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Viewpoints from David Wiesner

As EPIC and every other consulting and actuarial firm rush to the market with a coronavirus (COVID-19) cost impact modeling tool, I would urge a healthy dose of skepticism. Let me explain why:

The numbers are moving too fast.

Four weeks ago, the models told us 1.1 to 2.2 million people may die from COVID-19 based on then-assumed infection and death rates. Over the next few weeks, those models were revised downward and downward again. Even now as more tests come to the market, tests are broader in scope and include antibodies studies for those who were infected but had mild symptoms. The projections will change. With this unprecedented virus, it’s very difficult to accurately project the number infected, those infected requiring hospitalizations, escalations to intensive care units, and death rates.

The models need to be very specific about demographics, comorbidity and geography.

An accurate model would need to look at the demographics and population and then adjust for comorbidity within an age demographic – and at the same time apply an infection rate by geographic region. Clearly, some regions are harder hit than others. So an employer in New York City would have a higher cost assumption than one in Wichita. However, as we are seeing new hotspots appear, any model run today will miss the hotspot of tomorrow. These variables are significant, and the employer populations being evaluated are just too small to be credible – even with accurate assumptions.

The model would need to incorporate foregone and deferred treatment.

Any model would need to assess “normal” costs and those services which will not be utilized (such as physical therapy); missed sessions in March and April are not going to result in doubled-up sessions in May and June. Those costs will not reappear, or worse – the condition will be aggravated due to lack of follow-up treatment. Likewise, there is a lot of deferred treatment. One of our orthopedic physicians’ groups has furloughed half of their staff because they can’t schedule elective surgical appointments. When the economy opens back up, the ability to schedule surgeries will be limited by the capacity of surgical rooms and those costs will be spread out further over time.

Perhaps of greater concern is a report from the Fire Department of the City of New York (FDNY). While they have seen a 412% increase in calls to residences for heart attacks, the death rate prior to reaching the hospital has increased a whopping 769%, compared to 2019. Implied in this is that people in NYC are so afraid of going to the hospital they are hesitant to call 911 for fear of exposure to COVID-19, but the FDNY suspects that many of these deaths were caused by the virus. And the model would need to forecast the reduced costs of those victims who did not survive.

The cost of care for recovered COVID-19 patients is unknown.

Recent medical articles are now introducing the idea of significant damage being done by COVID-19 to the heart, lung, kidney, brain and nervous system of survivors. Today we just don’t know enough to accurately model the extent of follow-up care required.

The cost of new therapies is unknown.

Lastly, once-effective treatment protocols and lifesaving medications become available, those costs would need to be included in the model. The drug ingredient cost or treatment modality is unknown, so how can the cost be estimated?

The C-suite is asking “what will this cost us?” While we will do our best, the waters are unchartered and the answers are, at best, a good guess.

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David Wiesner

Regional Director, Employee Benefits – Concord, CA