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In worst-case scenario, COVID-19 coronavirus could cost the U.S. billions in medical expenses

If 20% of the US population were to become infected with COVID-19, it would result in an average of $163.4 billion in direct medical costs.

Jeff Lagasse, Associate Editor

One of the major concerns about the COVID-19 coronavirus pandemic has been the burden that cases will place on the healthcare system. A new study published April 23 in the journal Health Affairs found that the spread of the virus could cost hundreds of billions of dollars in direct medical expenses alone and require resources such as hospital beds and ventilators that may exceed what is currently available.

The findings demonstrate how these costs and resources can be cut substantially if the spread of COVID-19 coronavirus can be reduced to different degrees.

The study was led by the Public Health Informatics, Computational and Operations Research team at the City University of New York Graduate School of Public Health and Health Policy, along with the Infectious Disease Clinical Outcomes Research Unit at the Los Angeles Biomedical Research Institute, Harbor-UCLA Medical Center and Torrance Memorial Medical Center.

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The team developed a computer simulation model of the entire U.S. that could then simulate what would happen if different proportions of the population end up getting infected with the COVID-19 coronavirus. In the model, each infected person would develop different symptoms over time and, depending upon the severity of those symptoms, visit clinics, emergency departments or hospitals.

The resources each patient would require – such as healthcare personnel time, medication, hospital beds and ventilators – would then be based on the health status of each patient. The model then tracks the resources involved, the associated costs and the outcomes for each patient.

For example, if 20% of the U.S. population were to become infected with the COVID-19 coronavirus, there would be an average of 11.2 million hospitalizations and 1.6 million ventilators used, costing an average of $163.4 billion in direct medical costs during the course of the infection.

The study shows the factors that could push this amount up to 13.4 million hospitalizations and 2.3 million ventilators used, costing an average of $214.5 billion. If 50% of the U.S. population were to get infected with COVID-19, there would be 27.9 million hospitalizations, 4.1 million ventilators used and 156.2 million hospital bed days accrued, costing an average of $408.8 billion in direct medical costs during the course of the infection.

This increases to 44.6 million hospitalizations, 6.5 million ventilators used and 249.5 million hospital bed days (general ward plus ICU bed days) incurred, costing an average of $654 billion during the course of the infection if 80% of the U.S. population were to get infected. The significant difference in medical costs when various proportions of the population get infected show the value of any strategies that could reduce infections and, conversely, the potential cost of simply letting the virus run its course – the "herd immunity" approach.

Simply put, allowing people to get infected until herd immunity thresholds are met would come at a tremendous cost, and even if social-distancing measures were relaxed and the country "opened up" too early, the healthcare system, as well as the broader economy, would come close to buckling under the weight of the additional costs.

WHAT'S THE IMPACT?

The study shows how costly the coronavirus is compared to other common infectious diseases. For example, a single symptomatic COVID-19 infection costs an average of $3,045 in direct medical costs during the course of the infection alone. This is four times higher than a symptomatic influenza case and 5.5 times higher than a symptomatic pertussis case. Factoring in the costs from longer lasting effects of the infection such as lung damage and other organ damage increased the average cost to $3,994.

Importantly, for a sizable proportion of those who get infected, healthcare costs don't end when the active infection ends, and costs will likely stay high even after the bulk of the pandemic has passed.

A continuing concern is that the U.S. healthcare system will become overloaded with the surge of COVID-19 coronavirus cases and will subsequently not have enough person-power, ventilators and hospital beds to accommodate the influx of patients. The study shows that even when only 20% of the population gets infected, the current number of available ventilators and ICU beds will not be sufficient.

According to the Society of Critical Care Medicine, there are approximately 96,596 ICU beds and 62,000 full-featured mechanical ventilators in the U.S., substantially lower than what would be needed when only 20% of the population gets infected.

THE LARGER TREND

Data released this week by Kaufman Hall illustrates the extent to which U.S. hospitals are already suffering financially due to the coronavirus.

Looking at earnings before interest, taxes, depreciation and amortization, hospitals' operating margins fell more than 100% in March, dropping a full 13 percentage points relative to last year. Compared to most months, that's a much greater change. Operating EBITDA margin was up just 1% in March 2019, for example, and down 1% in February of this year.

These margins likely fell even further across broader health systems, which often include substantial physician and ambulatory operations outside of the hospital, Kaufman Hall found. Overall, operating margins fell 170% below budget for the month.
 

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com