Going Below The Surface E-newsletter: May 2020
May 20, 2020
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.
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.
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.
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.