Impact of Lockdown on the U.S. Medicare Economy

Alongside a health care crisis, COVID-19 has brought along with it an economic crisis. In the last 2 weeks of March, around 10 million people registered for unemployment insurance which is very high in comparison to any previous month numbers. It is even estimated that the U.S. economy will shrink to about 25% during this financial year's second quarter. The U.S. has already entered a recession period and possibly heading towards a depression. Some experts claim that the economies could surpass the great economic depression growth rate which was somewhere around -15%. If we go back to history, we hardly find the Medicare industry been hit by any sort of recessions. As individuals get sick both during good and bad times and hence demand for healthcare is nearly uniform across the business cycle. Moreover, health insurance limits the out-of-pocket expenses for attention that people face; thus, many infected people—at least those with health insurance—can nevertheless manage to visit practitioners. But, the recent pandemic is shaping up to be something unique. For beginners, people are being urged to halt outside activities. This is especially true for those who have medical stipulations that put them at greater risk—the types of people who use health care the most.

Health care departments are already sensing the pinch. Even though there is no national data but some primary care clinics are reporting decreases in the use of health care services by up to 70%. Without significant cash resources the wages of clinical staff are being stopped or reduced and some workers are being furloughed. For around the 3rd week of March, the second-largest cause of unemployment insurance claims in Michigan was due to health care businesses, loitering only restaurants and bars. The US government response to this situation is two-pronged, Firstly, the reserve is cutting down on the interest rates so as to flood the markets with cash and Secondly, the US parliament enacted the largest relief fund in the U.S. history, the $2 trillion relief fund will provide cash to most of the US families, loans for small businesses and have set a separate $100 billion from this fund to the hospitals destroyed by Corona Virus.

Harm of Sustained Shutdowns

The more prolonged the U shaped economy persists the greater will be its economic harm. Businesses can endure a short time without buyers, longer with the relief fund legislated by Congress. But continued shutdowns become increasingly more depressing. As time passes, the welfare checks will be consumed. And without passage to credit, some local stores—reasonably including medical offices—will shutter forever. This situation eventually feeds upon itself as there are fewer vacancies in the market which suggest fewer people would be paid and even lower wages when people work due to the high demand of labor supply, which would mean people would be having lesser dollars to spend, and so on. This is the reason why the government role becomes inevitable in recession period. One relief area for the medical care is that people who are deferring care now will be sought later. For say, deferred primary visits could be presumed during the summers which could prove to be beneficial for the Medicare staff that are on furlough as they can presume services later. But for a few sectors, such as restaurants and entertainment which cannot recoup the services later that are not provided now. Nevertheless, there are other major risks a long recession or depression may pose to the Medicare industry and its institutes. Job losses even bring a decline in employer-provided insurance coverage. And so more people will either be uninsured or on Medicaid where the payment rates are quite low. And consequently, as the state budgets are strained thin, governments will have no choice other than to cut the Medicaid fees and lower returns from the insurance policies of public sector workers. The longer this pandemic season continues the longer additional policies actions would be required. The current relief fund released by the Congress is around 10% of the country's total GDP and if the situation continues further, which is likely to be, more relief would be needed. The whole country would need to come together despite their political differences as we saw in the relief fund release the senate voted unanimously, but the political parties have not manifested the ability to recognize on much of anything during the past few years. So on both the economic and health aspects, the circumstances are laden with peril.