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A Look at COVID’s Lasting Impact on Healthcare Costs

COVID

While the COVID pandemic is by no means over, it seems clear that in most countries we are entering a new, less-deadly phase. The pandemic has entailed massive healthcare costs across the world and put significant strain on healthcare systems. But now that the pandemic is easing, you might be wondering what this will mean for healthcare costs. 

Let’s explore what long-term influence COVID might end up having on the cost of healthcare.

Less Severe Illness Means Lower Healthcare Costs

Research shows that infections with the dominant Omicron variants are 60% less likely to result in hospital admission compared to Delta. This is crucially important from a cost perspective. 

A 2021 study revealed that, based on 247,590 hospitalized COVID-19 patients in the U.S., the median hospital Length of Stay (LOS) was six days, and the median total cost of the stay was $13,443. 

Moreover, costs increase when patients are admitted to Intensive Care Units (ICUs). In this case, the overall median ICU LOS was five days and the median total cost of the stay was $13,443. 

If new variants, like Omicron, are less likely to result in severe symptoms and hospitalizations, and most people are able to recover safely at home, this will drastically reduce healthcare costs related to COVID-19.

Waning Vaccine Effectiveness Matters

COVID-19 cases, hospitalizations, and deaths have been decreasing, but so has the effectiveness of vaccines for many people. 

Research indicates that two doses of the COVID-19 vaccine provide high levels of protection in the first few months after the second shot was administered, but this protection wanes six months after the second jab. 

If older and vulnerable populations don’t get booster doses to reinstate protection against the virus, there’s a higher risk of severe illness from COVID-19. 

While cases of COVID-19 have been dropping dramatically in many countries, hospitalizations may still be relatively elevated due to waning immunity. 

Periods of high numbers of cases of COVID-19 have left many with natural immunity to the virus, but since variants can evade the immune response some individuals will still face substantial healthcare costs after contracting COVID-19.

The Cost of Long COVID

While the pandemic is waning for many people, there are still millions worldwide struggling with long COVID: symptoms that persist despite testing negative for the virus. 

These symptoms may include:

  • Extreme tiredness (fatigue)
  • Shortness of breath
  • Chest pain or tightness
  • Problems with memory and concentration (“brain fog”)
  • Difficulty sleeping (insomnia)
  • Heart palpitations
  • Dizziness
  • Pins and needles
  • Joint pain
  • Depression and anxiety
  • Tinnitus, earaches
  • Feeling sick, diarrhea, stomach aches, loss of appetite
  • A high temperature, cough, headaches, sore throat, changes to sense of smell or taste
  • Rashes

For many, these symptoms can make normal day-to-day activities difficult, meaning most will seek treatment. People with long COVID may visit their primary physician for a diagnosis, seek out medical or health specialists, and buy treatments in hopes of alleviating their symptoms. 

All of this can incur significant healthcare costs, especially if someone is trying out many options and investing in long-term treatment for their long-term symptoms. In many cases, those with long COVID are struggling to hold down jobs and maintain housing. These are healthcare costs that governments will ultimately have to consider.

Lessons from the Pandemic are Influencing Healthcare Costs

A 2022 report from PWC argues that, “Regardless of when the pandemic officially ends, the pandemic itself, some of its aftereffects and the health system’s response to changes and failures observed during the pandemic are expected to drive up [healthcare] spending in 2022.” 

For example, the report notes that some healthcare deferred during the pandemic will return, and rates of mental health issues and substance abuse will remain high. Additionally, investments to bolster shortcomings in the U.S. healthcare system highlighted during the pandemic are expected to drive prices higher in 2022. These include investments in new forecasting tools, improvements to the supply chain, increased wages for some staff, stockpiles of personal protective equipment (PPE), and infrastructure changes.

At the same time, changes in consumer behavior and provider operating models that occurred during the pandemic are expected to reduce healthcare spending in 2022. For instance, the pandemic prompted many consumers to embrace virtual care, retail clinics, and other alternative sites of care, sometimes instead of visiting the emergency department. This adoption of lower-cost sites is expected to drive lower spending in 2022. 

In addition, the pandemic forced new ways of working, including remote workforces, process automation, and cloud technology, all of which can help healthcare providers lower their cost structure. 

While the pandemic remains a driver behind factors that will increase or decrease healthcare costs in 2022, we should also keep in mind that other non-pandemic-related drivers exist as well, including drug spending, cybersecurity, and healthcare legislation.

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