Interestingly, in the previous sentence ('Livia se male habet'), H was pronounced and here it is missing. As far as I understand it could be done both ways - pronounced in Classical Latin and silent in Ecclesiastical version. But this should be a course of Classical Latin. So is this a mistake or perhaps there's any other explanation?
"Habere" literally means "to have/hold/keep". By itself it indicates possession: Domum habeo. I have a house.
The reflexive form indicates the state of the person: Livia bene se habet. Livia holds herself well.
I think you're confusing "habere" with "habitare", which means "to reside/dwell". Romae habito. I live in Rome.
|to have/hold/keep||to inhabit/dwell|
|ego habeo||ego habito|
|tu habes||tu habitas|
|is habet||is habitat|
|nos habemus||nos habitamus|
|vos habetis||vos habitatis|
|ei habent||ei habitant|
"Doing" is another verb altogether: "agere".
"Quid agit Livia?" literally means "What is Livia doing?" but the Romans used it idiomatically to means what we do when we say "How is Livia?"