to American workers” with a robust workforce-development agenda by:

• Investing in the perennially underfunded national system of workforce information-and-training centers;
• Loosening restrictions for receiving a Pell Grant, now mainly targeted to four-year colleges, so more Americans can access training through community colleges and certification programs;
• Expanding the narrowly targeted Trade Adjustment Assistance Act to include workers displaced by COVID-19 so millions of permanently laid-off workers retrain for jobs in higher demand;
• Targeting new support to community colleges to meet labor-market demand.

For McCourt chair Don Moynihan and professor Pamela Herd, there’s a bigger picture to understand during the federal and state response to the pandemic.

“It’s true, COVID-19 exposed all these holes in the safety net,” explains Herd, “from lack of access to health care to lack of sick leave. Our focus is on the other part of the story. Even the programs we have don’t work the way they should because policymakers don’t take the administrative features of these programs seriously enough.”

“If you step back and look at the current moment,” says Moynihan, “you have a lot of Americans who are interacting with government bureaucracies in a way they hadn’t had to before. They’re discovering for the first time these systems are not designed to be particularly helpful. They’re designed to put you through a series of ordeals or tests that many people can’t get through. The result is a largely invisible tax people have to pay for being citizens of the U.S.”

Professor Herd cites food stamps (known as SNAP, for Supplemental Nutrition Assistance Program): “We have a small portion of overpayments in the SNAP system that ranges year-to-year from 3 to 6 %,” notes Herd. “But 29 % of Americans are eligible for help but not able to get it, largely because of the administrative burden.”

Herd and Moynihan want to see regulations affecting individuals evaluated through the same type of cost-benefit analyses that are used to assess regulations on businesses. They also believe McCourt students will be a critical part of the solution in the years ahead. “I see our students being a key solution in the future, as they begin working in and around government,” states Moynihan. “By thinking about how the design and implementation of policy impact people who qualify for a safety net, they can begin dismantling these pernicious barriers that have a long history of racism and inequality.”

This post originally appeared in Policy Perspectives, the annual alumni magazine from the McCourt School of Public Policy. Click here to view the full digital magazine.