We’ve lost track of the days of the week, but we remain focused on the issues impacting the future of our health care system. Where to begin this month? We reached out to our Going Below The Surface (GBTS) Forum partners to ask them what their most pressing health spending questions are related to the next phase of this pandemic. We also looked at a recent analysis published in the Incidental Economist that examines the cost/benefit of the national shutdown.

Digging Deeper

What Health Spending Issues Will We Need to Address Post-Pandemic?

With the COVID-19 pandemic, many of our GBTS Forum partners are on the front lines of health care, working to treat patients and share accurate information with their constituencies while social distancing with their families. They’ve seen firsthand how the current environment has exacerbated existing problems with our health care system, created new challenges, and even brought to light areas that are working. Given their experiences, we asked our GBTS partners about the health spending issues we’ll need to address during the next few months, once states begin allowing more businesses to open and relaxing social distancing measures.

Read their responses on the GBTS website.

Does the QALY Stand Up in a Global Pandemic?

Ongoing efforts to slow the spread of COVID-19 through self-quarantine, though essential for public health, have taken an immense toll on the American economy. To quantify the economic impact of the pandemic, economists Eline van den Broek-Altenburg and Adam Atherly updated a previous analysis that leveraged a standard cost-effectiveness framework with a cost per Quality-Adjusted Life Year (QALY) threshold of $503,000 to $6.7 million.

The earlier calculations published on the Incidental Economist estimated the cost of the shutdown at $1 trillion to $4 trillion, at a cost-per-QALY threshold of $75,000 to $650,000. Now, two months into the pandemic, the updated calculations suggest a $5.2 trillion cost of shutdown, using a cost-per-QALY threshold of $503,000 to $6.7 million. For comparison, the Institute for Clinical and Economic Review’s (ICER) threshold is significantly lower at $100,000 to $150,000. Even at this higher threshold, the authors said the economic impact of the shutdown will be “outside the conventional range of acceptability even at the high end of deaths avoided.”

Just as health care stakeholders raised questions about the unknowns in ICER’s cost estimates for remdesivir, the authors highlighted several inputs that could not be captured in their assessment, due to quantification difficulties. These factors included health costs related to increases in domestic violence, delayed treatment for non-COVID-19 illnesses and declining mental health.

Why it Matters: As the COVID-19 shutdown continues, the societal cost impact continues to grow dramatically as a result of rising unemployment rates, increased government aid, and other economic factors. The economists noted that the cost-per-QALY threshold will continue to grow with the rising expenditures, which raises the question of whether a new societal “willingness to pay” benchmark is needed. Alternatively, both their model and ICER’s suggest that the QALY metric may be inadequate as it fails to capture several real-world inputs.

Challenging these economic models is critical to ensuring our metrics for assessing value are inclusive of relevant inputs and accurately reflect real-world data. Aligning on a method to determine value is complicated, but the stakes are even higher in light of a global public health crisis that continues to impact costs.

What We’re Reading

This month’s reading selections focus on how much we are spending on health care because of COVID-19, a decision-making tool for state policy-makers determining whether their regions can relax social distancing, and the importance of considering productivity in value assessment.

  • Bartsch SM, et al. The Potential Health Care Costs And Resource Use Associated With COVID-19 In The United States. April 23, 2020, Health Affairs
    If 20% of the population contracted COVID-19, what are the direct medical costs to treat those patients? What would happen if 80% of the population fell ill? In modeling these scenarios, researchers found that treating symptomatic COVID-19 cases is substantially higher than other common infectious diseases. The study highlights the value of strategies that minimize the spread of the virus as much as possible.
  • Hughes-Cromwick P, Miller G. Perspective: Unprecedented Decline in Health Spending is Leading the Economic Downturn. April 30, 2020, Altarum
    We’re spending less on health care than we did during the same time last year, but is it good news? Altarum researchers dug into the numbers and found that spending declined in all health care sectors, most notably on hospitals and on physician and clinical services, as people are forgoing care. This trend could lead to a continued reduction in low-value care, but it also could lead to higher costs in treating serious conditions down the road.
  • Vardavas R, et al. The Health and Economic Impacts of Nonpharmaceutical Interventions to Address COVID-19: A Decision Support Tool for State and Local Policymakers, May 2020, RAND Corporation
    RAND Corporation developed a tool to assist states in considering “how and when to relax interventions and how to weigh the economic cost of prolonged mitigation measures against the risk of a second wave of the virus.” The tool offers a wide range of inputs to assist decision-makers with complex health and economic questions.
  • Karmarkar T, Graff J, Westrich K. Underestimating the Value of an Intervention: The Case for Including Productivity in Value Assessments and Formulary Design. May 2020, Journal of Managed Care & Specialty Pharmacy
    Researchers from the National Pharmaceutical Council delved into the impact of health on work productivity and the importance of considering all benefits and costs, including productivity impacts and losses, when assessing health care interventions.

Dialogues on Health Spending

  • Tradeoffs Podcast: This health spending-focused podcast has been tackling pandemic issues via shorter format conversations. Catch up on recent episodes on their website.
  • Considering Health Spending: The Health Affairs series continues with articles on COVID-19 and health care financing, drug pricing, and costs and quality of care.