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Sitting here in early June it is hard to know what the future holds.  We are about 3 months since the COVID-19 pandemic officially hit the US, we just finished 8-10 weeks of quarantine and we are all sitting here wondering if another wave is coming.  According to the CDC, the total COVID-19 related deaths in the United States have now surpassed 110,375[1].  Our country has been in a state of chaos for many months with the economy shutting down and many deaths.  The question that many are still asking is if the worst is behind us or is it still coming.

Coffee shop conversation related to COVID-19 ranges from “the world is going to end” to “this is nothing worse than the flu” to “this whole thing was a scam that big pharma came up with”.  I do not think that any of these assertions are correct, but I do believe that we are not before or after the storm, but rather in the middle of it. The virus has not gone away, there is not currently a vaccine and the fact that many are now ignoring social distancing and other regulations, we may see a rise in the cases.

Confirmed cases of COVID-19 are nearly 2,000,000 and there appears to be about 1% of new cases added every day.  The news recently has had other things to talk about, but that does not mean that COVID-19 has gone away or is under control. The United States has about 328,000,000 people of which about 0.59% of the population has contracted the virus (1,938,823).  Of the people that have contracted the virus about 5.69% of the infected have died from the virus (110,375).  Original projection called for much higher rates of infection and death toll.

The reason the numbers have been so much better than thought is because of the actions that were taken to mitigate the spread.

The reason the numbers have been so much better than thought is because of the actions that were taken to mitigate the spread. Prompt action steered our country away from outcomes we have seen in other parts of the world and hospitals have not been overrun by patients as many feared.  States proactively implemented interventions such as: stay at home, shelter in place, limited gatherings and eliminated most social congregating activities like sports, concerts and movie theaters. According to a report just released by USA Today by[2] there were as many as 4.8 million confirmed Coronavirus cases (or about 60 million more infections) avoided by the interventions that were put in place.

Today the economy is beginning to open back up and social distancing has become less of a priority to many people.  There will no doubt be many more cases, and potentially a second wave later in the fall, but it appears that our past prudent behaviors have reshaped the future trajectory.  It has been said that the interventions were done to lower the potential peak need in hospital beds, but not necessarily to lower the overall number of cases.  This is very true, but as more people get exposed over time, I believe that fewer people will contract the virus.  Herd immunity, either through a vaccine or getting the virus is the key to a safe future.

Just like the captain of a ship often experiences a “calm before the storm” I believe we are in a calm.  I am hopeful that this is a calm After the storm, where the worst infections are behind us.  We all need to be vigilant to assure that we are not just creating a calm before the next big storm.  The storm called COVID-19 has reshaped our country and our world.  The health and financial effects will last for years to come.

The future storm may not be in the form of a virus but may have been brought on by a virus.  Some major healthcare entities projected a 40% increase in healthcare costs related to COVID-19.  To date that has not appeared to have happened.  The virus has lowered overall claim activity at most insurers and has caused massive financial issues with providers as some of their businesses were unable to perform procedures for many months.  Many frontline doctors such as ER doctors have seen their compensation decrease by more than 50% as many ERs have sat empty as people are scared to go and consume care at a hospital.  Many medical groups and hospitals are flirting with bankruptcy and fear that the virus may have shut them down for good.  The second wave of COVID-19 may not be related to more people getting infected but rather an instability in a system that has long allowed for financial structures that are not sustainable.

Our research at Axene Health Partners has shown that around 30% of the care provided in the healthcare system is potentially avoidable, and much of that is hospital related.  The overuse of the healthcare system is seen in many places and none more obvious than in the ER.  ERs were designed to be used for “life and limb threatening issues”, but in recent history, it has been used more as an express lane to getting the care you “want” and not having to deal with the red tape and approval process. Instead of making an appointment to see your primary care physician to get a referral to a specialist, many people end up in the ER so that they can go directly to the specialist.   Over the last three months, ERs have been much less busy and might be being utilized as they were originally designed.  The issues with this new ER usage pattern are that Hospitals have long relied on ERs as revenue generators and also as a path to inpatient stays.  If ERs continue to be used in this way hospitals may need to rethink how they do business.

The “Calm before the storm” as defined by an online dictionary[3] can be defined as: “a period of peace before a disturbance or crisis; an unnatural or false calm before a storm”.  We have many storms brewing in healthcare and the top of that list is that healthcare is costing too much, and trends are continuing to worsen.  COVID-19 could cause this issue to get even worse, but it may also shine a light on the economic model in healthcare that rewards providers for doing more procedures and not always what is right. We have a system that allows members to shortcut the system and force their way into getting services.  We have a system where fear often reigns and causes both providers and members to act in a way that is not appropriate.  This “unnatural or false” calm has existed for a long time and we all need to wake up to its reality and work toward creating a system that puts the patients’ health first and also cares about the financial health of the system.



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About the Author

Joshua AxenePartner and Consulting Actuary
Joshua W. Axene, FSA, FCA, MAAA, is a Partner and Consulting Actuary at Axene Health Partners, LLC